The Arbitration Act 2010 will come into force on 8 June 2010. In applying the UNCITRAL (United Nations Commission on International Trade Law) Model Law, the Act will align Ireland’s existing arbitration rules and procedures with international standards. If you adopt arbitration in your contracts as a means of dispute resolution, you should be aware of the forthcoming changes.
The Act applies to domestic and international arbitration agreements. However existing arbitration agreements will operate under the Arbitration Acts 1954 to 1998 where an arbitration commences before 8 June 2010. Legal guidance should be sought to determine the applicable framework.
Key changes under the Arbitration Act 2010 are:
- The Act increases arbitrators’ powers and the independence of the arbitral process from court involvement;
- Parties will be able to pre-agree cost allocation. Where not agreed, the arbitrator will have power to determine this. Parties may also agree arbitrators’ powers to award interest. Allocating costs and interest is a contentious area and experienced advice can be invaluable here;
- The Act reflects growing trends towards alternative dispute resolution. It empowers the High Court or Circuit Court to adjourn court proceedings and, with the agreement of the parties, to refer all or part of a dispute to arbitration. If agreed in such circumstances, proceedings would be discontinued with costs being awarded as the court sees fit. However, where not agreed, the courts may order continuance or otherwise of proceedings;
- It will be possible to consolidate an arbitral claim with other related arbitral claims or have them heard concurrently, as can happen with litigation. This party-driven process could save costs and improve efficiency;
- Arbitrators will have greater flexibility to order interim measures or security for costs (although not in relation to third parties) eg injunctions to secure funds or goods;
- Arbitrators will be required to give written reasoned awards, unless the parties agree otherwise. It will not be possible to appeal awards and awards may be set aside only on specific limited grounds; and
- Applying the international principle of ‘Kompetenz Kompetenz’, arbitrators may rule on their own right to act without recourse to the courts.
The Act is intended to create a more streamlined, cost-effective and user-friendly arbitral system and should present a genuine alternative to litigation for domestic and international parties alike.