UK: International Arbitration

1. What legislation applies to arbitration in your country? Are there any mandatory laws?

The Arbitration Act 1996 (the 1996 Act) will apply if the arbitration is seated in England and Wales or Northern Ireland. The Arbitration (Scotland) Act 2010 (the 2010 Act) will apply if the arbitration is seated in Scotland. The mandatory provisions are set out in Schedule 1 of the 1996 Act and section 8 of the 2010 Act. Such provisions include those in relation to duties of the arbitral tribunal and parties, and challenges to arbitrators and arbitral awards. Additionally, the Arbitration (International Investment Disputes) Act 1966 sets out a special regime for ICSID awards.

The responses below focus on the 1996 Act.

2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

The New York Convention entered into force in the United Kingdom on 23 December 1975, with a reciprocity reservation. The United Kingdom has submitted notifications extending the territorial application of the New York Convention to Gibraltar, Isle of Man, Bermuda, Cayman Islands, Guernsey, Jersey and the BVI.

3. What other arbitration-related treaties and conventions is your country a party to?

In addition to the New York Convention, the United Kingdom is also a party to (a) the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927, (b) the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 and (c) numerous other bilateral and multilateral investment treaties.

4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

The UNCITRAL Model Law has not been adopted in England and Wales but it has influenced the 1996 Act. Some significant differences relate to arbitrability, separability of arbitration clauses, competence of the arbitral tribunal to rule on its own jurisdiction and judicial intervention (including the availability of appeals on a point of law).

5. Are there any impending plans to reform the arbitration laws in your country?

Following consultations, the Law Commission of England and Wales announced its review of the 1996 Act in January 2022, with a view to maintaining London's status as a leading seat for international arbitration. In September 2022, it released a consultation paper highlighting six principal areas for potential reform: (i) arbitrators' duty of disclosure and impartiality, with a view to codifying case law that imposes a continuing duty to disclose circumstances that might reasonably give rise to justifiable doubts as to an arbitrator's impartiality, (ii) disallowing challenges to arbitral appointments on the basis of a protected characteristic under the Equality Act 2020 (e.g., race, sex or religion), (iii) strengthening arbitrators' immunity by precluding their liability for costs of court proceedings arising out of the arbitration, such as applications to remove an arbitrator, (iv) introducing an express power for tribunals to adopt a summary disposal procedure to deal with unmeritorious claims or issues, (v) a review of Section 44 of the 1996 Act (which enables English Courts to make orders against third parties) with a view to providing full appeal rights to third parties and clarifying of the court's power to order evidence from foreign witnesses, and (vi) a review of jurisdictional challenges under Section 67 of the 1996 Act, including proposals that some jurisdictional challenges should be heard by way of review, rather than a full, de novo, rehearing. The Law Commission has invited responses from stakeholders by mid-December 2022.

6. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?

A number of arbitral institutions are based in the United Kingdom, including: London Court of International Arbitration (LCIA); Chartered Institute of Arbitrators (CIArb); London Maritime Arbitrators Association (LMAA); and Reinsurance Arbitration Society (ARIAS (UK)). In addition, various commodity organisations based in the United Kingdom have published arbitral rules, including the Grain & Feed Trade Association (GAFTA) and the London Metal Exchange (LME).

The LCIA last updated its Arbitration Rules as well as to its Schedule of Arbitration Costs on 1 October 2020. The LCIA's stated aim in updating its Arbitration Rules was to streamline the arbitral process, provide clarity for arbitrators, mediators and parties alike, and to adapt the Rules to reflect evolving best practices (notably, the increased use of virtual hearings). The changes relate to: (i) enhancing the tribunal's case management powers; (ii) expressly permitting the conduct of virtual procedural conferences and hearings; (iii) making electronic filings and communications the default rule; (iv) the appointment and role of tribunal secretaries; (v) the rules regarding multi-party and multi-contract arbitrations, including expanding the tribunal's and the LCIA Court's power to consolidate and concurrently conduct arbitration proceedings; (vi) incorporating provisions on data protection, cybersecurity and compliance issues; and (vii) increasing the maximum hourly rate that can be charged by arbitrators.

As for other institutions, on 23 April 2021, the LMAA revised its Terms to reflect the impact of the COVID-19 pandemic by expressly recognising the possibility of virtual and semi-virtual hearings as well as electronic awards, among other changes. The new Terms apply from 1 May 2021. In the same vein, GAFTA introduced some minor changes to its Arbitration Rules (No. 125), which relates to the conduct of oral hearings by the Tribunal or the Board of Appeal, effective from 1 September 2020. GAFTA has approved changes to both its Arbitration Rules (No. 125) and Expedited Arbitration Procedure Rules (No. 126) to provide for the service of notices by electronic means and, separately, to recognise that in certain limited circumstances (such as the death or inability of an arbitrator to continue with the arbitration), the party who originally appointed the arbitrator, or GAFTA, may appoint a substitute.

In response to the growing trend towards virtual hearings, the CIArb in April 2020 released a "Remote Procedures Guideline" and in November 2021 its "Practice Guideline on the Use of Technology in International Arbitration".

7. Is there a specialist arbitration court in your country?

There is no specialist arbitration court in England and Wales. However, the English Commercial Court is highly experienced and supportive of international arbitration.

8. What are the validity requirements for an arbitration agreement under the laws of your country?

To fall within the scope of the 1996 Act, an arbitration agreement must be in writing or be evidenced in writing. This includes an oral agreement to arbitrate by reference to "terms which are in writing" (s.5(3) of the 1996 Act).

9. Are arbitration clauses considered separable from the main contract?

Unless otherwise agreed by the parties, an arbitration agreement is separable from the main contract (s.7 of the 1996 Act and Fiona Trust & Holding Corporation v. Privalov [2007] UKHL 40).

10. Do the courts of your country apply a validation principle under which an arbitration agreement should be considered valid and enforceable if it would be so considered under at least one of the national laws potentially applicable to it?

The English courts do not apply a validation principle per se. In order to consider the validity and enforceability of an arbitration agreement, the English courts will first determine the applicable law. In a recent decision, Enka Insaat ve Sanayi AS v OOO "Insurance Co Chubb" [2020] UKSC 38, the Supreme Court held that the law applicable to an arbitration agreement is determined by applying English common law rules for resolving conflicts of laws. Accordingly, the law applicable to an arbitration agreement will be (a) the law chosen by the parties to govern it or (b) in the absence of such agreement, the law with which the arbitration agreement is most closely connected (see Question 14).

The Supreme Court also expressly recognized the validation principle as a general principle of contractual interpretation in English law (Enka, para. [98]-[97]) as well as its applicability as part of the analysis to determine the parties' intentions with regard to the law applicable to the arbitration agreement. The Supreme Court also recognized, obiter, the possibility that the validation principle might constitute an exception to the "close connection" rule, if the arbitration agreement were invalid under the law of the seat (typically the law applicable to the arbitration agreement under the "close connection" test), but not under the law governing the rest of the contract (Enka, para. [146]).

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Originally published by The Legal 500.

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