Category: Dispute resolution

Glad tidings in the recognition and enforcement of judgments: The UK is to ratify the 2019 Hague Convention

On 23 November 2023, the UK Government published its response to the consultation paper on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (see the previous post related to the consultation and the groundwork of the process here The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog). Having considered the responses received, the Government has concluded that it is the right time for the UK to join Hague 2019 and will seek to do so as soon as practicable. Indeed, it is clear from the paper that a total of 39 responses were received from across the UK’s legal sector, both practitioners and law firms as well as academics, and all of the consultees supported the UK’s accession to the HJC.

The Convention has been in force since 1 September 2023 as the only global instrument containing uniform rules for the mutual recognition and enforcement of judgments in civil and commercial disputes for the EU, Ukraine and Uruguay as the existing Contracting States. Joining the Convention will indeed ensure greater legal certainty and promote the UK’s reputation as a preferred forum for resolving international civil and commercial cases. Indeed, it will contribute to a swift resolution of disputes by shortening expenses and time frames for businesses and consumers because of the facilitated recognition and enforcement of the final decisions. The latter will in turn boost commercial parties’ confidence while operating across borders with increased clarity about the effectiveness of their judgments.

The Government’s response further highlighted the fact that judgments from non-exclusive choice of court agreements, which are excluded from the scope of the 2005 Hague Convention on Choice of Court Agreements (HCCCA), are enforceable under Hague 2019, which will likely increase the attractiveness of the UK financial services industry. Having ratified the HCCCA, the UK has guaranteed the effectiveness of the English exclusive jurisdiction clauses in all other Hague Contracting States and vice versa. In fact, the HJC complements the HCCCA with the same objectives and further covers judgments given by non-exclusively designated courts; therefore, joining the HJC will enhance party autonomy and ensure the effectiveness of an entire range of choice of court agreements.

Additionally, becoming a Contracting State to the HJC will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. The relevant instruments will get reciprocally given effect in the UK and EU. Further, given the fact that the territorial scope of the Convention is expanding having Israel, Russia, Costa Rica, North Macedonia and the US already signed so far, joining the treaty will enhance the global enforceability of judgments.

In addition to the potential benefits of the HJC, the Government is also well aware of the downsides of the mechanism. In this context, the Government’s response underlines several concerns that have been raised by the consultees. These include the risks regarding the UK courts’ potential obligation to recognise and enforce foreign judgments under the HJC in the absence of an obligation under the common law or existing arrangements. Further, potential issues related to procedural fairness and rule of law in the origin country have also been mentioned. Yet, the Government considers that there are adequate safeguards such as making declarations under Article 29 to prevent the application of the Convention with regard to a particular Contracting State at the time of ratification of that state. Additionally, the recognition and enforcement of judgments can be refused if one of the grounds in Article 7 can be established, including if certain procedural fairness requirements have not been met and where recognition or enforcement would be manifestly incompatible with the public policy of the UK. Moreover, the Government is in the view that while Article 5 gives a list of indirect jurisdiction grounds and wider possibilities for recognition and enforcement in some circumstances, it also requires clear thresholds that parties must meet.

The Government also mentions the concerns raised regarding the exclusions and the more limited scope of the HJC compared to the Lugano Convention for which the UK applied to join. Yet, the potential merits of the HJC outweigh any possible downsides and joining the latter does not prevent the UK’s future reaccession to the Lugano regime. Another point that is noted by the Government is that the HJC does not change or remove existing recognition and enforcement mechanisms provided by domestic law in the UK and other Contracting States, on which parties can continue to rely for the recognition and enforcement of cases not covered by the treaty.

Regarding possible declarations under the relevant provisions of the HJC, the Government supports the respondents’ views about the potential of restricting the Convention’s application and likely reciprocal actions from other Contracting States which would further limit the scope of the Convention. In line with the consultees’ views, the Government thinks that the UK should not make any declarations at this time (nor any declaration in regard to insurance matters) but it will keep the questions of declarations under review as it proceeds to signature and implementation, and in future as the Convention comes into force between the UK and current and future Contracting States.

