Technically, there two different acts for the arbitration in the UK. The 1996 Arbitration Act governing arbitration in England, Wales and Northern Ireland, and the Arbitration (Scotland) Act 2010, which came into force on 7 June 2010. Despite the uncertainties of Brexit, London remains one of the widely-used seats of international arbitration. English courts have a distinct track record in supporting arbitration and enforcing foreign arbitral awards. Additionally, the 1996 Arbitration Act is one of the most accessible and sophisticated arbitration acts.
The 1996 Arbitration Act
The 1996 Arbitration Act applies to arbitral proceedings seated in England & Wales or Northern Ireland (Section 2). Although the 1996 Arbitration Act contains many principles enshrined in the UNCITRAL (United Nations Commission on International Trade Law) Model Law, it does not follow the Model Law itself. For instance, it makes no distinction between ‘domestic’ and ‘international’ arbitrations. Therefore, the legal framework for domestic and international arbitrations seated in the England & Wales or Northern Ireland will be the same. Notwithstanding, the UNCITRAL Arbitration Rules are often chosen by the parties to fill the lacunae of the 1996 Arbitration Act in ad hoc arbitrations.
Arbitration Agreement and Commencement of Arbitral Proceedings under the 1996 Arbitration Act
According to the 1996 Arbitration Act, “arbitration agreement” refers to an agreement to submit future or present disputes to arbitration, which shall be either in writing or evidenced in writing (Section 5).
Although parties are free to refer a wide range of contractual and non-contractual matters to arbitration (Section 6(1)), not all disputes may be resolved by an arbitral tribunal. In some cases, the subject matter of the dispute is not “arbitrable”. Non-arbitrable disputes usually involve mandatory law or public policy. For instance, the English Court of Appeal has decided that “the scope of even the most widely drafted arbitration agreement will have to yield to restrictions derived from other areas of the law”.
English courts will be willing to enforce multi-tiered clauses (i.e., a series of escalating dispute resolution mechanisms, such as mediation or conciliation) as long as the language of such clauses is clear and concise. In other words, if the language is compulsory (e.g., “shall” or “must” are used), it is likely that English courts will rule each preliminary step to be mandatory. In such a case, parties will have to comply with the procedures set forth in the clause before submitting the dispute to arbitration.
A party willing to commence arbitration shall submit a notice or request for arbitration stating (i) the parties’ details; (ii) a brief description of the factual background and nature of the dispute; and (iii) the relief sought. Although the 1996 Arbitration Act does not provide for any mandatory requirement, the requesting party may also indicate the governing law, the seat of the arbitration or language of the proceedings. Not rarely, parties indicate the highest quantum so as to encourage settlement.
Competence-Competence and Separability under the 1996 Arbitration Act
Section 30 of the 1996 Arbitration Act provides that the arbitral tribunal may rule on its own substantive jurisdiction, as an expression of the Competence-Competence principle. Therefore, unless otherwise agreed by the parties, arbitral tribunals may rule:
- whether there is a valid arbitration agreement,
- whether the tribunal is properly constituted, and
- what matters have been submitted to arbitration in accordance with the arbitration agreement.
Nonetheless, the rights of a party seeking to object to the tribunal’s jurisdiction are limited under the 1996 Arbitration Act: the objecting party must do so before the merits stage and as soon as he/she becomes aware of the grounds for objection (Section 31 and Section 73).
The doctrine of separability of arbitration agreements is enshrined in Section 7 of the 1996 Arbitration Act. This principle was endorsed in the well-known decision Fiona Trust & Holding Corp v. Yuri Privalov, in which the English House of Lords decided that the issue of invalidity of the underlying contract was arbitrable as long as the allegation of bribery did not concern the arbitration agreement itself.
Applicable Law under the 1996 Arbitration Act
Under the 1996 Arbitration Act, the arbitral tribunal shall apply the substantive law chosen by the parties. The tribunal may also decide “in accordance with such other considerations”, which include lex mercatoria or trade uses provisions (Section 46).
If the agreement is silent as to the applicable law, English courts will seek the implied choice of law. If the implied choice cannot be discovered, courts will consider the law with which the arbitration agreement has its closest connection (generally the law of the seat of the arbitration). This was the approach used by the English Court of Appeal in the well-known Sulamérica CIA Nacional de Seguros S.A. v. Enesa Engenharia S.A.  EWCA Civ 638.
Not rarely, English law is chosen as the applicable substantive law for international arbitration.
Constitution of the Arbitral Tribunal and Procedural Aspects under the 1996 Arbitration Act
Under the 1996 Arbitration Act, parties are free to select their arbitrators. Arbitral tribunals are typically constituted by either one or three arbitrators (Section 15).
In Jivraj v. Hashwani, the UK Supreme Court reaffirmed the principle of the parties’ autonomy in selecting their arbitrators. The Supreme Court ruled that parties were authorized to impose requirements based on nationality or religion in their arbitration agreements without infringing anti-discrimination provisions.
