Wednesday 29th January 2025
(1 day, 21 hours ago)
Commons ChamberArbitration Bill [HL] 2024-26 View all Arbitration Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 1-I Marshalled list for Committee - (9 Sep 2024)
The Parliamentary Under-Secretary of State for Justice (Sir Nicholas Dakin)
I beg to move, That the Bill be now read a Second time.
I am pleased to be opening this Second Reading debate on the Government’s Arbitration Bill. This legislation is a direct response to recommendations made by the Law Commission of England and Wales in its report on arbitral reform, published in September 2023. If enacted, the Bill will make targeted reforms to the Arbitration Act 1996, which governs arbitration in England, Wales and Northern Ireland. Scotland has its own devolved arbitral framework under the Arbitration (Scotland) Act 2010, which this Bill will not affect.
Arbitration is a major area of business activity. For example, the Chartered Institute of Arbitrators, headquartered in London, has more than 17,000 members across 149 countries. As the House will know, arbitration is greatly valued by individuals and businesses alike as an alternative to going to court, giving parties the ability to appoint a private tribunal to resolve disputes by issuing a binding and enforceable award. For example, when parties enter into a commercial contract, it is common to find a clause that provides that any disputes will be resolved through arbitration in this great capital city of London, rather than through litigation in court. That is often true even where a contract has no other connection to the UK, such is the prestige of arbitration here. Furthermore, thanks to an international convention commonly called the New York convention, which dates from 1958, arbitration awards made in the UK can be enforced anywhere in the world. Studies suggest that such enforcement is often faster and more reliable than seeking to enforce court judgments.
The New York convention may date from 1958, but arbitration has been a feature of our justice system for centuries. Arbitration was a common way of settling disputes back in Anglo-Saxon times. It was largely a public affair, with enforcement through community pressure. By Norman times, parties could choose their arbitrator, someone known to both sides and well placed to facilitate a reconciliation. In the 14th century—[Interruption.] The Opposition spokesman, the hon. Member for Bexhill and Battle (Dr Mullan), is enjoying my little canter through the historical background, which I am sure the massed attendance this afternoon is also enjoying. In the 14th century, the mayor and aldermen of London set up, in effect, an arbitration centre here in this great city. This also provided services to foreign traders whose disputes had no other connection to England. Arbitration then grew in Elizabethan times, and by the mid-18th century arbitration clauses were very common, as were professional arbitrators.
It is said that our first arbitration Act, the Arbitration Act 1698, was single-handedly drafted by the famous political philosopher John Locke after he had been tasked by the then Board of Trade to devise a scheme that would help merchants to reach a satisfactory settlement of their disputes. John Locke’s arbitral framework fitted on one or two sides of paper, which is a real achievement, is it not? If only we could emulate that today, but things have got more complicated and therefore more precise. Arbitration has come a long way since then, though we salute John Locke and his efforts in setting us on this journey.
Today, arbitration happens in a very wide range of settings, from rent reviews through commodity trades and shipping to international commercial contracts and investor claims against states. In each instance, it enables parties to resolve the dispute at hand and move on from it. The parties can choose a neutral venue to resolve their dispute. They can choose trusted arbitrators or arbitral institutions to preside over the proceedings. I add with emphasis that some of the world’s leading trade and arbitral institutions are headquartered here in London. I may have mentioned that before, but we need to be proud of it. They range from the aforementioned Chartered Institute of Arbitrators and the London Court of International Arbitration to important specialist organisations concerned with matters such as shipping and trade in grains, oils and sugars.
Parties can tailor the arbitration process to their own needs, which results in an award that is internationally enforceable. At the same time, the process is respected for its integrity—at least, that is the position here in the UK, thanks in large measure to the regulation of arbitration through the Arbitration Act 1996. The Act ensures that arbitration is conducted in a way that is impartial, fair and without unnecessary cost and delay. The English courts, which command much respect worldwide, retain a supervisory jurisdiction.
