Law Commission to review the Arbitration Act 1996

Yesterday, on 22 September 2022, the Law Commission for England and Wales published a public consultation paper unfolding provisional law reform proposals to ensure that the Arbitration Act 1996 remains state of art. After the Ministry of Justice asked the Commission to undertake a review of the Arbitration Act 1996 in 2021, the work began in January 2022. While consulting with a wide range of stakeholders in the field and assessing the current legal framework, the Commission has concluded that the Arbitration Act works very well, without any need for substantial reforms. However, it has been revealed that several discrete topics might necessitate amendments to ensure that the Act fits its purpose and continues to promote the UK as a leading destination for commercial arbitration. The Commission has drafted the consultation questions around the shortlisted aspects of arbitration:

1. Confidentiality

2. Independence of arbitrators and disclosure.

3. Discrimination. 

4. Immunity of arbitrators. 

5. Summary disposal of issues that lack merit. 

6. Interim measures ordered by the court in support of arbitral proceedings (section 44 of the Act). 

7. Jurisdictional challenges against arbitral awards (section 67). 

8. Appeals on a point of law (section 69). 

In addition, the Commission encourages consultees to suggest and comment on any other topics which are not covered in the consultation paper but might need reviewing.

The Commission welcomes responses to the paper between 22 September 2022 and 15 December 2022 using an online form, email, or post. After the consultation has been completed, the Commission will analyse the responses and ensure further stakeholder engagement as appropriate. The follow-up report of the final recommendations for law reform will be published by the Commission, and the Ministry of Justice together with other interested departments will decide whether to implement them.

More information on the reform project and the consultation paper are available at Review of the Arbitration Act 1996 | Law Commission.

Harmonised cybersecurity rules? The EU proposes Cyber Resilience Act 2022

On Thursday, 15 September 2022, the European Commission proposed the first-ever EU-wide Cyber Resilience Act regulating essential cybersecurity requirements for products with digital elements and ensuring more secure hardware and software for consumers within the single market.

According to the Commission, cybersecurity of the entire supply chain is maintained only if all its components are cyber-secure. The existing EU legal framework covers only certain aspects linked to cybersecurity from different angles (products, services, crisis management, and crimes), which leaves substantial gaps in this regard, and does not determine mandatory requirements for the security of products with digital elements.

The proposed rules determine the obligations of the economic operators, manufacturers, importers, and distributors to abide by the essential cybersecurity requirements. Indeed, the rules would benefit different stakeholders; by ensuring secure products, businesses would maintain customers’ trust and their established reputation. Further, customers would have detailed instructions and necessary information while purchasing products which would in turn assure data and privacy protection.

According to the proposal, manufacturers must ensure that cybersecurity is taken into account in the planning, design, development, production, delivery, and maintenance phase, and cybersecurity risks are documented, further, vulnerabilities and incidents are reported. The regulation also introduces stricter rules for the duty of care for the entire life cycle of products with digital elements. Indeed, once sold, companies must remain responsible for the security of products throughout their expected lifetime, or a minimum of five years (whichever is shorter). Moreover, smart device makers must communicate to consumers “sufficient and accurate information” to enable buyers to grasp security considerations at the time of purchase and to set up devices securely. Importers shall only place on the market products with digital elements that comply with the requirements set out in the Act and where the processes put in place by the manufacturer comply with the essential requirements. When making a product with digital elements available on the market, distributors shall act with due care in relation to the requirements of the Regulation. Non-compliance with the cybersecurity requirements and infringements by economic operators will result in administrative fines and penalties (Article 53). Indeed, market surveillance authorities will have the power to order withdrawals or to recall non-compliant devices.

The Regulation defines horizontal cybersecurity rules while rules peculiar to certain sectors or products could have been more useful and practical. The new rules do not apply to devices whose cybersecurity requirements have already been regulated by the existing EU rules, such as aviation technology, cars, and medical devices.

The Commission’s press release announced that the new rules will have an impact not only in the Union but also in the global market beyond Europe. Considering the international significance of the GDPR rules, there is a potential for such an expected future. On another note, attempts to ensure cyber-secure products are not specific only to the EU, but different states have already taken similar measures. By comparison, the UK launched consultation ahead of potential legislation to ensure household items connected to the internet are better protected from cyber-attacks.

While the EU’s proposed Act is a significant step forward, it still needs to be reviewed by the European Parliament and the Council before it becomes effective, and indeed, if adopted, economic operators and the Member States will have twenty-four months (2 years) to implement the new requirements. The obligation to report actively exploited vulnerabilities and incidents will be in hand a year after the entry into force (Article 57).

Hague Judgments Convention to enter into force!

On 29 August 2019, the European Union deposited its instrument of accession to the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). On the same day, Ukraine ratified the Convention.

According to Articles 28 and 29 of the HJC, the Convention shall enter into force on the first day of the month following the expiration of the twelve months after the second State has deposited its instrument of ratification, acceptance, approval, or accession. On this occasion, the Convention has already two Contracting States, and as a practically effective tool, it will be utilised by commercial parties for the swift resolution of international disputes from 1 September 2023.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, with the aim of guaranteeing the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

The HJC provides recognition and enforcement of judgments given in civil and commercial cases including the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serves legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for the mutual recognition and enforcement of judgments in civil and commercial disputes and it will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. Now, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU. Indeed, the EU’s opposition to the UK’s application to ratify the Lugano Convention will most likely impede the ratification of the HJC for the provision of the continuing civil judicial cooperation.