Enhancing the Arbitration Act 1996
Introduction
The 1996 Arbitration Act ratified by Parliament encompassed the need to resuscitate the process of arbitration in the United Kingdom. A decree recommended by the DAC Report within the Arbitration Report facilitated the enactment of the Arbitration Bill. The Accord rescinded and substituted the Arbitration Act of 1908[1]. Alternately, the procedures bordering English arbitration facilitated and configured the 1908 Arbitration Act thus developing the desire to change the Act in order to encompass the rapid advancements within the doctrine of Arbitration in British legal context[2]. As such, an international model developed by the United Nations Commission on International Trade Law (UNCITRAL) provided the platform to augment the acts on arbitration[3]. The result was the 1996 Arbitration Act.
Coincidentally, the drafting account of the Arbitration Bill illustrates the intention of the Legislature to focus on a law that encompassed and compounded previous English arbitration legislation. Originally, the Act’s title read, “An Act to consolidate the Amendments the Arbitration Acts 1950, 1975 and 1979 and associated enactments”, however, it eventually changed to, “An Act to restate and improve the law relating to arbitration pursuant to an arbitration agreement; to make other provision relating to arbitration and arbitration awards; and for connected purposes”[4]. Regardless of the fact that national legislation avoids delineating arbitration, it is worth mentioning that the 1996 Arbitration Act favourably itemises various leading principles. Foremost, the Act illustrates that the objective of arbitration involves acquiring the just resolution of conflicts by an independent tribunal without redundant delay or expenditure[5].
Secondly, the Act aims ate ensuring that parties possess the liberty to agree on the methods of dispute resolution, subject to such safeguards, which are indeed necessary within the interest of the public[6]. Additionally, certain features familiar to the UNCITRAL Model Laws are palpable in the 1996 Arbitration Act. Particularly, the principles of Party Autonomy and Judicial Non-Intervention are central themes within the Act[7]. Conversely, the foremost principle of Procedural Fairness presents the conflict arising from the dispute between due process and convenience. These points are complex to connect in arbitral proceedings. Secondly, despite the fact that the parties’ concurrence is supreme, certain mandatory regulations per the requirement by public interest overlap the objective in order to ascertain the arbitration’s integrity[8]. As such, pointing out some of the controversial factors that encompass the 1996 Arbitration Act provides an opportunity to outline the key improvements to the Act.
Overview
English courts and tribunals continue to struggle with the various principles and doctrines within the 1996 Arbitration Act. The problems evident within the 1996 Arbitration Act arise from the provisions stipulated based on the principles that guide the rule of arbitral legislation. As such, the Arbitration Act comprises four parts. The first part within the Act is considerably substantive. It focuses on dealing with arbitrations conducted in agreement to an arbitration agreement[9]. Most common principles and delineations emerge under this section specifically regard the arbitration constitution itself. On a separate context, a few facets regarding the reforms have created difficulties within the practice of arbitration legislation.
Additionally, the difficulties arise within the practice of the 1996 Arbitration Act. For instance, one of the specific features of the Act that most English tribunals and courts struggle with is the Doctrine/Principle of Separability[10]. The objective of tainting the Principle of Separability is to justify a constricted approach to integration by reference and to restrict categorization of an original contract[11]. Consequently, in specific areas that require the implementation of the Separability Principle, English courts have yet to realise the complete significance of Article 7 of the Arbitration Act 1996. The article specifically creates a platform for the endurance of an arbitration agreement in which the original contract is inexistent[12].
Another issue encountered within the practice is cost security. Cost security presents a considerable problem. Due to stern criticism by English courts based on orders for security within global arbitration proceedings, the fact that a sole entity possesses its own core control and management outside the United Kingdom creates a restricted ground for awarding such assistance. This concurs with the force of international arbitration whereby entities are local. Regardless of the provisions based on anti-discrimination within the Act, English courts continue taking account of the location of one entity outside the United Kingdom in awarding security orders in the milieu of arbitration-related proceedings[13].
Early judgments within the 1996 Act articulated opposing opinions on whether the length to which the qualities of questions regarding the subsistence, capacity and legitimacy of arbitration agreements is transferred to an arbitral tribunal after the court is satisfied with the possibility of the occurrence of an arbitration agreement. Recently, the Court of Appeal surmised that courts should choose these questions throughout applications in the interest of circumventing jurisdictional problems at a later phase after the cost of finishing arbitration proceedings[14]. This officious approach does not respect the Principle of Party Autonomy. Additionally, express admittance to local courts throughout the initial phases of arbitration dispossesses English legislation of advantages to be achieved from dogma and practice expanded at the international echelon where skilled arbitrators have invented elucidations to jurisdictional problems that differentiate significantly in temperament from those stumbled upon by State courts[15].
