The new Labour government has confirmed it will revive the Arbitration Bill, which had been shelved when Parliament was dissolved in the run up to July’s general election.

Although not mentioned in the headline bills, a background briefing attached to the King’s Speech setting out the UK government’s legislative programme made it clear that the bill would be brought back to Parliament. However, there was no return for the Litigation Funding Bill, which was similarly shelved when former Prime Minister Rishi Sunak called the election back in May.

Legal practitioners welcomed the Arbitration Bill’s return.

Bar Council chair Sam Townend KC said the bill would help to ensure London maintained “a deserved reputation as the foremost centre for international arbitration”.

He flagged up arbitration’s contribution to the country’s income from exports, saying: “The hard currency and soft power value to the country of the legal services sector, the most liberal and open in the world, and already constituting 10% of the global legal economy, should not be understated.”

The Law Commission, which drafted the bill, said arbitration had boosted UK invisible earnings to the tune of £2.5bn, offering the new Labour government – which is keen to encourage growth – a chance to do so through dispute resolution.  

Law Society of England and Wales president Nick Emmerson agreed, saying: “Ensuring we continue to have a modern arbitration legislative framework is an important component in maintaining England and Wales as the jurisdiction of choice for international dispute resolution.”

Matthew Saunders, head of international arbitration at Ashurst, said the news was “very encouraging”. Craig Tevendale, London head of international arbitration at Herbert Smith Freehills, agreed, saying the arbitration community widely supported the bill.

He also welcomed government clarification on the new default rule regarding the law applicable to arbitration agreements that would not apply to investor-state agreements.

Markus Burgstaller of Hogan Lovells explained why: “The bill would appear to maintain the position that the law applicable to arbitration agreements that do not arise from investor-state contracts will be the law of the seat. This clarifies the position under English law since the Supreme Court’s judgment in Enka v Chubb.  

“Underlining this policy is the consideration that where parties choose to seat their arbitration in England and Wales, it is English law that they want to govern critical questions such as arbitrability and scope. The policy aims to increase certainty and promote England and Wales further as an arbitration-friendly jurisdiction.”

Tomas Vail, the name partner of Vail Dispute Resolution, said the proposed change would ultimately create greater alignment between English and French arbitration regimes regarding the law governing the arbitration agreement.

Jonathan Wood, chair of international arbitration at RPC and president of the Chartered Institute of Arbitration, agreed, adding: “Much work has gone into this by Professor Sarah Greene and her team at the Law Commission, and CIArb was pleased to have been involved in the consultation process, having given evidence to the House of Lords committee to help it on its way.” 

Speaking on the decision not to include the Litigation Funding Bill on the list of 39 bills the government seeks to pass, Michael Roberts, a partner at Hogan Lovells, called it a “a missed opportunity” for businesses following the recent PACCAR Supreme Court judgment.

The judgment held that some litigation funding agreements constituted damages-based agreements (DBAs), requiring compliance with secondary legislation, and was met with concern from claimants, litigation funders and corporates alike. Former Lord Chancellor Alex Chalk KC had pledged to rectify the situation.

“The uncertainty the judgment creates continues, and the bill remains an unfortunate casualty of the early election,” said Roberts.