Arbitration (Scotland) Bill: Stage 2
Item 3 is stage 2 consideration of the Arbitration (Scotland) Bill.
I welcome the Minister for Enterprise, Energy and Tourism and his officials. I remind the officials that, as I am sure they are aware, they may not participate during the debate, although they may advise the minister at any point if required. I place on record our thanks to the minister and his officials for the constructive way in which they have engaged with the committee on the bill.
I remind members that they should have a copy of the marshalled list of amendments, a copy of the groupings of amendments and a copy of the helpful purpose-and-effect notes that have been provided for the Government amendments. We will now start consideration of the bill.
Sections 1 to 5 agreed to.
After section 5
Amendment 1, in the name of the minister, is the only amendment in group 1. I ask the minister to speak to and move the amendment.
Before I speak to amendment 1, the committee might find it helpful if I summarise the work that, with the committee's sanction, was carried out over the summer to address the issues that were raised in the committee's stage 1 report on the bill.
During the stage 1 debate, I undertook to hold meetings with those who have an interest in consumer arbitration schemes and with stakeholders from the legal profession. The meetings duly took place on 6 August and 18 August—Nigel Don attended the meeting on consumer arbitration schemes—and they were very constructive. Following those discussions, draft Government amendments were circulated to the relevant stakeholders for comment. The Law Society of Scotland and the Chartered Institute of Arbitrators submitted comments. I understand that they also did that at the committee's invitation.
To keep the committee fully apprised of how the Government intended to address the concerns that were expressed at stage 1, I wrote to the convener on 14 September to indicate the Government's thinking on how the bill would be amended in light of the conversations that had taken place and the comments that had been expressed. On receiving comments, we shared the draft Government amendments with the committee. Subsequently, the Government lodged its finalised amendments on 28 September so that committee members would have sight of them in advance of the committee meeting on 30 September.
As members will see, the Government has moved to address the concerns that were raised at stage 1 and has done its best to keep the committee informed of its further thinking. I hope that that open and inclusive consultation and discussion on the bill will be seen as a model of good practice for progressing legislation. Formal consultation is absolutely vital, but it can achieve only so much. Bringing the parties together in one room has proven to be extremely helpful and constructive in establishing which issues are important to those who will be affected, where potential conflict really exists and where the middle ground might lie.
I turn to amendment 1. If an arbitration agreement forms part of a larger contract, it is considered separately from that larger contract. That principle is enshrined in section 5 of the bill. In some jurisdictions, the law governing the arbitration agreement is the law that governs the contract that includes the agreement. In other jurisdictions, the law governing the arbitration agreement is the law of the "seat" of the arbitration. We understand that the international consensus among arbitrators is that it is preferable to use the law of the seat of the arbitration.
As the committee will be aware, a provision along those lines was suggested by the Chartered Institute of Arbitrators. The institute advises that, as far as it is aware, no legislation in the world addresses that important question. The significance of the law governing the arbitration agreement is that it covers matters such as the validity and scope of the agreement.
Amendment 1 introduces a new section that establishes a presumption that, when Scotland is designated by the parties as the seat of the arbitration, Scots law will govern the separable arbitration agreement, unless there is express agreement by the parties to the choice of law governing the agreement. At present, the matter is governed by the application of general rules of contract and international private law. The amendment is proposed as an improvement to the bill to clarify the circumstances in which Scots law applies to an arbitration agreement and to avoid potential litigation on the point, as has been the case in England.
I move amendment 1.
Amendment 1 agreed to.
Section 6 agreed to.
Schedule 1
Scottish Arbitration Rules
Amendment 2, in the name of the minister, is grouped with amendments 3, 6, 10 to 12, 16, 17, 28, 29, 38 to 41, 53 and 58.
There are 16 minor technical amendments in the group, spread throughout the Scottish arbitration rules in schedule 1. Given the nature of the amendments, I do not propose to speak to them, but I would be happy to explain any that are of particular interest to the committee.
I move amendment 2.
Amendment 2 agreed to.
Amendment 3 moved—[Jim Mather]—and agreed to.
Amendment 4, in the name of the minister, is grouped with amendments 5, 7, 25 and 27.
Amendment 27 amends rule 56, "Correcting an award", to ensure that it meshes with rule 79, "Formal communications", by using the term "made" rather than "receiving". Amendments 4, 5, 7 and 25 are required for the same purpose.
