Safer seats of arbitration: the importance of legislative reform 

11 May 2023
London International Disputes Week
Safer seats of arbitration: the importance of legislative reform 

Authors: Barry Fletcher and Philip Chong

Since its inaugural 2019 event, London International Disputes Week (LIDW) has celebrated the city’s role as a hub for international dispute resolution. Akin to an aim of the Standing International Forum of International Commercial Courts (SIFoCC)—another London-based, globally-focused organisation—LIDW provides a forum to discuss pressing issues and challenges facing clients and practitioners, and to develop best practice for the efficient and effective resolution of international disputes.  

A topic likely to recur across #LIDW23 is the role played by legislative reform in ensuring a seat of international arbitration can be considered “safe”, which is pertinent given the Law Commission of England and Wales is currently reviewing the Arbitration Act 1996 to ensure English arbitration remains state of the art domestically and a gold standard internationally. 

If arbitration is selected as the preferred method of dispute resolution, where to legally “seat” any disputes referred to arbitration is a key question for parties and counsel. As (Barry) discussed in an article ahead of #LIDW22, when faced with the task of choosing a seat, in addition to seeking expert advice, parties can turn to some useful tools and guidance in the market. In 2015, the Chartered Institute of Arbitrators (Ciarb) promulgated the ‘London Principles’, i.e. 10 principles necessary for an effective, efficient and ‘safe’ seat for the conduct of international arbitration, a project which it has subsequently started to build on with a seat index. A similar initiative from recent years is the Delos Guide to Arbitration Places. 

Ciarb identifies the importance of having a clear, effective, modern international arbitration law which respects party choice of arbitration as its first “principle” for a safe seat. Such a law should: (a) provide the necessary framework for facilitating fair and just resolution of disputes through the arbitration process; (b) limit court intervention in disputes that parties have agreed to resolve by arbitration; (c) and strike an appropriate balance between confidentiality and appropriate transparency, including the growing practice of greater transparency in investor state arbitration. 

For some seats, such a basic standard remains aspirational; for others, this crucial foundation has largely been taken for granted by clients and practitioners for a number of years.  

And yet, a seat’s “safety” is not enshrined in stone. The status of an arbitral seat’s legal framework must be appraised in light of shifts in best practice and party expectations. In a world full of potential seat choices, with new jurisdictions seeking to assert their “safe” credentials and build reputations, nothing can be taken for granted, including for leading, established seats. As such, timely, meaningful review of arbitration legislation, followed, where necessary and appropriate, by well-thought-out reform is important. Positive, user-centric reforms from recent years include Singapore’s various legislative efforts to permit third-party funding of domestic and international arbitrations, and Italy’s steps to permit arbitrators to grant interim measures. Of course, reform for its own sake is to be avoided. Unclear and/or unhelpful reform is worse still. It would be churlish, and contrary to the spirit of LIDW, to point fingers at jurisdictions which have fallen into these traps, but it does happen. 

Turning to England and Wales, the Commission’s review of the Act has arrived at an opportune moment. The Act has stood the test of time and is widely considered a successful piece of arbitration legislation. Some argue(d) that reform was unnecessary. The Law Commission recognised the Act does not require “root and branch” review or reform. However, the landscape of international arbitration has changed significantly over the last 25+ years due to, among other things, the introduction of procedural innovations, technology-linked change, and the foregrounding of important (if not new) concerns about certain aspects of the ethics, law and practice of arbitration.  

