London Maritime Arbitration

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The Arbitration Act 1996

A. Introduction

2.1 Most maritime arbitration in London will be governed by the Arbitration Act 1996 (“the 1996 Act”). This Act of Parliament (also known as a statute) is the most significant piece of English legislation containing statutory rules applicable to arbitration. It came into force on 31 January 1997. It was innovative in many respects, particularly in setting out a fresh statement of the law and imposing duties on the tribunal to adopt efficient procedures. The 1996 Act also maintained many of the established features of the English system, for instance appeals for errors of law. Its main hallmarks are party autonomy and minimising court intervention. However, many provisions apply as a matter of public interest regardless of the parties’ agreement: for example the tribunal’s duty to act fairly and impartially. 2.2 Overall, the 1996 Act has been extremely successful. The statutory framework for arbitration is generally regarded as favourable for maintaining the English system’s leading position against competing jurisdictions. Those who use arbitration have responded favourably to the 1996 Act, due largely to the fact that it reflected careful consultation. For many years there has been a healthy debate1 as to how the legislation could be improved (in particular as to whether there should be more or fewer appeals and whether the tribunal’s ruling on jurisdiction should be final). The view of the broad majority of users (as reflected in surveys and reports2) has generally been that the existing provisions (including the rules on error of law and jurisdiction) are effective and that a major overhaul would not be helpful or appropriate; and London has remained a leading arbitral seat. Debate continues as to whether legislation should be amended to reflect current issues in arbitration practice (e.g. to address third party

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funding, emergency arbitrators and allowing summary awards) especially where competing jurisdictions (such as Singapore and Hong Kong) introduce such provisions. In 2016 the Law Commission opened a consultation as to how the Act could be improved and reform remains under consideration. In practice, lack of parliamentary time means amendments are difficult to implement and case law will usually develop the law to address new situations. 2.3 There has been a substantial amount of litigation under the 1996 Act but its drafting has generally withstood tests except for one error regarding rights of appeal.3 Overall, the law has worked well, due in part to the courts’ respect for the approach adopted by the Departmental Advisory Committee on Arbitration Law (“the DAC”).

B. History

The Mustill Report

2.4 The starting point for the 1996 Act was the 1989 Mustill Report4 produced by the Departmental Advisory Committee on Arbitration Law (“the DAC”) under the chairmanship of Lord Justice Mustill (later Lord Mustill). The DAC had been asked to consider reform of English law, in particular whether the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”) should be adopted. The Model Law is a statement of rules and principles of arbitration adopted in 1985 by the United Nations Commission on International Trade Law (UNCITRAL). It has been implemented in many countries, including Scotland. 2.5 The Mustill Report recommended against the adoption of the Model Law on the grounds that English law on arbitration was sufficiently well developed and satisfactory to its users; the practical disadvantages of enacting the Model Law would outweigh its potential advantages. The Mustill Report also decided that radical changes to the content of English arbitral law were not needed. However, it indicated that the existing law was unsatisfactory since it was mostly found in case law only accessible to specialist lawyers. The statute law which did exist was dispersed in the Arbitration Acts of 1950, 1975 and 1979 and various amending statutes such as the Limitation Acts. The old statutes provided a disjointed and illogically arranged set of rules which were often drafted in complex terms incomprehensible to the layman. Recommendations for reform were set out in paragraph 108 of the Report:

In these circumstances we recommend an intermediate solution, in the shape of a new Act with a subject-matter so selected as to make the essentials of at least the existing statutory arbitration law tolerably accessible, without calling for a lengthy period of planning and drafting, or prolonged parliamentary debate. It should in particular have the following features:

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