King’s Speech: Arbitration Bill back on UK legislative agenda

The last Conservative government introduced an Arbitration Bill into parliament in 2023, seeking to implement recommendations made by the Law Commission of England and Wales. The Law Commission had undertaken a near year-long review of the existing Arbitration Act 1996 and identified areas that would benefit from targeted reform.

However, while the Arbitration Bill had reached the committee stage in the House of Lords, it was among a number of bills that fell when parliament was dissolved for the UK general election in May. At that time, experts at Pinsent Masons highlighted the potential for it to be resurrected quickly post-election.

In a background briefing paper issued alongside the King’s Speech, the new government confirmed that it will bring forward an Arbitration Bill in this parliamentary session to “support more efficient dispute resolution, attract international legal business, and promote UK economic growth” – and said this will be achieved by “enacting recent Law Commission recommendations to reform arbitration law and bolster our world-leading domestic and international arbitration sector”.

The previous Bill, among other things, proposed clarifications in relation to the law governing arbitration agreements. The new government has confirmed its intentions to resurrect those proposals, stating that the new Bill will provide that “the law applicable will be those of the legal location chosen for arbitration unless parties expressly agree otherwise”. It said this will “ensure that, where arbitration is seated in England and Wales, or Northern Ireland, it will be fully supported by our arbitration law which is among the most supportive of arbitration globally”. The government has helpfully clarified that the new default rule regarding the law applicable to arbitration agreements will not apply to investor-state agreements.

Other features of the previous Bill will also be revived, according to the new proposals. This includes enhancing arbitrators’ powers to “make awards on a summary basis on issues that have no real prospect of success, avoiding nuisance claims and making arbitrations more efficient”.

The government has said the new Bill will also revise “the framework for challenges where the challenge alleges that the arbitral tribunal lacked jurisdiction”. This is thought to be a reference to proposals in the previous Bill, which sought to limit the circumstances in which losing parties in arbitrations can ostensibly obtain a re-hearing of the case before the courts.

The new Bill will further empower courts to make orders supporting those of emergency arbitrators, which in turn will enable the decisions of emergency arbitrators to have the same efficacy as those of the “full” arbitral tribunal.

As with the old Bill, new safeguards to address potential conflicts of interest are to be provided for in the new Bill – it will impose a statutory duty on arbitrators to “disclose circumstances that might give rise to justifiable doubts about their impartiality, in line with international best practice”. Further proposals to enhance arbitrators’ immunity against liability for resignations are also to be resurrected.

Scheherazade Dubash, international arbitration expert at Pinsent Masons, said: “We welcome the reintroduction of the Arbitration Bill in the King’s Speech, a testament to the Law Commission’s diligent efforts and those of the arbitration community. This Bill is set to revolutionise the arbitration process in England, Wales, and Northern Ireland, expediting dispute resolution and attracting international business. It stands as a pivotal contribution to the UK’s economic growth.”

The Bill’s proposals are intended to bolster the UK’s position as a leader in international arbitration. A briefing paper from the House of Lords on the Bill outlined the anticipated economic impact, estimating the arbitration industry’s worth to the UK economy at a minimum of £2.5 billion annually.