Building on its extensive history of arbitration, and thanks to its legislative framework, London has become the world’s leading destination for international arbitration. It is highly respected as a neutral venue for resolving disputes across the world, something in which we all rightly take immense pride. In fact, the Law Commission estimates that at least 5,000 arbitrations take place in England and Wales each year, directly contributing at least £2.5 billion a year to our economy in fees alone. So arbitration and the Bill are part of our growth agenda for our great country. However, as arbitration is a largely private affair, we may speculate that its direct value is likely to be even greater than that £2.5 billion.
Arbitration is also an important offering in our country’s international business package, one that includes legal services, banking, insurance and trade. It is a great advantage of our jurisdiction that business can be done here in the knowledge that when legal disputes arise, they can be resolved swiftly and fairly. We enjoy a worldwide reputation for the quality, independence and ethics of our legal professions. It is therefore no surprise that arbitration here in London is a showcase for that, or that it is very much in demand.
Given that the Arbitration Act 1996 is approaching 30 years of age, the previous Government rightly asked the Law Commission to undertake a thorough review of the legislation back in 2021. It was tasked with determining whether the 1996 Act required amendment to reflect modern practices and maintain its effectiveness in a growing global market when competing jurisdictions had already updated their own arbitral frameworks. The Law Commission was painstaking in its review, carrying out the commission given to it by the previous Government, and I pay tribute to the members of the Law Commission for their painstaking work on this matter, from which we all benefit.
An initial consultation paper was published in September 2022. It laid out the Law Commission’s analysis of the law as it stood and proposed a small number of areas for reform. That consultation received responses from abroad and from an expert base of consultees including individual practitioners, academics, specialist bodies and international firms and institutions, as well as from our judiciary. Taking this feedback on board, the Law Commission refined its proposals and published a second consultation paper in March 2023. After yet another round of engagement, final proposals and a draft Bill were published in September 2023.
As I said, this process has been painstaking and thorough, and we need to credit everybody involved, including the Conservatives for their leadership of the process during that time. It is a testament to the longevity and flexibility of our arbitral framework that only targeted updates were recommended, with the Law Commission concluding that while some modernisation of the 1996 Act was needed and desirable, root and branch reform was not. And it is testament to the Law Commission’s thorough consultation that the Bill commands such support in the arbitral and legal sectors.
I cannot resist adding that the work has been watched carefully by our competitor jurisdictions abroad. The Law Commission’s report was cited by the Singapore court of its own initiative, and in the last few months, seeing the positive developments here, France has announced a need to review its own arbitration laws. We lead the way, and this Bill will ensure that we stay ahead.
As hon. and right hon. Members will be aware, the previous Government introduced an Arbitration Bill in 2023 that also sought to implement the Law Commission’s recommendations. That Bill had made its way through Committee in the other place when Parliament was dissolved for the general election. The legal sector was emphatic in expressing the view that the proposed reforms are vital for updating the arbitral framework and making sure that our jurisdiction remains competitive.
We are first in global class on arbitration, and this Bill will ensure that we stay first in global class. The Government agree wholeheartedly with the legal sector’s view, not least because of our commitment to fostering economic growth in our country. As such, this Bill was introduced in the other place at the very earliest opportunity in July 2024, as one of the first acts of this Government after the general election. I am pleased to see the Bill finally arrive in this House, as I am sure you are, Madam Deputy Speaker.
It is worth saying that the 1996 Act boasts some key strengths. It provides flexible procedures that allow parties to shape proceedings to best suit them. Parties can, for example, arbitrate their dispute with one of our jurisdiction’s many world-leading arbitral institutions, which have developed procedures that parties trust will deliver a fair and timely outcome.