Regardless of the comprehensiveness and articulation of the 1996 Arbitration Act in arbitration proceedings, it is evident that the arbitration legislation possesses issues and problems that produce challenges to the arbitration’s jurisdiction. The issues arising from practice of the Arbitration Act 1996 evolve from the fundamental sections of the Act that define the performance of arbitration proceedings as well as outline the jurisdiction of the English courts in addressing arbitration cases and granting arbitral awards[16]. As such, it is important to note the various exclusions that the 1996 Arbitration Act possesses that do not cater for the arbitral needs of particular groups requiring intervention of dispute resolution[17].
Thus, the issues based on exclusions within the 1996 Arbitration Act include privacy and confidentiality issues, transitional issues, consumer issues and other issues that require consideration. In addition, the issues considered result from the themes of the 1996 Arbitration Act, which include Party Autonomy, Judicial Intervention, and Constancy within different jurisdictions and augmented arbitral tribunal powers.
Issues within the 1996 Arbitration Act
Privacy and Confidentiality Issues
One of the model facets of arbitration involves the privacy of proceedings and the confidentiality of the substance, which grants the benefit of security against unsolicited enquiry and exposure for the disputant. Actually, privacy and confidentiality employ different connotations in their application within arbitration. The former concerns the privilege of individuals other than the entities, arbitrators and their obligatory agents and witnesses to be present at the arbitration hearing and to be acquainted with the arbitration[18]. This means that the arbitration proceedings are restricted to inclusion or observation by a third party[19]. On the other hand, the latter concerns with the obligation not to disclose or hand out pertinent information related to the evidence, transcripts, document, award or arbitration proceeding content by arbitrators and authorised parties[20].
The issue of privacy and confidentiality in arbitration has been existent from the late 1980s. Regardless of the principle’s absence within the written context of the 1996 Arbitration Act, an assumption based on the private temperament of arbitral proceedings facilitated the observance of the principle. Additionally, the temperament of the arbitral proceedings compelled its participants to sustain the confidentiality of the respective proceedings without consideration of the grounding of confidentiality within legal privilege or obligation[21]. The rationale behind the active discussion of the issue after the 1980s despite its long existence is insufficient. Regardless, the legislative rule of arbitration proceedings attributed to the discussion of the issue. Additionally, the English courts continued retaining a considerable degree of control over arbitral proceedings even after 1979[22].
As such, it is important to realise the address of the confidentiality issue within the 1996 Arbitration Act. Despite the fact that confidentiality of proceedings exists as one of the attractive facets of the Act, it is noteworthy that the existing exceptions to regulations encompassing confidentiality are drastically narrow and possess the capability to produce detrimental difficulties[23]. The Arbitration Act 1996 eliminates most of the restrictions intrinsic within confidentiality while simultaneously retaining the tenet of confidentiality. Additionally, the 1996 Arbitration Act does not delineate revelation of confidential information. This deprivation of description makes it ambiguous to parties regarding the documents subject to the restriction against divulging information within the Act[24].
The existing restriction on divulging confidential information associated with arbitral awards and arbitral proceedings and two of the limited exceptions do not adhere to the overall theme of Party Autonomy, which is the basis for the 1996 Arbitration Act. The foremost exception involves agreement between parties. The second exception involves permitting divulging of confidential information to an expert or other advisor of any entity, or, if the publication, message or exposé is contemplated by the 1996 Arbitration Act[25]. The exceptions based on privacy and confidentiality are extremely narrow and prohibit disclosures to interested parties such as advisors or experts, disclosures obliged by legislation or by a proficient regulatory entity but not considered by the 1996 Arbitration Act and disclosures for other justifiable reasons[26].
Additionally, the issue of confidentiality within the 1996 Arbitration Act concerns the tenets underlying open justice[27]. In connection to confidentiality, the issue concerns the degree to which, when arbitral dealings are well thought-out by a court, the standards of open justice should triumph over the private process of conflict resolution selected by the respective and involved parties[28]. It is notable that a third party that becomes conscious of and consequently divulges matters associated with arbitration can do so, in the event that common law based on confidentiality obligations applies. Nevertheless, the third party is not liable even if the obligation of confidentiality arises from an uninvolved contract[29].
