Arbitration Bill [HL]
Lord Ponsonby of Shulbrede ExcerptsTuesday 30th July 2024
(1 month ago)
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The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
My Lords, I thank noble Lords for their interest in the Law Commission’s review of the Arbitration Act 1996 and this Bill, which enacts the commission’s recommendations. Many of your Lordships will be aware of the Bill’s history, but let me provide a summary of it for the record.
In 2021, the Ministry of Justice asked the Law Commission of England and Wales to carry out a review of the Arbitration Act 1996, which provides the arbitral framework for England, Wales and Northern Ireland. The purpose of the review was to ensure that our world-renowned arbitration laws remain just that—world leading and fit for purpose in a changing business landscape.
The commission conducted two public consultations before laying its report and draft Arbitration Bill before Parliament on 5 September 2023. This report was widely praised for recommending measured rather than wholesale reforms of the 1996 Act to bring the law up to date and modernise the arbitral framework.
That Arbitration Bill was introduced into this House in November 2023, in the final Session of the last Parliament, by the noble and learned Lord, Lord Bellamy. It progressed through a Special Public Bill Committee, of which I was a member, under the Law Commission Bill procedure. That committee held an evidence-taking process chaired by the noble and learned Lord, Lord Thomas of Cwmgiedd, which marshalled expert views from practitioners, academia and the judiciary. The Bill was amended in response to the evidence gathered, and I will return to those changes shortly.
I am pleased to bring these reforms before Parliament again, as it is clear to me, from my position on the committee, that the Law Commission’s recommendations for reform commanded strong support from the sector and were the result of extensive consultation. By supporting our arbitration sector, this Bill will help to deliver one of this Government’s guiding missions: to secure economic growth.
The benefits that arbitration brings to this country are plain to see. The Law Commission estimates that the sector is worth at least £2.5 billion to the British economy each year, while according to industry estimates, international arbitration grew by some 26% between 2016 and 2020. Of course, London remains the world’s most popular seat for arbitration by some stretch.
However, we face healthy competition from Singapore, Hong Kong, Sweden and Dubai. They have all updated their arbitration frameworks in recent years and our legal system too must continue to adapt and evolve if we are to remain ahead of the curve. The changes this Government bring forward now will undoubtedly be a foundation for future success, although we are also clear that they represent evolution not revolution. I am therefore delighted that this Government have been able to prioritise time so early in this Session to legislate for these reforms to the 1996 Act and to support this crucial sector.
The Bill takes forward the full set of reforms recommended by the Law Commission. It also incorporates the minor and technical improvements that were made as amendments to the former Bill. There has also been one further change made to Clause 1 to address a point raised on investor-state arbitrations. For brevity, I will summarise only the key provisions of the Bill now and point out the revisions as I do so.
First, Clause 1 clarifies the law applicable to arbitration agreements by providing that the law governing the arbitration agreement will be the law expressly chosen by the parties; otherwise, it will be the law of the seat. An express choice of law to govern the main contract does not count as an express choice of law to govern the agreement to arbitrate. Clause 1 will provide greater certainty as to the law underpinning arbitration agreements, and ensure that arbitrations conducted in England, Wales and Northern Ireland are supported by our arbitration law, where appropriate. Here, we retain the change to Clause 1 made by the Law Commission draft Bill, which removed the words “of itself” from inserted Section 6A(2), as they were thought to be unnecessary and to cause confusion.
We have also made an additional change to Clause 1. Clause 1 now provides that the new default rule on governing law does not apply to arbitration agreements derived from standing offers to arbitrate contained in treaties or non-UK legislation. The reasons why are as follows. There were concerns raised during the previous Bill’s passage that Clause 1 should not apply to some investor-state arbitration agreements; that is, those arising under offers of arbitration contained in treaties and foreign domestic legislation. Sector feedback was that such arbitration agreements are, and should continue to be, governed by international law and/or foreign domestic law.