I move amendment 4.
Amendment 4 agreed to.
Amendments 5 to 7 moved—[Jim Mather]—and agreed to.
Amendment 8, in the name of the minister, is grouped with amendments 9, 18 and 47 to 50.
These are technical amendments in response to concerns raised by the judges of the commercial court of the Court of Session and the Chartered Institute of Arbitrators.
Amendments 8 and 9 provide expressly that, in rule 15, "Resignation of arbitrator", and rule 16, "Liability etc of arbitrator when tenure ends", the outer house's decision is final.
Amendment 18 ensures that rule 43, "Court's other powers in relation to arbitration", is consistent with the rest of the bill in that the arbitration may continue notwithstanding the application to the court.
Amendment 47 provides that the court can refuse to enforce an award when it is being appealed, reviewed or corrected. It may be inappropriate for an award to be enforced while it is still subject to further consideration by the court or the arbitrator under part 8 of the Scottish arbitration rules or rule 56 on correction. The provision is based on article 36(2) of the United Nations Commission on International Trade Law model law.
Amendment 48 is a technical amendment that ensures that section 11 does not bar recognition or enforcement of foreign arbitral awards under the 1958 New York convention or awards under any other enactment or rule of law.
Amendments 49 and 50 address concerns that sections 6 to 8 could mean that the Scottish arbitration rules in schedule 1 confer a private right between individuals rather than a statutory one such as is provided for by an act of Parliament. The amendments seek to make it clear that legal proceedings in relation to arbitration can be instigated only as provided for in the bill. Section 11 will bolster and support the finality and binding nature of arbitral proceedings in Scotland, and it confirms the jurisdiction of the courts when necessary.
I move amendment 8.
Amendment 8 agreed to.
Amendments 9 to 12 moved—[Jim Mather]—and agreed to.
Amendment 13, in the name of the minister, is grouped with amendments 14 and 52.
Amendment 52 provides a redrafted section 13 following the expression of concerns about the practicality of preserving anonymity when arbitration is the subject of legal proceedings.
Arbitration is usually conducted on a confidential basis both in Scotland and in other parts of the world—that is one of the main attractions of arbitration as a method of dispute resolution. Commercial parties, in particular, may not want their disputes to be conducted in public for reasons of commercial sensitivity. Rule 25 in the bill provides, on a default basis, that arbitration in Scotland will be conducted on a confidential basis.
It would defeat the object of confidentiality in rule 25 if the identity of parties were disclosed simply because one of the parties wished to raise legal proceedings in a court as a result of some aspect of the arbitration. In view of the issues raised, amendment 52 provides that the anonymity restrictions in relation to the identity of the parties in section 13 should depend on an application to the court, which would have discretion on whether to grant anonymity protection. There would, however, be a presumption in favour of granting such an application. Criminal proceedings and enforcement proceedings are also excluded from the anonymity protection in section 13. In the latter case, a party that is not complying with an arbitral award should not be able to hide behind anonymity.
Amendment 13 is a minor drafting change at the instance of the Law Society of Scotland to make it clear that breach of an obligation of confidence under rule 25 will be grounds for raising an appropriate action in court.
Amendment 14 extends rule 25 on confidentiality so that parties to an arbitral dispute will continue to be bound by confidentiality in relation to any court proceedings that arise from the arbitration, provided that the court has granted anonymity.
I move amendment 13.
The issue that was raised in evidence to the committee focused on the potential for conflict between the confidentiality that was sought in the arbitration process and the general principles on transparency in courts of law. Under these amendments, the judgment lies with the court. I take it that the combined effect of the amendments and the existing provisions will be that no appeal will be possible against that judgment.
I will draw on the resources at my disposal to give you the correct answer to that. [Interruption.] We have not yet made that clear in the bill. It is a procedural matter, but we will endeavour to make that clear as we move to stage 3.
So an amendment will be lodged at stage 3 to clarify that.
Yes.
Amendment 13 agreed to.
Amendment 14 moved—[Jim Mather]—and agreed to.
Amendment 15, in the name of the minister, is in a group on its own.
We are grateful to the judges of the commercial court of the Court of Session for suggesting the amendment, which amends rule 29 on tribunal decisions. It provides that, when three or more arbitrators are unable to make a decision either unanimously or by majority and when no-one has been appointed to chair the tribunal, the last arbitrator to have been appointed will decide the matter.
