Debate contribution: Arbitration Bill: Legislative Consent Motion

Debate contribution by Mrs Naomi Long on 9 December 2024.

MLA

Mrs Naomi Long

Party at the time

Alliance Party

Date

9 December 2024

Type

Debate contribution (made as a minister)

Business

Executive Committee Business

Heading

Arbitration Bill: Legislative Consent Motion

Assembly identifier

Official Report component 4698723

Read the official Assembly record

Text

I beg to move

I am grateful for the opportunity to speak about the Arbitration Bill, which is progressing through Parliament. Arbitration is a form of dispute resolution that offers an alternative to court. Parties can agree to appoint a third party or to resolve a dispute between themselves privately and issue an award.

Arbitration is used for the resolution of domestic and international disputes in a wide range of fields, including construction, infrastructure, shipping and international commercial contracts. The sector is estimated to be worth at least £2·5 billion to the UK economy each year.

The Bill would amend the Arbitration Act 1996, which governs arbitration in England, Wales and Northern Ireland. The 1996 Act predates devolution. However, arbitration is now a devolved matter within the legislative competence of the Assembly. On 7 November, the Executive agreed to a legislative consent motion (LCM) being progressed. My officials provided oral and written briefings on the Bill to the Justice Committee, and it agreed, through its report to the Assembly, which was published on 21 November, to support the motion. I thank Executive colleagues and Justice Committee members for their support and timely consideration of the matter. I now seek the Assembly's legislative consent for the Bill's provisions to be extended to Northern Ireland. Before I outline the Bill's provisions, it may be helpful to Members if I briefly provide some background. In 2021, the Ministry of Justice asked the Law Commission for England and Wales to review the 1996 Act to ensure that it remained fit for purpose and continued to promote the UK's position as an international arbitration leader. The Law Commission for England and Wales began its review at the start of 2022. It carried out two public consultations and engaged extensively with experts and practitioners in the sector, including key stakeholders in this jurisdiction. A Northern Ireland perspective was provided by Mr Justice Scoffield in his role as Chair of the Northern Ireland Law Commission. The final report of the Law Commission for England and Wales, together with a draft Bill, was published in September 2023. Reflecting the view of stakeholders and practitioners that the 1996 Act generally works well, the Law Commission for England and Wales concluded that substantial reform is not required but recommended a number of targeted reforms to update the legislative framework and provide greater clarity. The then Government agreed to implement all the commission's recommendations and an Arbitration Bill was introduced in Parliament in November 2023. However, it fell when the general election was called. The new Government introduced the current Bill in the House of Lords in July 2024 and it is awaiting its Second Reading in the House of Commons. With the agreement of the Ministry of Justice, the time for obtaining legislative consent has been extended to the final amending stage in that House. I now turn to the main reforms that are proposed. The Bill introduces a new statutory rule on the law governing individual arbitration agreements, providing that that will be the law expressly chosen by the parties and otherwise will be the law of the seat: that is, where the arbitration is taking place. There is also one change to the previous Bill to clarify that that new rule does not apply to arbitration agreements that are derived from standing office to arbitrate, which may be contained in treaties or foreign investment legislation. Such arbitration agreements will therefore continue to be governed by international law and foreign domestic law. The Bill will codify the common law duty for arbitrators to disclose circumstances that might give rise to justifiable doubts as to their impartiality. It will also strengthen arbitrator immunity against liability for costs arising from resignation or applications to court for removal. That will help to ensure that arbitrators can make robust and impartial decisions. In relation to challenges to an arbitral tribunal's jurisdiction, the Bill clarifies that, where the tribunal has ruled on an issue, a further challenge to a court can only be brought after the tribunal has made its final award. The Bill also clarifies that, even where it has been determined that a tribunal does not have jurisdiction, it can, nevertheless, award the cost of the arbitration proceedings up until that point. The Bill introduces a new express power for an arbitrator to dispose summarily of an issue that has no real prospect of success. That replicates the powers of summary disposal that are available to courts in litigation. The Bill enhances the effectiveness of emergency arbitration to deal with urgent matters, such as preservation of evidence, by clarifying that any orders made can be enforced by the court. The Bill also enhances the powers of courts in support of arbitration proceedings, clarifying that the court may make orders against third parties; for example, in relation to the taking of witness evidence and by providing for greater consistency in the remedies available where a tribunal award is challenged by one of the parties in court. The final targeted reform proposes a revision of the framework for applications to the court on the ground that the arbitral tribunal lacked jurisdiction. That will enable rules of court to provide that such applications should involve no new evidence or new arguments. That is to avoid such challenges becoming a full rehearing in court, thereby preventing further delay and expense. In addition, the Bill makes some technical amendments, including clarifying that parties must exhaust arbitral appeal or review processes before bringing matters to court and that a party may appeal a decision of the court to stay legal proceedings in favour of arbitration and streamlining the process of applying to the court for certain preliminary rulings on jurisdiction and points of law. That concludes my overview of the Bill. As Minister of Justice, it is, of course, my preference to legislate for devolved matters through the Assembly. However, Members will appreciate that the Arbitration Bill is relatively technical in nature, and, hopefully, they will agree that, in this instance, the extension of the Westminster Bill to Northern Ireland is the most efficient and expedient way to legislate for those matters. The Bill will simply modernise and clarify an existing legislative framework that already extends to Northern Ireland. No issues specific to this jurisdiction that would require a different approach from that in England and Wales have been identified. It would be disadvantageous to parties and practitioners here were the changes to be made by the Bill to the 1996 Act not to apply to Northern Ireland at the earliest opportunity. I hope that the legislative consent motion will have the support of the House.

Thank you, Mr Deputy Speaker. I thank Members for dealing with the motion so expeditiously, and I thank the Chair and members of the Committee for giving the Bill and the legislative consent motion their support. The Arbitration Act 1996 is over 25 years old. The proposals that arise from the review carried out by the Law Commission of England and Wales that are being taken forward in this Bill will modernise the legislative framework to ensure that it remains fit for purpose and that the UK remains an attractive seat for domestic and international arbitration. There is no appetite for divergence from England and Wales amongst practitioners, and I want to ensure that businesses here, especially those that operate in both jurisdictions, will also be able to avail themselves of a legislative framework for arbitration that is modern, fair and efficient. I therefore commend the motion to the House.

1,258 words. Text as published by the Northern Ireland Assembly.

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