The Government agree that it would be inappropriate for a treaty—an instrument of international law—to be interpreted in accordance with English law principles. Likewise, we should not subject foreign domestic legislation to English law rules of interpretation, rather than its foreign law. To apply Clause 1 to these arbitration agreements may have discouraged states from choosing London as a neutral venue for their investor-state arbitrations. Just as investor-state arbitrations with the International Centre for Settlement of Investment Disputes have their own separate regime, so too should non-ICSID investor-state arbitrations be treated separately in the matter of governing law. This change will ensure that will be the case.
Lastly on Clause 1, noble Lords have also brought to my attention a further matter requiring clarification. It is possible that issues may arise which are not expressly provided for by the inserted Section 6A; in particular, where there is no choice of seat in the arbitration agreement and no seat has yet been designated by the tribunal or the court. This rare issue was considered by the Law Commission in its final report, and the Government are confident that the courts will be able to resolve such matters through common law. We will also update the Explanatory Notes in due course to make this point clear.
I move on to the other key measures in the Bill. Clause 2 codifies a duty of disclosure for arbitrators that will protect the principle of impartiality and promote trust in arbitration. This duty will apply prior to the arbitrators’ appointment when they are approached with a view to being appointed. It is a continuing duty that also applies after their appointment ends.
Clauses 3 and 4 strengthen arbitrator immunity against liability for resignations and applications for removal. This will support arbitrators in making robust and impartial decisions.
Clause 7 empowers arbitrators to make awards on a summary basis on issues that have no real prospect of success. This will improve efficiency and aligns with summary judgments available in court proceedings.
Clause 8 will boost the effectiveness of emergency arbitration by empowering emergency arbitrators to issue peremptory orders and make relevant applications for court orders.
Clause 11 revises the framework for challenges to an arbitral tribunals jurisdiction under Section 67 of the 1996 Act. This will allow new rules of court to provide that such applications should contain no new evidence or new arguments. That will avoid jurisdiction challenges becoming a full rehearing, thereby preventing further delay and costs. Clause 11 also retains the improvements made to the previous Bill, including: the inclusion of subsection (3D), which makes it clear that the general power of the Procedure Rules Committee to make rules of court is not limited as a result of the provision; the change in subsection (3C), which ensures that the court rules within must provide that the restriction is subject to the court ruling otherwise in the interests of justice; and the change in the drafting of subsection (3C)(b), which clarifies that the evidence mentioned includes oral as well as written evidence.
These measures extend to England, Wales and Northern Ireland. They will apply to arbitration agreements whenever made but not to proceedings commenced before these measures come into force. There are other more minor yet quite worthy reforms in the Bill that I have not covered here but which I would be pleased to discuss during this Bill’s passage.
The Bill will enable efficient dispute resolution, attract international legal business and promote the UK’s economic growth. I welcome noble Lords’ participation in this debate.
Lord Ponsonby of Shulbrede (Lab)
My Lords, I am grateful to all noble Lords who have taken part in the Bill. Although it is a very short list of speakers, it is fair to say there are a number of other noble Lords who said that they are sorry not to be here, and have also said to me personally that they would have supported the Bill.
I will start with the comments of the noble Lord, Lord Beith. I agree with his overall point, which is that there has been a lot of process on the Bill and that we really need to conclude the Bill as soon as possible—we have written to all the arbitration institutions, and all the people who gave evidence in the process for the previous Bill, and that is a common theme in the responses we have had. I have been lobbied separately by numerous groups to say that they want the Bill to be concluded.
I turn to my noble friend Lord Hacking, who raised the issue of corruption. This of course is a serious matter, and I do not know the answer to the question raised by the noble and learned Lord, Lord Bellamy, about the responses to the letters he wrote to the institutions. I will see whether those letters have come back and will write to the noble and learned Lord and my noble friend, and copy it to other noble Lords. I am happy to have a private meeting with my noble friend, but my point is that we do not want anything that will hold up the current Bill. It has had a lot of process, and it is to the benefit of the arbitration process that it is concluded as quickly as possible. However, I will meet my noble friend when he wishes.
