The Arbitration Act 1996 (“the Act”) came into force on 31 January 1997. The Act:

• consolidated and updated the existing legislation on arbitration;
• codified legal rules and principles established by case law;
• brought English law more into line with internationally recognised principles of arbitration law;
• sought to make arbitration in England more attractive both to domestic and international users;
• is broadly based on the UNCITRAL Model Law on International Commercial Arbitration published by The United Nations Commission on International and Trade Law (UNCITRAL) in 1985 (“the UNCITRAL Model Law”) but applies equally to domestic and to international arbitration;
• goes beyond the scope of the UNCITRAL Model Law and contains a near-comprehensive statement of the English law of arbitration;
• is intended to be user-friendly, has a logical structure and is written in plain English;
• states what the objective of arbitration is, although it does not attempt a definition;
• increases the scope of party autonomy;
• strengthens the powers of the arbitral tribunal; and
• limits judicial intervention in the arbitration process while preserving the courts’ powers to provide assistance where this is necessary to make arbitration a fair and efficient dispute resolution procedure.

Before the Act came into force, English arbitration law was scattered over the Arbitration Acts 1950, 1975 and 1979. This legislation applied to different aspects of arbitration and was complemented, interpreted by and built on a large body of case law.

Historically, three broad criticisms were levelled at English arbitration:

• it was slow and expensive: “litigation without wigs”;
• the law was inaccessible to laypersons and to foreign users; and
• the courts were too ready to intervene in the arbitral process.

As a result arbitration became increasingly unattractive as an option for dispute resolution and London lost out to other jurisdictions as a venue for international commercial arbitrations.

In the 1980s, the Department of Trade and Industry established the Departmental Advisory Committee on Arbitration Law (“the DAC”) under the Chairmanship of Lord Justice Mustill (now Lord Mustill). One of the key decisions for the DAC to make was whether to recommend enactment of the UNCITRAL Model Law.

While the DAC decided against adopting the UNCITRAL Model Law wholesale, it did recommend that the new English Arbitration Act should, so far as possible, adopt the structure and language of the UNCITRAL Model Law and be clear and accessible. Despite these aspirations, the first draft bill of February 1994 did little more than consolidate the existing statutes of 1950, 1975 and 1979.

Under the new chairmanship of Lord Justice Saville, the DAC produced an entirely new draft bill by December 1995. After extensive consultation, but with relatively few changes, this became the 1996 Act.

Many provisions of the 1996 Act appear familiar at first sight, but the Act nevertheless implemented a number of radical reforms. The DAC also published Reports on the Arbitration Bill in February 1996 and on the Act in January 1997. These do not form part of the Act but are authoritative guides to its provisions and may be referred to in court and are frequently relied on by arbitrators.

The procedures for arbitration applications to the courts in England and Wales are now set out in Part 62 and the Practice Direction to Part 62 of the Civil Procedure Rules. (The courts of Scotland and of Northern Ireland follow their own procedure.)

Scope of application
The Act applies to all arbitrations, the legal “seat” or “place” of which is in England and Wales or Northern Ireland. Scotland has its own separate legal system and arbitration law (which is reviewed elsewhere in this Guide). The Act applies to institutional as well as to ad hoc arbitrations.

Certain provisions of the Act apply even if the seat of the arbitration is outside England, Wales and Northern Ireland, or if no seat has been designated or determined. These include:

• Sections 9–11 – stay of legal proceedings;
• Section 66 – enforcement of arbitral awards;
• Section 43 – securing the attendance of witnesses; and
• Section 44 – court powers in support of arbitral proceedings.

The provisions of Part I of the Act apply to all arbitrations conducted pursuant to an arbitration agreement. Part II of the Act deals with consumer arbitrations and arbitrations conducted on a statutory basis. Part III deals with the recognition and enforcement of foreign awards and Part IV contains general provisions. This overview will focus on the provisions of Part I and Part III of the Act. General principles
Pursuant to its Section 1, the 1996 Act is founded on and is to be construed in accordance with the following three guiding principles:

Fairness:
Section 1 (a) states that the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.

This is primarily a reflection of the rules of natural justice, but there is an additional emphasis on avoiding unnecessary costs and delay.

This principle is given effect in the general duties imposed on the tribunal by Section 33 and on the parties by Section 40 (discussed below).

Party autonomy:
Section 1 (b) states that the parties shall be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.

These “safeguards” are provided by the mandatory provisions of Part I of the Act, which apply regardless of any agreement by the parties to the contrary. The Act is structured in such a way as to complement the mandatory provisions with two types of additional provisions: first, those which apply only if the parties expressly so agree (i.e. the parties have “contracted in”); and, secondly, further provisions which apply automatically unless the parties expressly agree otherwise (i.e. the parties have “contracted out”).

