As discussed in our earlier blog here, the King’s speech confirmed on 7 November that Parliament would consider the Law Commission’s recommendations for the reform of the Arbitration Act 1996 (the Act) in the forthcoming parliamentary session.
Two weeks later, on 21 November, the draft Arbitration Bill (the Bill) was put before Parliament with a first reading in the House of Lords. A second reading is scheduled for 19 December 2023. As anticipated, the Bill has been introduced under the Law Commission’s special parliamentary procedure for “uncontroversial” bills, which speeds up the scrutinisation process. Assuming the process runs smoothly, the legislation could receive Royal Assent in early-mid 2024.
The Bill put before Parliament is in substantially the same form as that appended to the Law Commission’s Final Report. The proposals made in that Final Report are covered in our earlier blog post . There is, however, one change that is worthy of note.
The Bill introduces a new default rule into the Act providing that an arbitration agreement be governed by the law of the seat, unless the parties expressly agree otherwise. However, the Law Commission originally proposed that it would apply only to arbitration agreements made after the new legislation took effect. As discussed at an panel event at Herbert Smith Freehills on 20 September, this proposal would mean that parties and the English court would need to continue to apply the Supreme Court’s decision in Enka v Chubb to all arbitration agreements prior to that date, raising concerns that it may fail to deliver the benefit of simplicity and certainty in this area that was intended. Apparently to address this concern, the Bill now includes a new temporal scope for this default rule, providing that it will apply to all arbitration agreements, whatever their date, although not to arbitrations or court actions that have already been commenced before the legislation comes into force.
For further information, please contact Paula Hodges KC, Partner, Craig Tevendale, Partner, Chris Parker KC, Partner, Andrew Cannon, Partner, Hannah Ambrose, Partner, Charlie Morgan, Partner, Vanessa Naish, Professional Support Consultant, Liz Kantor, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.