Lord Hacking (Lab)
My noble friend would have heard my worry that the opportunity for arbitration reform is an opportunity that does not arise until a number of years have passed. Can he give any assurance that, as corruption is a serious issue—I think he recognises that—this Government will support this further investigation into corruption and whether any legislation relating to arbitration law should be brought in, and fairly swiftly?
Lord Ponsonby of Shulbrede (Lab)
We are always open-minded about addressing problems. We need to scope out the true extent of the problem, which is why I have offered to write to noble Lords about the responses that we may have received—I do not know the answer to that—to the letter written by the noble and learned Lord, Lord Bellamy, when he was the Minister concerned.
I turn to other points. The noble and learned Lord, Lord Bellamy, was very gracious to me in his opening, and I thank him for that. I certainly intend to behave as a Minister as he behaved when he was a Minister, and to consult with colleagues across the House to try to make sure that we focus on the real issues of difference between us, rather than any other matters that may distract us. I will take a leaf out of his book about how I conduct myself in trying to achieve that.
The noble and learned Lord asked about the possibility of carryover for uncontentious Bills between Parliaments. I will bring that comment to my noble friend’s attention. I do not know what the reaction will be, but it seems a sensible idea to me.
The second point the noble and learned Lord made concerned the choice of seat. I had a discussion with the noble Lord, Lord Wolfson, about this very issue, and my opening speech referred to it. I agree that we should have confidence in our judges, and perhaps some extra words can be added to the explanatory notes to reflect the position. We have undertaken to look at that.
The noble and learned Lord also raised an issue concerning Clause 13. I will have to write to him about that as well, as I am not sighted of that issue.
In conclusion, this Bill achieves a balance. It neither seeks to fix what is not broken, nor does it sell short the potential of our jurisdiction. Growth is a fundamental mission of this Government, and this Bill plays its part. I thank all noble Lords who have taken part in this short debate, and I look forward to interacting with them as the Bill progresses.
Fundamental Rights and the Rule of Law
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Baroness Chakrabarti (Lab)
My Lords, with the caveat that the word “eater” on today’s list should read “greater”, I beg leave to ask the Question standing in my name on the Order Paper.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
My Lords, as the Prime Minister has made clear, the UK is unequivocally committed to the European Convention on Human Rights. My right honourable friend the Lord Chancellor has said she will champion the rule of law at home and abroad, and my noble and learned friend the Attorney-General has described it as our lodestar. We are committed to rebuilding public trust in our political system by explaining how the rule of law serves us all and by promoting human rights as British values.
Baroness Chakrabarti (Lab)
I am grateful to my noble friend the Minister—it is very nice to be able to say that—for that Answer. The Human Rights Act 1998 was a wonderful innovation: a modern bill of rights for this country. There was very little public education and information to go with it, and that has made it vulnerable to attack and misrepresentation, including from allegedly moderate Conservative leadership candidates, even today. Will the Government therefore now use this second opportunity and every resource available, digital and otherwise, in government, to put things right?
Lord Ponsonby of Shulbrede (Lab)
I thank my noble friend for that question. We consider that the UK’s three national human rights institutions, each with specific jurisdictions and functions, have a role in this. They are the Equality and Human Rights Commission, the Northern Ireland Human Rights Commission and the Scottish Human Rights Commission. Each has an “A” status, as rated by the UN, and a role in promoting human rights and awareness of human rights within the United Kingdom.
My noble friend’s original Question went wider than that, to include reinvigorating an appreciation of human rights. While the bodies I have just described have a statutory responsibility, there is nothing to stop central government doing that as well. As I think I pointed out in my initial Answer, both the Lord Chancellor and Attorney-General take this matter extremely seriously and see it as central to what they are doing.
My noble friend also referred to today’s press reports. Tom Tugendhat MP said in his pitch to be leader of the Conservative Party that he is ready to leave the ECHR. That is in marked contrast to what the leadership of the Government are saying.
Lord Oates (LD)
My Lords, does the Minister agree that respect for human rights and the rule of law are key pillars of any free society, both at home and abroad? The Government will be aware of the brutal arrest and detention of Zimbabwe opposition leader Jameson Timba and 78 of his supporters, including a mother with a one year-old child. They have now been detained for 39 days in appalling conditions and denied their constitutional right to bail by a captured judiciary. Will the Minister make it clear that the new Government stand with all people standing up for their fundamental rights? Will he ask his ministerial colleagues to convey this message strongly to the Government of Zimbabwe?
