The proposed Arbitration Act 2024

Arbitration is a form of dispute resolution which can be agreed by parties to a contract or dispute. It remains one of the main forums for resolving construction disputes in England and Wales although not as popular as court proceedings or adjudication. 

It has the benefit of flexibility and party autonomy - with certain exceptions, the parties can agree the form and procedure of the arbitration. For the arbitration award to be enforceable in the courts in England and Wales, the arbitration must comply with the Arbitration Act 1996. 

There is currently an Arbitration Bill before the UK Parliament to amend the Act. It is expected that a new UK Arbitration Act 2024 will receive Royal Assent in mid-2024 and come into effect shortly thereafter. This article highlights the key changes in the Arbitration Bill.

What are the key changes in the Arbitration Bill?

The 2024 Act will govern arbitrations which have their juridical seat in England or Wales. The Bill is intended to update the current Arbitration Act 1996 to ensure that it remains fit for purpose. The seven most significant changes for arbitral users in the Bill are as follows: 

1. A new rule to determine the law governing the arbitration agreement in the absence of party agreement. In arbitrations governed by the Arbitration Act 1996 and the proposed 2024 Act there is a distinction between the law that applies to the arbitration and the juridical seat. The new default rule is that the law of the juridical seat applies to the arbitration unless the parties agree otherwise. This rule will apply to all arbitration agreements whatever their date but will not apply to arbitrations or court proceedings commenced before the new default rule comes into effect. This remains subject to any transitional or saving provision that may be made in relation to this new rule.
   
   
2. A new power of summary disposal is introduced enabling claims or defences to be dismissed on a summary basis if a party has ‘no real prospect of succeeding’ on a claim, defence, or issue.
   
   
3. The court’s powers, in support of arbitration proceedings, in relation to third parties who are not parties to the arbitration have been clarified in the Bill to confirm that court orders in support of arbitration can be made against third parties who are not parties to the arbitration. The matters which the court can make orders about in relation to third parties are:
   • Taking of witness evidence
   • Preservation of evidence
   • Orders relating to relevant property
   • Sale of goods
   • Interim injunctions
   • The appointment of a receiver
4. There are provisions promoting the court enforcement of emergency arbitrator orders.
   
   
5. The Bill codifies an arbitrator’s common law duty to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality.
   
   
6. A revised framework for challenges to the arbitrator’s jurisdiction before the court where a party has objected to the arbitrator’s jurisdiction during the arbitration and the arbitrator has ruled on jurisdiction. Such challenges will now be more similar to an appeal rather than a full rehearing, as they currently are, since:
   1. 1. No new grounds of objection are permitted, unless unknown to and reasonably undiscoverable by the applicant.
      2. No new evidence will be admitted.
      3. Evidence will not be re-heard, save in the interests of justice.
7. An extension of arbitrators' immunity by ensuring arbitrators are not liable:
   1. 1. For their resignation, unless the resignation is proved to be unreasonable.
      2. For the costs of any application for their removal as arbitrator, unless they are proven to have acted in bad faith.

Stephen Homer is a fellow of the Chartered Institute of Arbitrators, and with Ashfords’ construction team, regularly represents clients in arbitration. For more information the proposed Arbitration Act 2024, please contact the construction and infrastructure team.