Privatised systems of justice, such as arbitration, can result in situations where the “law can ossify” and democracy is undermined, the Lord Chief Justice has warned.
Lord Thomas said that “many have felt” that the restrictions on the right to appeal decisions of commercial arbitrators were “too tight and had stultified the development of English commercial law”.
Delivering the Lord Williams of Mostyn memorial lecture, he said: “The more disputes that are and have been determined by private forms of adjudication, the fewer opportunities the courts have had to develop commercial law.
“And the consequence of this is that the law can ossify. It cannot work itself fine; correct errors; make clear the content of rights. Its ability to provide a sure framework for the development and carrying out of social relations, business dealings and so on is undermined. It thus undermines our democracy.”
Lord Thomas said that, until 1979, a “substantial contribution” was made to the development of commercial law by appeals from decisions of arbitrators. He referred to his own experience as a young commercial lawyer, who knew that if he lost an arbitration, he could appeal to the Commercial Court.
“It is undeniable that the practice, as applied not only to the maritime market but also to the commodities market, produced far too many appeals. So in 1979 an Arbitration Act restricted the right of appeal.
“That restriction is now embodied in the Arbitration Act 1996. Many have felt that the restrictions are too tight and have stultified the development of English commercial law.
“As long ago as 2004 in delivering the Sixth Cedric Barclay Lecture, Sir Robert Finch, then the Lord Mayor, called for a widening of the scope of appeals from commercial arbitrations as a need to help the modernisation of English commercial law so that it kept in tune with the developments of the commercial world. Eleven years on, the need is even greater.”
Lord Thomas said resolution by arbitration or mediation could not “clarify or develop” the law.
“Insofar as decisions circulate, they often circulate to a narrow range of lawyers who may then gain special knowledge of the way in which groups of arbitrators decide issues.
“It therefore lacks the features that would enable it to play the wider normative role of decisions reached in litigation before the courts”.