Our current framework also permits effective recourse to our courts, where needed. Parties can request that our courts determine a preliminary matter in the arbitration, such as jurisdiction, or later challenge an award produced by arbitration. Arbitrators can similarly apply to the courts to assist their proceedings, such as by enforcing their orders. At the same time, the regime of court support is carefully balanced to prevent parties from dragging their feet and re-litigating cases. This gives parties huge confidence that arbitrations taking place in our jurisdiction are both efficient and fair.
Many of this Bill’s reforms are designed to build on the strengths of the 1996 Act. I will now go through the key clauses, because I can tell that Members are deeply interested in checking through the detail so that, should we move to a vote, we know exactly what we are voting on.
Sir Nicholas Dakin
I am pleased to see the Opposition spokesman give me a willing eye of encouragement, for which I am duly grateful.
I start at the beginning. Clause 1 will make it much simpler to determine what law applies to an arbitration agreement. Currently, the rules for identifying the governing law are found in the common law and a recent Supreme Court decision. That decision shows both immense learning and the complexity of the current approach. The Supreme Court was split in its judgment, and its approach was different from that of the Court of Appeal, which used an approach different from that at first instance.
Instead, to make the law clearer and more predictable, clause 1 provides that the governing law will align with the legal location—that is, the seat—of the arbitration by default. This will ensure that arbitrations, where seated in England and Wales and Northern Ireland, will be fully supported by our law, which is among the most supportive of arbitration globally.
Clause 2 codifies a duty for arbitrators to disclose circumstances that may cause doubts as to their impartiality. This will codify the common law and align domestic law with international best practice, such as the United Nations Commission on International Trade Law model law, which our expert lawyers had a major hand in drafting. The model law’s influence can be found in other jurisdictions as far apart as Scotland and Switzerland. It will promote trust in arbitration by promoting trust in the integrity and impartiality of arbitrators.
Clause 3 and, in the interest of briskness, clause 4 will support arbitrators in making impartial and proper decisions by extending their immunity against liability when they resign for good reason or are removed for no fault of their own. This will support arbitrators to make robust and impartial decisions without fear.
Clause 5 clarifies the two pathways for a party that wants to challenge the jurisdiction of the arbitrators—that wants to question whether the dispute should be arbitrated at all. The party can either apply to the court for an early ruling, or it can wait until the award is issued and then go to court. Clause 5 clarifies that it cannot do both. It is either/or.
Clause 6 ensures that, where arbitrators agree that they should not be hearing a dispute after all, they can still award the costs incurred up to that point against the party that generated those costs.
Clause 7 will allow arbitrators to adopt expedited procedures to dispense with issues that have no real prospect of success. This aligns with summary judgments available in court proceedings and will make arbitrations more efficient.
We move seamlessly to clause 8, which will help emergency arbitrators. Emergency arbitrators are appointed on a temporary basis while a full tribunal is being established—that process can sometimes take weeks. They are, therefore, very important to arbitrations. They are often tasked with vital preliminary matters, such as preserving evidence or assets, and are important to ensuring that arbitrations can proceed smoothly. As the practice of emergency arbitrators post-dates the 1996 Act, our framework did not make explicit provision for them, so looking again gives us an opportunity to examine their role.
Clause 8 empowers emergency arbitrators to handle urgent matters better and ensure compliance with their directions by equipping them with final orders and court enforcement. That will give emergency arbitrators the same pathways to enforce their orders as other arbitrators, and will enhance their effectiveness.
Clause 9 provides that court orders made in support of arbitral proceedings can be made against third parties, which aligns with the position in court proceedings. For example, it would enable a party to arbitration to get an order freezing assets held by a third party, such as a bank.
Clause 10 ensures that when a party challenges an arbitral award at court, the court has the full range of remedies available, regardless of the pathway. This clause irons out discrepancies that courts and practitioners have otherwise sought to work around.
Clause 11 provides more efficient court challenges to the tribunals jurisdiction through rules of court that would prohibit repeating evidence and arguments already debated in front of the tribunal. That will avoid such challenges becoming full re-hearings, reducing costs and delays.
