- The Law Commission has proposed a reform of the Arbitration Act 1996 relating to clarifying the courts’ powers in support of the arbitral proceedings in the following two areas:
- (1) Making orders against third parties: The proposed reform seeks to provide greater clarity as to the extent to which third parties may be subject to court orders issued under section 44 of the Act. Importantly, it underscores that third parties, when subject to such orders, retain their full rights of appeal
- (2) Enforcement of peremptory orders made by emergency arbitration: The reform also addresses the implementation and enforcement of peremptory orders made by emergency arbitrators, aiming to clarify the applicable procedures.
- The proposals are welcomed and focus on enhancing the efficiency and effectiveness of the arbitral process.
In the fifth and concluding instalment of our series focusing on the proposed reforms to the Arbitration Act 1996 (the Act) by the Law Commission, we explore the proposed expansion of English courts’ powers in support of arbitral proceedings, with a focus on two key aspects: (1) the power to issue orders against third parties, and (2) implementing peremptory orders made by emergency arbitrators.
Orders against third parties
Challenges relating to the involvement of third parties often arise when a party to the arbitration seeks preservation or delivery of documents or witness evidence from a third party, or attempts to extend the scope of the arbitration agreement to a third party.
A question then arises whether section 44 of the Act, which deals with the courts’ powers to grant specific interim measures in support of arbitration proceedings, extends to third parties. In essence, section 44 allows parties to the arbitration to seek assistance from the court in a limited, yet significant, range of arbitration-related matters, including securing evidence or preserving assets. This aims to ensure the effectiveness of the arbitration process.
The Law Commission identified a degree of ambiguity regarding whether the current form of section 44 applies to third parties. After a comprehensive review of relevant case law and its evolution, the Law Commission concluded that section 44 indeed extends to third parties. However, to eliminate any lingering uncertainty, the Law Commission proposes to make a minor amendment to section 44, explicitly referring to orders issued “whether in relation to a party or any other person”.