United Kingdom: Arbitration

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in the United Kingdom including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present.

This Q&A is part of the global guide to Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/

  1. What legislation applies to arbitration? 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 and 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 s.8 of the 2010 Act. Mandatory provisions include those in relation to duties of the arbitral tribunal and parties, challenges to arbitrators and arbitral awards.

    Given London's position as a centre of international arbitration, the responses below are to the 1996 Act and not the 2010 Act.

  2. Is the 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 also 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 the 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 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, competence of the arbitral tribunal to rule on its own jurisdiction and judicial intervention (including appeals on a point of law).

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

    The Law Commission of England and Wales consulted in late 2016 on whether there were any areas of the 1996 Act which should (or should not) be considered for inclusion in its 13th Programme of Law Reform. Possible suggested areas for change included making explicit provisions for summary judgment and allowing for the arbitration of trust disputes. The Law Commission is currently working with the UK Government to receive the necessary approvals for its 13th Programme.

  6. What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any 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 issued revised Arbitration Rules in 2014 and the new LMAA terms came into effect in May 2017.

  7. What are the validity requirements for an arbitration agreement?

    To fall within the scope of the 1996 Act, an arbitration agreement must be in writing or 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).

  8. 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).

  9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?

    The 1996 Act does not provide for court-ordered consolidation. This matter is left open to (a) the rules of arbitral institutions, which often provide a framework for consolidation or (b) the parties to agree as they so wish (s.35 of the 1996 Act).

  10. How is the law applicable to the substance determined?

    The arbitral tribunal will decide the dispute either (a) in accordance with the law chosen by the parties as applicable to the substance of the dispute, or (b) if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal. A choice of law is understood to refer to the substantive laws of a country and not its conflict of law rules. If or to the extent that there is no such choice or agreement, the tribunal shall apply the law determined by the conflict of laws rules which it considers applicable (s.46 of the 1996 Act).

  11. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?

    Both contractual and non-contractual disputes can be submitted to arbitration (s.6(1) of the 1996 Act, see also the recent case of Fiona Trust & Holding Corporation v. Privalov (2007) UKHL 40). Examples of non-arbitrable matters as a matter of English law include criminal and family matters and insolvency proceedings.

  12. Are there any restrictions in the appointment of arbitrators?

    Arbitrators must act fairly and impartially as between the parties (s.33 of the 1996 Act).

  13. Are there any default requirements as to the selection of a tribunal?

    The 1996 Act contains default provisions for the appointment of arbitrators, in the absence of agreement between the parties on the procedure for appointing arbitrators (sections 16 – 17), including time limits.

  14. Can the local courts intervene in the selection of arbitrators? If so, how?

    The courts can intervene where there is an initial failure of the procedure for the appointment of the arbitral tribunal, and a subsequent failure by the parties to agree on what is to happen in such circumstances. Pursuant to s.18 of the 1996 Act, any party may apply to the court (under Part 62 of the Civil Procedure Rules) to exercise its powers to (a) give directions on the appointment (b) approve or revoke previous appointments or (c) make the appointment itself.

  15. Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?

    Pursuant to s.24 of the 1996 Act, any party may apply to the court (under Part 62 of the Civil Procedure Rules) to remove an arbitrator where (a) circumstances exist that give rise to justifiable doubts as to his impartiality, (b) the arbitrator lacks the requisite qualifications or capacity or (c) the arbitrator refuses or fails to properly conduct proceedings or make an award.

    Arbitrator challenges are not common, but statistics from arbitral institutions indicate a recent increase in arbitrator challenges, particularly in investment treaty disputes. This trend is also reflected in a number of recent decisions by the English courts as regards arbitrator challenges, including Cofely Ltd v Bingham and another [2016] EWHC 240 (Comm).

  16. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?

    The 1996 Act allows the parties to agree what should happen in the case of a truncated tribunal (s.27). If there is no agreement, the provisions of s.16 (procedure for appointment of arbitrators) and 18 (failure of appointment procedure) apply in relation to the filling of the vacancy as in relation to an original appointment (s.27(3)).

    The tribunal is given the power to determine whether and if so to what extent the previous proceedings should stand (s.27(4)).

  17. Are arbitrators immune from liability?

    Under the 1996 Act, an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his functions as arbitration unless the act or omission is shown to have been in bad faith (s.29(1)). Another exception is where the arbitrator resigns (s.29(3)). A procedure is provided in s.25 for the courts to deal with the resignation.