I can deal with clause 12 pretty quickly, you will be pleased to know, Madam Deputy Speaker. Clause 12 ensures that the time limit for challenging awards is consistent across the Act.
Clause 13 corrects a rare example of a drafting error. What the Act meant to say was that court orders could be appealed, but in some cases there would be restrictions. What it actually said was that court orders could be appealed only where there were restrictions. To its credit, the Judicial Committee of the House of Lords spotted this error and interpreted the statute as it was meant to be read. We have taken this opportunity to correct the drafting to reflect the judicial ruling, as a useful bit of tidying up.
Clause 14 streamlines the requirements for applying to court to obtain preliminary rulings from the court on questions of law, or on whether the arbitrators have jurisdiction to hear the dispute. Early rulings, such as those from expert judges, can save time and cost.
I am getting towards the end of going through the clauses. In fact, I have come to the last and final clause that I wish to comment upon, clause 15, as you had probably worked out, Madam Deputy Speaker, because that usually comes after clause 14. [Laughter.] There is no clause 16, so clause 15 is the final clause. Clause 15 repeals provisions that were never brought into force, simply to tidy up the Act. Those provisions would have meant slight differences in approach between domestic arbitrations and international arbitrations. In the event, they were never used or needed, never brought into force and there remains no demand for them. Our arbitration law is first class and applies equally to domestic and international arbitrations, so removing the provisions is a helpful way to tidy things up.
In sum, the Bill will greatly approve the arbitral process in our jurisdiction and further cement our position as a top global business destination, where legal disputes can be resolved fairly and quickly. The Bill has already gone through the other place, where it received considerable examination and support from noble and learned Members, including many experienced arbitrators. There are, apparently, a lot of experienced arbitrators in the other place, and they brought their knowledge, experience and expertise to the debate, for which we are very grateful.
Indeed, I emphasise that the Bill has been reviewed by Members of the other place not once, but twice. The first time, scrutiny was provided by a Committee, led by the noble and learned Lord Thomas of Cwmgiedd, that took further evidence from expert stakeholders. The several technical improvements made to the previous Bill because of that work are retained in this Bill. This time, the Bill was reviewed on the Floor of the other place, where the Government amended clause 13 to fix a long-standing error in our framework on arbitral appeals.
I have been quite thorough in covering the ground. I hope all Members feel they have got a good understanding of the issues behind the Bill and why we need to take the steps that I am urging the whole House to take.
To conclude, I second the remarks made by Lord Thomas on Third Reading:
“We must find a means of doing this very rapidly, as we must keep English law—I say English law deliberately—attractive and at the forefront of use internationally, for the benefit of our whole economy.”
—[Official Report, House of Lords, 6 November 2024; Vol. 840, c. 1499.]
I hope the House agrees, and will give the Bill a Second Reading.
Madam Deputy Speaker (Ms Nusrat Ghani)
A tour de force. I call the shadow Minister.
Dr Kieran Mullan (Bexhill and Battle) (Con)
I rise on behalf of the Opposition to support the Second Reading of the Arbitration Bill. As the Minister has laid out, arbitration is a cornerstone of the UK’s legal and economic landscape, contributing significantly to our reputation as a global hub for dispute resolution. The Bill seeks to amend the Arbitration Act 1996 to ensure our framework remains world leading and fit for purpose in a rapidly evolving global business environment.
Arbitration plays a vital role across both the domestic and international spheres. It is employed in areas ranging from family law and rent reviews to commodity trading, shipping and investor claims against states. With over 5,000 arbitrations conducted annually in England and Wales, the process directly contributes more than £2.5 billion to our economy in arbitrator and legal fees, while also supporting wider sectors, such as banking, insurance and trade. The Minister used the opportunity of this debate to cover quite extensively the long and distinguished history of arbitration in our judicial system.
