Arbitration Bill [HL]

Lord Beith Excerpts

Second reading committee
Tuesday 19th December 2023 Grand Committee

[Lord Beith (LD)]

My Lords, it is a very good principle in the House of Lords to speak mainly on things of which you have a great deal of knowledge and experience. That principle has been followed in this debate admirably so far, and would have continued to be followed had my noble friend Lord Marks of Henley-on-Thames not been otherwise engaged today, leaving me with the task without that essential qualification.

What a fascinating debate it has been. We had the long sweep of history from the noble Lord, Lord Hacking, whose knowledge goes back even further than I had realised. The emphasis on the competitive market in arbitration, in which England is currently very successful, and its wider legal implications, which the noble and learned Lords, Lord Hope and Lord Thomas of Cwmgiedd, mentioned, means it is important to keep the laws and procedures up to date so we can continue to get that benefit. It is indeed competitive: was it last year or the year before when Singapore equalled the amount of arbitration that England had been able to achieve?

In the course of the debate, the noble and learned Lord, Lord Hope, initiated a discussion, in which others joined, of the additional subsection in Clause 6 of the 1996 Act. When I read it, I took it to mean that you could not automatically read across, from the contract being by English law, that the arbitration would necessarily be governed by the law of the seat unless it was expressly stated. It seems bizarre that you could conduct proceedings on a contract that was expressly stated to be of English law but you chose to do it by arbitration not under English law, but sometimes Bills have to prohibit bizarre things from happening. No doubt the Minister will be able to explain that to us.

I was helped by the noble Lord, Lord Faulks, who saved me the task of explaining the Nigerian case, the anxiety that it promotes about how corruption could be concealed within arbitration proceedings and what restraints there were on preventing that from happening by the clear, common-sense statement that if you discover serious corruption,  you should not allow it to be buttressed or assisted by the legal process that you are engaged in—that is, the process of arbitration. Arbitration takes place under commercial confidentiality, but it is not meant to be there as a means of allowing corrupt actions to be perpetrated. If the Minister could help us on what might be necessary to deal with that, I would certainly be very grateful. However, I recognise that amending the Bill at this stage, given the special procedure to which it is subject, is not necessarily an easy option even if we could agree on what that amendment should be.

The history of arbitration in England and Wales in recent years is a huge success. It is a major source of foreign earnings and, even more importantly, a great reputation support for our legal system in general and, consequently, for our commercial success. The 1996 Act has operated as a model of its kind and has worked extremely well. There are a huge number of commercial contracts, often nothing to do with England or English entities, that include English arbitration clauses, making England the seat of any arbitration and often subject to English law. A large number of such contracts make English law the law of the contract, not just the law of the arbitration. Undoubtedly significant in that success is the reputation of English arbitrators, including many well-known retired judges—some of them might be Members of this House—for legal incisiveness, incorruptibility, impartiality, courtesy and an unfussy and relatively informal style.

The Bill makes small changes to the Arbitration Act 1996 and introduces some reforms, all of which will be beneficial. It is a model of the Law Commission’s work and, welcome to say, a model of Parliament attending to the Law Commission’s work with due expedition, which has not always been the case. When I chaired the Justice Committee in the Commons, we were constantly complaining about the work that the Law Commission had done that was going nowhere because parliamentary opportunities had not been found to take it forward. This is a very good example of the Government taking it forward and using the fast track that is available. The work itself—two public consultations and thorough consideration of the responses —is also commendable.

The debate so far has identified most of the significant features of the Bill. Other things that I have not mentioned so far include the duty of disclosure, which may be important for parties from outside the UK who are not accustomed to the way in which normal practice would support disclosure in this country. Having an explicit provision may be helpful from that point of view.

Then there is the power to make awards on a summary basis, which reflects the power that courts have to make summary determinations where one party or the other has no real prospect of success. That does not have to be in relation to the whole claim but can relate to particular issues, and the benefit is to stop parties running hopeless points, often at the risk of running up costs for both sides that may not prove recoverable, and at further risk of delaying the proceedings.

Good case management by arbitrators, with the help of the parties in identifying and defining issues suitable for summary determination, could save time and costs. Importantly, it can encourage parties to settle proceedings where summary awards are given on particular issues.

Then we have in Clause 11 the streamlining of the procedure for determining challenges to the courts for awards on jurisdiction under Section 67. That, too, is a helpful improvement in the Bill.

This Bill has been carefully prepared. We spend a lot of time in this House looking at Bills which have been woefully or inadequately prepared, contain numerous unresolved issues or do not even give proper effect to their stated purposes. We cannot say that about this. It is a model of its kind, as is the way that it has been gone about, and I welcome it.