Transitional Issues
The Arbitration Act 1996 raises transitional issues in practice of the legislation in arbitration. The issues encompassing transitional problems comprise the issue of appointment of an arbitrator and an umpire and the issue based on the provision of transition[30]. Section 19 of the Arbitration Act 1996 provides, that in the case of an arbitration agreement that provides for the appointment of two arbitrators, before the start of the Act and arbitral dealings proceeding after the Act, the two arbitrators possess the mandate to select an umpire if there is absence of the expression of an opposing intention. Based on the regulations governing the appointment, section 19 raises issues that arise in difficulties in exercising the article in the event of the selection of arbitrators[31].
It is evident that the selection of an arbitrator or an affiliate of an arbitral tribunal represents an essential constituent within of the arbitral procedure. As such, it is desirable that the procedure exercise clarity and predictability, especially in the event that parties disagree on a single arbitrator or upon a group of arbitrators[32]. Thus, the provision within Section 19 raises questions based on interpretation of the phrase, “provides for the appointment of two arbitrators”. One of these questions includes whether inclusion of agreements that offer selection of two arbitrators and an umpire is evident. Aside from Section 19’s provision, various statues within the 1996 Arbitration Act assert that in the event that parties differ on arbitrating a dispute, both possess the opportunity to select an arbitrator. In addition, the arbitrators are required to select an umpire[33].
In summary, the difficulty is that the Arbitration Act 1996 does not include a provision for umpires other than the restricted circumstances highlighted in Section 19. Additionally, another difficulty arises within the issues of transition. The issue illustrates the appropriateness or inappropriateness of the transitional provision in any circumstance[34]. Most experts of the Arbitration Act have asserted that for some categories of the contract, the transition interlude could stay for decades. Thus, in such situations, the 1908 Arbitration Act could continue operating[35].
Consumer Issues
The issues raised on the arbitration disputes involving consumer with respect to the 1996 Arbitration Act concern application of the principle of party autonomy. The Arbitration Act 1996 identifies that consumers face disadvantages during the events of formalizing contracts within business transactions[36]. It is noteworthy that arbitration law experts had already determined the effect of the 1996 Arbitration Act on consumers in formalizing contracts. It was notable before passage of the Act that clauses of arbitration could function oppressively against consumers, especially if the standardised contracts incorporated the consumers in the event of officiating business transactions. However, it is lawful to assert that consumers should choose inclusion in facing the consequences of the clauses of arbitration[37].
It is acknowledgeable that arbitration possesses a negative impact on disadvantaging consumers. Arbitration possesses the latency to inconvenience consumers in disagreements with commercial institutions. This is because commercial institutions are likely to possess organizational advantages in determining the selection of arbitrators and the regulations encircling the management of arbitrations[38]. Since the costs of the arbitrators require payment from both parties, arbitration could prove too expensive for consumers in connection to the worth of the subject in dispute[39].
Additionally, the Arbitration Act 1996 lacks a provision on the availability of legal aid for consumers[40]. Furthermore, despite privacy being among the advantages linked to arbitration, for a consumer in a disagreement with an organization, the exposure of litigation could be a distinct advantage. This is because commercial organizations will normally be sensitive to unsympathetic effects on their public image, which plays a considerable role in determining their success or failure inn carrying out business t6rhsactions with other current and potential consumers[41].
Consequently, another difficulty arising from practising the clauses of Consumer Arbitration in the 1996 Arbitration Act is on the signing of the arbitration agreement at the period of the underlying contract. The Act specifies that it is necessary for the consumer to sign the arbitration agreement at the period of getting into the original contract. As such, the Act specifies that the period of signing the arbitration agreement should not be after the creation of a dispute[42]. Another difficulty evident in practising consumer arbitration within the 1996 Arbitration Act involves lack of a provision for clauses of arbitration that offer techniques to establish issues. On top of offering that disagreements should set out for arbitration, rather than become litigated in English courts, clauses on arbitration should offer techniques to verify unjusticiable issues such as challenged rent reviews[43].