The Government concluded that the HJC should extend to all of the UK jurisdictions to ensure consistency and ensure that all jurisdictions can benefit from the advantages of the Convention. Also as observed in the respondents’ comments, the Government is planning to use a registration model for implementing the mechanism same as what is used for the implementation of the HCCCA 2005, which would require foreign judgments to be registered prior to their enforcement in the UK. It means that parties seeking to have a foreign judgment recognised and enforced in the UK under the HJC would need to apply to the court, setting out the applicable indirect jurisdiction ground, amongst other things, and provide the necessary evidence. Parties objecting to the recognition and enforcement of the foreign judgment would then have an opportunity to challenge the registration before enforcement takes place, by way of appeal against or setting aside of the registration.

The Government will further consider the details of this implementation model particularly in relation with the challenges highlighted by respondents for the indirect jurisdiction aspects of the procedures. In line with this, the suggestion to amend the jurisdiction grounds currently found in Practice Direction 6B and adjusting them to Article 5 of the HJC, will be passed onto the Master of the Rolls and the Civil Procedure Rule Committee for consideration. Moreover, since this might become a devolved matter in respect of Scotland and Northern Ireland, Government officials will continue to work closely with their counterparts in the Scottish Government and in Northern Ireland to ensure implementing frameworks are in place in all 3 jurisdictions ahead of ratification of the Convention. Overall, the Government will work with the Crown Dependencies and the Overseas Territories to determine if the Convention should extend to these territories.

The Government has further considered the concerns in relation to signature by Russia and considers that the UK should sign the Convention with the understanding that a future notification in relation to the Russian Federation under Article 29 might be available to prevent the Convention applying between the UK and Russia, should there be any development in the latter’s ratification of the treaty.

In summary, based on all the responses and comments received during the Consultation process, the Government estimates there will be a positive impact on businesses that operate across borders, because they will have a predictable, more certain and uniform way to enforce judgments that they might need to seek to resolve disputes. The Government also estimates that there will be a positive impact on the litigation sector. The Government will undertake further work to quantify the impact and issue guidance when implementing the Convention.

The Government is planning to lay the Convention in Parliament soon ahead of ratification and to make sure the implementing legislation is in place for the three jurisdictions ahead of the accession. Once ratified, the HJC will be implemented in domestic law mainly using powers in the Private International Law (Implementation of Agreements) Act 2020 as well as via rules of court in all 3 jurisdictions of the UK subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

See Government response to the Hague Convention of July 2019 on the Recognition and Enforcement of Foreign Judgements in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk)

As welcome as flowers in May: The new Arbitration Act on the horizon

A long-desired development in the arbitration sector: Having included into the King’s Speech only a couple of days ago, the draft Arbitration Bill is taking its course to the UK Parliament. Brief key points below.

In March 2021, the Ministry of Justice asked the Law Commission to conduct a review of the Arbitration Act 1996 to ensure that the legislation remains fit for its purpose and continues to promote England and Wales as a leading destination for commercial arbitration. The consultation process that began in January 2022 analysed the existing law in two consultation papers (the papers were published in September 2022 and March 2023 respectively). See the related blog posts here Law Commission to review the Arbitration Act 1996 – The Institute of International Shipping & Trade Law (IISTL) Blog and here The next step in the reform of the Arbitration Act 1996 – The Institute of International Shipping & Trade Law (IISTL) Blog

Following the Law Commission’s completion of the review of the Arbitration Act, the final report was published in September 2023.  With the Law Commission’s estimations of at least 5,000 domestic and international arbitrations taking place in England and Wales each year, it was vital to modernise the arbitration framework and respond to global competition in the sector. Indeed, several competing jurisdictions have updated their legislation more recently: Singapore in 2023, Hong Kong in 2022, and Sweden and Dubai in 2018. Further, Singapore ranked equal first to London as the preferred choice of seat for the first time in 2021.

The Commission’s conclusions and recommendations were accompanied by a draft Arbitration Bill which was announced by King Charles in his speech at the State Opening Parliament on 7 November 2023. The King’s Speech points out that the Bill modernises the law on arbitration as recommended by the Law Commission. It has been stated that the reforms clarify the law governing arbitration agreements, strengthen the courts’ supporting powers, and facilitate quicker dispute resolution. The King’s speech also indicates that the new measures will bolster England, Wales, and Northern Ireland’s world-leading domestic and international arbitration sector with benefits for individuals and businesses seeking to resolve disputes, as well as boosting economic growth.