Non-intervention by the courts:
The Act limits the scope for court intervention in the arbitral process, and provides that the courts shall not intervene except as expressly provided by the Act. At the same time, by the following provisions, the Act reduces the scope for obstructive parties to delay arbitration proceedings by making applications to the courts:

• Section 9 – mandatory stay of court proceedings in favour of arbitration;
• Section 32 (4) – proceedings to continue pending a decision of the court on the tribunal’s jurisdiction;
• Section 38 (3) – tribunal (not the court) can order security for costs;
• Section 41 – extension of a tribunal’s powers in case of party default; and
• Section 44 (5) – court may exercise such powers as it has only if the tribunal has no equivalent power.

Formal requirements
Section 5 of the Act stipulates that the arbitration agreement must be made in writing, but construes this requirement broadly so that it can be satisfied not only if there is a written agreement as such, but also if the agreement is contained in an exchange of communications in writing, or if the agreement is merely evidenced in writing or is reached otherwise than in writing but by reference to terms which are in writing (e.g. general terms and conditions). The form requirement is also satisfied if there is an exchange of submissions in arbitral or legal proceedings in which the existence of an arbitration agreement other than in writing is alleged by one party and not denied by the other. The exchange of written submissions between the parties is then taken to constitute the written arbitration agreement. Finally, an agreement is considered to be in writing, even if it is recorded by any other means.

Section 6 (2) clarifies that a reference in a main agreement to a separate written arbitration clause or to a document containing an arbitration clause constitutes an arbitration agreement if the reference is such as to make that clause part of the main agreement. Such an incorporation of the arbitration agreement by reference does, however, require the use of clear and unambiguous words.

Separability
Pursuant to Section 7 of the Act, the arbitration agreement is treated as separate from the main commercial agreement into which it has been incorporated and the arbitration clause therefore survives the invalidity, non­existence or ineffectiveness of the main agreement.

Mandatory/non-mandatory provisions
The mandatory provisions of Part I of the Act are listed in Schedule 1 to the Act. They deal with such matters as:

• Section 9 – duty of the court to stay its proceedings;
• Section 12 – power of the court to extend time limits;
• Section 24 – power of the court to remove an arbitrator;
• Section 28 – joint and several liability of parties to arbitrators for fees and expenses;
• Section 29 – immunity of arbitrators;
• Section 31 – objections to the tribunal’s jurisdiction;
• Section 33 – general duty of the tribunal;
• Section 40 – general duty of the parties;
• Section 66 – enforcement of an award;
• Sections 67 and 68 – challenges to the award; and
• Section 74 – immunity of arbitral institutions.

All other provisions of Part I of the Act are non-mandatory and the parties are free to make their own arrangements. If the parties do not make any such arrangements, the non-mandatory provisions form a set of “model rules” which will apply in the absence of any express agreement by the parties.

Where parties agree to incorporate into their arbitration agreement institutional rules, such as those published by the LCIA or the ICC International Court of Arbitration, Section 4 (3) of the Act provides that this amounts to parties making their own arrangements and displaces non-mandatory provisions in circumstances where arbitration rules are contrary to any such provisions.

Choice of law
Pursuant to Sections 46 (1) and (3), the tribunal shall decide the dispute in accordance with the law chosen by the parties as applicable to the substance of the dispute, or, if and to the extent that there is no such choice or agreement, it shall apply the law determined by the conflict of law rules which it considers applicable. The parties’ choice of the laws of a country will be taken to exclude conflict of law rules and to refer to the substantive laws of that country only.

The courts have recently confirmed their willingness to recognise and enforce choices of law in parties’ arbitration agreements.

If parties choose England as the seat of the arbitration, they will be taken to have agreed that the English courts shall have exclusive jurisdiction of the arbitration and the mandatory provisions of the Act will apply, including those relating to parties’ ability to challenge the award under Sections 67 and 68.

By the arbitration agreement (or on some other basis) the parties can also authorise the tribunal to decide the dispute on the basis of the lex mercatoria or ex aequo et bono (also referred to as amiable composition); however, these are very rarely agreed upon in practice, given the uncertainties as to the scope of the lex mercatoria and the principles to be applied in making a decision ex aequo et bono.

Under English conflict of law rules, the applicable law of a contract (in the absence of the parties’ agreement) will in most cases be determined in accordance with the provisions of the 1980 Rome Convention on the Law Applicable to Contractual Obligations, which was implemented in the United Kingdom by the Contracts (Applicable Law) Act 1990. In July 2007, the European Community adopted a new Regulation on the Law Applicable to Non-Contractual Obligations (colloquially known as “Rome II”), which came into force on 11 January 2009. Rome II sets out new choice of law rules for non-contractual obligations, such as torts and equitable claims, and it is anticipated that English courts will determine non-contractual conflicts of laws issues in accordance with Rome II. Where the arbitration agreement is drafted widely to include disputes that arise from non-contractual obligations, then the determination of the applicable law may also include reference to Rome II.

