Arbitration, Certainty and English Commercial Law

It is often said by courts and commentators that certainty (or perhaps more correctly predictability) is a central or foundational feature of English commercial law. The idea of certainty in commercial law is likely to bring to mind substantive legal issues in areas such as contract, agency, sale of goods and documentary credits.

It will, however, be argued that procedural certainty (especially in relation to international arbitration) may now be more important for English law than certainty in the substantive law. Procedural certainty is understood here as a product of two things: the procedural rules for the dispute resolution process in combination with perceptions about the trustworthiness and reliability of the English courts. Recent high profile arbitration decisions such as Enka v Chubb and Halliburton v Chubb and debates around the Law Commission’s proposed changes to the Arbitration Act 1996 are indicative of a concern that English law might adopt approaches that introduce (or at least fails to address) uncertainty within the dispute resolution process. The emphasis on procedural certainty in the international arbitration context is driven by several things: the influence of the New York Convention the directness of the link between perceptions about certainty and the choice of England as the arbitral seat; and the influence exerted by the arbitration community.

Finally, the popularity of arbitration for international commercial disputes has an impact on certainty as it relates to the substantive law. First, disputes settled by arbitration may involve more flexible applications of the law to merits than is likely to be the case with litigation. Second, the more that disputes are resolved by arbitration (private and confidential and with very limited rights of appeal on the merits) the fewer the opportunities for the English courts to develop the law and promote certainty in the substantive law in areas such as contract and the sale of goods.