With the Government’s acceptance of the recommendations introduced by the Commission in the proposed Bill means that we can now anticipate a draft legislation to come before the parliament soon. The Bill will update the Arbitration Act 1996 that is currently in force. The territorial scope of the expected legislation covers England and Wales whereas the Arbitration Act 1996 also applies to Northern Ireland. Subject to the agreement of the Northern Ireland Department of Justice, the Bill might also extend and apply to Northern Ireland.

The King’s Speech 2023 is available here: The King’s Speech 2023: background briefing notes – GOV.UK (www.gov.uk).

Twenty one years on and still fighting over the ‘Prestige’. Registering a foreign judgment in England and the Brussels Regulation.

Butcher J’s judgment of October 6, [2023] EWHC 2473 (Comm), provides us with the latest chapter in the long-running saga between Spain and the London P&I Club regarding the former’s attempts to register its Supreme Court Judgment of 2016 in England. The Club had a declaratory award of non-liability against Spain from Mr Schaff which it successfully converted into a judgment in a decision of Hamblen J, which was upheld by the Court of Appeal (The Prestige (No. 2) [2015] EWCA Civ 333, [2015] 2 Lloyd’s Rep 33). Subsequently, Henshaw J and the Court of Appeal The Prestige (Nos. 3 & 4) [2021] EWCA Civ 1589, [2022] 1 WLR 3434. found that damages would not result from Spain’s failure to comply with an award that was purely declaratory, but the Club obtained permission from the Court to appoint an arbitrator under s.18 of the Arbitration Act 1996 in a second arbitration claiming either damages or equitable compensation.

At the end of 2020 just prior to the ending of the Brexit transition period, Butcher J, who had been hearing the Club’s appeal against Spain’s obtaining a Registration Order for its 2016 Judgment, referred three questions to the CJEU. Shortly after the Court of Appeal found that he was wrong to make the reference but only he could withdraw the reference. Before that could be done, the CJEU gave their judgment, which did not bode well for the Club. In paras 54-73 the CJEU had found that, while a judgment on an arbitration award might fall within Article 34(3), this was only when a judgment on the same terms could have been entered by the enforcing court, and then to provide ‘guidance as to how that test should be applied to the facts presented to the CJEU in this case.’ This ‘guidance’ was that ‘the content of the arbitral award at issue in the main proceedings could not have been the subject of a judicial decision falling within the scope of Regulation No. 44/2001 without infringing two fundamental rules of that regulation concerning, first, the relative effect of an arbitration clause included in an insurance contract and, secondly, lis pendens.’ Further, it was not simply for the court seised with the enforcement application under the Regulation to consider and apply these principles, but the court seised with the application to enter the judgment in the terms of the arbitral award.’

Permission to appeal the Court of Appeal’s Judgment to the Supreme Court had been granted to Spain and a hearing scheduled, which was suspended with the agreement of the parties after the CJEU Judgment appeared. Later in 2022 Spain’s application for permission to appeal to the Supreme Court against the Court of Appeal’s Judgment in the Prestige 3 & 4 was turned down.

Since then, the Club has continued its appeal against Registration of the Spanish Judgment and in January and March 2023 it obtained two partial awards in its favour from Sir Peter Gross, appointed as sole arbitrator for the second arbitration. The awards were to the effect that Sir Peter Gross had jurisdiction as arbitrator, the arbitration exclusion in Brussels I meant that the CJEU erred in its findings at paragraphs of its judgment, equitable compensation could be awarded against Spain, potentially injunctive relief too, although the arbitrator exercised his discretion not to award such relief, and damages could also be awarded in lieu of an injunction.