The constitution of the arbitral tribunal
Pursuant to Section 15 of the Act, the parties are free to agree on the number of arbitrators and whether there is to be a chairman or umpire. However, an agreement that the number of arbitrators shall be two or any other even number shall be understood as requiring the additional appointment of a chairman, unless the parties agree otherwise. If the parties have agreed that there is to be a chairman or umpire, they are free to agree on his functions, but Sections 20 and 21 contain default provisions. If there is no agreement as to the number of arbitrators, the tribunal shall consist of a sole arbitrator.

The procedure for the appointment of the tribunal is also in the first instance determined by the arbitration agreement between the parties, but Section 16 of the Act makes detailed provision for the appointment of the arbitral tribunal where the parties have not agreed an appointment procedure.

Section 17 provides that, where each of two parties to an arbitration agreement is to appoint an arbitrator but one of the parties refuses or fails to do so within the time specified, the other party, having duly appointed its arbitrator, may give notice in writing to the party in default that he proposes to appoint his arbitrator to act as sole arbitrator. If the party in default does not make the required appointment and notify the other party that he has done so within seven days of that notice, the other party may appoint its arbitrator as sole arbitrator and the arbitrator so appointed may proceed to make an award which is binding on both parties.

If the agreed appointment procedure fails to constitute an arbitral tribunal, the courts are given specific powers under Section 18 to appoint, or assist with securing the constitution of, an arbitral tribunal upon application by one of the parties.

Removal of arbitrators
Pursuant to Section 23, the authority of an arbitrator can be revoked by agreement of the parties in writing or by an arbitral or other institution or person vested by the parties with powers in that regard.

The court may order the removal of an arbitrator under Section 24 upon application by one of the parties on any of the following grounds, namely if:

• there exist circumstances which may give rise to justifiable doubts as to his impartiality;
• he does not possess the agreed qualifications;
• he is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to his capacity to do so; or
• he fails to conduct the proceedings properly or with reasonable speed and substantial injustice has been or will be caused to the applicant.

The arbitral tribunal may, however, continue the arbitral proceedings in the meantime and proceed to make an award while the application to the court is pending. The challenge procedure cannot therefore be abused to delay the arbitration proceedings for tactical reasons.

The appointment of substitute arbitrators
Where an arbitrator ceases to hold office (whether it be due to resignation, removal or death) and the parties have not agreed whether, and if so, how the vacancy is to be filled, Section 27 provides that the Section 16 or Section 18 procedures apply to the filling of the vacancy as in relation to the original appointment.

Arbitrators’ fees, expenses and immunity
Section 28 of the Act makes express provision for the parties’ liability to the arbitrators for fees and expenses and Section 29 provides that arbitrators enjoy immunity from claims unless they act in bad faith.

Competence to rule on jurisdiction
Section 30 of the Act gives the arbitral tribunal the power to rule on its own jurisdiction. It is up to the tribunal to decide which, if any, of the disputes referred to arbitration are within the scope of the arbitration agreement.

However, under Section 32, if agreed in writing by the parties or in certain cir­cumstances with the permission of the tribunal, the courts have jurisdiction to determine preliminary points of jurisdiction upon application by one of the parties. The tribunal’s decision on jurisdiction may also be subject to a full rehearing by the courts under Section 67 (discussed below).

Section 31 requires that a party must raise objections to the substantive jurisdiction of the tribunal at the earliest possible stage in the proceedings, i.e. before that party takes any steps in the proceedings to contest the merits of any matter in relation to which he challenges the tribunal’s jurisdiction.

The right to object to the tribunal’s lack of substantive jurisdiction (and to other irregularities affecting the tribunal or proceedings) may be lost pursuant to Section 73 if the objection is not made at the earliest opportunity.

Power to order interim measures
Under Section 38 (1) of the Act, the parties are free to agree on the powers exercisable by the arbitral tribunal. It is therefore possible for the parties to confer on the tribunal the power to order interim measures, either by incorporating the institutional rules of a major arbitration institution such as the ICC into their arbitration agreement or otherwise.

In the absence of any agreement by the parties on the issue of interim measures, Section 38 (4) empowers the tribunal:

• “[to] give directions in relation to any property which is the subject of the proceedings or as to which any question arises in the proceedings, and which is owned by or is in the possession of a party to the proceedings –
• (a) for the inspection, photographing, preservation, custody or detention of the property by the tribunal, an expert or a party; or
• (b) ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property.”

Section 38 (6) also empowers the tribunal to “give directions to a party for the preservation for the purposes of the proceedings of any evidence in his custody or control.”

Unless otherwise agreed by the parties, the Act does not confer upon arbitrators the power to secure the sum in dispute by an order taking effect as an injunction, although it is possible to seek a freezing injunction from the High Court under Section 44 (2) (e) of the Act (see below).