That person will normally have been appointed by the two arbitrators who have already been appointed. In some cases, that will avoid the time and expense involved in appointing an umpire, including the time that it will take the umpire to become familiar with the dispute. When there are two arbitrators and no chair has been appointed, the position remains that the decision will be made by an umpire.
I move amendment 15.
Amendment 15 agreed to.
Amendments 16 to 18 moved—[Jim Mather]—and agreed to.
Amendment 19, in the name of the minister, is grouped with amendments 20 to 24 and 43.
This group of amendments responds to representations made by stakeholders and the committee.
On rule 45(b) on damages, in line with the strong representations made about the risk of abuse of financially weaker parties by stronger parties, amendment 19 will separate out the rule, giving the tribunal the power to award payment and damages, in order that it can be made mandatory. That means that it will not be possible for parties to remove the arbitrator's power to award damages, although the position remains that there is no obligation on an arbitrator to award damages. It may be inappropriate for the tribunal to make such an award—for example, when no party seeks such an award. Also, the tribunal must resolve the dispute in accordance with the law, unless the parties agree to the contrary.
Rule 46 on interest will also be added by amendment 43 to the list of mandatory rules. That means that parties cannot agree that an award including interest will not be available to the arbitrator. Again, there is no obligation on the arbitrator to award interest, unless it is appropriate to do so in the context of the arbitration. We have raised concerns previously about making rule 46 mandatory, but we are taking on board the strong representations of the Law Society of Scotland in particular on this matter.
In addition, through amendment 23 we propose to make compound interest and the manner in which interest is calculated something from which the parties can contract out. The judges of the commercial court point out that compound interest cannot be awarded by the court unless the parties contract for it. We hope that that accommodation meets the committee's approval.
Amendment 24 is a technical amendment to remove rule 47 due to doubts about its interaction with other provisions. The judges of the commercial court highlighted that point in their evidence to the committee. Existing rule 54 as recast in the body of the bill will remain to provide the necessary protection for third parties.
Finally, reflecting the widespread views of stakeholders in evidence to the committee, amendment 43 will remove rule 50 on provisional awards from the list of mandatory rules, thereby making it a default rule, and will add rule 51 on part awards to the list of mandatory rules. Although it was considered that making rule 50 mandatory could protect the weaker party, we have altered the protections in the light of the expert recommendations to the committee on what would be effective in practice.
The other amendments in the group will make consequential provision to make those changes work. I can address those amendments if members would like me to do so.
I move amendment 19.
Amendment 19 agreed to.
Amendments 20 to 25 moved—[Jim Mather]—and agreed to.
Amendment 26, in the name of the minister, is grouped with amendment 46.
Amendments 26 and 46 will move the provision made by rule 54 to the main body of the bill, which deals with enforcement.
The content of rule 54 is more appropriately located with the enforcement provisions, given that it relates to the final and binding nature of arbitral awards and that an arbitral award will, if necessary, be enforced by the courts. The Scottish arbitration rules in schedule 1 to the bill relate to the arbitral proceedings themselves.
I move amendment 26.
Amendment 26 agreed to.
Amendments 27 to 29 moved—[Jim Mather]—and agreed to.
Amendment 30, in the name of the minister, is grouped with amendments 31 to 37.
The amendments in this group seek to address concerns raised by stakeholders about the appeals process in rule 67, particularly the proposed procedure for seeking leave of the court to lodge such an appeal. The intention behind that proposal was to avoid vexatious appeals on spurious grounds that are simply intended to frustrate the finality of the arbitral process.
We hope that, once the bill has been enacted, the Lord President will be minded to direct that challenges and appeals relating to arbitrations will be dealt with by the commercial court of the Court of Session. The committee has received comments that my officials sought from Lord Glennie, the senior judge of the commercial court, in which he indicated that his court would establish procedures to deal with such applications. He further commented that that process works in England and he saw no reason for it not to work in Scotland.
Nevertheless, amendments are offered that are intended to address some of the concerns that have been expressed. In particular, parties who agree that appeals on grounds of legal error should be available to them should also be able to agree to dispense with the process whereby the leave of the court has to be sought in order to proceed.