The Club’s appeal came before Butcher J, along with Spain’s challenges to the awards of Sir Peter Gross under ss 67, 68 and 69 of the Arbitration Act 1966. Butcher J has essentially agreed with the findings of Sir Peter Gross, except as regards the availability of injunctive relief, due to s.13(2) of the Sovereign Immunity Act 1978, and the availability of damages in lieu of an injunction. He deferred a decision on the availability of injunctive relief against a State till after the decision of the Court of Appeal in UK P&I Club N.V. v Republica Bolivariana de Venezuela (The ‘Resolute’) [2022] 1 WLR 4856which is scheduled to be heard this December. On the key question of the effect of the CJEU’s judgment he noted that CJEU had considered questions beyond the three he had referred, and concluded, as had Sir Peter Gross, there was an issue estoppel to the effect that the jurisdiction-allocation provisions of the Regulation, and in particular its lis pendens and insurance provisions, were no good reason for the English s. 66 Judgments not to have been entered because the Regulation is not applicable to arbitration. Specifically, the CJEU did not take into account that, because of the issues which had been raised and decided in the earlier proceedings, there might be res judicatae relevant to the line of reasoning which it adopted. The Court could and should give effect to that issue estoppel, notwithstanding what may have been suggested in paragraphs [54]-[73] of the CJEU Judgment, and  the decision in the relevant part of the CJEU Judgment could not be binding.

Butcher J found that the Club’s Appeal against the Registration Order succeeded because the Spanish Judgment was irreconcilable with the English s. 66 Judgments, and, if that were wrong, recognition of the Spanish Judgment would be contrary to principles of English public policy relating to res judicata by reason of the prior Award of Mr Schaff.

Spain were given permission to appeal under s.69 on all of its four grounds of challenge, save that part of ground 1 which raised the issue of the effect of the CJEU Judgment on the jurisdiction of Sir Peter Gross as arbitrator. The appeal under s. 69 AA 1996 on grounds (1) and (2) (relating to the CJEU Judgment) and (4) (relating to equitable compensation) was dismissed. On ground (3) regarding injunctive relief against Spain and damages in lieu of an injunction, Butcher J concluded that Sire Peter Gross had no jurisdiction to grant either relief, but deferred his decision until after the decision of the Court of Appeal in The Resolute.

On the same day Butcher J gave a similar decision  [2023] EWHC 2474 (Comm) in relation to France’s applications in connection with two partial awards from the Arbitrator appointed by the Club, Dame Elizabeth Gloster, in which it sought declarations that the French State was in breach of its obligations not to pursue the non-CLC claims other than by way of London arbitration, injunctive relief, and an order that the French State pay to the Club such sums as the Club is ordered to pay to the French State in any jurisdiction in which the Spanish Judgment is recognised or enforced, as well as compensation for its costs of defending the non-CLC claims in Spain.

France did not seek to register the Spanish Supreme Court Judgment in England. It sought leave to appeal four questions of law arising out of the Awards, pursuant to s. 69 AA 1996 and an extension of time to appeal the first partial award.

Ground 1: whether the arbitral tribunal had the power to grant an injunction against the French State under s. 48(5) AA 1996;

Ground 2: whether the arbitral tribunal had the power to award equitable compensation for breach of an equitable obligation to arbitrate arising by application of the conditional benefit principle, or whether equitable compensation is otherwise available in these circumstances; Ground 3: whether an anti-enforcement injunction can be granted where its effect is to restrain enforcement of a foreign judgment which is granted recognition under English law; and

Ground 4: whether equitable compensation can be granted where its effect is to neutralise the effect of a foreign judgment which is granted recognition under English law.

Butcher J found that France required an extension of time to bring its s.69 AA 1996 application in respect of matters decided in the First Partial Award and one should be granted on Grounds 1 and 2, but not on Grounds 3 and 4. There should be permission to appeal on Grounds 1 and 2, but there would not have been such permission on Grounds 3 and 4. The appeal on ground 2 was dismissed. In relation to Ground 1 he concluded that the arbitrator had no jurisdiction to grant and injunction against the French state but his decision was deferred until after the Court of Appeal had come to a decision in the ‘Resolute’.

Arbitration agreements — for once, perhaps we should be the world’s policeman

Whatever the position as regards English jurisdiction clauses, we’ve known for nigh on a quarter-century that you can’t get an ASI in London to protect the agreed jurisdiction of a foreign court. In 1998 Airbus Industrie G.I.E. v Patel [1999] 1 A.C. 119, our judges firmly eschewed the idea that they should operate as a kind of Global Good Litigation Police, and said that that foreign fora wanting to guard their jurisdiction as a choice of place to litigate could be expected to do their own dirty work.

