Reform Of The UK Arbitration Act

• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Subject Matter: Litigation, Mediation & Arbitration, Energy and Natural Resources, Energy Law, Arbitration & Dispute Resolution
• Author: Mr Justin Williams and Jenny Arlington
• Published date: 02 October 2023

The upcoming changes to the UK Arbitration Act are an important development for energy practitioners. That's because arbitration is the default means to resolve cross-border energy and natural resources disputes, and London is frequently the seat of arbitration for those cases. The proposed changes are (amongst other things) another step toward improved time and cost efficiency in English arbitration.

On 6 September 2023, the Law Commission published the long-awaited final report of its review of the UK Arbitration Act 1996 (the "Act") and a draft bill setting out the recommended amendments to the Act. The upshot is that the Act works well and root and branch reform is not necessary or desired, but that after 27 years there are some areas where the text can be improved. The key reforms that are likely to be of most interest to users of international arbitration concern moves to improve the cost and time efficiency of English arbitration. In particular, it is proposed that tribunals be given the express power to dismiss a claim or an issue at an early stage if it has "no real prospect of success". This would bring the Act into line with a number of institutional rules, and reflects London's concern to meet users' demands.

The other main recommendations include:

1. New restrictions on how the jurisdiction of the arbitral tribunal may be challenged before the court (section 67 of the Act), which should avoid delay, increased costs and potential unfairness.
2. The law governing the arbitration agreement will by default be the law of the seat, a much simpler test to apply than the current complex process under Enka v Chubb.
3. New clarification that the court has powers against third parties (under section 44 of the Act), bringing clarity and avoiding unnecessary litigation on the point.
4. Codifying a duty for arbitrators to disclose what they actually know and what they ought reasonably to know, which should reassure users as to the arbitrators' impartiality.
5. Strengthening arbitrators' immunity in relation to resignations and costs, which should boost users' confidence in the robustness and impartiality of the arbitration process.

Details of the Major Changes and Their Impact

Express Provision for Summary Disposal of Claims or Issues

Summary judgment, in English court proceedings, may be granted where the court decides a claim or issue without trial, when it considers that a party has no real prospect of success and there is no other compelling reason why the issue...