Arbitration Bill Back: UK’s Labour Party Government Confirms In King’s Speech

Arbitration Bill Back: UK’s Labour Party Government Confirms In King’s Speech

The move was welcomed by legal practitioners, but they regretted the inability to resurrect the Litigation Funding Bill

The new Labour Party government in the United Kingdom has confirmed the reviving of the Arbitration Bill that was shelved after the Parliament was dissolved in the run-up to the general elections held early this month.

A background briefing attached to the King’s speech, setting out the UK government’s legislative program, stated that the bill would be back. However, the fate of the Litigation Funding Bill, which was shelved when former Prime Minister Rishi Sunak called the elections in May, has been sealed.

The legal practitioners welcomed the return of the Arbitration Bill.

Bar Council chair Sam Townend KC expressed that the bill would help to ensure that London maintained “a deserved reputation as the foremost centre for international arbitration.”

While explaining the arbitration’s contribution to the income from exports, he stated, “The hard currency and soft power value to the country of the legal services sector, the most liberal and open in the world, and already constituting 10 percent of the global legal economy, should not be understated.”

The Law Commission, which drafted the bill, said that the arbitration boosted the UK’s invisible earnings to £2.5bn, offering the new government that is keen to encourage growth through dispute resolution.

Meanwhile, the Law Society of England and Wales president Nick Emmerson expressed, “To ensure we continue to have a modern arbitration legislative framework is an important component in maintaining England and Wales as the jurisdiction of choice for international dispute resolution.”

Matthew Saunders, the head of international arbitration at Ashurst, said the news was ‘very encouraging’.

Craig Tevendale, the London head of international arbitration at Herbert Smith Freehills welcomed the government’s clarification on the new default rule on the law applicable to arbitration agreements that would not apply to investor-state agreements.

Emphasizing the same, Markus Burgstaller of Hogan Lovells explained, “The bill would maintain the position that the law applicable to arbitration agreements that do not arise from investor-state contracts will be the law of the seat. This clarifies the position under English law since the Supreme Court’s judgment in the Enka v Chubb case.:

He added, “Underlining this policy is the consideration that where parties choose to seat their arbitration in England and Wales, it is English law that they want to govern critical questions such as arbitrability and scope. The policy aims to increase certainty and promote England and Wales further as an arbitration-friendly jurisdiction.”

Tomas Vail, the name Partner of Vail Dispute Resolution mentioned that the proposed change would create greater alignment between English and French arbitration regimes on the law governing the arbitration agreement.

Similarly, Jonathan Wood, the chair of international arbitration at RPC and president of the Chartered Institute of Arbitration, added, “Much work has gone into this by Professor Sarah Greene and her team at the Law Commission, and CIArb was pleased to have been involved in the consultation process, having given evidence to the House of Lords committee to help it on its way.”

On the decision of not including the Litigation Funding Bill in the list of 39 bills the government would pass, Michael Roberts, a Partner at Hogan Lovells said it was ‘a missed opportunity’ for businesses following the recent Supreme Court ruling in the PACCAR case.

The judgment held that certain litigation funding agreements constituted damages-based agreements and required compliance with secondary legislation. It was met with concern from claimants, litigation funders and corporates.

While former Lord Chancellor Alex Chalk KC pledged to rectify the situation, Roberts remarked, “The uncertainty the judgment creates continues, and the bill remains an unfortunate casualty of the early elections.”