But what about arbitration? Does a similar rule apply to complaints that a defendant is blithely suing away in Ruritania under a contract containing on the face of it a clause calling for arbitration in Utopia? A decision a week ago from Sir Nigel Teare suggests a possible Yes.

In G v R [2023] EWHC 2365 (Comm) suit was brought in Russia on a performance bond governed by English law. The claimant pointed out that the bond provided for any disputes to be settled by ICC arbitration in Paris, and to make sure this happened sought an ASI from the High Court. Could it get it? The answer was a fairly resounding no. In fact the claimant fell at the first fence; having failed to show that the agreement to arbitrate, as against the main contract, was governed by English law, he failed to seise the court of the matter in the first place.

But apart from that, even if the contract to arbitrate had been governed by English law, the judge thought England was not shown to be the appropriate jurisdiction. The fact that England could grant ASI relief whereas the French court, as the court of the seat, could not, went for little: the parties having chosen a French seat, there was nothing wrong with saying that having made their bed they should lie in it, and thus be stuck with the limited remedies available in France. Nor was there much relevance in a (hypothetical) English governing law, even if that had been chosen, since there was unlikely to arise any serious issue of English law that it would be difficult for a foreign tribunal to determine.

We have, if we may say so with great respect, our doubts about this decision.

First, there is an argument that if parties choose to have an arbitration agreement governed by English law, that should incline a court in favour of doing their best to make available the remedies normally applying in English law for breach of it. If so it should actually be a strong pull in favour of the English courts being an appropriate venue. The parties in G v R, had they (as the claimant argued) chosen English law as the lex arbitri, would one suspects have been somewhat nonplussed at the information that the English courts were nevertheless closed to them as an inappropriate forum. To that extent, the differing view of the Court of Appeal on an interlocutory appeal in SQD v QYP, decided the day before G v R (and noted here), and also a similarly divergent view expressed in March this year by Calver J (noted here), seem to carry more conviction.

Secondly, unlike choice of court agreements, there is something approaching an agreed international regime in force for international arbitration agreements under the New York Convention, which very strongly favours giving the most robust protection possible to such agreements. (Indeed, it was the notoriously casual attitude of the Russian courts towards the New York Convention that spawned the satellite litigation in G v R in the first place.) There is something to be said for an “all hands to the pumps” approach here, with the English courts doing their best to uphold the New York system.

This issue is clearly heading fast towards the Court of Appeal, if not further. Meanwhile, what should practitioners do if they wish to feel secure in reserving their seat on the Eurostar for that ICC session in Paris? First, they must make clear, preferably expressly, that the lex arbitri is English – something doubly important, if the Law Commission’s recommendation is enacted that the presumptive lex arbitri should always be that of the seat, rather than that of the matrix contract.

They should also – as some already do — expressly confer at least non-exclusive jurisdiction on the English court in matters related to the arbitration agreement. Not only will this make service out easier: it will make it much harder for another party to deny that the English court is indeed the appropriate one to seek relief in. True, the parties cannot force the court by agreement to exercise its discretion in favour of the always-discretionary remedy of an injunction. But they can sure use tactful means to smooth its way to that destination.

A DAY TO REMEMBER: THE 2019 HAGUE JUDGMENTS CONVENTION ENTERS INTO FORCE

At last, we no longer lack functional global rules for the recognition and enforcement of judgments. Only a couple of days ago, on 1 September 2023, the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC) entered into force. This is a momentous event for private international law and a real game-changer for international dispute resolution. With its entry into force, the HJC can now be utilised by commercial parties and contribute to a swift resolution of disputes by shortening expenses and timeframes for the recognition and enforcement of a foreign judgment in other jurisdictions. Having adopted the HJC, the Hague Conference achieved its target to guarantee the effectiveness of court judgments similar to arbitral awards as ensured by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

A year ago and almost around the same time we provided some comments on the provisions of the Convention determining the procedure for becoming effective (see here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog). 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 was ratified by Ukraine and the EU on 29 August 2022, and now has a force of law for both. In addition, Uruguay ratified the treaty on 1 September, and it will come into force for the latter 12 months later.

