UK arbitration in England and Wales, takes place according to the Arbitration Act 1996 ("Arbitration Act").The Arbitration Act provides a broad basis of arbitration, reflecting the influence of the UNCITRAL Model Law on International Commercial Arbitration.

Arbitration Act and UNCITRAL Model Law

The Arbitration Act is largely based on the UNCITRAL Model Law, which aims to standardise the rules governing international arbitration. However, the Arbitration Act comes with selected inclusions and modifications to adapt to the legal culture and practices of England and Wales. Thus, for example, the Arbitration Act maintains a more flexible approach to the procedural powers of courts and tribunals, leaving the parties with greater freedom but with available judicial backup when required.

Arbitration Agreements

The Arbitration Act requires an arbitration agreement to be in writing; this can be achieved by any type of correspondence, such as letters, emails, or even verbal agreements put down inwriting by a party or a third party. The flexibility of this definition means that arbitration agreements can come into being quite easily, and this occurs often in commercial relationships.

Another important feature of the Arbitration Act is that it recognises the separability of the arbitration agreement, meaning that even when the main contract is void, the arbitration agreement can be valid and enforceable.

Parties to an arbitration agreement can choose the law that will govern the agreement itself. However, in the absence of a choice, UK courts would otherwise apply the law of the seat of arbitration. The recent Arbitration Bill aims to bring clarity to the issue of what is the governing law of arbitration agreements; it suggests that unless otherwise stated, the law chosen by the parties to govern the main contract should not automatically affect the agreement to arbitrate.

Appointment of Arbitrators

The question of the number and appointment of arbitrators is a matter of agreement by the parties. The Arbitration Act offers flexibility to the parties as to whether they would want a sole arbitrator or a three-member tribunal, which largely follows the complexity of the dispute. If the parties fail to agree on the number of arbitrators, the Act defaults to a single arbitrator unless agreed otherwise.

The procedure for the appointment of the arbitrators is also specified by the parties, with many using the rules of well-established institutions such as the London Court of International Arbitration.

The Act sets out grounds on which an arbitrator can be challenged, such as bias or lack of qualifications, but these challenges must be made in accordance with the procedures set by the parties or the applicable institutional rules.

Arbitral Procedure

The Arbitration Act leaves procedural matters largely to the discretion of the tribunal, although it stipulates that the tribunal must ensure fairness and avoid unnecessary delays or expenses. The tribunal is entitled to decide upon the conduct of the proceedings, including the time and location of hearings, rules of evidence, and document production.

However, the powers of the tribunal are balanced by a general obligation to act fairly. If the parties have agreed to institutional rules, such as the LCIA or ICC rules, those rules may provide additional procedural guidance.

Court Support for Arbitration

The Arbitration Act limits the intervention of the courts in arbitration proceedings, entrenching the minimal judicial approach. Courts can facilitate the appointment of arbitrators, issue awards, and grant interim relief in special cases. This, therefore, reenforces the UK's policy of supporting arbitration while respecting its independence from the national court systems.

The Arbitration Bill proposes the expansion of judicial powers in certain circumstances, especially regarding enforcement of interim relief and the role of courts when a third-party is involved in arbitration.

Interim Measures and Relief

Under the Arbitration Act, arbitrators can make interim relief orders, such as an order for security for costs or preservation of property and evidence. The Arbitration Act provides that tribunals may make interim awards, although the scope of their powers depends upon the terms of the original arbitration agreement. Parties may sometimes exclude the possibility of interim measures within the terms of their agreement.

The courts may also intervene to provide interim relief, such as injunctions or orders to preserve assets. In this way, the dual system enables parties to obtain interim relief during the pendency of arbitration.

Enforcement of Arbitral Awards

Enforcement of the arbitral awards in the UK is governed by the New York Convention of 1958, to which the UK is a signatory. This means that an arbitral award can be enforced in the UK in the same way as a court judgment would be.

Awards made in foreign jurisdictions also can be recognised and enforced, subject to very limited exceptions. In practice, enforcement of an award in the UK is relatively straightforward. A party seeking enforcement of a foreign order can apply to the courts for an order recognising the award. The grounds for refusal to enforce are limited and challenges can only be made on narrow legal grounds such as issues of public policy or serious procedural irregularities.

Appeal and Challenge of Awards

The Arbitration Act restricts the basis upon which an arbitral award can be appealed or challenged.

The following bases upon which an award can be challenged:

·      lack of jurisdiction - section 67;

·      serious irregularity causing substantial in justice - section 68;

·      point of law - section 69, provided this right has not been waived by the parties.

These challenges represent a balance between the finality of arbitration and the need to correct clear legal or procedural errors. However, appeals on factual issues are generally not permitted.

The Arbitration Bill proposes some changes to the appeal procedure, especially challenges to jurisdiction, which should help to simplify the procedure and reduce the possibility of delaying tactics.

Conclusion

The Arbitration Act provides a sound statutory basis for arbitration in England and Wales, reflecting the essential principles of the UNCITRAL Model Law while incorporating elements that reflect the UK legal system. Its flexibility, together with the recent proposed reforms by the Arbitration Bill, makes the UK continue to be one of the leading jurisdictions in arbitration. With such a balanced approach to parties’ autonomy, court support, and judicial oversight, England and Wales continue to be a seat of choice for international arbitration.