Chapter II: Other Provisions Relating to Arbitration
| Library | Merkin and Flannery on the Arbitration Act 1996 |
| Pages | 830-836 |
| Author | Robert Merkin,Louis Flannery |
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– (1) In the case of a domestic arbitration agreement the provisions of
Part I are modified in accordance with the following sections.(2) For this purpose a ‘domestic arbitration agreement’ means an arbitration agreement to which none of the parties is
an individual who is a national of, or habitually resident in, a state other than the
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United Kingdom, or
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a body corporate which is incorporated in, or whose central control and management is exercised in, a state other than the United Kingdom.
(3) In subsection (2) ‘arbitration agreement’ and ‘seat of the arbitration’ have the same meaning as in
Part I (see sections 3, 5(1) and 6). -
an individual who is a national of, or habitually resident in, a state other than the
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United Kingdom, or
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a body corporate which is incorporated in, or whose central control and management is exercised in, a state other than the United Kingdom.
Sections 85 to 87 of the Act have not been brought into force, and it is now clear that they will never be. Conversely, it is also unlikely that the sections will ever be formally repealed. Although several foreign jurisdictions retain the distinction between domestic and non-domestic arbitrations (including Canada, New Zealand and Australia), such as existed in English law prior to the coming into force of the Act, the distinction has been effectively abolished by holding back these three sections from the statute as enacted.
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– (1) In section 9 (stay of legal proceedings), subsection (4) (stay unless the arbitration agreement is null and void, inoperative, or incapable of being performed) does not apply to a domestic arbitration agreement.
(2) On an application under that section in relation to a domestic arbitration agreement the court shall grant a stay unless satisfied
that the arbitration agreement is null and void, inoperative, or incapable of being performed, or
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that there are other sufficient grounds for not requiring the parties to abide by the arbitration agreement.
(4) For the purposes of this section the question whether an arbitration agreement is a domestic arbitration agreement shall be determined by reference to the facts at the time the legal proceedings are concerned.
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that the arbitration agreement is null and void, inoperative, or incapable of being performed, or
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that there are other sufficient grounds for not requiring the parties to abide by the arbitration agreement.
This section (along with sections 85 and 87) has not been brought into force, and, although scheduled for repeal, it is likely to remain included in the statute but ignored for all purposes: see the Notes to section 85.
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– (1) In the case of a domestic arbitration agreement any agreement to exclude the jurisdiction of the court under –
section 45 (determination of preliminary point of law), or
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section 69 (challenging the award: appeal on point of law),
(2) For this purpose the commencement of the arbitral proceedings has the same meaning as in
Part I (see section 14).(3) For the purposes of this section the question whether an arbitration agreement is a domestic arbitration agreement shall be determined by reference to the facts at the time the agreement is entered into.
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section 45 (determination of preliminary point of law), or
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section 69 (challenging the award: appeal on point of law),
This section (along with sections 85 and 86) has not been brought into force; see the Notes to section 85.
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– (1) The Secretary of State may by order repeal or amend the provisions of sections 85 to 87.
(2) An order under this section may contain such supplementary, incidental and transitional provisions as appear to the Secretary of State to be appropriate.
(3) An order under this section shall be made by statutory instrument and no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
No order has been made under this section. Perhaps the Secretary of State should do so, and put these sections out of their misery.
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– (1) The following sections extend the application of Part 2 (unfair terms) of the Consumer Rights Act 2015 in relation to a term which constitutes an arbitration agreement.
For this purpose ‘arbitration agreement’ means an agreement to submit to arbitration present or future disputes or differences (whether or not contractual).
(2) In those sections ‘the Part’ means Part 2 (unfair terms) of the Consumer Rights Act 2015.
(3) Those sections apply whatever the law applicable to the arbitration agreement.
Sections 89 to 91 lay down a scheme for the regulation of consumer arbitration agreements, replacing the Consumer Arbitration Agreements Act 1988. The 1988 Act invalidated an arbitration agreement to which a consumer was a party and which fell within county court limits, provided that the agreement had been entered into prior to the dispute arising. The 1988 Act was all but rendered redundant with effect from 1 July 1995 by the Unfair Terms in Consumer Contracts Regulations 1994, 1 re-enacted with minor amendments by the Unfair Terms in Consumer Contracts Regulations 1999, 2 and was duly repealed by the Arbitration Act 1996. The 1999 Regulations have now been repealed and replaced by Part 2 of the Consumer Rights Act 2015. The 2015 Act implements the EU’s Unfair Terms in Consumer Contracts Directive 1993. 3 The 2015 Act applies to any contract between a consumer (i.e. an individual acting for purposes that are wholly outside that individual’s trade, business, craft or profession) 4 and a trader 5 (i.e. a person acting for purposes relating to that person’s trade, business, craft or profession, 6 including a government department or local authority). 7 Under the CRA 2015 a term in a contract with a consumer is unfair, and not binding on the consumer, 8 if ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer’. 9
It is apparent that the CRA 2015 applies to all manner of contract terms, most importantly, exclusion clauses. However, the CRA 2015 is not so limited, and Schedule 2 to the CRA 2015 sets out a list of terms which may be regarded as unfair. Paragraph 20 in Schedule 2 refers to any term that has the object or effect of excluding or hindering the consumer’s right to take legal action or exercise any other legal remedy, in particular by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions.
The purpose of section 89 in its amended form is to extend the CRA 2015 Regulations to consumer arbitration agreements. No distinction is drawn between pre- and post-dispute arbitration clauses, and any clause, whenever agreed to, is within the CRA 2015. It is, however, far more likely that an arbitration agreement freely entered into by a consumer after a dispute has arisen will be regarded as fair. Fairness is to be determined at the time the agreement was made, and not in relation to what has happened subsequently, so the fact that the consumer has participated in the arbitration does not remove his right to allege that the clause was unfair by challenging the award. 10 A consumer who is sophisticated or who has had the...
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