Common law tradition
England and Wales is a common law jurisdiction. The legal process has traditionally emphasised the importance of procedural issues and a number of English procedural concepts, although familiar in other common law jurisdictions such as the United States, Canada, Australia and most Commonwealth member states, are not part of the continental European civil law tradition. These include the disclosure and inspection of documents, the exchange of witness statements, cross-examination of witnesses, and use of party-appointed expert witnesses.

There was intended to be a significant shift in approach under the Civil Procedure Rules 1998 (which govern the conduct of cases in the English Courts) towards more proactive case management by the courts. However, English legal proceedings in essence remain adversarial in approach (i.e. party-driven with the judge adopting the position of arbiter between the opposing parties) rather than inquisitorial (i.e. more reliant on the judge taking charge of progressing a case). One of the advantages of arbitration over litigation as a means of settling international commercial disputes is that, because of its flexibility, arbitration can transcend the confines of national legal systems and the parties can tailor a procedure to suit their particular needs. English arbitration proceedings under the Act are not tied to English court procedure. The Act enables arbitrators to use wide-ranging powers (which are much more akin to the case management techniques employed under the continental European procedural system) to ensure that the arbitration progresses efficiently, proportionately and in the interests of the parties.

Commencement of arbitration
Unless otherwise agreed by the parties, Section 14 (4) provides that proceedings are commenced when one party serves on the other a written notice requiring him to appoint an arbitrator or to agree to the appointment of an arbitrator. The court will interpret Section 14 broadly and flexibly. An implied request to appoint an arbitrator has been found to be sufficient. However, in order to avoid any uncertainty in this respect, the written notice of arbitration should expressly call upon the other party to appoint an arbitrator.

Section 14 does not deal with the matters in dispute that a party wishes to refer to arbitration. A written notice should clearly specify such matters but be drafted widely to ensure all potential matters in dispute are also referred to arbitration.

General procedural principles
The Act expressly defines and imposes duties on the parties and the arbitrators.

General duties of the tribunal: Section 33
Section 33 (1) is one of the key provisions in the Act and provides that:

• “... The tribunal shall
• (a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent; and
• (b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.”

The express duty to avoid unnecessary delay and expense is new and important. It is intended to encourage arbitrators to impose strict timetables to ensure that the proceedings are progressed with all due expedition.

General duties of the parties:
Under Section 40, the parties have a general duty to do everything necessary for the proper and expeditious conduct of the arbitral proceedings and, corresponding to the duties imposed on the tribunal by Section 33, a duty to comply with the tribunal’s directions without delay.

Procedural powers of the tribunal:
Procedural and evidential matters are decided by the tribunal unless the parties agree otherwise. Section 34 (2) sets out a non-exhaustive list of the procedural issues to be determined by the tribunal. Those powers give arbitrators the ability to impose expedited procedures in suitable cases and to dispense with, for example:

• Section 34 (2) (c) – written submissions;
• Section 34 (2) (d) – disclosure;
• Section 34 (2) (e) – interrogatories (i.e. questions put to and answered by the parties prior to trial);
• Section 34 (2) (f) – oral evidence; and
• Section 34 (2) (h) – oral hearings.

The tribunal may refer to Section 34 as a guideline in dispensing with procedures which are not appropriate in the circumstances of a particular case. Nevertheless, arbitrators have to exercise these powers with care so as not to deprive a party of a reasonable opportunity to put its case or to deal with that of its opponent (one of the tribunal’s general duties under Section 33 (1) (a)). If the tribunal acts contrary to this obligation, the aggrieved party may be able to challenge any subsequent award in the courts on the grounds of “serious irregularity” under Section 68 (see below). However, the courts have generally approached this issue in favour of arbitrators actively managing their arbitrations.

The Act provides the tribunal with further express powers, including the power to:

• Section 37 – appoint its own expert(s);
• Section 38 (3) – order the claimant to provide security for costs;
• Section 38 (5) – direct that a party or witness shall be examined on oath and, for that purpose, to administer the necessary oath;
• Section 39 – if the parties agree, to order interim payments to be made or to make other provisional awards;
• Sections 41 (3) – make an award dismissing a claim for want of prosecution where there has been an inordinate and inexcusable delay on the part of the claimant in pursuing the claim and where the delay prejudices the respondent;
• Section 41 (4) – continue the proceedings in the absence of a party who fails to attend a hearing of which proper notice was given without showing sufficient cause;
• Section 41 (5) – make a peremptory order where a party fails to comply with an order or direction of the tribunal; the tribunal’s peremptory orders may be enforceable by the court pursuant to Section 42;
• Section 47 – make awards on different issues at different times;
• Section 49 – award compound interest; and
• Section 65 – direct that the recoverable costs of the arbitration be limited to a specified amount.

