The Scottish courts have always recognised the right of parties to agree to exclude the jurisdiction of the courts to inquire into the merits of their disputes and instead to refer any disputes to arbitration.
Scotland has new legislation which reforms and modernises its law of arbitration. Indeed, some commentators have pointed out that the Arbitration (Scotland) Act 2010 (“the Scottish Act”) offers a number of improvements on the Arbitration Act 1996 (“the English Act”), which applies to the rest of the UK. Advantages include:
- The Scottish Act uses modern and international terminology – “arbitrators”, not “arbiters”, and places its procedural arbitral rules together in a schedule to make the law more user-friendly, particularly for non-lawyers involved in arbitrations.
- A confidentiality rule puts into statute the position governed by case law in the rest of the UK – unless the parties agree otherwise. Few other legislatures in the world have made clear that arbitration is usually a confidential business. Confidentiality is of course one of the attractions of arbitration to parties whose dispute is commercially sensitive. Where a party to an arbitration suffers loss as a result of another party breaching the duty of confidentiality, the aggrieved party can bring an action for damages.
- Where the process the parties have agreed for appointment of an arbitrator fails, recognised persons or bodies (“arbitral appointments referees”) can resolve the failures, thus reducing recourse to the courts. The English Act provides that this is a role for the court. The Scottish Act misses out this unnecessary step, but retains the courts as a backstop only in the event of irreconcilable disputes over the appointment process.
- Subject to issues of proof, oral as well as written arbitration agreements are recognised by the Scottish Arbitration Rules in the Act. Otherwise, they would remain subject to the old (unsatisfactory) common law. They are excluded from the substantive provisions of the English Act.
- Reflecting modern arbitral practice, the Scottish Act requires arbitrators to be independent as well as impartial.
- Prospective and post-appointment arbitrators are placed under an explicit continuing disclosure requirement concerning conflicts of interest.
- It is clear in the Scottish Act that experts, witnesses or legal representatives have immunity in respect of acts or omissions as if the arbitration were civil proceedings.
- The Scottish Act includes express provision covering the resignation of the arbitrator. The English Act does not provide for the process of resignation.
- To reduce unnecessary court challenges, the Scottish Act limits appeals from the Court. There is no appeal to the Supreme Court.
- Where a correction of an award has a consequential effect on another part of the corrected award or any other award, whether on some part of the substance of the dispute or on expenses or interest, the tribunal may make consequential correction of that award.
- The Scottish Ministers have the power, by order subject to affirmative resolution procedure in the Scottish Parliament, to amend and update the Scottish Act in consequence of changes to the UNCITRAL Model law, the UNCITRAL Arbitration Rules or the New York Convention.
http://www.legislation.gov.uk/asp/2010/1/contents
http://www.legislation.gov.uk/asp/2010/1/pdfs/asp_20100001_en.pdf