Lord Ponsonby of Shulbrede (Lab)
I thank the noble Lord for his question. I am not sighted on that issue, but I will absolutely take up his suggestion that the relevant Ministers make clear their position regarding the importance of human rights in all parts of the world, and in the example he gave as well.
Lord Alton of Liverpool (CB)
My Lords, the noble Lord will know that the House of Commons has accused the Chinese Communist Party of genocide in Xinjiang against the Uighur Muslim population. He will also know that the health of 76 year-old British national Jimmy Lai, who is being kept in a cell along with 1,800 other political prisoners, is deteriorating. What is the Government’s view on the continued presence of British judges dignifying the courts of Hong Kong?
Lord Ponsonby of Shulbrede (Lab)
I thank the noble Lord for that question. Hong Kong is a friend of ours, and this means we can have a frank exchange of views on human rights matters, which the Government continue to do. The noble Lord raised a specific question about Jimmy Lai and the other prisoners detained in Hong Kong. I will make sure that that is brought to the attention of my noble friend Lord Collins, who is directly responsible for these matters. If necessary, he will write to the noble Lord.
Lord Lexden (Con)
My Lords, have the Government been advised to establish whether it is compatible with the European convention to slap VAT on independent school fees? The noble Lord, Lord Pannick, does not believe it is.
Lord Ponsonby of Shulbrede (Lab)
The advice we have received is that it is within the law, and we have every intention of carrying it out as soon as is practicable.
Lord Keen of Elie (Con)
My Lords, Michael Forst, the UN special rapporteur on environmental defenders, recently displayed a profound ignorance of the rule of law when he suggested that the Government should intervene with the judiciary over the legitimate and necessary sentences passed on the M25 Just Stop Oil conspirators. Will the Minister take steps to educate the rapporteur about the application of the rule of law and the separation of powers in the United Kingdom?
Lord Ponsonby of Shulbrede (Lab)
My Lords, of course it is for judges to sentence as they see fit within sentencing guidelines—whichever case it is. It is important that peaceful protest is a vital part of our democratic society. It is a long-standing tradition in this country that people are free to demonstrate as they want, as long as they do it peacefully and within the law. But there is a balance to be struck. The rights of protestors must be weighed against the rights of others to carry out their daily activities without fear of intimidation or significant disruption. Peaceful protest does not include violent or threatening behaviour, and the police have the power to address this, as they have done.
Baroness Whitaker (Lab)
My Lords, I am delighted to congratulate my noble friend on his role. Will he recognise the role in human rights of non-statutory bodies such as the British Institute of Human Rights? I declare my interest as an advisory board member. It trains many public servants in how to implement equality and human rights legislation. Will he also note that there is a certain absence of teaching human rights in schools? We do not have a written constitution, like the Gettysburg Address, which can be easily communicated to young people, so we should do more to let them know what rights actually consist of.
Lord Ponsonby of Shulbrede (Lab)
I agree with my noble friend. There is an absence of teaching civic rights in our schools, and we could do more on this. Given the new focus on and enthusiasm for human rights, the various non-governmental bodies to which she has referred can play a greater role in promoting human rights in our society.
Lord Carter of Haslemere (CB)
My Lords, the Independent Human Rights Act review of 2021, led by Sir Peter Gross, recommended a programme of civic and constitutional education in our schools and universities. Does the Minister agree that this is essential to ensure that our human rights framework develops to meet the needs of society?
Lord Ponsonby of Shulbrede (Lab)
Yes, I think I do agree with the noble Lord, Lord Carter. I spoke to Sir Peter Gross about this a number of years ago, and I will make essentially the same point that I have made in answering other questions from noble friends. There is a role for greater promotion within our schools, and that should be seriously looked at.
Baroness Bennett of Manor Castle (GP)
My Lords, in a speech to the Institute for Government on 10 July 2023, the then Attorney-General said:
“Laws should be accessible, intelligible, clear, and predictable”.
