Law Commission reviews arbitration procedures in England and Wales – how is it done elsewhere in Europe?

The Law Commission is considering reforming parts of the Arbitration Act 1996 and has recently published a consultation paper setting out various proposals. Although the Arbitration Act 1996 covers England and Wales and Northern Ireland, the Law Commission can only propose reforms for England and Wales. (The Law Commission hopes that the government will consider implementing any proposed reforms in Northern Ireland too, after appropriate consultation). This article compares the approach taken by Poland, Germany and the Netherlands on the topics which are currently under consideration, including confidentiality, arbitrator impartiality and immunity. 

Confidentiality 

Does the law recognise that arbitrations are, by default, private and confidential? If so, is that expressly recognised in a statute or code?

England and Wales

The Arbitration Act 1996 does not contain any provisions relating to confidentiality. However, English case law does recognise that, by default, arbitrations which are seated in England and Wales are private and confidential. Confidentiality is an implied term where the arbitration agreement is silent on the point. There are exceptions (see below) and these are developed on a case-by-case basis. 

Germany

The German Arbitration Act contained in the tenth book of the German Code of Civil Procedure (Zivilprozessordnung or ZPO) does not provide for the confidentiality of arbitral proceedings. Parties to arbitrations subject to the German ZPO would have to conclude a separate confidentiality agreement or agree to the application of arbitration rules that do provide for confidentiality. Article 44 of the Arbitration Rules of the German Arbitration Institute (DIS Arbitration Rules), for instance, does provide for the confidentiality of proceedings administered by the DIS.

The Netherlands

The Dutch Code of Civil Procedure (DCCP) provides a general framework governing arbitration proceedings. It is standard practice that parties refer to the applicability of (the rules of) an arbitration institute in their agreement. In such a case, the (rules of the) chosen arbitration institute shall be deemed to be part of the agreement. The Netherlands Arbitration Institute (NAI) is an established arbitration institute in the Netherlands, among others.

The DCCP does not state that arbitrations are, by default, private and confidential. It is recommended – and standard practice – that confidentiality is explicitly agreed to between parties. This can be done by referring to (the applicability of the rules of) an arbitration institute which include confidentiality. See in this regard, for example, article 6 of the arbitration rules of the NAI.

If a party tries to set aside an arbitral award in the regular court, there is a chance that (part of) the arbitration file will fall in the public domain (possibly in anonymised form).

Poland

Polish law does not provide any confidentiality duty specific for arbitration proceedings. The obligation of confidentiality may be agreed by the parties of the dispute as a contractual obligation. Moreover the rules and regulations of individual arbitral courts include provisions on confidentiality, subject to exceptions – see below examples.

Rules and regulations of the Court of Arbitration at the Polish Chamber of Commerce in Warsaw:

§ 8 states: "Unless otherwise agreed by the parties, the arbitrators, the Court of Arbitration, its employees and members of its bodies shall be obliged to keep confidential all information concerning the proceedings."

§ 47 states: "The Arbitration Council may agree to the publication of a judgement in whole or in part, ensuring its anonymity, if none of the parties has objected to the publication within 14 days of being served with that judgement."

Rules and regulations of the Lewiatan Arbitration Court in Warsaw:

§ 4 states: "1. The Court of Arbitration and the Lewiatan Confederation, including their bodies and employees, as well as the arbitrators, the parties and all other  participants in the proceedings are obliged to maintain confidentiality of the very fact of conducting of the arbitration proceedings, the judgments, the decisions and any documents submitted or disclosed in the arbitration proceedings, as well as any information acquired in connection with the arbitration proceedings, unless the parties stipulated otherwise, disclosure is a statutory duty or serves to protect or enforce the statutory obligation, or serves to protect or enforce a right, in particular to  in particular the recognition, enforcement or filing of an action to revoke of an arbitral judgement in proceedings before a general court common court.

2. Publication of the contents of a judgment by the Lewiatan Arbitration Court shall be permitted while maintaining anonymity. The parties may, within 14 days from the date of delivery of the judgement to object to its publication. Failure to object within the time limit indicated above shall be deemed to constitute consent to the publication of the judgment."

If there is a duty of confidentiality, are there any exceptions to that duty? 

England and Wales

English case law has set out various exceptions including: where the parties consent and where the exception is reasonably necessary for the protection of the legitimate interests of an arbitrating party.

