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Arbitration is a highly effective alternative dispute resolution procedure, especially for commercial and business-related disputes

Thanks to the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), the Arbitrator’s decision (known as an award) is binding and can be enforced in signatory countries. 

In England, Wales, and Northern Ireland, the Arbitration Act 1996 (the Act) governs the arbitration process. In this article, we set out some of the basic principles of the Act. 

Arbitration Act 1996 summary

When the Arbitration Act 1996 came into force more than 25 years ago, Lord Mustill, an English judge, described it as a “complete spring clean” of English arbitration law.

The UK, particularly London, jointly with Singapore, is the world’s leading place for international commercial arbitration disputes. This is in large part due to the stability and ease of process provided by the Act.

The New York Convention

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959.

Widely considered the foundational instrument for international arbitration, it applies to arbitrations and legal proceedings that are not considered domestic awards in the state where recognition and enforcement are sought.

As of December 2021, the convention has 169 state parties, which includes 166 of the 193 United Nations member states plus the Cook Islands, the Holy See, and the State of Palestine.

 

Free Dispute Settlement Agreement template

 

What are the main provisions of the Arbitration Act 1996?

The Act provides a framework for arbitration proceedings, including, but not limited to:

  • Setting out mandatory and non-mandatory terms
  • Enforcement of awards
  • How arbitration proceedings are to be conducted
  • Costs of arbitration

Your dispute resolution solicitor will explain how arbitration works and ensure the process complies with the Act’s requirements.

What is the stay in proceedings in arbitration?

In section 9 of the Act. If a party to an arbitration agreement brings court proceedings in breach of the agreement. In that case, there will be a mandatory stay of proceedings, and it will be moved to other legal processes in a trial unless the party bringing proceedings successfully argues that the “arbitration agreement is null and void, inoperative, or incapable of being performed."

Review of the Arbitration Act 1996

The Law Commission is reviewing the Arbitration Act 1996, the key legislation governing arbitrations in England and Wales.

The Act has helped London to become a pre-eminent destination for commercial arbitrations. The Law Commission has identified the Act as a piece of legislation which should be reviewed to ensure that it “remains up to date in all respects”. 

Following on from the consultation conducted by the Law Commission as part of the 14th Programme on Law Reform, 

The number of points that have been identified as possible areas for reform of the Act. include:

  • Powers to summarily dismiss unmeritorious claims or defences in arbitral proceedings
  • The courts’ powers exercisable in support of arbitration proceedings
  • The law concerning confidentiality and privacy in arbitration proceedings

The Law Commission aim to produce that consultation paper in late 2022. 

Get legal assistance from LawBite

Including an arbitration agreement in your commercial contracts provides a route to resolve disputes without entering into formal litigation, which can be costly and stressful. Our friendly team of expert solicitors can assist you with drafting an arbitration agreement and protect your interests in arbitration proceedings.

LawBite has years of experience helping startups, charities, and small businesses achieve their commercial ambitions and resolve disputes quickly and cost-effectively. You can book a free 15 minute consultation with one of our experts in commercial law or you can call us on 020 3808 8314.

 

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In closing

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