We all agree that London stands proudly as one of the world’s most preferred seats for international arbitration, alongside Singapore. Maintaining this position is no accident. It reflects the strength of our legal system, the confidence of global businesses in our expertise and the robustness of the original 1996 Act. However, as other jurisdictions modernise their arbitration laws, we must ensure that ours remain cutting edge to safeguard our competitive lead.
The previous Conservative Government rightly recognised that need, and in March 2021 tasked the Law Commission to review the Act. I thank all those involved at the Law Commission for their hard and excellent work. After extensive consultation and input from stakeholders, the Law Commission published its final report and a draft Bill in September 2023, identifying targeted reforms to enhance our arbitration framework. A Bill to deliver those reforms was introduced by the Conservative Government in November 2023; I thank the Minister for his acknowledgment of the previous Government’s work.
The Bill’s progress was interrupted by the general election. The Opposition commend the Government for reintroducing the Bill swiftly in light of the broad support. Observers may have noticed that we have a quiet Chamber today, but in this the world’s first debating chamber, the lack of attendance is a reflection of the deep and considered consensus and lack of debate around the need for this important Bill and what it is seeking to achieve.
I thank Lord Bellamy in particular for his contributions as the sponsoring Minister of the original Bill and for his continued and important contributions in the development and improvement of this Bill. I also thank Lord Hacking for his contribution to the debates in the other place, particularly on the issue of corruption. We appreciate such valuable input and agree that that matter warrants further consideration. Even if, ultimately, the need to get the Bill on to the statute book for all the benefits that it brings means that it would not be appropriate to do that through the current legislation, we should continue to monitor and revisit that issue.
The Arbitration Bill introduces a range of reforms designed to improve clarity, efficiency and fairness in arbitration proceedings. Those reforms address practical changes while reinforcing the UK’s position as a global leader. I will highlight a few key provisions, as the Minister has explained in detail, which make the Bill significant.
First, the Bill addresses long-standing uncertainties in the legal framework, particularly regarding arbitration agreements where no jurisdiction is specified. By defaulting to the law of the seat of arbitration, the Bill aligns with international norms, thereby enhancing predictability and clarity for parties involved. Secondly, it strengthens the integrity of arbitrators by codifying the duty of impartiality and disclosure. As clarified in the landmark Halliburton v. Chubb case, the Bill ensures greater transparency and fosters trust in the arbitration process. Finally, the Bill promotes procedural efficiency. Provisions such as allowing summary awards, recognising emergency arbitrators and streamlining jurisdictional challenges represent vital steps towards making arbitration more accessible and efficient for all stakeholders.
Those are just some of the many commendable provisions in the Bill that aim to modernise the 1996 Act and ensure that arbitration remains an attractive and effective method of dispute resolution. The Opposition developed the original Bill and support this one to ensure the UK’s ongoing leadership in arbitration. However, we remain committed to scrutinising its provisions in Committee to ensure they achieve their intended goals without unintended consequences. I commend the Bill to the House and I look forward to hearing the contribution of the Liberal Democrat spokesperson to the debate.
Olly Glover (Didcot and Wantage) (LD)
I thank the Minister for his comprehensive history of arbitration in the United Kingdom. It has been a long time since I have considered John Locke, having studied him as part of a history of political thought paper, which feels almost as long ago as the starting point of the Minister’s survey.
The Liberal Democrats welcome the reintroduction of the Bill and its wide support across the House. As the Minister said, the Arbitration Act 1996, which governs arbitration in England, Wales and Northern Ireland, is more than 25 years old. As he also said, the Law Commission estimates that there are at least 5,000 arbitrations annually in England and Wales, worth at least £2.5 billion to the economy in arbitrator and legal fees alone. Arbitration is also important in supporting a whole range of business activities, as has been outlined.
