Significant increase in arbitration-related claims in English Commercial Court

International arbitration expert Madelaine Power of Pinsent Masons said the rise in these claims reflected London’s continued status as an important centre for international arbitration. “This new report not only provides useful insight into the volume of arbitration-related applications, it also identifies their likely prospects of success,” she added.

According to the Courts and Tribunals Judiciary study (76 pages / 104MB PDF) into claims issued in the Commercial Court, arbitration-related applications made up around 25% of the court’s caseload in 2021-22. In total, there were 40 applications made under section 68 of the 1996 Arbitration Act, for ‘serious irregularity’ – an increase of 54% from the previous year. While most section 68 applications were still awaiting a decision at the time of publication, the study revealed that in the 2020-21 reporting period, just 4% of them were successful.

There was also a 59% rise in the number of applications made under section 67 of the Act, for lack of substantive jurisdiction. These claims totalled 27 – up from 17 in 2020-21. According to the report, 20 of these section 67 applications were still pending, while five were dismissed, one was discontinued, and one was unsuccessful. For applications made in the 2020-21 reporting period, to date, only one application was successful, with three still pending.

The report noted a small rise (8%) in applications under section 69, for appeals on a point of law. Of a total of 40 applications, permission to appeal was granted in 13 cases – more than double the 2020-21 figure of five permissions. Final decisions were pending at the time of publication. The average time for determining permission to appeal applications has increased from 100 days in the previous reporting period to 111 days. The average completion time for applications where permission is granted was 240 days.

Power said: “Despite the doubling of the number of challenges brought under both sections 67 and 68, the prospects of success remain reassuringly low, demonstrating the Commercial Court’s respect for awards issued by tribunals and the high threshold places on users of arbitration who seek to challenge them.”

The report also notes that the judges of the Commercial Court have liaised with the Law Commission on possible reforms to the Arbitration Act. The second consultation published by the Law Commission includes proposals to impose limits on the ability to bring section 67 challenges in future.

These include a challenge by way of appeal and not a rehearing; restrictions on new grounds of objections to jurisdiction or new evidence; evidence not being reheard, save exceptionally in the interest of justice; and the court will only allow the challenge where the decision of the arbitral tribunal on its jurisdiction was wrong. Mr Justice Henshaw is co-ordinating the Commercial Court’s response.

Robyn MacDonald of Pinsent Masons said: “In its second consultation, the Law Commission acknowledged that reforms to section 67 and discrimination were ‘perhaps the most controversial of the topics of potential reform’ with the aim of its revised proposal being to stop those making jurisdictional challenges from ‘having a second bite of the cherry’.”