Tag: 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).

PAPERLESS TRADE: THE ELECTRONIC TRADE DOCUMENTS ACT IS OFFICIAL NOW 

Charles Darwin had a point. It was not, he said, the strongest of the species that survived, nor the most intelligent, but that most adaptable to change.  So too with the law and digital transformation. The UK government recognises this well.

As the G7 President, the UK has been actively leading the process to achieve the legal environment for the full digitisation of trade documents. The Electronic Trade Documents Bill was first introduced in the House of Lords on 12 October 2022 (See the previous blog post here:  PAPERLESS TRADE: ANOTHER STEP FURTHER – The Institute of International Shipping & Trade Law (IISTL) Blog). Following intense efforts and different stages, the Bill has now the status of law with Royal Assent swiftly received on 20 July 2023. Hence, the UK is the first G7 country to achieve an act to ensure transformation of trade and cement the legal recognition of electronic trade documents, including most importantly bills of lading, mate’s receipts, ship’s delivery orders, warehouse receipts, marine insurance policies, and cargo insurance certificates same as their paper equivalents.

Digitisation is an inevitable part of today’s global economy, with big data and cloud-based computing the driving force of industry and its supply chains and the smooth running of trade dependent not only on commercial operations but also to a great extent on the instantaneous turnaround and exchange of the relevant documents. Yet a huge number of the underlying processes and operations still rely “on practices developed by merchants hundreds of years ago.” This matters for us: under the latest statistics from the Department of Trade, international trade is worth around £1.266 trillion annually to the UK. Now as we have a law to these ends that is awaiting enforceability in September 2023, the Act will undoubtedly facilitate cross-border commerce by cutting unnecessary costs and reducing processing times and delays adding over £1bn to the British economy over the next decade as estimated. This will also contribute to sustainability, eco-efficiency, and environmental values by mitigating harmful carbon emissions, quite apart from boost the UK’s reputation as a global centre for international commerce and trade.

The Act is commendably brief, consisting of only seven sections. It starts with definitions of “paper trade document” and “qualifying electronic document” before presenting a non-exhaustive list of trade documents affected by it (excluding some more exotic instruments subject to the Uncertificated Securities Regulations 2001, and curiosities such as bearer bonds). Among others, the Act brings clarity to the concept of possession, transfer and indorsement of electronic documents, and deal withs the change of a paper form to an electronic one or vice versa. The provisions assure their functionality and reliability for the right to delivery of goods or payments of sums of money similar to paper counterparts.

It is worth noting that the Act does not contain any provisions on the procedural aspects of digitisation of documents, the use, and exploitation of digitised documentation, or the mechanics of changing its form. In addition, the effectiveness of the gateway criteria might be achieved only upon the adoption of the specific protocols regarding the digital systems, their control mechanisms, and accreditation standards. Indeed, a detailed commentary will become essential for the practical application of the Act. This matters: unless such concerns are satisfactorily sorted out, an electronic trade document that is effective in one jurisdiction might not be treated in the same way in another.  Moreover, while trade documents are being transferred across borders, cross-border disputes are at least to some extent inevitable. This means that we will need to give attention to the private international law rules specific to such documents: even if they contain an English choice-of-law clause, this will not necessarily ensure the application of English law to all their aspects. The Law Commission, to its credit, has recognised this. It has already launched a follow-up project on the Conflict of laws and emerging technology to ensure the rules of applicable law and jurisdiction in an increasingly digitised world (the latter is still at the pre-consultation stage).

Needless to say, the Act is a very important development not only for the UK but also globally; most likely, its adoption will become a significant example and the best practice for other jurisdictions. As put by Nigel Huddleston, UK’s Minister for International Trade, “It’s exciting to see the power of technology being harnessed to benefit all industries, reduce paper waste and modernise our trading laws.” It is for us to welcome it!

See: Electronic Trade Documents Act 2023 – Parliamentary Bills – UK Parliament

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 Ball is Rolling: The UK to ratify the Hague Judgments Convention?

On 15 December 2022, the UK government published a public consultation paper on the possible ratification of the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). With the UK-wide call open in all three jurisdictions by 9 February 2023, the Government is seeking expert views from practitioners, academics, businesses, and any other persons with an interest in or who may be affected by cross-border civil and commercial litigation in the UK on its very welcome plan to become a Contracting State to the Convention. Besides the open call and public responses, the officials including experts from the Lord Chancellor’s Advisory Committee on Private International Law will get involved in the consultation before the publication of the outcomes.

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, to guarantee 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.”

In August 2022, with the subsequent ratifications of the Convention by the EU and Ukraine, its entry into force became a long-awaited reality and indeed, the Convention is about to enter into force from 1 September 2023 (see my earlier blog post here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog).

As the jurisdiction is well-known for its strong legal traditions and robust private international law rules, the UK instantly enhances its routes of international judicial cooperation to ensure certainty and predictability for citizens and businesses involved in cross-border commercial relationships. Most likely, the EU’s opposition to the UK’s application to ratify the Lugano Convention will impede the ratification of the HJC for the provision of continuing civil judicial cooperation.

The HJC provides recognition and enforcement of judgments given in 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. 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, serve 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 mutual recognition and enforcement of judgments in civil and commercial disputes. It will significantly contribute to legal certainty in the post-Brexit era with its sister instrument HCCCA. Indeed, 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.

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. 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.

Further details of the paper and consultation questions are available here: Consultation on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk).

Peripatetic seamen and the Pensions Act 2008

In The Queen (on the application of Fleet Maritime Services (Bermuda) Ltd) v The Pensions Regulator [2015] EWHC 3744 (Admin) it has been held that the Pensions Act 2008, requiring automatic enrolment of workers into a pension scheme, does not apply to seafarers who began and ended their tours of duty outside the UK, and who spent most if not all of those tours of duty outside the UK, although they travelled to and from the UK at the start and end of their tours of duty .