The HJC provides recognition and enforcement of judgments given in cross-border civil and commercial cases, excluding 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. That being said, the HJC is not an ideal framework and does not include every issue that might arise from civil and commercial cases. Yet, it complements the HCCCA not only by sharing the same objectives but also by covering judgments given by non-exclusively designated courts; therefore, it indeed serves party autonomy and ensures the effectiveness of an entire range of choice of court agreements.

The Convention further contributes to certainty and access to justice post-Brexit since it is the only international treaty providing rules for the recognition and enforcement of judgments in cross-border commercial disputes. However, the UK has not ratified the Convention yet and even if it does, the Convention will enter in and for the UK only twelve months after the date it deposits an instrument of ratification. Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. Indeed, if ratified, the HJC will not only contribute to access to justice and effectiveness of judgments involving EU-related civil and commercial cases but also the UK’s global judicial cooperation with the other Hague Contracting States will be enhanced. For the previous post related to the UK’s plans to ratify the HJC see: The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog.

Yet, we must admit the HJC leaves significant matters unresolved. Besides excluding extremely important commercial matters from its application scope, the Convention does not contain any specific regulation of parallel proceedings, lis pendens, and related actions – the famous yet infamous Brussels terminology. In this regard, there is a hope that the Hague Conference will succeed in its Jurisdiction Project. Indeed, if the latter is achieved the three Conventions might well function together and provide safeguards for international commercial parties and global justice.

The UK’s commitment to ADR: Compulsory mediation

On 25 July 2023, the UK Government – the Ministry of Justice (MoJ) adopted a compulsory mediation for all small civil claims valued up to £10,000 starting with specified money claims which amount to 80% of small claims. Indeed, this should not come as a surprise as the Government has been employing innovative manners to ease effective dispute resolution without any need for a mandatory court referral. It was only a year ago when the Government published a Public Consultation on “Increasing the use of mediation in the civil justice system”. Further, there is already serious work being done across the Government to implement the United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention), which the UK signed on 3 May 2023 (The Singapore Convention on Mediation: The UK’s Serious Commitment to ADR – The Institute of International Shipping & Trade Law (IISTL) Blog). As an integral part of the UK justice system, mediation may save businesses around £5.9 billion per year in management time, relationships, productivity, and legal fees with the value of UK mediated cases each year being estimated at approximately £20bn as of February 2023. The UK’s implementation of the Singapore Convention is expected to bolster the UK’s £17.5 billion mediation sector and underscore its leading role in international commercial dispute resolution and the MoJ’s latest decision will incredibly serve to this target. Along these lines, the Digital Markets, Competition and Consumers Bill will also strengthen oversight of dispute resolution opportunities available to consumers; an initiative which would have been more constrained whilst in the EU. According to the newly adopted system, after he filed a defense on a small claim and allocation of the case to the court, mediation will be the next phase and parties will get notified about this. Once they have filled out a ‘directions questionnaire’ the case will move to HM Courts & Tribunals’ free small claims mediation service in a form of an hour-long telephone conversation with the mediator. In case parties will agree on a settlement, the court will register a legally binding formal agreement between them. Otherwise, a judge will hear the dispute. This is indeed a very welcome policy decision and legal reform to ensure easy and accessible dispute resolution by everybody and save both time and expenses while decreasing the workload of the courts. On another note, the intended reforms such as setting a compulsory mediation for all claims issued under the Civil Procedure Rules Part 7 will necessitate a serious planning and strategy. Indeed, the new scheme will provide an avenue for learning the best lessons and adopting them in the later reform stages.  

The Singapore Convention on Mediation: The UK’s Serious Commitment to ADR

Following the public consultation on the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention on Mediation”), which ran from 2 February to 1 April 2022, the UK Government signed the treaty on 3 May 2023. Once the UK has implemented the Convention into domestic legislation and deposited the instrument of ratification, it will enter into force six months later as provided in Article 14.1 of the treaty. To date, 56 countries have signed the Singapore Convention, and 11 of the signatories have also ratified it.

The Singapore Convention on Mediation was adopted by UNCITRAL in 2019 as a multilateral treaty providing a uniform and efficient framework for the enforcement and invocation of international settlement agreements resulting from the mediation of commercial disputes. Mediation is the most common form of alternative dispute resolution (ADR) and probably the quickest way of resolving disputes. As for the settlement of disputes, a neutral third party facilitates a negotiated agreement without any decision-making power.