  18. Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?

    The 1996 Act recognises the principle of competence-competence (s.30(1)).

    If a party commences court proceedings in the jurisdiction in breach of the arbitration agreement, the court has the power to grant a stay on an application made by the other party against whom legal proceedings are brought (s.9(1)). If proceedings are commenced outside the jurisdiction, the court does not have the power to issue an anti-suit injunction against the breaching party.

  19. How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?

    The 1996 Act requires service of written notice in accordance with s.14. Further, it states that the Limitation Acts 1980 and the Foreign Limitation Periods Act 1984 apply to arbitral proceedings as they apply to legal proceedings (s.13(1)). In summary, in contractual and tortious claims the relevant period will be six years from accrual of the cause of action.

  20. What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?

    The 1996 Act allows the parties to agree on the powers of the tribunal in case a respondent (or claimant) fails to participate in the arbitration (s.41(1)). The tribunal is empowered to dismiss the claim, continue the proceedings in the absence of that party or issue a peremptory order (see s.41).

    Generally, a third party cannot be bound by an arbitration clause without its consent. It may participate in an arbitration only with the consent of all parties concerned. Consent may be given by adopting institutional rules that provide for joinder.

  21. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?

    The State Immunity Act 1978 (the 1978 Act) allows a state to be bound in arbitration proceedings if it has agreed to submit to arbitration to resolve a dispute that has arisen, or may arise (s.9(2)). Otherwise it can claim immunity.

  22. In what instances can third parties or non-signatories be bound by an arbitration agreement or award?

    The general rule is that a valid and enforceable arbitration award can only be made by a tribunal that has jurisdiction over the dispute and can only bind the parties to the arbitration. However, the 1996 Act states that references in Part I (Arbitration pursuant to an arbitration agreement) to a party to an arbitration agreement include "any person claiming under or through a party to the agreement" (s.82(2)).

  23. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    The 1996 Act allows the parties to agree on the powers exercisable by the tribunal for the purposes of and in relation to the proceedings (s.38(1)). If there is no agreement, sections 38 and 44 outlines the various measures a tribunal and court are permitted to make respectively.

    Powers are provided to the local courts in s.44 pending the constitution of the tribunal to support the arbitration process including the preservation of evidence or assets.

  24. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?

    The 1996 Act provides that (subject to the parties' agreement) it is for the tribunal to decide whether to apply strict rules of evidence as to the admissibility, relevance or weight of any material (oral, written or other) sought to be tendered on any matters of fact or opinion, and the time, manner and form in which such material should be exchanged and presented (s.34(2)(f)).

    In support of the arbitration, the local courts may assist in the obtaining of evidence such as securing attendance before the tribunal of a witness (s.43) and have the power to make orders in relation to evidence (s.44).

  25. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings?

    An arbitrator conducting an arbitration in this jurisdiction will primarily be subject to any applicable ethical codes or professional standards in their own jurisdiction. There are also a number of non-binding ethical codes for arbitrators (including the IBA's Rules of Ethics for International Arbitrators and its Guidelines on Conflicts of Interest in International Arbitration).

    Further, the 1996 Act states that the tribunal shall (a) act fairly and impartially, and (b) adopt procedures to provide a fair means for the resolution of the matters (s.33).

  26. How are the costs of arbitration proceedings estimated and allocated?

    The 1996 Act allows the parties to agree what costs in the arbitration are recoverable (s.63(1)). If there is no contractual agreement, the tribunal may determine by award the recoverable costs of the arbitration on such basis as it thinks fit (s.63(3)).

  27. Can pre- and post-award interest be included on the principal claim and costs incurred?

    Unless otherwise agreed by the parties, the 1996 Act allows the tribunal to award simple or compound interest:

    (a) Pre-award interest: from such dates as it considers just to do so on the whole or part of any amount awarded by the tribunal, in respect of any period up to the date of the award (s.49(3)(a)).

    (b) Post-award interest: from the date of the award (or any later date) until payment, at such rates that it considers just to do so on any outstanding amount of any award. The award of interest can be made on any award as to costs (s.49(4)).

  28. What legal requirements are there for the recognition of an award?

    The 1996 Act allows the parties to agree on the form of an award (s.52(1)). If there is no agreement, s.52 provides the conditions that needs to be met including that the award shall be in writing and signed by the arbitrators or all those assenting to it (s.52(3)).