Germany

Not applicable.

The Netherlands

Confidentiality (including the related duty of secrecy) is an established principle of unwritten Dutch arbitration law. Also, lawyers admitted to the Dutch bar are bound by a duty of confidentiality under the Rules of Professional Conduct for Lawyers. It is recommended – and standard practice – that confidentiality is (also) explicitly agreed to between parties. See in this regard, for example, article 6 of the NAI Rules.

Poland

See answer above.

Arbitrator impartiality

Is there an express requirement in statute or code that arbitrators must be impartial or neutral, or an express requirement in statute or code that they must be independent (with no connection to the parties)?

England and Wales

Yes – and bias can be actual or apparent. There is no requirement that they must be independent though.

Germany

Section 1036 of the ZPO states that a person who is approached in connection with a possible appointment as an arbitrator is to disclose any and all circumstances likely to give rise to doubts as to their impartiality or independence. Arbitrators are under an obligation, after they have been appointed and until the arbitral proceedings have come to an end, to disclose such circumstances to the parties without undue delay unless they have already so informed the parties previously.

The Netherlands

Yes, the DCCP provides that a person can be excluded from appointment as arbitrator in view of the impartiality and independence of the arbitral tribunal. The DCCP also provides various provisions in the event arbitrators are not (sufficiently) independent and impartial. These include the challenge ("wraking"), the refusal of leave to enforce ("exequatur") and the annulment of an arbitral award ("vernietiging").

The rules of an arbitration institute can also express that arbitrators must be impartial and neutral. See, for example, article 11(2) NAI Rules 

Poland

The Polish Civil Procedure Code requires the person appointed as arbitrator to:

• submit in writing to each of the parties and the other arbitrators a declaration of his impartiality and independence; and
• immediately disclose to the parties all circumstances that could raise doubts as to his or her impartiality or independence.

The law states that the arbitrator may be excluded if there are circumstances giving rise to justifiable doubts as to his impartiality or independence, or if he does not possess the required qualifications, as agreed to by the parties.

The law provides the party of an arbitration proceeding an option to demand the exclusion of the arbitrator before a common court if the arbitration court does not exclude the arbitrator. The party demanding exclusion of the arbitrator has two weeks from receipt of a notice from the arbitration court to file a relevant motion to the common court.

Is there any express duty to disclose anything which  might reasonably give rise to doubts about an arbitrator's impartiality or independence?

England and Wales

Common law recognises a duty to disclose circumstances which might reasonably give rise to justifiable doubts as to an arbitrator's impartiality. The Law Commission has proposed that this should also become an express provision in the Arbitration Act 1996. It remains unclear whether the duty of disclosure is based on the arbitrator's actual knowledge or whether they should disclose what they ought to know after making reasonable inquiries.

Germany

See answer to the question above.

The Netherlands

Yes, this is required by the principles of impartiality and independence (see above). Furthermore, parties can agree such disclosure obligation explicitly. For example, the NAI Rules do contain the obligation for a person who cannot satisfy the fundamental principle of the impartiality and independence of arbitrators, to decline the invitation to act as arbitrator (before the appointment) or to communicate about such justifiable doubts (during the proceedings). Furthermore, the arbitrator must sign a statement of impartiality before being formally appointed.  

Poland

See answer to the question above.

Arbitrator immunity

Are arbitrators immune from liability for anything they do while acting as an arbitrator?

England and Wales

Arbitrators are not liable for anything done or omitted in the discharge, or purported discharge, of their functions, unless they can be shown to have acted in bad faith.

Germany

If arbitrators act in breach of their obligations, they may be removed from their office under the conditions of sections 1036, 1038 of the German ZPO. In addition, they may be liable to the parties for damages for non-performance or poor performance under sections 280 et seq. of the German Civil Code (Bürgerliches Gesetzbuch, or BGB) or based on tort under sections 823 et seq. BGB. In practice, however, arbitrators seek and are granted far-reaching limitations to their liability, whether expressly agreed in the contract between the arbitrator and the parties or through the application of institutional rules. Article 45 of the DIS Arbitration Rules contain a limitation of liability regime for arbitrators.

The Netherlands

The DCCP does not provide specific provisions devoted to (the limitation of) an arbitrator's liability. However, arbitrators can be held personally liable if they acted intentionally or knowingly reckless or with manifest gross disregard for what constitutes proper performance of duties. The liability of arbitrators can also be agreed to by the parties explicitly. See, for example, article 61 NAI Rules.

