Keith Mack
Arbitration is a method of resolving disputes as an alternative to court. It involves an impartial arbitrator or panel of arbitrators who are appointed by the disputing parties. The arbitrator considers arguments from both sides at a hearing and makes a binding decision. Arbitration can be ad hoc, where the parties determine the rules, or administered, where the arbitration is conducted by an organisation such as the International Chamber of Commerce. In the UK, arbitration is regulated by the Arbitration Act 1996, which is currently being reviewed to ensure it remains fit for purpose and continues to promote the UK as a leading jurisdiction for international arbitration.
| Characteristics | Values |
|---|---|
| Regulating body | Arbitration Act 1996 |
| Regulated regions | England, Wales, and Northern Ireland |
| Purpose | Efficient dispute resolution, attracting international legal business, and promoting UK economic growth |
| Type of disputes | Individual disputes, collective disputes |
| Arbitrator | Neutral and impartial |
| Arbitrator appointment | By Acas |
| Hearing | Remote, half-day |
| Decision | Binding, in writing |
| Appeal | Available from an application to stay legal proceedings |
| Jurisdiction | Simplified preliminary applications |
| Time limits | Clarified time limits for challenging awards |
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What You'll Learn
Arbitration law in the UK
Arbitration in the UK is a non-court method of resolving disputes, where a neutral and impartial third party, the arbitrator, is appointed to make a binding decision. The process allows for greater flexibility and privacy than court trials.
The Arbitration Act 1996 provides the framework for arbitration in England, Wales, and Northern Ireland. The Act has been in force for over 25 years, and the UK government has recently sought to review it to ensure it remains fit for purpose and continues to promote the UK as a leading jurisdiction for arbitration. The review found that the Act works well and does not require root-and-branch reform. However, some recommendations for major and minor initiatives were made, including:
- Codification of an arbitrator's duty of disclosure
- Strengthening arbitrator immunity around resignation and applications for removal
- Clarification of court powers in support of arbitral proceedings and emergency arbitrators
- Making appeals available from applications to stay legal proceedings
- Simplifying preliminary applications to court on jurisdiction and points of law
- Clarifying time limits for challenging awards
The Chartered Institute of Arbitrators, headquartered in London, has over 17,000 members across 149 countries, and a 2021 survey showed London to be the world's most popular seat for arbitration. The UK government's review of the Arbitration Act 1996 aims to modernise the legislation to continue attracting international legal business and promote UK economic growth.
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The role of an arbitrator
Arbitration is a method of resolving disputes outside of court, where an arbitrator (or panel of arbitrators) is appointed by the parties involved to make a binding decision. The arbitrator is a neutral and impartial third party who considers arguments and evidence presented by both sides of the dispute before making a decision.
In the UK, arbitration is facilitated by organisations such as the Chartered Institute of Arbitrators, Acas, and Citizens Advice. These organisations may appoint arbitrators and help facilitate the arbitration process. Before the arbitration hearing, the arbitrator will receive written statements and supporting documents from both sides. During the hearing, the arbitrator will listen to both parties present their cases and may ask questions or seek clarifications. The arbitrator may choose to have multiple meetings with the involved parties to gather all the necessary information.
After the hearing, the arbitrator will deliberate and make a decision, known as an award. This decision is legally binding, and there are limited grounds for challenging it. The arbitrator's decision will be communicated to both parties in writing, usually within 45 days of closing the proceedings. The arbitrator ensures a fair and impartial resolution to the dispute, providing an alternative to traditional court proceedings.
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Types of arbitration
Arbitration is a non-court method of resolving disputes, where a neutral and impartial third-party arbitrator or panel of arbitrators is appointed to help both sides reach an agreement and make a binding decision. The Arbitration Act 1996 provides a framework for arbitration in England, Wales, and Northern Ireland.
There are two main types of arbitration: ad hoc and administered. Ad hoc arbitration allows the involved parties to determine the rules they consider appropriate for the arbitration. On the other hand, administered arbitration is conducted under the supervision of an arbitral organisation, such as the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), or the London Court of International Arbitration (LCIA).
Additionally, arbitration can be classified into individual and collective arbitration. Individual arbitration is often used for disputes between an employer and an employee, such as disagreements about flexible working or unfair dismissal. On the other hand, collective arbitration is used for disputes between an employer and a group of employees, and the decision is not legally binding but binding in honour.
Before the arbitration hearing, both sides are required to submit written statements of their case, along with supporting documents, to the arbitrator and each other. The arbitrator will only consider the evidence presented before the hearing. The hearing typically lasts for about half a day, after which the arbitrator will deliver a written decision called an "award".
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The Arbitration Act 1996
Arbitration is a non-court method of resolving disputes, where an arbitrator or panel of arbitrators is appointed by the disputing parties to make a binding decision. The Arbitration Act 1996 (AA 1996) is an act of the Parliament of the United Kingdom that provides a framework for arbitration proceedings within the jurisdiction of England, Wales, and Northern Ireland. The Act sets out the duties and powers of the arbitral tribunal, the procedure, and the supportive role of the courts. It also outlines the structure of the legislation and examines key provisions, including the arbitration agreement, the commencement of proceedings, and the duties and powers of the arbitral tribunal.
The Act defines serious irregularity in terms of the court's consideration of whether there has been or will be "substantial injustice" to the applicant. This includes the tribunal exceeding its powers, failure to conduct proceedings in accordance with the agreed-upon procedure, failure to deal with all the issues, uncertainty or ambiguity regarding the award, fraud, non-compliance with requirements, and more.
Under the Act, there are two primary ways to challenge an arbitration award: challenging the substantive jurisdiction under Section 67, or seeking to set aside the award for serious irregularity under Section 68. Any challenge must be brought within 28 days of the arbitrator's decision, although extensions are permitted in exceptional circumstances. Section 69 permits appeals on points of law to a court unless excluded by agreement between the parties.
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Arbitration hearings
The Arbitration Act 1996 provides the framework for arbitration in England, Wales, and Northern Ireland. It has been recognised that this Act may need to be modernised to keep up with other jurisdictions and to continue attracting international legal business. The UK government is currently reviewing the Act and has proposed an Arbitration Bill to implement recommended reforms.
In preparation for the hearing, both sides are required to submit written statements of their case, along with supporting documents, to the arbitrator and each other. The arbitrator will only consider the evidence presented before the hearing and will not take into account any new information that arises during the hearing itself. Hearings are typically held remotely and last for about half a day.
After the hearing, the arbitrator will communicate their decision in writing to both parties simultaneously. This decision is final and cannot be changed at a later date, unless specific grounds for challenge are met. Arbitration hearings offer a time and cost-efficient method of dispute resolution, allowing parties to resolve their legal issues on their own terms while still achieving a binding outcome.
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Frequently asked questions
Arbitration is a non-court method of resolving disputes with the help of a neutral and impartial third party, known as an arbitrator.
An arbitrator is responsible for considering the arguments from both sides of a dispute and making a decision based on the evidence presented. This decision is called an 'award'.
In the case of individual disputes, the arbitrator's decision is legally binding. However, for collective disputes, the decision is not legally binding but binding in honour, meaning neither side can go to court to change it later.
Both sides submit written statements of their case and supporting documents to the arbitrator before the hearing. The hearing is then held remotely, typically lasting half a day. After the hearing, the arbitrator makes a decision in writing and sends it to both parties.
The Arbitration Act 1996 is a legislation that provides a framework for arbitration in England, Wales, and Northern Ireland. It outlines the rules and procedures for conducting arbitration and ensures consistency and effectiveness in handling disputes.