Amendment 31 adjusts rule 67—on legal error appeals—addressing concerns that the double-step appeal procedure, which is intended to deter applications that are simply delaying tactics, is too complicated or simply unnecessary since parties already have the option of contracting out of legal error appeals. Where parties have elected not to contract out of the appeal on error of law, that appeal should not be severely restricted, so the new sub-rule will more clearly allow the parties to bypass the hurdle of applying for leave to appeal on grounds of legal error. The agreement of the parties to allow legal error appeal will be possible either in the arbitration agreement or when the dispute arises.
The other amendments in this group are more technical. Amendment 30 is a minor drafting amendment to spell out fairness as an express ground for a serious irregularity appeal order on fees and expenses, for consistency. Amendment 32 amends rule 67(4)(c) to put it beyond doubt that there is no implication that a tribunal's decision cannot proceed on assumed facts by the arbitrator where appropriate.
Amendment 33 partly simplifies rule 67 by removing sub-rule 67(4)(d), as concerns were raised that the provision would allow the court to say that there was no appeal, even if there was an outstandingly bad error. The second sub-rule added by amendment 33 also provides that the court must proceed without a hearing, unless something convinces it otherwise. The fourth sub-rule provides that the appeal must be made within seven days once leave to appeal is granted, unless it is made with the agreement of the parties.
Amendment 34 is a minor consequential change that is needed as a result of the switch to express "leave" to appeal terminology in rule 67. Amendments 35 and 36 mean that an appeal must be made no later than 28 days after the later of the date on which the award giving rise to the appeal or application is made, or the date on which the tribunal decides on any correction to the award under rule 56. Amendment 37 makes it clear that the application for leave to appeal is the procedural step that is required to be taken by the end of the 28-day period for a legal error appeal.
I move amendment 30.
Amendment 30 is to insert
"that an arbitrator has not treated the parties fairly,".
Fairness is obviously difficult to define and could be construed widely. Is the Government prepared to look at the concept of fairness to ensure that it cannot be abused by any parties? Will it assess whether there are ways of tightening up the definition—there might not be—to ensure that it is not open to abuse?
I thank the member for that observation. I have no hesitation in giving him our agreement to do exactly that.
Amendment 30 agreed to.
Amendments 31 to 41 moved—[Jim Mather]—and agreed to.
Schedule 1, as amended, agreed to.
Section 7—Mandatory rules
Amendment 42, in the name of the minister, is in a group on its own.
Amendment 42 will add rule 4, on eligibility to act as an arbitrator, to the list of mandatory rules in the bill. That is the provision that an arbitrator must be more than 16 years of age and cannot be mentally or otherwise incapable.
The Government cannot imagine why a party to an arbitration would want a minor or incapable person to be appointed as an arbitrator, other than for vexatious reasons. Such a person is unlikely to have the attributes, qualifications or experience necessary to conduct an arbitration that would have a legally enforceable result. The Chartered Institute of Arbitrators commented that it was unlikely that parties would wish to contract out of the rule and agree that a minor or incapable person could be appointed, and that it would look odd to international parties if that were possible in Scotland. The rule was also mandatory at consultation as part of a wider provision. We therefore propose that rule 4 is made mandatory so that a minor or incapable person cannot be appointed as an arbitrator.
I move amendment 42.
Amendment 42 agreed to.
Amendment 43 moved—[Jim Mather]—and agreed to.
Section 7, as amended, agreed to.
Section 8—Default rules
Amendment 44, in the name of the minister, is grouped with amendment 51.
The Government's position remains that, in accordance with the overwhelming body of opinion expressed at consultation, the model law should be replaced as the default arbitration law for international commercial arbitrations by an arbitration law that is based substantially on the principles of the model law, but which fills in the main gaps in the arbitrators' powers. Accordingly, the bill proposes to repeal the 1990 act.
At consultation, repeal was supported by, among others, the Royal Institution of Chartered Surveyors; the judges of the commercial court of the Court of Session; Professor Fraser Davidson, a leading academic authority on arbitration; and the Chartered Institute of Arbitrators, which has members conducting arbitrations all over the world. In its evidence to the committee, the Faculty of Advocates also supported repeal.
In its stage 1 report, the committee recognised the strongly held views of those who supported repeal, and during the debate, I was happy to provide the assurance sought that even if the model law is repealed, it will be possible for parties to adopt it for their arbitration if they wish, subject to the mandatory rules, as the committee noted in its report. I repeat that assurance. Following our review of the bill and the model law, we propose one necessary technical amendment and also one clarification.
