The Arbitration (Scotland) Act 2010: A New Beginning

A new era for arbitration in Scotland was celebrated on 23 June 2010 in the Playfair Library of the University of Edinbugh.  The event was an international arbitration conference entitled: the Arbitration (Scotland) Act 2010: A New Beginning.     

 

The event was jointly organised and sponsored by the University of Edinburgh, the Edinburgh Centre for Commercial Law, The Scottish Branch of the Chartered Institute of Arbitrators, the Faculty of Advocates, the Law Society of Scotland and the Royal Institution of Chartered Surveyors. The speakers included draftsmen of the Act, Scottish and international arbitration practitioners and academics.  Approximately 130 delegates attended, comprising not only qualified lawyers from all branches of the Scottish legal profession, but also chartered surveyors and other professionals involved in aribitration proceedings. 

 

The conference centred around the Arbitration (Scotland) Act 2010, which had come into force just a few days before, on 7th June 2010. The development of the Act, its essential features and the challenges ahead to make best use of the Act and its opportunities were presented. In time the new Act is to fully supersede the former Arbitration regime of Scotland with its rather difficult and complicated set up. In contrast, the new Act and the default Rules provide a system for arbitration that is clear and user-friendly, even where the parties have not chosen any procedural steps in detail. The Act, reflecting the best of arbitration practice around the world, has been commended for good draftsmanship.  It also includes new features which make it an outstanding instrument which is hoped to attract not only local but also international business. 

 

Some of the conference discussions focused on steps necessary to put Scotland on the international map of arbitration. The Minister for Community Safety, Mr Fergus Ewing MSP, in his keynote address had pledged the support of the Scottish Government to secure the success of the new Act. It was highlighted that another milestone in measuring the success of an Arbitration centre was the manner in which the courts supported arbitration by minimal interference, whilst upholding the foundations of justice.

 

Many papers were presented at the conference, and it would not be possible to provide a summary of them all here.  The conference programme can be found here: http://system.newzapp.co.uk/EditSite/Customers/6210/nz-docs/Arbitration_Programme.pdf

 

Almost all of the speakers emphasised the role of the Act as the first step in progress towards the creation of a centre for arbitration in Scotland.  It was conceded that Scotland is not necessarily ahead of the game in this respect: Singapore, Paris, and Stockholm are locations which have all built a reputation as world-beating centres for arbitral business.   James Hope, Solicitor Advocate, Vinge, Sweden encouraged us to think of what Scotland could offer which differed from its competitors.  The mixed nature of Scots law could potentially be an asset.  We should compare ourselves not simply with our nearest neighbour, but internationally.  An aspect of Scots law which could work to our benefit is the lack of discovery.  This procedure is not part of Scots law, whereas it forms part of both English and US law.  Scots rules have developed in order to prevent “fishing diligence.”  This practice is unpopular and can add immeasurably to the time and cost of arbitral proceedings.  It is an aspect of Scots law which might be attractive to those seeking to arbitrate. 

 

Mr Hope also commended Edinburgh University Law School for its highly successful and popular LLM commercial law programme.  International Commercial Arbitration is studied at Edinburgh in a highly international context, with classes containing students from all round the globe.  Many of the speakers at the conference are teachers on this course.  This blogger can confirm that the LLM class in international commercial arbitration is one of the most popular LLM courses at Edinburgh Law School and this trend is set to continue in September 2010, with the beginning of the new academic term. 

 

Mr Hope also conceded that Scotland could attract business by offering low cost arbitration, but cautioned  against selling ourselves too cheaply.  We can offer high quality people and procedures.  We now have a world-beating Arbitration Act, which has been carefully drafted.  The drafters have left no stone unturned, a fact which was illustrated by another speaker, one of the drafters of the Act, Hew Dundas, Independent International Arbitrator and Mediator, Edinburgh, who explained that the comparative analysis of the drafters had extended as far as the Bolivian Arbitration Act. 

 

In the first panel discussion which ended the morning’s proceedings, attention was focussed inter alia on the short form arbitration rules which form part of the Act.  These are intended to operate in relatively low value proceedings (under £25,000).  They are intended to provide a cheaper and quicker alternative to full arbitral proceedings.  The short form rules have already attracted a good deal of attention. 

 

In the afternoon, Kaj Hober, Professor of International Law, CEPMLP, University of Dundee, and Mannheimer Swartling, Stockholm, provided further food for thought by suggesting that Scotland required to find a niche within the arbitration world.  He suggested that such a niche area could be energy.  Scotland has the opportunity to offer renewable energy on a world-leading scale.  It is perhaps only by developing a speciality such as this that Scotland could compete with the already-established arbitral centres.            

 

Finally, Michael Davison, Head of International Arbitration, Hogan Lovells, London, provided a thought-provoking and highly entertaining presentation.  He provided the perspective from England, emphasising the fact that he is, in fact, Scottish, and had been forced to listen to an entire day’s proceedings which focussed in large part on how Scotland could compete with England.  He suggested five reasons for choosing a seat of arbitration:

(1)   Neutrality, i.e. a system which is not the system of either of the parties to the dispute;

(2)   The perceived efficiency of arbitration in that legal system;

(3)   The perceived extent to which the judiciary interfere with the arbitral process;

(4)   The facilities of that arbitral centre;

(5)   The track record of that centre. 

 

By focussing on these reasons, Scotland might more meaningfully market itself as an arbitral centre to the rest of the world.

 

Mr Davison commended the drafters of the Act.  In particular he welcomed the express confidentiality clause and he thought that the aims and objectives were clearer than the 1996 Act.  Additionally, the issue of whether specific provisions are mandatory or non-mandatory is more clearly spelled out in the Scottish Act.  The issue of discovery also formed a focus for Mr Davison.  The increase of time and cost makes England less attractive in this respect than, for example, Paris.

 

He suggested that the existence of a split profession (between solicitors and barristers) might also increase costs, and this is an issue which the Scots should consider.  Finally, there is a perception outside the UK that the relatively complex English procedure means that arbitration in England is really nothing other than another form of litigation. 

 

Singapore was used as a model of a successful arbitral centre.  Mr Davison compared the state of the art premises in Singapore, Maxwell Chambers, with what is available in London.  This may have led delegates to consider whether the Scottish Government could be persuaded to invest in purpose-built premises in order to launch the Act.  In the current economic climate this seems unlikely, but it is hoped that the message might be conveyed to the keynote speaker, Fergus Ewing MSP, who had unfortunately left the conference by this stage. 

 

In common with several of the other speakers, Mr Davison identified the energy sector as an area where Scotland could most usefully find a niche in which to develop specialisation.  In a climate of reducing energy reserves, squabbles between commercial parties are likely to develop.  Carbon trading is also an area where a niche might be developed. 

 

The final panel of the afternoon was extremely interesting, focussing on arbitral and Scottish commercial court proceedings.  The panel involved both Lord Drummond Young as chair, and Lord Glennie, principal judge of the commercial court.  It seemed clear that many of the delegates were not entirely familiar with the procedures of the Scottish commercial court.  The old ways have changed, and the rules are less technical and more efficient than is generally perceived.  Examples include the use of witness statements and allowing experts to get together by themselves to resolve outstanding issues (a practice known as “hot-tubbing” in the US, according to Iain Clark, Solicitor Advocate, Young and Partners, Glasgow.  This expression did not seem to be within judicial knowledge in Scotland). 

 

A lively and interesting day was had by all.  Many of the significant actors in the arbitration scene in Scotland were present, and the insights provided by the speakers from other jurisdictions were extremely valuable.  With this excellent beginning for the new Act, one hopes that it will now go from strength to strength.         

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