King’s Speech: Arbitration bill seeks to attract legal firms to London. But what is it?

Amongst the 40 laws the government announced in the King’s Speech today, the Arbitration Bill made an appearance.

So what is Arbitration, and what does this Bill mean?

Arbitration is one of the methods used in dispute resolution, but for commercial cases. Unlike litigation, this form is strictly private and held behind closed doors in front of a third-party. 

Arbitrators are responsible for settling disputes between two parties and coming to a fair decision, and unlike litigation, arbitration are non-judicial. But the in-and-outs of what was argued and what was agreed is not published to the public. 

In order to opt for arbitration over litigation, this is usually down to what was written into the contracts in question. If arbitration was highlighted as the method for any disputes, an arbitration agreement will detail what the process will look like including what ‘seat’ it will be held in or how many arbitrators will be selected.

The London Court of International Arbitration (LCIA) has always been highly regarded, as 80 per cent of parties in pending cases to the LCIA are not of English nationality.

However in recent years, Singapore has invested enormously updating its legislation for the Singapore International Arbitration Centre. Singapore climbed the ranks over the years and is on a similar level as London for its arbitration reputation.

Now the UK government is bringing in a Bill on this legal method aiming to “support more efficient dispute resolution, attract international legal business, and promote UK economic growth”.

The Bill is built on a Law Commission recommendation from a 2022 review to reform arbitration law and bolster the “world-leading domestic and international arbitration sector”.

According to the Law Commission, there are at least 5,000 domestic and international arbitrations each year in England and Wales, worth £2.5bn to the British economy in arbitration and legal fees alone.

The new legislation includes clarification on the law applicable to arbitration agreements that do not arise from investor-state agreements, providing that the law applicable will be those of the legal location chosen for arbitration unless parties expressly agree otherwise.

It will be codifying a duty on arbitrators to disclose circumstances that might give rise to justifiable doubts about their impartiality. While also strengthening arbitrator immunity against liability for resignations and applications for removal, so they are free being sued by a disappointed party.

The Bill will also empower arbitrators to make awards on a summary basis on issues that have no real prospect of success. Additionally, it will be empowering courts as well for those to make orders in support of emergency arbitrators.

While finally, the new Bill will see the government revise the framework for challenges, where the challenge alleges that the arbitral tribunal lacked jurisdiction.

The Bill is not for the entire UK as it applies to England and Wales and Northern Ireland.