We have listened to stakeholders who said that it would be helpful to have an express provision that parties can agree to adopt the UNCITRAL model law in place of the default rules. That was previously implied in the bill, but amendment 44 will add the model law as an example in the bill. Parties will be able to choose which version of the model law to apply.
Amendment 51 will fix a gap in provision for the model law and ensure that recourse to the courts is available to appoint or remove an arbitrator when parties agree that the model law is to apply. There is no power at common law, given the other repeals in the bill. Other common law powers of the courts to support arbitration are preserved.
I move amendment 44.
Although the amendments respond to some of the questions that have been raised, the minister will be aware that the Law Society of Scotland remains hostile to the repeal of the model law, and makes its argument less around the technical and procedural issues that the amendments address and more around the signal of Scotland's position in relation to the model law. We might want to discuss the matter further at stage 3, but I would be interested if, when he is responding to these points, the minister lays out his reasoning on the Law Society's approach to the model law, the proposition of repeal and its impact on Scotland's international reputation.
If the model law is not repealed, it will perpetuate the position in which there are two arbitration laws in Scotland: one for domestic arbitration and one for international commercial arbitration. We have listened to the Law Society with great care and attention, and we will continue to do so, in line with our attempts to reach a consensus on the matter through engagement. However, our view is pretty clear, and we want to move the situation forward.
The fundamental issue is that the model law is incomplete and contains many crucial gaps, as I have said today and in previous committee meetings. The law does not provide a comprehensive arbitration regime—the arbitrator is given no powers to award damages, expenses or interest, for example—so it has to be supplemented by domestic law. The bill, which—like the Arbitration Act 1996—is based on the model law principles, will provide a comprehensive framework for arbitration in Scotland. We understand the Law Society's feelings, but we think that there is a greater good in what we are trying to introduce.
Amendment 44 agreed to.
Section 8, as amended, agreed to.
Section 9—Suspension of legal proceedings
Amendment 45, in the name of the minister, is in a group on its own.
The committee and the Faculty of Advocates were concerned that the Scottish courts should not lose the ability to refuse to sist where there is no genuine dispute. That can be used as a delaying tactic by the defender to a court action; however, the Government is not convinced that there would be a significant problem with cases being sisted as a delaying tactic.
Where parties have agreed to go to arbitration and a spurious point of law is raised to attempt delay, the remedy should be for the dispute to be resolved quickly using arbitration rather than litigation. The bill imposes a mandatory duty on arbitrators to progress arbitrations proactively, without unnecessary delay or expense. That broadly reflects the approach by the judges of the commercial court in their response to consultation on that provision.
Amendment 45 seeks to address some of the procedural concerns that have been raised about section 9, which may also help to ensure that sisting legal proceedings is not used as a delaying tactic. By referring to the "matter under dispute", the new provision recognises that where a dispute comprises numerous matters, only some of those may be for arbitration. It also clarifies that the provision does not have a wider effect than necessary.
The new provision provides in paragraph (b) that an applicant must be a party to both the legal proceedings and the arbitration agreement. Provision is made consistent with the Arbitration Act 1975 and the Arbitration Act 1996. The applicant may be a person claiming through or under the party to the arbitration agreement; for example, with a contractual right assigned to someone else, or as part of a group of companies.
The word "unenforceable" in the bill has been replaced with "inoperative" in new paragraph (e), which is the word that is used in the New York convention on the recognition and enforcement of arbitral awards, the model law and the 1975 and 1996 arbitration acts. There is no difference, but the drafting makes it clearer that the wording should be interpreted in line with the New York convention.
I move amendment 45.
Amendment 45 agreed to.
Section 9, as amended, agreed to.
Before section 10
Amendment 46 moved—[Jim Mather]—and agreed to.
Section 10—Enforcement of arbitral awards
Amendments 47 and 48 moved—[Jim Mather]—and agreed to.
Section 10, as amended, agreed to.
Section 11—Court intervention in arbitrations
Amendments 49 to 51 moved—[Jim Mather]—and agreed to.
Section 11, as amended, agreed to.
Section 12 agreed to.
Section 13—Anonymity in legal proceedings
Amendment 52 moved—[Jim Mather]—and agreed to.
Section 13, as amended, agreed to.
Sections 14 to 17 agreed to.
Section 18—Refusal of recognition or enforcement
Amendment 53 moved—[Jim Mather]—and agreed to.