Unless the parties specifically agree, the tribunal has no power to consolidate different arbitration proceedings or to order concurrent hearings.

Place and language of arbitration
Pursuant to Section 3 of the Act, the term “seat” of the arbitration means only its “juridical” seat. The fact that the parties have agreed that the seat of the arbitration shall be, for example, London, does not prevent the parties or the arbitrators from deciding to hold any part of the proceedings elsewhere if this is more convenient (Section 34 (2) (a)).

The language or languages to be used in the proceedings and the question of whether translations of documents are to be supplied is equally a matter for the parties to decide or, in the absence of any agreement by the parties, for the tribunal to determine (Section 34 (2) (b)).

Submissions
The format and timetable for submissions will be determined by the tribunal unless agreed by the parties (Section 34 (2) (c)). In English arbitration proceedings, the parties’ submissions frequently take the form of formal statements of case, similar but not identical to those used in court proceedings and limited to identifying the issues between the parties. They may, however, take the form of more complete submissions which also deal with the relevant facts, evidence and law, similar to continental European court submissions.

Oral hearings and written proceedings
Before the 1996 Act either party could effectively require that an oral hearing be held. Under the Act it is now for the tribunal to decide whether there should be an oral hearing including submissions and evidence, subject to the parties’ right to agree otherwise (Section 34 (2) (h)). In suitable cases the tribunal can therefore make an award on the basis of written proceedings alone. However, in practice it would be rare for the tribunal to proceed on this basis unless agreed by the parties.

Evidence
Evidential matters will be determined by the tribunal, subject to any agreement between the parties. These matters might include whether disclosure and inspection of documents should take place between the parties and, if so, whether the scope of disclosure should in any way be restricted to certain documents or classes of documents; whether there should be an exchange of witness statements or expert reports; and whether strict rules of evidence should be followed as to admissibility, or the relevance of, or weight to be given to, the evidence adduced by the parties. The Act expressly authorises the tribunal to appoint experts and advisers but the parties must be given an opportunity to comment on the opinion, information or advice provided by any expert appointed by the tribunal direct.

Remedies
Subject to any agreement by the parties as to the powers which the tribunal may exercise, Section 48 provides that the tribunal may:

• make a declaration as to the subject matter of the proceedings; or
• order the payment of a sum of money in any currency.

Furthermore, the tribunal has the same powers as the courts to:

• grant a permanent injunction;
• order specific performance of a contract; or
• order the rectification, cancellation or setting aside of a deed or other document.

The tribunal’s powers to grant interim measures are discussed above.

Interest
In the absence of an agreement between the parties, the tribunal has discretionary power under Section 49 to award simple or compound interest, from such dates and at such rates and with such rests as it considers just, on the whole or part of:

• the amount awarded, in respect of any period up to the date of the award;
• any amount claimed in the arbitration and outstanding at the date of commencement of the arbitration but paid before the award was made, in respect of any period up to the date of payment; and/or
• the outstanding amount of any award from the date of the award until payment.

The fact that the tribunal has discretionary power to award interest does not affect the parties’ rights to claim contractual interest.

Decisionmaking by the tribunal
The parties are free to agree how the tribunal is to make its decisions, orders or awards. The Act sets out detailed rules in Sections 20–22 to be followed if there is no such agreement. The Act differentiates between proceedings where there is a chairman or an umpire, and proceedings where there is neither a chairman nor an umpire. Generally, decisions, orders and awards are made by all or by a majority of the arbitrators.

Form, content and effect of the award
Pursuant to Section 58 of the Act, an arbitral award made by the tribunal pursuant to an arbitration agreement is final and binding on the parties to the arbitration, subject to the limited rights the Act provides for challenge or appeal to the courts.

Section 52 provides that, unless otherwise agreed by the parties, an award shall be in writing, signed by all the arbitrators or a majority of those arbitrators assenting to the award, contain reasons (unless it is an agreed award or the parties have agreed to dispense with reasons), and shall state the seat of the arbitration and the date on which the award was made.

Once an award has been made, it shall be notified to the parties without delay (Section 55), but the tribunal has power pursuant to Section 56 to withhold the award until the arbitrators’ fees and expenses are paid in full.

Settlement
If the parties settle their dispute in the course of the arbitration, the tribunal shall terminate the substantive proceedings under Section 51 and shall record the settlement in the form of an agreed award if requested to do so by the parties.

Costs
Unlike the UNCITRAL Model Law, Sections 59–65 of the Act make express provision for the allocation of the costs of the arbitration as between the parties. The Act also provides that, unless the parties agree otherwise, the tribunal may make an award of costs. The costs of the arbitration include:

• the fees and expenses of the arbitrators;
• the fees and expenses of any arbitral institution concerned; and
• the legal or other costs of the parties.