There is a tendency in the UK to stimulate parties to mediate their arisen or potential disputes instead of litigating in courts, therefore, to immerse mediation as an integral step in the court process. In this regard, the Ministry of Justice’s Call for Evidence on Dispute Resolution in England and Wales set out the goals of the civil justice system to integrate dispute resolution processes, including resolving disputes consensually through mediation. Following this, the Government made proposals on the automatic/mandatory mediation of civil disputes valued up to £10,000 by Her Majesty’s Courts and Tribunals Service (HMCTS) as part of the court process. The latter is at the consultation stage.  

By signing the Singapore Convention, the UK has demonstrated its serious outlook for becoming a leader in the promotion of mediation as an essential part of the civil justice system. In the absence of such an international treaty, there is a process to be followed for a settlement agreement to get enforced. A party would need to make a claim for breach of contract and get a judgment that is to be enforced first unless the terms of the settlement have been recorded in a “Tomlin order”.

With the UK’s membership to the Singapore Convention, international mediation agreements or iMSAs (settlement agreements qualifying under the Convention) as well as settlements will become directly enforceable without any further need to issue a claim for breach of contract or to litigate the case on the merits. Having the Singapore Convention together with the New York Arbitration Convention and Hague Convention on Choice of Court Agreements in its armoury will enhance the UK’s credibility as an attractive dispute resolution hub as well as promote its relations with global trading partners. Furthermore, membership in these fundamental Private International Law instruments will also have serious Brexit implications. Needless to say, the UK’s plans to ratify the Hague Judgments Convention significantly contribute to these ends (for more on this see the blogpost here: The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog.

The next step in the reform of the Arbitration Act 1996

Recently, the Law Commission for England and Wales published the Second Consultation Paper on the Review of the Arbitration Act 1996 containing provisional law reform proposals to ensure that the arbitration law remains state of the art. Back in 2021, the Ministry of Justice asked the Law Commission to undertake a review of the Arbitration Act 1996. Following this, the Commission published its first public consultation paper unfolding provisional law reform proposals. The consultation period was open by December 2022. See the previous post about the first consultation paper here: Law Commission to review the Arbitration Act 1996

The consultation questions in the previous paper were around the shortlisted aspects of the arbitration, including confidentiality, independence of arbitrators and disclosure, discrimination, immunity of arbitrators, summary disposal of issues that lack merit, interim measures ordered by the court in support of arbitral proceedings (section 44 of the Act), jurisdictional challenges against arbitral awards (section 67), and appeals on a point of law (section 69). In addition, the Commission encouraged consultees to suggest and comment on any other topics which were not covered but might need reviewing.

It is worth reiterating the main points of my response to the first consultation paper:

  • As of the status quo based on the existing legislation and authorities, relitigation and reconsideration by the court following the challenges brought under Section 67 not only double the waste of time and expenses by the repetitive proceedings and potential parallel or inconsistent judgments but also go against the whole idea of arbitration and the fundamental principle “Kompetenz-kompetenz”.
  • The courts’ powers to grant interim injunctions derive from the two fundamental legal frameworks – Arbitration Act 1996, Section 44 and Senior Courts Act 1981, Section 37. The revision of the existing legal frameworks to reflect the interrelationship and boundaries of the instruments with regard to the court’s powers to make orders in support of arbitral proceedings would be in line with the objectives and general principles of the Arbitration Act 1996 to improve the law relating to arbitration, in general. Indeed, the revision would bring clarity about the application scope of the Act (see the Introductory Act to the Arbitration Act 1996) and contribute to the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.

Based on the suggestions made by the consultees involved in the first round of the reform project, in its second consultation paper, the Commission has made new proposals about the proper law of the arbitration agreement. Furthermore, the Commission considers the following two issues as the most controversial ones among the others and seeks the views of consultees on the revised proposals: (1) challenges to awards under section 67 on the basis that the tribunal lacked jurisdiction; and (2) discrimination in arbitral appointments.

The second consultation paper will be open by 23:59 hours on 22 May 2023. The responses of consultees to this second consultation paper will be taken along with responses to the first consultation to inform the final report and recommendations. All the details of the project and relevant consultation documents are available here: Review of the Arbitration Act 1996 – Law Commission