Section 18, as amended, agreed to.
Sections 19 and 20 agreed to.
Section 21—Prescription and limitation
Amendment 54, in the name of the minister, is in a group on its own.
Section 21 clarifies the beginning and end of arbitration in relation to the loss of legal rights by prescription and the limitation of legal action over time. Some stakeholders pointed out that the process of interrupting the prescriptive period, during which court action can be taken by one party giving the other a notice submitting a dispute to arbitration, might be used tactically. Arbitration might never properly begin because, having referred the matter to arbitration in order to preserve its legal rights, the pursuing party would not move to appoint an arbitrator. As a result, the prescriptive period would remain interrupted indefinitely.
Amendment 54 simply seeks to provide that interruption of the prescriptive period does not arise if an arbitrator is not appointed. If the appointment is made, the interruption is backdated to the notice to submit the claim to arbitration.
I move amendment 54.
Amendment 54 agreed to.
Section 21, as amended, agreed to.
Section 22—Arbitral appointments referee
Amendment 55, in the name of the minister, is in a group on its own.
Arbitration agreements commonly specify how arbitrators are to be appointed. Although the bill continues to permit that, it also addresses any failure or refusal by the parties to appoint an arbitrator, either under the arbitration agreement or under the default appointment provisions in rule 6. Rule 7 provides that either party is able to refer the matter to an arbitral appointments referee designated by the Scottish ministers.
When designating a body as an appointments referee, ministers must have regard to the desirability of ensuring that prospective referees are able to provide training and operate disciplinary procedures. Although it is expected that most bodies will provide such training and procedures, that might not be the case. However, arbitrators might not always be members of a professional body. They might have a lifetime's experience in the area of the dispute's subject matter, but have no formal qualifications.
Amendment 55 seeks to put it beyond doubt that an arbitrator appointed by an arbitral appointments referee need not be subject to the referee's training and disciplinary procedures. For example, if the dean of the Faculty of Advocates were designated an arbitral appointments referee, he or she could appoint someone who was not a member of the faculty, such as a solicitor.
I move amendment 55.
Although I welcome the fact that the amendment clarifies a situation raised by a number of people in evidence, I am concerned that the overall wording of section 22 is slightly inelegant. Could the wording be looked at again before stage 3 to make it more elegant?
We will take that on board. We are always keen to improve and elegance will be sought.
Amendment 55 agreed to.
Section 22, as amended, agreed to.
Section 23 agreed to.
Section 24—Amendments to UNCITRAL Model Law or New York Convention
Amendment 56, in the name of the minister, is grouped with amendment 57.
Section 24 gives the Scottish ministers the power, by order subject to affirmative resolution procedure in the Scottish Parliament, to amend and update the bill or provisions that are made under it in consequence of any future amendment to the UNCITRAL model law or the 1958 New York convention on the recognition and enforcement of foreign arbitral awards. Amendment 56 means that the Scottish ministers can also amend and update the act or provisions that are made under it in consequence of amendment to the UNCITRAL arbitration rules, which provide a comprehensive set of procedural rules upon which parties may agree for the conduct of arbitral proceedings.
Adding the UNCITRAL arbitration rules to section 24 demonstrates to the outside world that Scotland is determined to keep the Scottish arbitration rules at the forefront of international developments by reacting to any changes in modern arbitral practice. It is important that Scotland meets UNCITRAL standards. Of course, the Scottish arbitration rules in the bill are more comprehensive than the UNCITRAL model law and rules; however, it is right that there is a mechanism for reacting to changes in international practice.
Amendment 57 provides that the Scottish ministers must consult those whom they consider to be interested in arbitration law in Scotland before making changes to the act or provisions that are made under it in consequence of any change to the UNCITRAL model law, the UNCITRAL arbitration rules or the New York convention.
I move amendment 56.
The procedure exists in the bill as a discretion that is available to ministers, and there is no obligation on ministers to update Scots law to reflect changes in international provision. I am interested to know whether repeal of the model law reduces the extent to which the arbitration rules would be subject to updating. In other words, were the model law not repealed, would the obligation on ministers be mandatory rather than discretionary?