Poland

Polish law does not provide the arbitrators with any exemption from liability for their actions in the capacity of an arbitrator. These kinds of exemptions are included in the rules and regulations of the particular arbitration courts and thus can be accepted by the parties as a contractual release from liability.

Rules and regulations of the Court of Arbitration at the Polish Chamber of Commerce in Warsaw:

§ 5 states: "1. The Court of Arbitration and the Arbitral Tribunal shall perform actions connected with the arbitration proceeding with due diligence, seeking in particular to assure that the ruling issued is effective and enforceable. 

2. The arbitrators, the Polish Chamber of Commerce, the Court of Arbitration, their staff and the members of the authorities of the Polish Chamber of Commerce and the Court of Arbitration shall not be liable for any loss arising as a result of acts or omissions connected with conduct of an arbitration proceeding, unless the loss was caused intentionally."

Rules and regulations of the Lewiatan Arbitration Court in Warsaw:

§ 15 states: "Lewiatan Arbitration Court, including its authorities and staff, Lewiatan Confederation and the arbitrators shall not be liable for acts or omissions connected with the arbitration proceedings arbitration, unless the loss was caused intentionally."

Are arbitrators immune from liability for resigning?

England and Wales

Despite the general immunity referred to above, there is an exception for where liability is incurred by reason of the arbitrator resigning. If the parties do not agree the consequences of an arbitrator’s resignation, the arbitrator can apply to court to “grant [the arbitrator] relief from any liability thereby incurred”. To grant relief, the court must be satisfied that it was reasonable for the arbitrator to resign.

Germany

See answer to the question above.

The Netherlands

No, see answer to the question above. 

Poland

Polish law does not provide the arbitrators with any exemption from liability for resigning. Quite the opposite, the Civil Procedure Code states that while the arbitrator may resign at any time, the arbitrator is liable for damages resulting from resigning without "important reasons". The general clause of "important reasons" is used similarly in the Polish Civil Code as regards to termination of an agreement to provide services. This may imply that Polish law recognises the arbitrator's liability in a similar way to the liability of a provider of services.

Court support for arbitration

Is there any provision in statute or code which gives courts the power to make orders to support arbitral proceedings (such as ordering witness evidence or the preservation of evidence)?

England and Wales

Yes, unless the parties agree otherwise, the courts have the power to make various orders to support arbitral proceedings, including the taking of witness evidence and preserving evidence. If the case is urgent, the court can make such order as it thinks necessary to preserve evidence or assets if one of the parties (or a proposed party) applies. Where the case is not urgent, the permission of the tribunal or the agreement in writing of the other parties is required for an application.

Germany

Support from the German courts is available throughout the course of arbitration proceedings. Courts may, among other things, on the application of a party, appoint arbitrators (section 1035 ZPO), order interim measures (section 1033 ZPO), order that a recalcitrant party comply with an interim measure issued by the arbitral tribunal (1041(2) ZPO), and assist in the taking of evidence (section 1050 ZPO).

The Netherlands

An arbitration agreement shall not prevent a party from requesting the "ordinary" court to order a preliminary examination of witnesses, a preliminary expert opinion, a preliminary site inspection and viewing, or inspection, copy or excerpt of certain documents.

Poland

Civil Procedure Code regulates the institution of judicial support by a common court. The arbitration court may request a common court to take evidence or perform another act that the court of arbitration cannot perform. 

For example, at the request of the arbitration court a common court may: 

• depose a witness who refuses to appear at an arbitration court hearing (also the arbitration court may request the common court to fine the witness if he or she fails to appear or request that the witness be forcibly brought and heard before the common court); 
• fine the expert for failing to prepare an opinion or for failing to appear before the arbitration court;
• oblige the party or a third party to present a document relevant to resolving the case;
• oblige a public authority or a state body to present a document that cannot be obtained by the parties to the arbitration or the arbitration court.

Can the court make orders binding non-parties too?

England and Wales

The position is unclear. Initially it was felt that the court could, but then later cases found that it could not. In 2020, the Court of Appeal held that orders can be made against non-parties, at least sometimes. The Law Commission has proposed amending the Arbitration Act1996 to confirm that orders can be made against non-parties.

Germany

Yes.