The last two questions have referred to the difficulty and lack of understanding of the UK’s constitutional arrangements. Our constitution, accreted by centuries of historical accident, fails to fit the criteria the Attorney-General set out. Are the Government prepared to set out a path towards a modern, democratic, functional written constitution?
Lord Ponsonby of Shulbrede (Lab)
I think the short answer to that is no. The accretion of laws the noble Baroness refers to is the common law system. She is shaking her head, but that is an accretion of laws over centuries. All the lawyers I have spoken to are very proud of it and think it a flexible system. Many times, it is a better way of dealing with changing circumstances than primary legislation. We want to keep that flexibility in our current arrangements.
Strategic Lawsuits Against Public Participation
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Baroness Stowell of Beeston
To ask His Majesty’s Government what plans they have to introduce legislation to prevent ‘strategic lawsuits against public participation’.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
My Lords, the Economic Crime and Corporate Transparency Act 2023 was a positive and significant step forward in tackling SLAPPs relating to economic crime. The Government are now carefully considering options to tackle SLAPPs comprehensively. I know that the noble Baroness has a long-standing interest in this area, and I assure her that the Government are taking the matter very seriously and are establishing working parties, working at pace to try to address this issue.
Baroness Stowell of Beeston (Con)
First, I welcome the noble Lord to his new appointment. It is very important for us to understand that SLAPPs are related not just to economic crime. SLAPPs are illegitimate and aggressive lawfare, used by all kinds of the rich and powerful to silence politicians, journalists and public bodies. They are an abuse of our legal system, and they are a threat to press freedom. Before Dissolution, we were very close to outlawing SLAPPs in their entirety, through the then Government supporting a Labour MP’s Private Member’s Bill. Would the Minister ensure that his Government supported another Private Member’s Bill, if another MP was to bring forward a revised version that incorporated all the amendments and agreements reached with the previous Government before the general election? If not, could he commit to the Government bringing forward their own legislation in this first Session of Parliament to outlaw SLAPPs comprehensively?
Lord Ponsonby of Shulbrede (Lab)
I agree with the first point that the noble Baroness made. It is not just about economic crime, and that is one of the reasons why we want to have a wider review of potential SLAPPs legislation coming forward. I am not in a position to make the commitment that the noble Baroness has asked for around when any legislation might come forward, but I reassure her that we are taking this matter very seriously. On the Private Member’s Bill that fell at Dissolution, we support the principle behind it. However, we believe that there are outstanding questions that need to be properly balanced. That is to prevent the abuse of the process of SLAPPs, about which the noble Baroness spoke, but we also need to protect access to justice for legitimate claims. It is that balance that needs to be fully worked through. There were live discussions with important stakeholders—for example, the Law Society—at the time of the previous Private Member’s Bill. We have every intention of continuing those discussions as we review any potential legislation.
Lord Thomas of Gresford (LD)
The Private Member’s Bill that I produced on the abusive SLAPPs civil litigation, which was given its First Reading in the last Session of the last Parliament, was based on the Ontario model, which was approved in the Supreme Court of Canada as recently as last year and provides a way forward. It was also well received, as I recall, by the Ministry of Justice. Will the Minister take that into account?
Lord Ponsonby of Shulbrede (Lab)
My Lords, there are various attempts at dealing with SLAPPs in different legislatures across the world. The Government are currently working with the Council of Europe, with its 46 member states, to try to get a more comprehensive approach. The noble Lord’s experience in Ontario, which he referred to, will be taken into account.
Lord Faulks (Non-Afl)
My Lords, I congratulate the noble Lord on his appointment. He is of course doubly there—he is not only elected but appointed, which gives him particular status on the Front Bench. I sympathise greatly with his position in the Ministry of Justice, which he will much enjoy. He will remember the terms of the amendment put down to the then Economic Crime and Corporate Transparency Bill; it was a start, but will he agree that it is important that we have really muscular legislation? Can he bear in mind that his own Foreign Secretary said that these SLAPPs have the effect of
“stifling effectively not just the rule of law and freedom of speech, but particularly going to journalists doing their job”?