We are trying to ensure that Scotland is in as competitive a position as possible in relation to dispute resolution. There is an imperative not just to be seen to be doing this, but to do it in principle. I will pause to take advice from my officials. [Interruption.] The consensus is that our rules already go much further. An interesting by-product of this procedure of engaging with the professions is that it has become something that we and they would want to continue. I think that they would be clamouring to continue that engagement both directly with ministers and through the committee or its successors. In our experience, that would be a sensible thing to do, as we are building consensus that removes conflict internally and allows us to demonstrate a much better position to those whom we would like to attract to Scotland to have their disputes resolved.
I recognise that there may be a technical element to this and I would welcome your assurance that you will clarify the discretionary/mandatory question at stage 3.
I am content to give you that assurance.
Amendment 56 agreed to.
Amendment 57 moved—[Jim Mather]—and agreed to.
Section 24, as amended, agreed to.
Sections 25 to 27 agreed to.
Schedule 2 agreed to.
Section 28 agreed to.
Section 29—Interpretation
Amendment 58 moved—[Jim Mather]—and agreed to.
Section 29, as amended, agreed to.
Section 30 agreed to.
Section 31—Orders
Amendment 59, in the name of the minister, is grouped with amendment 60.
The substantive amendment is amendment 60, which provides that the bill will not apply to arbitrations that have begun at the time when the bill comes into force. We have proposed, however, that the bill will be applied to existing arbitration agreements, irrespective of when they were agreed, and that parties who want to use the old law may opt out of the new regime in the bill. That is to meet the concerns that were raised by the Law Society of Scotland and the Faculty of Advocates, which the committee discussed in its stage 1 report.
I clarify that even if it is applied to existing agreements, the bill will not be technically retrospective. It will not change the law in the past for events that occurred before commencement. However, it might interfere with existing rights, and it is right that such matters be considered. Disputes might exist without arbitration having begun, before the commencement of the bill, but the subject matter of the bill is the rules on arbitration. There is precedent in various arbitration acts in England for new law being applied to existing arbitration agreements. We understand that that approach has caused no difficulty.
The opt-out in the bill is a reasonable compromise. However, the bill was introduced because the old law is discredited, obscure, out of date and incomplete. It is difficult to imagine why parties would want to use the old law, which is likely to make the arbitral process more difficult, protracted and expensive, instead of the modern comprehensive regime that is provided for in the bill.
It is proposed that the opt-out from the new law be time limited. If, as is likely, parties are increasingly attracted to using the new law, the old law should be repealed. The alternative would be for two arbitration laws to run concurrently in Scotland. Subsection (4) of the new section that amendment 60 will insert will therefore give the Scottish ministers the power to remove the opt-out in due course, after a suitable period, by order subject to affirmative procedure. The power will not be capable of being exercised for at least five years. After that period, and following due consultation, the old law can be repealed.
The rest of amendment 60 provides for a number of technical changes. Subsection (6) of the proposed new section provides that for the purposes of the bill references to "arbiters" in arbitration agreements are to be taken as references to arbitrators. "Arbitrator" is the term that is used in the bill and is recognised internationally.
Subsection (7) makes it clear that any reference in statute to a decree arbitral is to be taken for the purposes of section 10 of the bill as a reference to a tribunal's award. That is required because there are many statutory references to debts being enforced as a decree arbitral.
Subsection (8) makes transitional provision so that agreement to contract out of the stated case procedure—where the court is asked a question of law that arises in the arbitration—in an existing arbitration agreement will result in the exclusion of rule 40, which allows a party to ask the outer house of the Court of Session to determine any point of Scots law that arises during the arbitration, and rule 67, which replaces the stated case procedure with a default appeal for error on a point of Scots law, on the basis of the findings of fact in the award, to the outer house, against a final award of the arbitrator. That will preserve the intention of the parties.
Amendment 59 means that an order under the new section on transitional provisions will require affirmative resolution of the Scottish Parliament.
I move amendment 59.
Amendment 59 agreed to.
Section 31, as amended, agreed to.
Sections 32 and 33 agreed to.
After section 33
Amendment 60 moved—[Jim Mather]—and agreed to.
Section 34 agreed to.
Long title agreed to.
That concludes consideration of the bill at stage 2. I thank the minister and his team for their attendance and again put on record our gratitude for the support that the ministerial team has given us. We have dealt with 60 amendments in less than an hour, which is a testament to the amount of work that was done in advance of stage 2.
I do not think that we know when stage 3 will take place; it will not be in the first week after the recess.
Meeting continued in private until 11:57.