Generally, an award of costs will “follow the event”, but the tribunal has discretion to take other relevant factors into account when making its award on costs. Only reasonably incurred costs of the arbitration and fees and expenses of arbitrators are recoverable. An agreement between the parties that a party is to pay the whole or part of the costs of the arbitration is only valid if it has been made after the dispute has arisen.

Correction and interpretation of the award
The 1996 Act makes provision in Section 57 for the tribunal to correct obvious errors, mistakes, omissions or ambiguities in the award, or to make an additional award in respect of claims which were presented to the tribunal but not dealt with in the award. These powers may be exercised by the tribunal either on its own initiative, or upon application of a party, and after hearing representations from the other party.

The jurisdiction of the courts
The extent to which the courts may interfere in the arbitration process is one of the most important issues for parties to international arbitration proceedings. The Act follows the scheme of the UNCITRAL Model Law in this regard: the courts have no jurisdiction in matters relating to arbitration unless expressly provided by the Act. A distinction can be drawn between the role of the courts (i) before and during the arbitral proceedings; and (ii) after the award has been made.

The powers of the court in relation to arbitral proceedings are limited to those expressly conferred by the Act. Those powers include:

• Section 42 – the enforcement of peremptory orders made by the tribunal;
• Section 44 – preservation orders in relation to evidence and assets; and
• Section 45 – the determination of preliminary points of law.

Stay of court proceedings
Section 9 provides that, upon application by a party to an arbitration agreement against whom court proceedings are brought in respect of a matter which under the arbitration agreement is to be referred to arbitration, the court must grant a stay of the court proceedings unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed. The court has recently established two threshold requirements for granting a stay of proceedings under Section 9: (a) there must be a concluded arbitration agreement; (b) the issue in the proceedings must be a matter that, under the arbitration agreement, is to be referred to arbitration.

The court also has an inherent jurisdiction to order a stay in exceptional circumstances. The absence of jurisdiction under Section 9 to order a stay does not preclude the court’s exercise of this inherent jurisdiction.

Although Section 9 is silent on the point, the court decision granting or refusing a stay of proceedings can be appealed, provided permission to appeal is granted either by the High Court judge hearing the application for a stay or by the Court of Appeal.

A significant number of cases on the stay of court proceedings under Section 9 have reached the courts since the Act came into force. The case law suggests that the courts’ general approach is to enforce arbitration agreements strictly, even in circumstances where the agreement containing the arbitration clause might have been procured by bribery.

Extension of time for commencement of arbitral proceedings
An arbitration agreement may provide that a claim shall be time barred, or that the claimant’s right shall be extinguished, unless the claimant begins within the time fixed by the agreement either arbitral proceedings, or another dispute resolution procedure which must be exhausted before arbitral proceedings may be commenced. In such cases the court may extend the time for taking these steps pursuant to Section 12 of the Act.

Preliminary rulings on points of jurisdiction and law
Under Section 32, the courts have power to determine preliminary points on the substantive jurisdiction of the tribunal upon the application of a party. Pursuant to Section 45, the courts may on application of a party to arbitral proceedings determine any preliminary points of law arising in the course of the proceedings if satisfied that it substantially affects the rights of one or more of the parties, unless otherwise agreed by the parties. The court will only consider the application if it is made either with the agreement of all other parties or with the permission of the tribunal, and if the court is satisfied that the determination of the question is likely to produce substantial cost savings and that the application was made without delay.

While Section 32 is a mandatory provision, the parties are free to exclude the courts’ jurisdiction under Section 45 by agreement. Note that an agreement by the parties to dispense with the requirement that the tribunal give reasons in support of its award will be considered as an agreement also to exclude the courts’ jurisdiction under Section 45.

Interim protective measures
Unless otherwise agreed by the parties, the courts have the power under Section 44 (2) of the Act to order certain defined interim measures in support of arbitration proceedings, including orders preserving evidence and interim injunctions. If the case is one of urgency, Section 44 (3) of the Act also em­pow­ers the English court, on the application of a party or proposed party to the arbitration proceedings, to make such orders as it thinks necessary for the purpose of preserving evidence or assets.

The interim measures which the court may order include freezing orders, ‘search orders’ and anti-suit injunctions. Anti-suit injunctions restrain a person over whom the tribunal has jurisdiction from continuing with or commencing proceedings in a foreign court that are vexatious or oppressive or that are in breach of an arbitration agreement. Following a recent referral of a case by the House of Lords, the European Court of Justice (“ECJ”) considered whether it is consistent with Regulation 44/2001 for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings in another Member State on the ground that such proceedings are in breach of an arbitration agreement. The ECJ determined that anti-suit injunctions are inconsistent with the Regulation, thereby curtailing the court’s ability to grant anti-suit injunctions to prevent parties from continuing with or commencing proceedings before the courts of EU Member States.