Lord Ponsonby of Shulbrede (Lab)
Regarding the noble Lord’s opening comments, I am a hereditary Peer, though not an elected one, but I am a life Peer, which is the reason I am standing here at the moment. The noble Lord is absolutely right: my right honourable friend David Lammy has expressed very strong views on this matter, which is one that the Government are taking seriously. As I tried to reassure noble Lords in my earlier answers, we want to get this right and to be trenchant in the legislation that we bring forward.
Lord Cromwell (CB)
Does the Minister agree that any further legislation coming forward on SLAPPs should enable the judge to determine the intent of the litigant by their actions as to whether they are trying to harass the defendant? Will the legislation further make clear that no level of such harassment is acceptable?
Lord Ponsonby of Shulbrede (Lab)
I thank the noble Lord for that question. SLAPPs represent an abuse of the legal system, where the primary objective is to harass, intimidate and financially and psychologically exhaust one’s opponent via improper means. Judges are able to assess that. One objective of any forthcoming legislation will be to give them greater capacity to assess improper use of these objectives within the court’s process.
Lord Keen of Elie (Con)
I welcome the Minister to his place on the Front Bench. As has been indicated, SLAPPs often involve an insidious abuse of domestic legal systems in order to intimidate investigative journalists, or indeed human rights defenders. At the same time, it is necessary to balance any consideration of that with the issue of access to justice. The issue of harassment can sometimes be a somewhat subjective one. However, at the end of last year, the European Union published a directive to address SLAPPs and how they might be dealt with in domestic jurisdictions. The Minister may not yet have had an opportunity to consider that directive. Will he undertake to do so, lest it might give some guidance to our way forward as well?
Lord Ponsonby of Shulbrede (Lab)
I thank the noble and learned Lord for that question. I am happy to give that undertaking. As I mentioned, there is a Council of Europe initiative going on, but clearly we should, and we will, look at the EU directive.
Lord Browne of Ladyton (Lab)
My Lords, I welcome my noble friend to the Dispatch Box. Recognising that the Government are planning a review, do they still agree that there is an urgent need for a stand-alone anti-SLAPP Bill, and that the lack of legislation will see SLAPP litigations continue? In the words of our right honourable friend the Foreign Secretary, as already mentioned, and as reported in the i newspaper on 3 June, they will continue effectively to stifle
“not just the rule of law and freedom of speech, but particularly … journalists doing their job to throw a spotlight and transparency on the most egregious behaviour of oligarchy, plutocracy, and very corrupt individuals doing bad things”.
Surely we need to stop that as soon as possible.
Lord Ponsonby of Shulbrede (Lab)
I agree with everything that my noble friend has said. I cannot make a commitment to a stand-alone Bill, but there is nevertheless an urgent need for legislation. My noble friend may be interested to know that the number of Russian litigants appearing in judgments from the Commercial Court has more than halved in the year to March 2024, falling to 27 from a record high of 58. We believe that that is a result of the successful UK sanctions regime taking effect.
Viscount Colville of Culross (CB)
My Lords, to build on the question from the noble Lord, Lord Cromwell, surely it would be better for a judge to be able to infer the intention of a SLAPP litigant based on their actions, rather than, as happens at present, having to infer the litigant’s state of mind, which is so hard to determine.
Lord Ponsonby of Shulbrede (Lab)
I agree with that point, but it is a complex question and we want to look at it in the round.
Lord Garnier (Con)
My Lords, I declare an interest, in that I have been practising at the defamation Bar since the mid-1970s. Much has been said in this House and in Committee about the need for SLAPP laws. I invite the Minister to look, if he can, at the letter I wrote to his predecessor, my noble and learned friend Lord Bellamy, on this very subject just before the election; if he cannot look at it, I will send him a copy. Will he also undertake to put this matter before the Law Commission, so that we can generate rather more light than heat?
Lord Ponsonby of Shulbrede (Lab)
My Lords, I am happy to look at the letter and to consider whether the matter should go before the Law Commission.