However, the Arbitration Act lacks the mechanisms to enforce this assertion. This is because the issue lacks referral to arbitration unless the official requirements of the Consumer Arbitration clauses are complied. The outcome of this is that the contract comprises no mechanism to verify the specific issue under contention. The clauses based on consumer arbitration also apply in instances where the agreements on arbitration exuded enforcement before ratifying the 1996 Arbitration Act. As such, parties that entered into arbitration agreements with consumers before ratification of the Arbitration Act may discover that it is difficult if the consumer decides to decline his participation within the respective arbitration. This results in failing of the whole agreement based on lack of an operating verifying mechanism. In addition, the same problem is indicated where parties entered into cross-lease agreements before ratification of the 1996 Arbitration Act in which no consumer agreement was in signature.
Other Issues for Consideration
Various issues based on practicing the 1996 Arbitration Act possess difficulty in practice within different areas within the Act. These issues involve the processes based on default selection of arbitrators, requests for rectification and interpretation of arbitral awards, the procedures for acquiring witness subpoenas and the judicial immunity for appointers of arbitrators.
On default selection of arbitrators, Article 11 of the First Schedule provides that parties possess the freedom to concur on a process for selection of an arbitrator. Additionally, the Article also adds that a party possesses the power to request for assistance in arbitrator appointments from the High Court[44]. The Second Schedule provides a default process, which if the parties fail to disagree on, will be the process agreed under Article 11[45]. Regardless of the provisions within the Articles, difficulties in practice arise where both parties are unable to concur to agree on a sole arbitrator. This is a default under the Arbitration Act 1996. Therefore, the entity whose recommended arbitrator was redundant can immediately send a default notice to the other entity, which will lead to appointment of the recommended arbitrator. In summary, regardless of the situation in which one party fails to agree to the other party’s choice of arbitrator, for justifiable and rational reasons, the party will be compelled to accept that choice[46].
On requests for rectification and interpretation of arbitral awards, the Act provides that a party, after notifying the other party, possesses the capability to request the arbitral tribunal to rectify the award of errors of computation, clerical or other problems within the award within a specified period of 30 days. Additionally, the Act provides that a party, after notifying the other party, possesses the ability to request the arbitral tribunal to provide an interpretation of a precise point or section of the award. As such, if the arbitral tribunal deems the requests viable, it will make the correction or provide the interpretation in the specified period provided by the Act after receiving the request. Simply, the Act provides that only one party possesses the power to request the arbitrator to attend to the subject at hand. However, both parties must agree in order in the event of requesting for a correction or interpretation. The difficulty is whether it should be satisfactory for one party to formulate such an appeal.
In summary, there lies a concern that if both parties disagree to the procedure of interpretation, then one party could utilise the process to elongate or resurrect a finished dispute. However, if the arbitral tribunal deems the request justifiable within the short time allocated for making the request, then the concern resolves to a particular extent. Otherwise, if a significant question, which possesses the ability of clarification by the arbitral tribunal, arises, then the arbitral tribunal should provide interpretation, which it supports in order to encourage finality.
On acquiring witness subpoenas, the Act provides that the party or the arbitral tribunal, with approval and assistance from the court, possesses the power to obtain evidence. Additionally, in order to support acquiring witness subpoenas, the Act provides that courts construct orders of subpoenas or issue a witness summons in order to compel a witness’ attendance before an arbitral tribunal for the objective of providing evidence or valid documents. Additionally, the courts, in the event of assistance in obtaining witness subpoenas, possess the power to order a witness to submit to examination or affirmation before a tribunal, or before a court officer, or any individual for the use of the tribunal. As such, the difficulty arises in the processes used by courts in obtaining subpoenas from witnesses in arbitral proceedings within arbitral tribunals.
The difficulty arises because of the disadvantages of carrying out the procedures specified by the 1996 Arbitration Act in acquiring witness subpoenas for use in arbitral proceedings. This is because the procedures require a pair of applications. The first application results from an arbitrator from the party. The second application involves application from the arbitrator to the court. In addition, it is unclear whether the tribunal should transact ex parte with an application for consent or whether the request should be on information to other parties. This deprivation of clarity is objectionable. In fact, it was achievable to acquire subpoenas from the courts upon litigating of a praecipe[47].
On judicial immunity of arbitration appointers, arbitrators possess judicial immunity in the event that they operate as arbitrators. An issue raised based on judicial immunity of arbitrators revolves on whether comparable immunity should be provided in support of those required to select arbitrators under the specified arbitration agreement. Evidence of public interest within professional entities involves appointment of arbitrators qualified to perform this specific task. As such, the issue involves the susceptibility for inclusion of any scope for argument based on payment of damages by the involved entities if a party experiences dissatisfaction with the outcome of the respective arbitration. This may also result from frustration based on the performance of the specified arbitrator.