An effective legal and dispute resolution process is one of the underpinnings of a successful democratic and trading nation, and something of which the United Kingdom has historically been proud. The Bill will help to maintain that status, based on recommendations from the Law Commission and, as the Minister has said, particularly that of London as one of the great centres of international arbitration. The Bill implements recommendations made in a 2022-23 Law Commission review of arbitration law to support more efficient dispute resolution. The legal sector has widely supported the targeted reforms in the Bill, with positive feedback from public consultations held by the Law Commission.
Two key issues were raised in Committee in the other place, which we are happy to see resolved. The first was on the subject of corruption risk. The Liberal Democrats pressed the Government to provide more information to ensure that confidential arbitration is not abused to hide corruption from public scrutiny. We thank the Minister for detailing the actions being taken by arbitral institutions to militate against the risk of arbitration being misused and we were satisfied with the reassurance given. The second concerns the right of appeal. The Liberal Democrats were glad to support the two amendments tabled by the Government to correct the drafting of clause 13, following concerns that the original clause provided a more limited access to the Court of Appeal than was established in case law.
In conclusion, the Liberal Democrats are pleased to support the Bill. Given some of the other discussions in this House today, we welcome an uncontroversial contribution to the economic growth that this country needs.
Madam Deputy Speaker
We now come to the wind-ups. I believe the shadow Minister has a few comments he wishes to make.
Dr Mullan
With the leave of the House, I will speak briefly. I focused my remarks earlier on the Bill, as hon. Members might expect, but I want to take this opportunity, as important matters such as arbitration are before the House and as I have the Minister’s attention, to reiterate our thanks to everybody involved both in this Bill and in the previous one, in both Houses. Particularly, we thank Lord Hacking for his work in highlighting other issues.
I encourage the Minister to recognise that, although the Bill is welcomed and will be positive, the Government will need to continue work on some issues: as I mentioned earlier, the interplay between arbitration and corruption; the need for expedited hearings; the role of third party funding; and the authority to mandate mediation between parties. The Minister may not have an immediate response, but I would welcome future work from the Government in those areas.
Sir Nicholas Dakin
I thank all Members for their contributions. I thank the Conservative spokesperson for recognising, as we do, the work of Lord Bellamy, Lord Hacking and other peers in the other place, as well as everybody who has contributed to where we are today. I also very much welcome what the Liberal Democrats spokesman said on the tackling of issues through the process—that is, giving greater confidence about tackling corruption risk and the issues around the right of appeal. I am grateful for the constructive way in which this debate has been pursued.
The Bill mirrors that of the last Government’s, save for two changes, which I will note here for completeness. The first, as I mentioned in my opening speech, was the amendment to clause 13 to better reflect the case law on appeals. The drafting error it fixed was in section 18 of the Senior Courts Act 1981 and in section 35 of its Northern Ireland equivalent, the Judicature (Northern Ireland) Act 1978. That suggested that appeals to the court of appeal under part 1 of the Arbitration Act 1996 would only be permitted if expressly permitted in the 1996 Act. However, case law established that the intended regime for appeals under the 1996 Act was to permit appeals to the Court of Appeal, unless there is provision in the 1996 Act that adds an explicit restriction on those appeals. I hope that deals with that issue.
Clause 13 therefore corrects the drafting error identified in the House of Lords’ judgment in Inco Europe v. First Choice Distribution and makes it clear that appeals from High Court decisions under part 1 of the Arbitration Act 1996 may, subject to provision in that part, be made to the Court of Appeal. A slight amendment to the long title was also required to reflect that change.
The second change was to clause 1, which we made prior to the Bill’s introduction to Parliament. That was to address concerns about the effect on arbitrations between investors and states, in particular those that follow from an open invitation to arbitrate made in a trade agreement or in domestic legislation. The current position is that those arbitrations are governed by international law and foreign domestic law. Sector feedback made clear that that is what should continue. Our change therefore provides that new section 6A(1) of the Arbitration Act 1996 does not apply to arbitration agreements derived from standing offers to arbitrate contained in treaties or non-UK legislation. [Interruption.] Does the hon. Member for North Bedfordshire (Richard Fuller) wish to interject?
