Developed following a 2022 Law Commission review, the Arbitration Bill is set to progress under the new Government, as announced in July’s King’s Speech.
The Bill aims to “modernise” the Arbitration Act 1996 in line with other jurisdictions that have recently updated their legislation, including Sweden, Dubai and Singapore.
What might this mean for construction? Our experts are taking a look.
How is arbitration currently used?
Some construction disputes will proceed straight to litigation, but many construction contracts will include a clause requiring arbitration as the primary form of dispute resolution.
This allows both parties to give their evidence and perspective, but removes the onus of reaching a mutual agreement and places in the hands of an impartial expert – making it a great alternative to both mediation and litigation.
This decision is legally binding and can be enforced through the Courts if necessary.
What changes could be introduced?
It’s likely that the Government will be keen to introduce legislation outlined in the Bill. Notes from the official briefing on the Bill names London as one of the two most popular sites for international arbitration, alongside Singapore – with arbitration bringing around £2.5 billion to the UK economy.
The Bill therefore seeks to introduce changes which will bring the UK’s arbitration system in line with international standards of excellence, including:
- Allowing arbitrators to make awards on a summary basis where claims have little chance of success
- Providing the opportunity for Courts to make orders for emergency arbitrators to enforce their judgements
- Codifying a duty of arbitrators to disclose potential conflicts of interest
- Strengthening arbitrator immunity against liability for resignations and applications for removal
- Revising the framework for challenges against the jurisdiction of an arbitration tribunal.
The impact on construction
The prevalence of arbitration in the construction sector likely means that the Bill will have a substantial impact on the industry in comparison to other sectors.
This push by the Government towards arbitration may mean that an even greater proportion of construction disputes are referred to arbitration, bringing only the most complex of cases to litigation.
Additionally, strengthened protections for arbitrators and amends to the framework for challenging awards may mean that arbitration becomes an even more straightforward and decisive way to resolve disputes.
It seems that arbitration is increasingly the future of construction disputes, so we’re likely to see arbitration clauses continue as a mainstay of construction contracts.
Need advice on arbitration and potential upcoming changes? Contact our specialist Construction Law team to discuss your needs.