Lloyd's Maritime and Commercial Law Quarterly
THE ARBITRATION ACT 1996
Lord Saville*
Arbitration is a long established and popular form of dispute resolution. English law has the most developed law of arbitration of any country and a highly developed system of commercial law which can be chosen as the law applicable to parties’ relationships; also England is a leading world centre for international arbitrations. After consideration of the UNCITRAL Model Law on international commercial arbitrations, Parliament has modernized and comprehensively restated the law of arbitration in the Arbitration Act 1996.
In the nature of human affairs disputes often arise. In a civilized society there are ways and means of resolving those disputes without recourse to violence or to other methods which are regarded as inconsistent with the principles which underlie such societies. In a democratic society one of those principles is the rule of law, which in turn requires there to be a State judicial system available to all and which is independent of the legislature and the executive. At the same time, in a free society those who want it should have the right by agreement to choose, if they wish, their own means of resolving their disputes, without recourse to the State court system, provided, of course, that this does not offend other basic principles of our society. That right we have set out as the second of the general principles in s. 1 of the Arbitration Act 1996, which is that:
The parties should be free to agree how their disputes are to be resolved, subject only to such safeguards as are necessary in the public interest.
Arbitration is one such means, perhaps the oldest form of acceptable alternative dispute resolution, i.e., an alternative to the State court system. The essence of arbitration is that the parties choose a third party whose decision on the dispute is binding on them. Arbitration as a form of dispute resolution accordingly rests on the agreement of the parties; and the second principle thus also encapsulates this principle of party autonomy.
The need for legislation
Since arbitration rests on agreement, the question immediately arises as to why we need to legislate at all, save to exclude arbitration where the public interest so dictates. Surely, if the parties wish to arbitrate, they can make their own agreement as to how to proceed, and there is no need for the many provisions in the first Part of the Arbitration Act? In
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