So, how has the Commission responded? While still in the consultation phase (with no final recommendations made yet), the Commission has published two consultation papers containing provisional proposals on potential areas of reform[1]. Some examples by reference to the areas of change identified above include: 

  • Procedural innovations (summary disposal): In recent years, arbitral institutions have introduced express tribunal powers to dismiss cases that are obviously lacking in merit, plugging a perceived gap when arbitration is compared with litigation before national courts. The Commission proposes to put such powers on a statutory footing, which should give parties more confidence to request their exercise (resulting in cases being dealt with more quickly and perhaps more cheaply) and give tribunals greater confidence about the existence and scope of their powers. If approved, such provisions would be the (or among the) first contained in a national arbitration law. 
  • Law and ethics (conflicts and discrimination): Addressing concerns about potential arbitrator conflicts of interest, the Commission is proposing to amend the Act to include a duty on arbitrators to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality (effectively, codifying the decision of the UK Supreme Court in Halliburton v Chubb [2020] UKSC 48). Notably, the Commission is also proposing that provisions in arbitration agreements which require an arbitrator to be appointed by reference to a protected characteristic under domestic equality legislation (such as sex and disability), unless such a requirement can be justified as a proportionate means of achieving a legitimate aim. This article isn’t the right place to discuss the (de)merits of this proposal, but its inclusion reflects an increased focus on diversity, equality and inclusion in international arbitration more generally in more recent years. 
  • Technological change (digitalisation and AI): The Commission is consulting on whether the Act should expressly reference remote hearings and electronic documentation as procedural matters on which tribunals may give directions, reflecting changes to society and how disputes are now resolved. However, it has declined to consider (for now) whether the Act should address explicitly arbitration conducted by AI. Given the speed of technological change, it will likely be much less than 25 years before this issue is grappled with. 

A legislative review process also provides a valuable opportunity to clarify substantive points of law to improve the end-user experience of arbitrating in accordance with the chosen law. The Commission is proposing to undertake such an exercise with respect to the sometimes-vexed question of determining the proper law of the (legally separable) arbitration agreement, in the absence of express party choice. This example highlights one of the benefits of a process of legislative review and reform: consultation. Without consultation, the Commission would probably not have grappled with this issue as demonstrated by the publication of a second consultation paper in response to the reaction to the Commission’s initial conclusions. The result: the Commission is proposing to introduce a new provision into the Act to the effect that the law of the arbitration agreement is the law of the seat, unless the parties expressly agree otherwise in the arbitration agreement itself. This would be a positive step for arbitration users and London as a seat. 

The long-term impact of any reform on English arbitration and England’s standing as a seat of arbitration remains to be seen. The Commission is keen to press on with the reform project and update the Act as quickly as possible. In an increasingly global and competitive marketplace for arbitration services, the timing couldn’t be better.


Note: Professor Sarah Green, Commissioner for Commercial and Common Law, the Law Commission of England and Wales, will be speaking on the #LIDW23 Main Conference panel, “Opening up the international dispute resolution toolbox: are existing methods fit for purpose?”. To register to attend #LIDW23, including the Main Conference and International Arbitration Day, click here. 

Barry Fletcher

Barry Fletcher is a Senior Knowledge Lawyer at DLA Piper with significant experience in international arbitration obtained from private practice and as a knowledge lawyer/legal editor. Barry ensures DLA Piper leverages its collective experience and expertise for the benefit of clients, and that colleagues have what they need to deliver exceptional service. Barry has written extensively about the Arbitration Act 1996 and contributed to a leading commentary title published by LexisNexis Butterworths on challenges to arbitrators, arbitral awards and their enforcement before the courts of England and Wales. Barry is also a member of the LIDW Strategy Group.

Philip Chong

Philip Chong is a Partner at DLA Piper and Head of International Arbitration, Europe. Philip specialises in the resolution of complex commercial disputes and has a wealth of experience in resolving important contentious matters for clients. Philip’s expertise in resolving disputes encompasses several industries including energy, infrastructure and transport, and includes complex technical disputes. Philp has been described as “one of the leading oil and gas lawyers in the market” (The Legal 500, 2021) and is a member of the prestigious “Hall of Fame” for International Arbitration (The Legal 500, 2022).   

[1] This article isn’t intended to summarise those proposals: you can read more general coverage here and look out for our article on the second consultation paper to be published soon.