Sir Nicholas Dakin
I just a pause for a little reflection while I gather my thoughts on the other issues to do with arbitral corruption. I am sure the hon. Member for North Bedfordshire, for whom I have the highest regard, would not want me to skimp on dealing with arbitral corruption, which has been raised by both the speakers in the debate so far.
Sir Nicholas Dakin
I am encouraged by his nodding.
We take corruption very seriously. However, we have concluded that arbitral corruption is not caused by any issue with our domestic arbitral framework. The Arbitration Act 1996 and common law already provide remedies to deal with corrupt conduct. The courts are empowered to set aside arbitral awards where there are serious irregularities, as they have done recently in the well-known case of Nigeria v. P&ID. Furthermore, arbitrators are under a statutory duty to be impartial and to reach a fair resolution of the dispute. They can issue an award that prevents the corrupt party from benefiting. Although arbitration procedures are often private, corruption can be exposed. Common law allows an exception to confidentiality when disclosure is in the public interest.
However, there is a need for arbitral practitioners and institutions across the world to ensure that their practices are continually developing to weed out attempts to exploit them. We shall support and keep track of initiatives that are under way, such as that of the International Chamber of Commerce’s anti-corruption taskforce. We will engage with the sector to adopt the very best practices as they are developed. I hope that that assures the shadow Minister and the hon. Member for Didcot and Wantage (Olly Glover).
I give my sincere thanks to right hon. and hon. Members who have contributed to the debate. It has been a measured and helpful debate, which underscores the broad support for this legislative programme. I am happy to have heard so much support for this Bill, particularly those contributions that emphasise its importance to economic growth. Our legal services are a vital element of our economy both for creating favourable domestic business conditions and for attracting investment in the UK. And this Government will continue to support them.
I re-emphasise that these reforms are very much appreciated. Many businesses will be deciding whether to designate London as their seat of arbitration versus competitors such as Singapore, Hong Kong, Sweden or Dubai, which have updated their arbitral frameworks in recent times. This decision is not just to settle disputes via arbitration now. Arbitration agreements are often pre-emptive, so these businesses will be making a decision as to where and how disputes may be settled many years in the future.
For the past quarter of a century, our Arbitration Act and our law have been a key draw, making our shores the natural choice for arbitration. In 1996, we created a truly world-leading legislative framework, which contributed to London becoming the preferred forum for arbitration proceedings across the globe. We must maintain our leading position and continue to attract businesses to ensure economic growth. It was therefore important that these measures sought only to improve the arbitral process and promote trust in arbitration. It would have been no good had these reforms created red tape—we would not want to see that.
Arbitration must remain a quicker and a more flexible means by which to resolve a legal dispute versus going to court. But also it is key to promote trust in arbitration to ensure that proceedings on our shores remain robust and respected internationally. The Law Commission needs to be commended for doing such a brilliant job—a superb job—reviewing our framework line by line and seeing where improvements can be made. This Bill contains, as I have said, the expertise and wisdom of myriad practitioners, experts, firms, judges and others.
I will, if I may, indulge in sharing some of the supportive quotes from the sector about the Law Commission’s work.
Sir Nicholas Dakin
I have only a few. [Laughter.] The House would be the poorer for not hearing these quotes—[Hon. Members: “Hear, hear.”] I feel that it is important to share them. More are available, but I will restrict myself to just a few. The Bar Council said:
“We welcome the Law Commission’s characteristically careful and balanced review of the Arbitration Act, and we support the proposals for reform which it makes. It is extremely important that the government finds parliamentary time,”—
we are doing that—
“for the short bill which the Law Commission proposes. London has a well-deserved reputation as the foremost centre”—
the foremost centre—
“for international arbitration. It is important to legislate to make the modest changes to the arbitration regime which the Law Commission has recommended in order to maintain and enhance that reputation.”