It is important to note, however, that the courts only have the power to grant interim measures if or to the extent that the arbitral tribunal has no power or is unable for the time being to act effectively. In practice, the court is most commonly called upon to exercise this power to order interim measures in circumstances where the tribunal has not yet been constituted. Section 44 applies to all arbitral proceedings regardless of whether the seat of the arbitration is in England and Wales. The courts may, therefore, in appropriate circumstances grant interim measures in aid of foreign arbitration proceedings which would not otherwise fall within the scope of the Act if there is a good reason for the court to exercise its discretion and intervene.

Obtaining evidence and other court assistance
An arbitral tribunal has no powers to compel witnesses to attend before it to give evidence. Section 43 therefore provides that a party to arbitration proceedings can use the usual court procedures to secure the attendance of witnesses. Under English civil procedure this means that the party may serve a witness summons on the witness to secure attendance before the tribunal, either for the purpose of giving oral evidence or for the purpose of producing documents or other evidence. Applications for the preservation of evidence or the taking of witness evidence may be made to the court under Section 44. This also covers applications to the court for the issue of letters of request to judicial authorities overseas in accordance with the 1970 Hague Evidence Convention and other international agreements.

Loss of right to object to award
Pursuant to Section 73, the right of a party to object to an award on any of the following grounds may be lost if the aggrieved party does not raise such objections at the earliest possible opportunity in the arbitral proceedings, namely that:

• the tribunal lacked substantive jurisdiction;
• the proceedings were improperly conducted;
• there was a failure to comply with the terms of the arbitration agreement; or
• there was any other irregularity affecting the tribunal or the proceedings.

Challenging the award
An arbitration award once made can only be challenged pursuant to:

• Section 67, on the ground that the tribunal lacked substantive jurisdiction; or
• Section 68, on the ground that there was a serious irregularity affecting the tribunal, the proceedings or the award.

On applications challenging the award on the grounds that the tribunal lacked jurisdiction under Section 67, the court may either confirm the award, vary the award or set the award aside in whole or in part. Section 68 (2) sets out an exhaustive list of the circumstances which may constitute a serious irregularity, namely:

• breach of Section 33 (general duty of the tribunal);
• excess of powers by the arbitrators;
• failure to conduct the proceedings in accordance with the arbitration agreement;
• failure by the arbitrators to resolve all matters in dispute referred to them;
• uncertainty or ambiguity of the award;
• the award being obtained by fraud or in a manner contrary to public policy;
• failure to comply with formal requirements relating to the award; and
• admitted irregularity in the proceedings or the award.

In recent years, there have been a number of challenges to arbitral awards on the grounds of bias, on the basis that it involves a breach of Section 33 (which requires the tribunal to, inter alia, act fairly and impartially between the parties). The court has held that actual or apparent bias of an arbitrator is a substantial injustice, and can amount to a serious irregularity for the purposes of Section 68.

If an award is successfully challenged on grounds of serious irregularity under Section 68, the court may either remit the award (in whole or in part) to the tribunal for reconsideration, set the award aside or declare it to be of no effect.

Appeal on point of law
Awards can be appealed on points of law only. An award may only be appealed after permission has been granted by the court or by the agreement of the parties. The grounds on which such permission to appeal will be granted by the court are set out in Section 69 (3). These derive from the pre-1996 Act common law guidelines: “Section 69 (3): leave to appeal shall be given only if the court is satisfied:

• that the determination of the question will substantially affect the rights of one or more of the parties;
• that the question is one which the tribunal was asked to determine
• that, on the basis of the findings of fact in the award:
  • the decision of the tribunal on the question is obviously wrong; or
  • the question is one of general public importance and the decision of the tribunal is at least open to serious doubt;
• that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.”

On an appeal under Section 69, the court may either confirm the award, vary the award, remit the award to the tribunal for reconsideration in whole or in part, or set the award aside in whole or in part. The court will generally remit the matters in question to the tribunal for reconsideration unless it is satisfied that this would be inappropriate under the circumstances.

Unlike challenges under Sections 67 and 68, the parties’ right to appeal on points of law can be excluded by agreement between the parties, either in the arbitration agreement or at a later stage. Pursuant to Section 69 (1), the parties’ agreement to dispense with the requirement that the tribunal give reasons for its award will be considered an agreement to exclude the right of appeal (see above on the effect of such an agreement on the courts’ jurisdiction under Section 45). Sections 70–72 contain supplementary provisions and restrictions in relation to the challenge or appeal of arbitral awards.

Domestic awards
Section 66 provides that domestic arbitration awards may, as before, be enforced with the permission of the court as if they were court judgments. Permission shall only be refused if the person against whom the award is to be enforced shows that the tribunal lacked substantive jurisdiction to make the award.

