HL Deb 18 November 1996 vol 575 cc1095-6

2.49 p.m.

Lord Hacking asked Her Majesty's Government:

When the Arbitration Act 1996 will come into force; and whether they propose that the distinction between domestic and international arbitrations should be abolished.

The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)

My Lords, my honourable friend the Minster for Corporate and Consumer Affairs gave an undertaking when the Arbitration Bill was being debated in another place to use his best endeavours to bring the new Act into force in January next year. That remains the position. Our intention is not to commence Sections 85 to 87 of the Act. After the rest of the Act has been commenced, an order will be laid before both Houses under Section 88 of the Act to repeal those sections. Assuming the order is agreed, the special provisions for domestic arbitrations will no longer apply.

Lord Hacking

My Lords, I thank my noble and learned friend for that Answer. Can he confirm he is saying that when the Act comes into force there will be no distinction between domestic and international arbitration? Has my noble and learned friend received any representations from any quarter relating to any section of this Act not coming into force at the commencement date? If he has received representations, what has been his response?

Lord Fraser of Carmyllie

My Lords, my noble friend is correct to say that on commencement—which we hope will be in January next year—there will be no distinction between domestic arbitration and international arbitration. As regards the latter part of his question, the only representations we have received concern Section 46 of the Act, which relates to the so-called equity or honourable engagement clauses. This provision will apply only to new arbitration agreements entered into after the Act has come into force. The provision will be different from the rest of the Act because it is concerned with the critically important issue of how the substance of the dispute is to be decided. Other provisions relate to procedural matters. Those representations came from the insurance industry, and the departmental advisory committee on arbitration law agreed with the view put to us.

Lord Hacking

My Lords, will my noble and learned friend give further consideration to that issue for two reasons: first, the Act, right the way across its provisions, will now apply equally to all arbitrations started after commencement date? Secondly, will my noble and learned friend consider whether it is in the best interests of the insurance and reinsurance industry that this delay is allowed?

Lord Fraser of Carmyllie

My Lords, that is certainly the view of the insurance industry which, as I indicated, has been supported by the departmental advisory committee. What I sought to explain in my first Answer is that we see that Section 46 is different in character because it goes to the substance of a dispute. It seems to us that while one might adjust procedural matters, it would in principle be wrong to adjust the way in which the substance of a dispute is determined.