Following on from our previous commentaries on the Law Commission’s Consultation Paper (CP) summarising its review of the Arbitration Act 1996 (the Act), we now turn to the eighth issue the Commission considered: whether it is necessary to reform the law on appealing arbitral awards.
The CP summarises how the right to appeal an arbitral award on a point of law has developed, culminating in s.69 of the Act, making the point that the ability to appeal awards is not widespread internationally (for example, there is no such provision in the UNCITRAL Model Law, and some legislation provides for appeals only on an “opt-in” basis – i.e. the right of appeal will only apply if the parties agree).
The CP provides a commentary on the two opposing views in relation to s.69 of the Act.
Some consider that the right to appeal should be repealed so that no appeals are allowed, thereby ensuring finality of the arbitral award, and avoiding clogging up court time in dealing with these types of appeal.
The CP gives fairly short shrift to this point of view making the point that only very few of the appeals received by the court are made under s.69 of the Act, and in only about a third of these is permission to appeal actually given. The CP also argues that s.69 is not mandatory; it is an opt-out provision. Therefore, parties who want to ensure finality of the arbitral award can do so by agreeing to preclude any right of appeal.
The opposing view is that the limits to appealing under s.69 should be relaxed to allow more appeals to be heard. For example, the bar to mounting an appeal might be lowered from only being allowed if the arbitral decision is “obviously” wrong (s.69(3)(c)(i)) to one where there is a “good arguable case”. In support of this point of view commentators have said that having too limited rights to appeal restricts access to the law and has “a detrimental effect on the development of commercial law”.
Again, the Commission does not appear persuaded by the arguments made by those wishing to relax the law on appealing arbitration awards. First and foremost, arbitral awards are a private and confidential dispute resolution mechanism, not intended to give the public access, nor to create binding precedent. To argue that more appeals will enhance the public’s understanding of arbitration and allow the commercial law to develop is therefore misconceived. The CP considers the real complaint seems to be the lack of transparency in arbitration and that too many parties prefer to arbitrate rather than litigate, not the need for more appeals.
The provisional conclusion reached by the CP is that s.69 as drafted strikes a compromise between the two competing motivations and no evidence has been presented to suggest that s.69 of the Act is problematic in practice. Therefore, the provisional conclusion is that no reform is required.