UK: Arbitration Under The 1996 Arbitration Act

Last Updated: 30 April 2001
Article by Simon Salzedo

1. These notes cover a few of the key practical points that can be issues when arbitrating under the 1996 Arbitration Act. Although the Act has been in force for only three and a half years, there has already been a rash of litigation arising from it. The emphasis in these notes is on some of the points where recent case law suggests that problems are most likely to arise. The notes are selective, not comprehensive.

2. Incorporation of arbitration clauses by reference to other document.

  1. Bill of lading, reinsurance, sub-contractors.
  2. Old cases upheld so far. Argument based on Article 7(2) of Model Law rejected by HHJ Jack QC (Trygg Hansa v Equitas [1998] 2 Lloyd’s Rep 439). Incorporation generally requires express reference to arbitration clause, but this remains a problematic area.

3. Confidentiality of arbitral proceedings. The law is now reasonably settled. See Ali Shipping v Shipyard Trogir [1999] 1 WLR 314. There is an implied term that an arbitration is confidential, subject to certain exceptions:

  1. Consent
  2. Court order, eg for disclosure in other proceedings.
  3. Leave of the Court given because it is reasonably necessary to enable a party to establish or protect its legal rights.
  4. The interests of justice – eg where a witness gives a different version of the facts to one tribunal than to another.

4. Stays under s9

  1. Domestic arbitrations are no longer different. Sections 85 to 87 have not been brought into force.
  2. No more Order 14 (part 24) objection to stay – The Halki [1998] 1 Lloyd’s Rep 465.
  3. Where issues arise as to whether there is a binding arbitration agreement or as to whether the agreement covers the dispute which is referred, the court has a choice whether to grant a stay for such issues to be resolved by the tribunal or to decide the issues on the affidavits or to order an issue be tried. See Birse Construction v St David (1999) 70 ConLR 10 and Al-Naimi v Islamic Press [2000] 1 Lloyd’s Rep 522.
  4. A new kind of stay under the inherent jurisdiction – a stay of proceedings pending a related arbitration against another defendant. See Reichold Norway v Goldman Sachs [2000] 1 WLR 173.

5. Commencement. – s14

  1. Section 14 is a complete code. It must be complied with to commence arbitration. Section 14(4) is in very similar terms to old section 34(3) Limitation Act 1980 and going back to earlier Limitation Acts.
  2. Per HHJ Jack QC in Vosnoc v Transglobal [1998] 1 WLR 101 it was not enough to require a dispute to be submitted to arbitration. It was necessary expressly to require the appointment of an arbitrator; the requirement could not be implied.
  3. Per Rix J in The Smaro [1999] 1 Lloyd’s Rep 225, an implied request to appoint an arbitrator does suffice.
  4. Per Moore-Bick J in Allianz v Fortuna [1999] 1 WLR 2117 at 2126, it is sufficient for the notice to make clear by whatever language that the sender is invoking the arbitration agreement and requiring the recipient to take steps to enable the tribunal to be constituted.
  5. A notice (even sent in copy) making it clear that the matter is referred to arbitration is sufficient per Thomas J in Seabridge Shipping v Orssleff’s [1999] 2 Lloyd’s Rep 685. Per Thomas J, authorities on previous statutes (including all of the above) are irrelevant.
  6. Conclusion: the only safe course to commence an arbitration is to follow section 14 to the letter, however the Court will probably take a sensible view if you do not. Vosnoc v Transglobal is unlikely to be followed on this point.

6. Extension of time. – s12

  1. Harbour & General Works v Environment Agency [2000] 1 WLR 950. The purpose of section 12 is to reinforce party autonomy. An extension will be granted only if the circumstances are such that the parties, at the time the contract was made, would have contemplated that the time limit would not apply in those circumstances.

7. Procedural matters

  1. The tribunal has great freedom of choice on procedural matters – s 34.
  2. No award à no appeal: The Smaro [1999] 1 Lloyd’s Rep 225. The tribunal can be asked to change its mind on a procedural decision. If it does not do so, there is no remedy short of removal of arbitrator until an award is issued. Even then, there is no remedy unless the procedural decision amounts to a serious irregularity causing substantial injustice which can be appealed under s 68.

8. Court intervention in arbitration

  1. Section 1(c) – no Court intervention save where permitted by the Act. This has been applied in several situations. Most notably, the Court has no power to determine the substantive jurisdiction of the tribunal except under the procedure in section 32. The points made above about s 12 and about the lack of appeal from procedural decisions could be treated as further examples.
  2. Bias of arbitrator – under s68 or s24. Now clear it is the same test as for a Judge – "real danger of bias": AT&T Corp v Saudi Cable, [2000] 2 Lloyd’s Rep 127 approving Laker Airways v FLS Aerospace [1999] 2 Lloyd’s Rep 45.
  3. S.69(1) – appeals on question of law.
      1. Agreements to exclude appeal are upheld eg ICC 1988: Sanghi v TII [2000] 1 Lloyd’s Rep 480.
      2. Generally restrictive interpretation of "question of law"
        1. It is an error of fact, not of law, to make a finding of fact with no supporting evidence: How Engineering Services v Lindner Ceilings (1999) 64 Con LR 67.
        2. Any question of foreign law is a question of fact not law for this purpose: s 82(1) and Egmatra v Marco Trading Corp [1999] 1 Lloyd’s Rep 862.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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