Proposed Interventions towards Issues
The proposed solutions towards the issues experienced in practicing the 1996 Arbitration Act possess the sole objective of improving the Arbitration Act as an effective and efficient method of resolving disputes within arbitration. Additionally, the proposed interventions reflect the tenets underlying the Arbitration Act, which include Party Autonomy, Judicial Intervention, and Constancy within different jurisdictions and augmented arbitral tribunal powers.
One of the issues raised in practicing the Arbitration Act involves consumer arbitration. Irrespective of the fact that the 1996 Arbitration Act recognises the problems faced by consumers in formalizing contracts during business transactions, the Act has not provided an effective platform to protect consumers against difficulties in exercising arbitration rights against commercial organizations. As such, a proposed solution based on consumer arbitration involves enhancing the degree of protection provided to consumers entering consumer arbitration contracts with commercial organizations[48]. Because of the proposal, arbitration agreements will cease requiring the consumer’s signature at the similar time of entering into the contract with a commercial organization. As such, the proposed solution involves ensuring that the arbitration agreement between the consumer and the commercial organization takes effect only if the arbitration is specifically endorsed as a method of dispute resolution after the dispute rises. Additionally, the proposal will also restrict the delineation of consumer to persons.
Additionally, another solution based on consumer protection will take the form of an amendment. In this case, the amendment will focus on amending the legislative clauses based on arbitral tribunals. The solution will focus primarily on the issue of jurisdiction of arbitral tribunals. This is because jurisdiction restricts the consumer from exercising his right of arbitration due to the tribunal’s restriction resulting from jurisdiction[49]. As such, the proposed solution involves eliminating the jurisdiction of tribunals in circumstances where a consumer and a commercial organization concur, after the commencement of a dispute, that arbitration is the only form of conflict resolution. This solution coincides with offering augmented protection to agreements of consumer arbitration.
Another issue raised in practising the 1996 Arbitration Act involves privacy and confidentiality of information based on arbitral proceedings. The regulations revolving around confidentiality are shallow and construe undesirable difficulties in practising the Arbitration Act. This is because the regulations restrict the norm of privacy and confidentiality in arbitral proceedings[50]. As such, one of the proposed solutions based on improving confidentiality within the Act involves eliminating the numerous restrictions to confidentiality and at the same time retaining the tenet of confidentiality. Thus, the solution involves creation of a default stipulation within the 1996 Arbitration Act. The provision will provide that confidentiality will be a prerequisite in the information and certification associated with the arbitral procedures. Thus, the provision, as a solution, will endorse the privacy of performing arbitral hearings and proceedings.
Moreover, the exceptions to confidentiality based on the provision will include evidence of an order based on compelling disclosure of confidential information through a court directive, subpoena or where the disclosure is performed in front of an expert or an advisor to both parties. Additionally, the provision will incorporate a general exception. This exception will permit arbitrating entities to submit an application to the arbitral tribunal for an order for authorization to divulge confidential information. In the process of application, the provision will provide an autonomous privilege to appeal to the courts in the event of a declined application[51].
Consequently, the issue of appointment of arbitrators presents difficulties while practising the 1996 Arbitration Act. This is because appointing arbitrators determines the efficiency of applying arbitration in dispute resolution. Additionally, as aforementioned, the process of dispute resolution through arbitration requires clarity and transparency, especially in the event that both parties within the dispute disagree on an arbitrator or a jury of arbitrators. As such, one of the solutions proposed based on mitigating appointment of arbitrators involves creation of a default procedure. The procedure involves mitigating the element of disagreement especially in choosing arbitrators. Thus, the solution will provide that for entities to concur in the choice of arbitrator/s, within the arbitration agreement, a default procedure will facilitate the agreement if both parties fail to agree on the selection of an arbitral tribunal.
Conclusion
In conclusion, improvement of the1996 Arbitration Act requires careful scrutiny of the specific elements that create difficulties in practice of the Act in arbitration proceedings. Consequently, improvement of the Act requires the involvement and incorporation of various principles within the Act such as the Principle of Separability and the Competence-competence Principle. These principles bear significant consequences and advantages that determine autonomy and performance of the Act in exercising arbitration among consumers, determining the degree of disclosure regarding the information related to the arbitration proceedings and solving the problem of the appointment of arbitrators based on disagreement between parties.
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