Arbitration (Scotland) Bill: Stage 3
The next item of business is stage 3 proceedings on the Arbitration (Scotland) Bill. Members should have the bill as amended at stage 2—that is, Scottish Parliament bill 19A—the marshalled list and the groupings, which the Presiding Officer has agreed. The division bell will sound and proceedings will be suspended for five minutes for the first division this afternoon. The period of voting for the first division will be 30 seconds. Thereafter, the voting period will be one minute for the first division after a debate and 30 seconds for all other divisions.
Section 7—Mandatory rules
Group 1 is on court procedures etc to be mandatory. Amendment 1, in the name of the minister, is grouped with amendments 2 to 4, 9 to 13 and 18.
Before I speak to the first group of amendments, I would like to say a little about the amendments more generally. Following stage 2, the Government reviewed the bill. We did so because stage 3 is the last chance to shape the law. As I said in the stage 1 debate, some commentators in other countries have been
"amazed at the elegance and economy of this Bill".—[Official Report, 25 June 2009; c 18954.]
We want to make it as good as we can, as it may be a long time before arbitration is back on the legislative agenda.
Although there are 30 Government amendments, they are minor and technical. I am told that the overall number of amendments is significantly smaller than it has been for most similarly sized bills that the Parliament has considered during its first 10 years. The technicality of the amendments is a reflection of the intense stakeholder interest in line-by-line scrutiny of the bill's provisions, which has greatly helped to identify where the bill can be improved.
The first group of amendments seeks to restructure existing rules to provide added certainty on the extent to which the parties can contract out of those rules. It addresses some concerns that were raised by the commercial judges of the Court of Session about the status of the Scottish arbitration rules in schedule 1 that relate to court procedures.
The fact that some provisions that deal with court procedures have default status means that parties to an arbitration can agree whether those particular court procedures should apply to their arbitration, but it could cause uncertainty in the courts if parties also had the ability to decide on precisely how the courts should deal with a challenge or appeal. We want to provide additional certainty for the parties and the courts, so we propose to split and modify the relevant rules to retain the default aspect to allow parties to decide whether the court procedures should apply to their arbitration, but provisions that relate to how the court deals with such procedures should in some cases be mandatory and not within the power of the parties to alter.
Amendment 1 makes rule 7, on failure of appointment procedure, mandatory. It applies only to allow an arbitrator to be appointed where the parties' preferred method fails for whatever reason. Rule 7 does not lend itself to being split in the same manner as other rules that are affected by this group of amendments, but many opportunities for the parties to opt out of its rules are already built into its provisions. For instance, the parties can agree to dispense with the arbitral appointments referee and go straight to the court to have the arbitrator appointed. Amendments 9 and 10 ensure that rule 7 works as a mandatory rule. They provide that the parties can also agree to dispense with the initial notice procedure under that rule.
Amendments 2 to 4, 11 to 13 and 18 move procedural aspects of rules 22 and 40, on reference to the court by agreement of the parties or where the arbitral tribunal agrees on jurisdiction and point of law; rule 41, on court power to vary the time limits set by parties; and rule 67, on appeal for error of law, into mandatory rules to give certainty on what procedures will apply. Some of the default court intervention rules are split so that the right to go to court remains the default, but aspects of the court procedure to be followed if the default rule is triggered become mandatory. Other specific opt-outs are added to the mandatory rules where necessary. Parties can still agree not to go to court, as they could before, but if they agree to go to court, they will not be able to vary all the court procedures.
I move amendment 1.
Amendment 1 agreed to.
Amendments 2 to 4 moved—[Jim Mather]—and agreed to.
Section 9A—Arbitral award to be final and binding on parties
Group 2 is on provisional awards not to be final. Amendment 5, in the name of the minister, is grouped with amendments 6 and 14.
At stage 2, the provision in rule 54 relating to the final and binding nature of an award was moved to the main body of the bill, which deals with enforcement. The provision now sits in section 9A because the Scottish arbitration rules in schedule 1 relate to the arbitration proceedings themselves, whereas provisions regarding the final and binding nature of an award and its enforcement are relevant after the arbitration proceedings conclude.
Amendments 5, 6 and 14 are minor consequential amendments. A minor correction is required as a result of the deletion of rule 54 at stage 2.
I move amendment 5.
Amendment 5 agreed to.
Amendment 6 moved—[Jim Mather]—and agreed to.
Section 13—Anonymity in legal proceedings
Group 3 is on the duty to make an anonymity order. Amendment 7, in the name of the minister, is the only amendment in the group.
At stage 2, section 13 was redrafted following concerns that anonymity should not be automatic when an arbitration is the subject of civil legal proceedings, but should be available on application to the court. Section 13 allows for the protection of the identity of parties to arbitration in civil legal proceedings relating to an arbitration. That covers only the parties' identities, not the other contents of any court judgment.