The Chartered Institute of Arbitrators said that it welcomes
“the proposed changes, the majority of which are in line with our recommendations, which were informed by input from our membership… It is a sign of the Arbitration Act 1996’s strength and value that only specific changes to ensure that Act remains current have been recommended as opposed to an overhaul. As well as underpinning the attractiveness and competitiveness of London as an arbitration seat, the Act forms the basis of legislation in many other jurisdictions, lending global significance to this development.”
The Chartered Institute of Arbitrators
“worked closely with the UK Law Commission to inform the review. We support regular review of such legislation to ensure arbitration remains effective, fit for purpose, and a viable means of justice in a modern world.”
White & Case LLP said that
“we expect that the amendments proposed by the Law Commission will promote the efficiency and finality of arbitration proceedings, whilst not unnecessarily introducing drastic reform to existing legislation. The Report therefore is to be welcomed as a positive, incremental step in maintaining London’s position as a major centre for international arbitration and dispute resolution more generally.”
The last quote is one of many positive comments that have been received on what we are doing today and on the Law Commission’s work. Herbert Smith Freehills LLP said:
“There can be no suggestion that any changes are being made for change’s sake. The Law Commission has respected the importance of this legislation and sought only to make changes that are necessary…If enacted into law, they will continue to ensure that the arbitration legislation of England and Wales maintains its market-leading status.”
That is what we all want, Madam Deputy Speaker. We want this Arbitration Bill, which began under the previous Government and was completed under this Government, to maintain our market-leading status. We are determined to do that by working together across this House.
Those are, I assure the House, only a small sample of those who engage with, and support, the Law Commission’s review. However, I will also highlight that these comments were made almost a year and a half ago now on the publication of the Law Commission’s final report. Although it is indeed the case that law reform can take some time, this Government are committed to ensuring that these reforms find their way on to our statute book as quickly as possible.
We must ensure that the Bill faces no further delay. These measures must now proceed at pace through the House. Dispute resolution matters. Disputes that go unresolved are bad for the parties and have knock-on consequences for everyone else. At best, disputes distract from firms getting on with their business and individuals getting on with their lives. At worst, the slow and stressful impact of legal disputes can have much greater impacts elsewhere. Businesses may have money tied up in litigation that could and should go towards investment. Individuals may find that a protracted court battle, with its costs and delays, may lead to sickness, which of course will have its own knock-on effect on economic productivity.
Resolving disputes allows everyone to move forward—all the more so if disputes can be resolved by a process that is trusted and respected and that can be tailored flexibly to the needs of those involved. It is no wonder that arbitration has proved such a popular method for resolving disputes in the UK and why UK arbitration has proved such a popular method for resolving disputes worldwide.
I will also take a moment to compliment the other excellent forms of dispute resolution on our shores. In the construction sector, many disputes will by default go to an expedited adjudication with experts, allowing for a quick determination that enables the project to proceed without further delay. We also boast an excellent network of ombudsmen, which deal with all manner of disputes, including consumer matters. We also have a growing mediation sector, which, in both commercial and family matters, is expert at facilitating negotiation between parties to come to a truly consensual resolution to disputes.
The Bill will enact long-awaited reforms to our arbitration law framework, which will enable more efficient dispute resolution for domestic and international parties alike. It will attract international legal business and promote UK economic growth—not just directly because arbitrations happen here, but because it promotes the UK as a one-stop shop for business. Our arbitrations are respected, and so too are our lawyers engaged in arbitrations—lawyers who are then engaged for transactional businesses; business that is funded by our banks, underwritten by our insurers and mediated through our trading houses; and trading houses that also offer arbitral services in a mutually reinforcing offering.
The Bill ensures that our arbitration law is cutting edge. As I have said, it has attracted attention the world over, serving as a reminder of why the UK remains a premier destination internationally for businesses everywhere. The Bill is therefore of great importance to the legal services sector and to the Government. I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time.