A provision in the Arbitration Act 1996 that allows the courts to rule on points of law during arbitration proceedings is under-used, Sir Rupert Jackson has suggested.
He also predicted that Brexit would have no “significant adverse effect” on arbitration, but cautioned arbitrators not to be complacent and avoid “the temptation of taking on too much work”, to the detriment of the UK’s reputation as an arbitration centre.
Speaking at a joint British Institute of International and Comparative Law and Simmons & Simmons conference on the Act, the former Court of Appeal judge said he was only aware of three cases invoking the right under section 45 to seek judicial determination of points of law that arise during an arbitration.
“It may be that currently section 45 is under-used. Depending on the state of the Technology and Construction Court (TCC) list and Commercial Court list, there could be great advantage in seeking a judicial decision on one or more legal issues, while the arbitration proceeds on other issues.”
Sir Rupert said there may also be a cost saving, as judges were cheaper than arbitrators.
Further, he continued, greater use of section 45 would address the concern expressed by the likes of the former Lord Chief Justice, Lord Thomas , that arbitration was inhibiting the development of commercial law, because so many decisions on important questions of law and principle are cloaked by confidentiality.
On Brexit, Sir Rupert – who now practises from 4 New Square as an arbitrator, adjudicator and mediator – pointed out that “no-one brings an arbitration in London because the UK is a member of the EU”.
He said London’s attractions were the quality of its Commercial Court and TCC judges, “the expertise of London solicitors and counsel”, the quality of its arbitrators, the efficiency of the London Court of International Arbitration, together with the English language and the city’s location and time zone.
“The UK’s accession to the New York Convention and the ability of the English courts to enforce judgments and arbitration awards will be unaffected by Brexit,” he continued.
“Some 40% of international contracts are agreed to be subject to English law.”
Sir Rupert said Brexit would not, like Britain’s departure from the Roman Empire in 409 AD, lead to an “apocalypse”, but it would be “harmful to our economy in the short-term”.
The judge said Simon Davis, vice-president of the Law Society, had “rightly pointed out” the difficulties which will arise for British lawyers in EU countries unable to rely on the Lawyers Services Directive.
“So far as I can see, the problems which practitioners may face will be highly disruptive, but not ultimately insoluble. What the long-term holds no-one really knows, despite many bold assertions on both sides of the debate.”
He went on: “Having said all that, I cannot emphasise too strongly the importance of avoiding complacency.
“The fact that London has been the venue of choice for many overseas litigants over the last century does not automatically mean that this will be the case for the next century.
“London arbitrators will maintain their reputation for so long as they merit that reputation. In particular, they must resist the temptation of taking on too much work.
“Having offered hearing dates to a party, no arbitrator should re-offer those dates to anyone else unless the first party has said no.
“Likewise, we have a strong Bar and world-class solicitors in the City of London. The legal profession will maintain its reputation for excellence for so long as it merits that reputation and provided that the fees which it charges are proportionate.”
Sir Rupert said a ruling by the Supreme Court in Halliburton v Chubb, expected in November, could have a “massive impact” on London as a centre for international arbitration.
“The court may conclude that – whatever was acceptable in the past – when it comes to disclosure obligations London arbitrators must now comply with the emerging international standards.”
Jackson LJ said the ‘fair-minded observer’ test may also require a review by the Supreme Court.
“It is an odd intellectual exercise to create a fictitious person, to endow him or her with an impressive list of virtues and then to speculate what he or she would make of the case before the court.
“In practice, the judge may simply project upon this imaginary person the judge’s own opinions.”