Parties may also apply to the courts to remove an arbitrator in the following cases (Section 24):
- there are circumstances that give rise to justifiable doubts as to his/her impartiality;
- the selected arbitrator does not have the qualifications required by the arbitration agreement;
- he/she is physically or mentally incapable of conducting the proceedings;
- that he/she has refused or failed (a) properly to conduct the proceedings, or (b) to use all reasonable dispatch in conducting the proceedings or making an award.
Interestingly, Section 24 does not refer to lack of “independence” as a ground to remove an arbitrator.
Notwithstanding, the threshold to remove an arbitrator is high. In AT&T v. Saudi Cable, the fact that one of the arbitrators held a non-executive position in a company, which was a competitor of one of the parties, was not sufficient to remove the arbitrator.
Section 34 of the 1996 Arbitration Act gives the arbitral tribunal substantial discretion in deciding “all procedural and evidential matters” of arbitral proceedings. In practice, arbitral tribunals, under English law, have considerable leeway to manage the proceedings as they deem appropriate taking into consideration the general duty of acting impartially and providing each party with a reasonable opportunity to put its case (Section 33).
Annulment of Arbitral Awards under the 1996 Arbitration Act
The grounds for annulment of an arbitral award under the 1996 Arbitration Act are strict. Essentially, there are three grounds that allow a party to challenge an arbitration award:
- the tribunal lacked substantive jurisdiction under Section 67;
- there was a serious irregularity affecting the tribunal, proceedings or award under Section 68; and
- an appeal to the court on a question of law under Section 69 arising out of an award.
While Sections 67 and 68 are mandatory provisions, Section 69 may be excluded if parties choose to do so.
The reference to “substantive jurisdiction” of Section 67 is defined in Sections 30 (as described supra) and 82 of the 1996 Act. It allows parties to challenge an award on the basis that it was made without jurisdiction. Therefore, Section 67 applies only if the question of substantive jurisdiction was dealt with in the award.
Section 68, which is also a mandatory provision, establishes the grounds for annulment based on “serious irregularity”. These grounds are:
- a failure by the tribunal to comply with Section 33 (general duty of tribunal);
- the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction);
- a failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;
- a failure by the tribunal to deal with all the issues that were put to it;
- any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;
- uncertainty or ambiguity as to the effect of the award;
- the award being obtained by fraud or the way in which it was procured being contrary to public policy;
- a failure to comply with the requirements as to the form of the award; or
- any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.
Nonetheless, annulments under Section 68 are exceptional. Firstly, there must be an award (instead of a simple order). Secondly, the irregularity must be serious, i.e., it must have caused substantial injustice to one party. Thirdly, the irregularity must be listed in Section 68, which is exhaustive.
Finally, Section 69 allows parties to appeal before the courts on questions of English law. In reality, the purpose of Section 69 is to ensure that arbitral tribunals are applying English law correctly and that courts can continue to develop English law through arbitration.
Section 69 may be excluded before the commencement or during the arbitral proceedings.
Enforcement of Arbitral Awards under the 1996 Arbitration Act
Section 66 provides that an award is enforced with the leave of the court in the same manner as a judgment or order of the court.
The enforcement of foreign awards may fall within the scope of the following treaties to which the UK is a signatory party:
- Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1975 (the “New York Convention”);
- Convention on the Execution of Foreign Arbitral Awards 1927 (the “Geneva Convention”); and
- Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (the “ICSID Convention”).
The UK ratified the New York Convention in 1975 and has implemented it in its territory through the 1996 Arbitration Act.
Therefore, awards made in a State, which is also party to the New York Convention, are enforced pursuant to Sections 100 to 103 of the 1996 Arbitration Act, which incorporate the same requirements for enforcement and recognition set forth in the New York Convention. Likewise, enforcement and recognition may be challenged under the same grounds provided in New York Convention, which are included in Section 103.
Arbitration in Scotland
Arbitration in Scotland is governed by the Arbitration (Scotland) Act 2010 (the “Scottish Act”), which largely follows the 1996 Arbitration Act in force in England & Wales. The Scottish Act applies to arbitral proceedings seated in Scotland.
Following the enactment of a modern arbitration act and the creation of the Scottish Arbitration Centre, arbitration in Scotland is becoming more popular. According to Section 1, there are three founding principles in the Scottish Act:
- arbitration is pursued to resolve disputes fairly, impartially and without unnecessary delay or expense;
- parties should be free to agree how to resolve disputes subject only to such safeguards as are necessary in the public interest; and
- courts should not intervene in an arbitration except when required by the act itself.
The Civil Jurisdiction and Judgments Act 1982 authorizes the recognition and enforcement in England of arbitral awards issued in other parts of the UK. Therefore, arbitral awards made in Scotland are domestic awards for the purpose of recognition and enforceability.
 Fulham Football Club (1987) Ltd v Sir David Richards and The Football Association Premier League Ltd  EWHC 3111 at 41.
 JT Mackley & Co Ltd v. Gosport Marina Ltd  EWHC 1315 (TCC)
 Fiona Trust & Holding Corp v. Privalov,  UKHL 40
 Jivraj v Hashwani  UKSC 40
 AT&T Corporation v. Saudi Cable Company  EWCA Civ 154