The Netherlands

Yes, for example in the case of a witness hearing. It is possible that a witness does not appear at the hearing, or refuses to give a statement. In that case, the tribunal may allow the relevant party to start summary proceedings before the "ordinary" court at which the witness hearing may take place.

Poland

Yes, see answer to the question above.

Emergency Arbitrators

Are there any provisions in statute or code dealing expressly with emergency arbitrators?

England and Wales

No. The Law Commission does not believe that the provisions of the Arbitration Act 1996 should generally apply to emergency arbitrators.

Germany

No.

The Netherlands

Based on art. 1043b DCCP and art. 254(1) DCCP, it is possible to start summary arbitral proceedings. Provisions regarding the summary arbitral proceedings can also be agreed to by the parties. See, for example, article 9 NAI Rules.

Poland

The Civil Procedure Code does not provide for the institution of emergency arbitrators. Nonetheless the law states that a common court is entitled to grant a temporary injunction even if the dispute is subject to being resolved in arbitration proceedings. Emergency arbitrators are regulated in the rules and regulations of the particular arbitration courts. 

One example is the rules and regulations of the Lewiatan Arbitration Court. An emergency arbitrator may issue a decision on a protective measure until the Arbitral Tribunal is constituted.

Appeals

Are there provisions in statute or code expressly allowing an appeal on a point of law and, if so, can the parties agree to opt-out (or opt-in)?

England and Wales

Yes, a party can appeal to court on a question of law arising out of an award. This requires the agreement of all the other parties to the arbitration or the permission of the court. The court will only give permission if satisfied that that the determination of the question will substantially affect the rights of one or more parties and either the award is obviously wrong or the question of law is of general public importance and the tribunal's decision is at least open to serious doubt.

Germany

No. An arbitration award can only be challenged on the narrow grounds set out in section 1059 of the German ZPO.

The Netherlands

It depends on the arbitration institute. For example, no appeal is provided for an NAI-arbitration, unless parties explicitly agreed on the possibility of appeal. Regarding an arbitration with the Arbitration Board for the Building Industry, it is the opposite: appeal is provided for, unless parties agree to waive the possibility of appeal. However, in many cases it is possible to initiate proceedings to revoke or even set aside an arbitral award. An action to that effect can only be brought before the Court of Appeal. The decision of the court is then subject to appeal in cassation. Moreover, cassation can be excluded (opt-out) by the parties. But this is not possible if one party is a consumer (a natural person not acting in the exercise of a profession or business).

Parties are allowed to opt-out of this right of appeal.

Poland

Under the Code of Civil Procedure, an arbitral award may be set aside by a common court if the party files a relevant motion (appeal). An arbitral award may be set aside for reasons relating to (among other things) being "contrary to the fundamental principles of the legal order of the Republic of Poland (public policy clause)".

There is no possibility for the parties to opt-out from the above grounds for setting aside of an arbitral award.

As noted by the Court of Appeal in Katowice, the public policy clause should be interpreted in the following way: "Only qualified violations of substantive or procedural law, which amount to the fact that the judgment is irreconcilable with the norms of law considered fundamental to the functioning of the legal system as such, may constitute grounds for setting aside an arbitral award. This means that a mere misinterpretation of substantive law or its misapplication by the arbitration court does not justify the upholding of the action even if a breach of mandatory rules would have occurred. In applying the criterion of the public policy clause, the question is not whether the judgement under assessment complies with all the mandatory rules of law at issue, but whether it has had an effect contrary to the fundamental principles of the national legal order." (Judgment of the Court of Appeal in Katowice of 21 September 2020, V AGa 152/19)

Osborne Clarke comment 

The Law Commission considered the situation in foreign jurisdictions and legislation for some areas currently under consideration (namely, confidentiality, arbitrator independence and appeals on a point of law). Although it noted differences in approach in certain countries, it does not appear to have based its proposals for reform on the law of any particular jurisdiction. 

Our overview above demonstrates that, although different jurisdictions often adopt the same approach to common issues which crop up in relation to arbitrations, there are differences: for example, where there is an express statutory requirement in some countries for arbitrator independence – something which the Law Commission does not currently propose adopting. There are also new areas (such as the use of emergency arbitrators) where no express codification has yet been introduced in the countries surveyed (and that position may change, in the same way that the Law Commission is now reviewing such areas). 

More details on the Law Commission's proposals can be found here.

The consultation closes on 15 December 2022.