As we reported last week, the Arbitration Act 2010 was passed by the Oireachtas recently, and has now been signed into law by the President. The legislation will apply to all arbitrations which commence after the legislation comes into operation on 8 June 2010.
Analysis of the Act:
The Arbitration Act 2010 has now been enacted in Ireland, reflecting the Irish Government's support for arbitration processes – support also shown by the Irish judiciary.
The new legislation was prompted by an analysis of the Irish Arbitration regime in the lead up to the International Council for Commercial Arbitration Conference, held in Dublin in 2008, to celebrate the 50th anniversary of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The new legislation incorporates the United Nations Convention on International Trade Law Model Law on International Commercial Arbitration ("Model Law") and will be instantly recognisable to international lawyers. It repeals and replaces earlier Irish legislation, sweeping away historic distinctions between domestic and international commercial arbitrations. The legislation applies the Model Law to all arbitrations in Ireland.
The legislation repeals certain provisions for certain applications to the High Court. The opportunities for parties to seek judicial intervention in arbitration are now severely curtailed, in keeping with the Model Law.
The legislation will apply to all arbitrations which commence after the legislation comes into operation on 8 June 2010.
The Model Law has been adopted by more than 50 countries and covers all stages of the arbitral process. Although originally primarily designed for international commercial arbitration in mind, other countries such as Germany, New Zealand and Kenya have likewise extended it to domestic arbitrations. Ireland originally adopted the Model Law in the Arbitration (International Commercial) Act 1998, for international commercial arbitrations. It will soon apply to all arbitrations in Ireland.
Significant Changes to Irish Arbitration Law
- Domestic/International Arbitrations
There will be no difference between the legislative provisions for domestic and international arbitrations. Irish practitioners will need to be familiar with the Model Law and this will be particularly useful when advising on contractual arbitration clauses, particularly those which have an international dimension.
- Case Stated
The 'case stated' procedure has been abolished. Arbitrators will no longer be able to refer questions of law to the Courts. It remains open to an arbitrator to seek independent advice if necessary in relation to a point of law arising in the arbitration. The removal of the case stated procedure and significant reduction of the scope for judicial intervention is likely to lead to an increased focus on the choice of arbitrators and appointment mechanisms and requirements.
- Challenging Award
The only method of challenging an arbitral award will be under Article 34 of the Model Law. The grounds are extremely limited and the legislation will make it far more difficult to challenge an arbitral award. The Model Law grounds of challenge have been interpreted narrowly in other jurisdictions, and the Irish Courts are likely to adopt a similar approach, in keeping with their approach to arbitration generally.
The application of the Model Law for all Irish arbitrations will mean that Irish arbitration practitioners can avail of international jurisprudence on the Model Law.
The arbitrator will be required to give reasons for the award unless the parties have agreed otherwise (Article 31(2) of the Model Law). The requirement for a reasoned award imposes an additional rigor on the arbitrator.
The legislation allows the parties to agree on the allocation of costs either before or after the dispute has arisen (Section 21). The previous legislation provided that any such agreement on costs was only binding if it was reached after the dispute had arisen.
- Consumer Claims
Consumer claims under €5,000 will not be covered by arbitration agreements unless the consumer agrees to go to arbitration after the dispute has arisen or the agreement has been individually negotiated (Section 31).
- Single Arbitration Judge
The legislation introduces the concept of a single arbitration judge (Section 9) to deal with any applications. One judge will develop expertise in arbitration issues. This should ensure a consistent judicial approach, and reduce the risk that parties might inappropriately seek judicial intervention. Furthermore, and exceptionally, there is no right of appeal from the High Court in respect of applications under the new legislation – the High Court is the court of final jurisdiction in that regard (as well as the Court of First Instance).