As amended at stage 2, section 13 provides a weak presumption in favour of granting anonymity. The court has discretion as to whether to grant the order, but it must have regard to whether disclosure is reasonably needed to protect the lawful interests of a party in the public interest or in the interests of justice. Amendment 7 strengthens the presumption by making it clear that the court must grant an application for anonymity unless one of the exceptions that would permit disclosure applies. The amendment also adds exceptions relating to disclosure for the performance of public functions, which brings section 13 into line with rule 25 on confidentiality. A stronger presumption reflects the principle that arbitration will normally be a confidential process, unless the parties agree otherwise. With the appropriate safeguards, the parties should have a reasonable expectation that anonymity will continue unless one side makes a persuasive case to the contrary.
I move amendment 7.
Amendment 7 agreed to.
Group 4 is on restrictions of rights to appeal. Amendment 8, in the name of the minister, is grouped with amendments 15 to 17 and 19.
Arbitration should be an efficient means of resolving disputes. The amendments make it clear that certain decisions in particular courts are final in each court. They remove, where appropriate, some opportunities for parties to seek to delay the resolution of disputes that are sent for arbitration when additional appeals are considered to be unnecessary.
Section 13 protects the identity of parties to arbitration in civil legal proceedings relating to an arbitration—protection that covers only the parties' identities and not the other contents of any court judgment. Anonymity may be available on application to the court, which has the discretion whether to grant an order providing that protection—subject to the presumption that I mentioned in relation to amendment 7. Amendment 8 provides that the decision of the court on whether to grant anonymity is not subject to appeal. Lewis Macdonald raised the issue at stage 2 and we are happy to accept it and to provide clarification.
Rule 56(4) provides that an application to correct an arbitral award under the rule must be made within 28 days of the award or by such later date as the outer house or sheriff may specify. Amendment 15 provides that the decision of the outer house or sheriff to extend the time limit for correcting an award is final. It is not considered that that procedural administrative discretion of the court requires to be subject to appeal.
Amendments 16, 17 and 19 amend rules 65, 66 and 67 to make it clear that the outer house's decision on granting leave to appeal to the inner house under those rules is final. Although there are court rules on those matters, we consider that it is helpful to have that set out in the bill, together with the other court procedures that are provided for.
I move amendment 8.
I acknowledge the minister's clarification of those technical matters in response to the issues that were raised with members by the Law Society of Scotland, a number of which impinge on this area. It has been helpful that the minister has made clear in the bill and in the appropriate rules some of the matters that would otherwise appear only in court rules. I therefore support the amendments.
I thank Mr Macdonald for that acknowledgement.
Amendment 8 agreed to.
Schedule 1
Scottish Arbitration Rules
Amendments 9 to 19 moved—[Jim Mather]—and agreed to.
Group 5 is on challenging awards: procedure et cetera. Amendment 20, in the name of the minister, is grouped with amendments 21 to 30.
These are technical amendments about the procedures for appeals to the outer house against arbitral awards and leave to appeal from there to the inner house. They take the opportunity to put into the bill some of the material—such as time limits—that would otherwise appear only in the court rules. They ensure that procedural decisions cannot be appealed when the main decisions cannot be appealed and make some minor, consequential amendments.
Amendment 20 provides that an appeal against a decision of the outer house must be made within 28 days of that decision and that leave to appeal, if granted, expires after seven days.
Amendments 21 to 30 are tidying-up amendments that amend the supplementary provisions in rule 68, on challenging arbitral awards, and rule 69, on reconsideration by the arbitral tribunal. The amendments ensure that the inner house has power, when hearing appeals, to make the same orders and other decisions as the outer house.
Amendments 25 and 27 are minor consequential amendments to update references in rules 68(9) and 68(11) to reflect the stage 2 introduction of the concept of leave to appeal.
Amendment 28 makes additional provision for appeals to the inner house against decisions of the outer house concerning the supplementary powers of the court on appeals against arbitral awards under rule 68; for example, the power of the court to order a sum of money to be paid into the court by one of the parties pending the outcome of the appeal. The same time limits and rules on seeking leave to appeal are applied to the use of those powers as to the main appeal decisions.
Amendment 28 sets out the same time limits for appeals under rule 68 on the supplementary powers of the court—for example, the ability in rule 68(11) to require a party to lodge a sum of money in court—as amendment 20 sets out for main appeals under rules 65 to 67, which deal with jurisdiction, serious irregularity and legal error.
To discourage spurious appeals to the inner house that are intended to frustrate the finality of the arbitral process, leave to appeal may be given only if the proposed appeal would raise an important point of principle or practice or if there is some other compelling reason for the appeal.
I move amendment 20.
Amendment 20 agreed to.
Amendments 21 to 30 moved—[Jim Mather]—and agreed to.
That ends consideration of amendments.