Arbitration Bill [HL]

Debate between Lord Mance and Lord Sentamu

Committee stage
Wednesday 11th September 2024 Lords Chamber

[Lord Sentamu (CB)]

My Lords, I associate myself with the wonderful words of the three noble and learned Lords and I share the concern of the noble Lord, Lord Hacking, but when I was reading theology, my then—wonderful—professor of theology said that the only way you know whether you have resolved a theological conundrum is to try to find some practical solution to your particular difficulty.

My greatest concern with the amendment is this. It talks about safeguarding the arbitration proceedings against fraud and corruption. Probably Queen Elizabeth I would have said to such a suggestion what she said to the troops at Tilbury:

“I have no desire to make windows into men’s souls”.


How do you safeguard proceedings against corruption? Corruption is in the hearts and minds of people. How do you do it? I cannot find a real, practical solution. Therefore, on those grounds, although the amendment is well intentioned, I think the burden it would put on the proceedings of arbitration is far too great, so please may we not have a desire to make windows in people’s hearts.

[Lord Mance (CB)]

My Lords, I declare an interest as an arbitrator, including in cases involving corruption in my practice hitherto. It seems to me that there are two types of corruption that we may be talking about. One is substantive corruption affecting the transaction which is the subject of an arbitration. That is regularly arbitrated and investigated, and tribunals do their best. With respect to the noble and right reverend Lord behind me who has just spoken, I am afraid that sometimes involves trying to see into men’s minds. Arbitrators do make findings of corruption. I will come back to what might be done with those findings slightly later.

We have been talking mainly about corruption in relation to the arbitration proceedings, which is the area to which the amendment of the noble Lord, Lord Hacking, is directed. We have heard of cases in which—one hopes, remarkably—it has been found in court that both sides were involved in some sort of collusion. I am thinking not of the case which has been expressly mentioned but of a case which I believe was decided in the Commercial Court by Mr Justice Butcher, where a non-existent arbitration award endorsed by a non-existent foreign court judgment was attempted to be enforced in the Commercial Court. That could happen only by some form of collusion between those appearing in front of the court, hoping that the persons to be affected by an English judgment would not get to know of it or involve themselves in time. As it happens, they did, and of course the non-existent award was not enforced. I believe the matter was referred to public authorities who might be interested.

I agree with my noble and learned friend Lord Hoffmann that such investigations into the propriety or ethical behaviour of those appearing in front of arbitrators as a matter of standard procedure would be difficult to contemplate, given the sort of exercise that would be involved. That said, I am sure that arbitrators, if they were on notice for any reason of possible complicity in some corrupt activity by those appearing in front of them, would be very concerned to try as best they could to get to the bottom of it. I suggest that the noble Lord’s proposed amendment would, if anything, be duplicative and unnecessary if read mildly, but if read widely, as involving the sort of initial admonition which he suggested, it would be problematic and would not carry matters very far, so I, too, do not support it.

I will make a general observation about corruption, which, as I have indicated, is regularly fought in the courts in a substantive respect. Of course, arbitrators have the problem that they are confined by the agreement to arbitrate, which usually relates to a specific transaction. However, if you are talking about a widespread scheme of corruption, perhaps involving fraud on a foreign state, the state may not be party to the arbitration, and it may be quite difficult to investigate all the other ancillary transactions that form part of the web of corruption. Corruption notoriously involves complexity designed to confuse and conceal. That problem is inherent in arbitration; it seems to me that it may be one of the disadvantages of arbitration. It is a problem that can, to some extent, be alleviated by court assistance. There is a valuable clarification of Section 44 of the Arbitration Act 1996 in this Bill, which will enable that assistance to be secure when third parties are involved.

It is difficult to foresee arbitrators being made into investigators. That would be a change of role for which they are not suited. The one possible area where I suggest that legal attention might be considered—but not in this Bill, for the reasons already given by noble Lords—is where corruption is found by an award. There might be something to be said in that context for an express provision permitting disclosure, to interested public authorities, of corruption that has actually been found. One would not have or contemplate a situation where arbitrators had to disclose allegations of corruption that they were concerned to decide. But once they decided that there was corruption, disclosure might then be contemplated. It seems to me that it is probably already permitted by common law, because there is no privilege in iniquity; on the other hand, I do not believe that arbitrators at the moment would, without express legislative backing, be likely to disclose even corruption that they had found in their award. That might be a possible area where an express legislative provision—so they could at least just disclose corruption —would be valuable.