    The 1996 Act also provides for the recognition of a New York Convention award from s.100 et seq., including when it can be refused (s.103).

  29. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    Subject to any rights of challenge, the parties are free to agree the remedies enforceable by the tribunal (s.48).

  30. Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?

    Under the 1996 Act, an award may be challenged (a) as to its substantive jurisdiction (s.67(1)); or (b) due to the existence of a serious irregularity affecting the tribunal, the proceedings or the award (s.68). Unless otherwise agreed by the parties, the parties can appeal to the court on a question of law arising out of an award made in the proceedings (s.69(1)). Appealing under s.69 is difficult and only happens in rare circumstances. The grounds for challenge and appeal are stated in these sections and the procedure is outlined in the Civil Procedure Rules.

  31. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    Under s.69(1) of the 1996 Act, the parties to arbitral proceedings can agree to waive the right to appeal to the court on a point of law.

    The right to challenge the award for lack of jurisdiction or serious irregularity cannot be waived. However, s.73 of the 1996 Act states that if a party continues to take part in the proceedings, it may lose the right to raise such an objection late in the proceedings unless it can prove it did not know of the grounds for objection at the time.

  32. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    Under s.9(1) of the 1978 Act, if a State has agreed in writing to submit a dispute to arbitration, it waives immunity from proceedings in the UK courts which relate to the arbitration. This does not apply to an arbitration agreement between States.

  33. To what extent might a third party challenge the recognition of an award?

    Only a party to the proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging any award of the arbitral tribunal as to its substantive jurisdiction or on the ground of serious irregularity affecting the tribunal, the proceedings or the award (sections 67 and 68 of the 1996 Act).

  34. Have there been any significant developments with regard to third party funding recently?

    In Essar Oilfields Services Ltd v Norscot Rig Management PVT Ltd [2016] EWHC 2361 (Comm), the English Commercial Court confirmed that arbitrators have the power to award the costs of a third party funder. These are considered to be "other costs of the parties" under s.59(1)(c) of the 1996 Act.

  35. Is emergency arbitrator relief available? Is this frequently used?

    Parties in LCIA arbitrations can apply to submit disputes to an emergency arbitrator for urgent relief pending the formation of the arbitral tribunal. The rules governing the appointment of an emergency arbitrator are set out in Article 9B of the LCIA 2014 Rules.

    However, this type of relief does not appear to be frequently used. In 2016, the first application under Article 9B of the LCIA 2014 Rules for the appointment of an emergency arbitrator was made, and was rejected. This may be due to the fact that Article 9A of the LCIA 2014 Rules sets out a procedure for the expedited formation of a tribunal, which can be used as an alternative route to obtaining interim measures.

    Parties can apply to the English court for interim relief under s.44 of the 1996 Act, however, it is likely that the court will not intervene where an application could be made to an emergency arbitrator (Gerald Metals SA v The Trustees of the Timis Trust & others [2016] EWHC 2327).

  36. Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used?

    The London Maritime Arbitrators Association (LMAA) Terms contain a Small Claims Procedure, designed for disputes under a value of US$50,000 (however, parties are free to agree a higher limit). A sole arbitrator acts for a fixed fee, and generally assesses the case based on written submissions and documents.

  37. Have measures been taken by arbitral institutions to promote transparency in arbitration?

    The LCIA publishes information in relation to costs and duration of cases it has administered.

  38. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how?

    Many UK firms, institutions and individuals have signed the Equal Representation in Arbitration Pledge, which is intended to improve the profile of women in arbitration with a view to securing the appointment of more women as arbitrators, on an equal opportunity basis.

  39. Have there been any developments regarding mediation?

    England and Wales is a mediation friendly jurisdiction. There are costs implications if the parties refuse to participate in mediation and proceed straight to the local courts. This is likely to influence a tribunal's view in a similar manner.

  40. Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?

    On 27 July 2017, the English Commercial Court dismissed an application to enforce a Russian arbitral award that had been set aside by the Russian Commercial Court (Maximov v Open Joint Stock Company OJSC (Novolipetsky Metallurgichesky Kombinat) [2017] EWHC 1911 (Comm)).

    The Court held that an applicant must not only prove that a foreign court’s decisions were wrong or manifestly wrong, but that they were so perverse that they could not have been arrived at in good faith or otherwise than by bias.