Foreign awards
The procedure for recognition and enforcement of foreign arbitral awards is covered in Part III of the 1996 Act.

Pursuant to Section 99, the Arbitration Act 1950 continues to apply to the recognition and enforcement of awards under the 1961 Geneva Convention, which continues to apply in relation to certain arbitration awards which cannot be enforced under the 1958 New York Convention.

Most foreign awards are today enforced under the 1958 New York Convention. This requires the award to be a “New York Convention Award”, i.e. an award made pursuant to a written arbitration agreement in a state which is a signatory to the 1958 New York Convention. A list of the signatory States to the 1958 New York Convention appears in Appendix 3 to this Guide.

The recognition and enforcement of New York Convention Awards are governed by Sections 100–104 of the Act and may only be refused if the party against whom it is to be enforced proves one or more of the following:

• incapacity of a party to the arbitration agreement;
• invalidity of the arbitration agreement;
• lack of due notice or opportunity to present its case;
• lack of substantive jurisdiction of the tribunal;
• irregularity in the composition of the tribunal or conduct of the proceedings;
• award not binding on parties, set aside or suspended;
• the subject matter of the arbitration is not capable of settlement by ­arbitration; or
• recognition and enforcement of the award would be contrary to public policy.

Arbitration applications are generally dealt with by the Commercial Court or, in relation to cases where the subject matter relates to technology or construction, the Technology and Construction Court (“TCC”), both forming part of the Queen’s Bench Division of the High Court of Justice. They are governed by Part 62 and the Practice Direction to Part 62 of the Civil Procedure Rules 1998. Appeals in arbitration matters from decisions of the Commercial Court or TCC lie to the Court of Appeal, but permission to appeal will first be required from the First Instance Court, either the Commercial Court or TCC as the case may be.

A number of questions have not been addressed by the 1996 Act and have instead been left open to developments in the jurisprudence. These include, in particular, the following:

Multi-party disputes and consolidation
Multi-party disputes and consolidation of separate arbitration proceedings give rise to a number of potentially complex issues, and require careful consideration on a case-by-case basis at the contract drafting stage to ensure that adequate provision is made in relation to the appointment procedure for the arbitral tribunal, the tribunal’s jurisdiction and procedural matters. Some institutional arbitration rules, for example the 1998 ICC Arbitration Rules, have been drafted to accommodate multi-party disputes.

Privacy and confidentiality
Privacy and confidentiality of the arbitration proceedings and of the subsequent award are traditionally perceived as typical advantages of arbitration over court litigation. Under English law, the confidentiality of arbitration is an implied term of every arbitration agreement. This principle has been clearly confirmed in a number of recent cases, despite conflicting decisions in the Commonwealth. The court has held that the obligation includes any documents prepared for and used in the arbitration, or disclosed or produced in course of the arbitration, or transcripts or notes of the evidence in the arbitration or the award. Notwith­standing the position taken by the English courts, it is advisable for the arbitration agreement expressly to stipulate confidentiality in relation to the arbitral proceedings and the award.

There are a number of exceptions to the duty of confidentiality, namely:

• by consent of the parties;
• by order or leave of the court;
• where the court considers that making an exception is reasonably necessary (to establish or protect a party’s rights against a third party); or
• where the court considers that making an exception is in the interests of justice (e.g. prior inconsistent views expressed by an expert in arbitral proceedings).

The court has recently authorised the disclosure of arbitration pleadings to foreign courts, so as to avoid them being misled in proceedings that involved the same parties and concerned the same or similar allegations.

The 1996 Act has contributed significantly to revitalising English arbitration and to ensuring that London remains a leading centre for international commercial arbitrations.

The Act has made arbitration a more attractive option for dispute resolution by increasing party autonomy as well as reducing the scope for court interference in the arbitral process. Arbitrators have been given wider procedural powers which can contribute to making arbitration more efficient; the success of these provisions depends on arbitrators exercising their powers in practice fairly and imaginatively, distinguishing the parties’ choice of arbitration as their preferred method of dispute resolution from more formal and rule-bound court proceedings.

CMS Cameron McKenna LLP
Mitre House, 160 Aldersgate Street
London EC1A 4DD, United Kingdom


Guy Pendell
(Head of the CMS Dispute Resolution Practice Area Group)
T +44 20 73 67-2404
F +44 20 73 67-2000
E guy.pendell@cms-cmck.com


Rupert Choat
(Construction)
T +44 20 73 67-3573
F +44 20 73 67-2000
E rupert.choat@cms-cmck.com


Ben Holland
(Oil and Gas)
T +44 20 73 67-3682
F +44 20 73 67-2000
E ben.holland@cms-cmck.com


Stephen Netherway
(Insurance/Reinsurance)
T +44 20 73 67-3573
F +44 20 73 67-2000
E stephen.netherway@cms-cmck.com