The Law Commission has published a second consultation paper as part of its ongoing review of the Arbitration Act 1996. An initial consultation paper containing proposals for reform was published in September 2022 (see our October 2022 On the Record blog post on this paper).
Implied terms: Commercial Court defers to arbitral tribunal
In Pan Ocean Co Ltd v Daelim Corporation, the Commercial Court decided that an arbitral tribunal had correctly implied a term requiring inspection of a vessel’s holds without delay into a charterparty. The court decided that although the arbitral award suggested that it was reasonable to imply the term, which is not a sufficient basis to do so, the award was valid if read in a reasonable and commercial manner.
EU Plans To Regulate Third-Party Funding in Litigation and International Arbitration
On 13th September 2022, the EU Parliament voted to approve a resolution proposing a directive (the “Directive”) on the regulation of third-party funding entitled “Responsible private funding of litigation”. If adopted in its current state, the proposal would regulate Third-Party Funders (“TPFs”) funding proceedings in the European Union.
The High Court Shows Support for Arbitral Process
In its instructive judgment in RQP v ZYX, the High Court of England and Wales has provided helpful commentary on two aspects of the arbitration process, namely: (i) the limited circumstances in which a tribunal may have jurisdiction over a set-off counterclaim; and (ii) the scope of the courts’ role in enforcing orders made by tribunals. In doing so, it has demonstrated the respect the courts have for the arbitral process and a constructive view as to when and how they should support that process.
Exercising an Option to Arbitrate: a Matter of Content over Form
In Aiteo Eastern E&P Company Limited v Shell Western Supply and Trading Limited the High Court of England and Wales considered what a party with an option to refer a dispute to arbitration must do to successfully exercise that option. It concluded that all that was required was an unequivocal statement requiring the other party to arbitrate an identified dispute. In terms of how that statement was to be delivered, the judge clarified that “it is the message which matters, not the medium”. In this case, the unequivocal statement was found to have been made in a notice of appeal challenging a Nigerian court’s jurisdiction to hear the dispute.
Court of Appeal Lifts Stay to Allow English Court to Determine the Validity of Arbitration Clause
The Court of Appeal of England and Wales has set aside a stay in order to allow the English court to determine the validity of an arbitration clause contained in a contract between an English consumer and a foreign company. The stay had been imposed by the Commercial Court under section 9 of the Arbitration Act 1996 in favour of arbitral proceedings in New York. The Court of Appeal considered that the case had significant implications for consumers in general and it was therefore important that the issues were considered and ruled upon in public in an English court rather than privately in a US arbitration.
The 1996 Arbitration Act Under Review: The Law Commission Requests Comments on Proposed Reforms
On 22 September, the Law Commission published a consultation paper, together with a summary, on proposals to review certain sections of the Act.
Dispute Resolution no Longer Alternative
Alternative Dispute Resolution is henceforth to be called Negotiated Dispute Resolution. This change in nomenclature, introduced in the 11th Edition of the Commercial Court Guide, reflects the drive to place dispute resolution at the heart of the litigation process. The message is clear: engaging in dispute resolution should be a standard part of the litigation process.