The advent of the new Labour government sparked optimism within the legal industry, partly due to hope for a change in direction, but also due to the Prime Minister’s high-profile legal background and that of many of his colleagues. 40 bills were announced in July’s King’s Speech, however many in the legal profession were underwhelmed through a lack of immediate action on some of the more pressing issues within the system. So what litigation policies have been announced?
Well, notably absent was The Litigation Funding Agreements (Enforceability) Bill, as well as the Strategic Litigation Against Public Participation (SLAPP) Bill. However, the Arbitration Bill was one of the 40 bills mentioned as part of the new government’s priority agenda. Emphasis was also placed on employment rights through the inclusion of Employment Rights Bill.
Let’s take a look at these areas in more detail and examine the approach the government may take.
Arbitration Bill
Labour will look to implement the Arbitration Bill, which was due to be passed by the previous government, before failing due to July’s general election.
The bill is a consequence of the Law Commission being asked by the Government to review the Arbitration Act 1996. The Law Commission were tasked with reviewing whether there were any amendments needed to make the Act fit for purpose, as well as ensuring that the UK continues to be a leading destination for commercial arbitration. Their findings subsequently resulted in the advent of the Arbitration Bill, which re-entered Parliament in July’s King’s Speech.
With at least 5000 domestic and international arbitrations taking place each year in England and Wales, worth £2.5 billion to the economy in fees, it is vital to ensure that the UK maintains its world-leading position as the globally preferred choice for international arbitration.
The Arbitration Bill sets out how it will update the Arbitration Act 1996 and ensure more efficient dispute resolution by:
- Clarifying the law applicable to arbitration agreements. This will provide greater certainty, avoid unnecessary satellite litigation and ensure parties are supported by our arbitration laws where appropriate.
- Codifying a duty of disclosure for arbitrators. This will better protect the principle of impartiality and promote trust in arbitration.
- Strengthening arbitrator immunity against liability for resignations and applications for removal. This will support arbitrators in making robust and impartial decisions.
- Empowering arbitrators to make awards on a summary basis on issues that have no real prospect of success. This will improve efficiency and aligns with summary judgments available in court proceedings.
- Empowering emergency arbitrators to issue peremptory orders and make relevant applications for court orders. This will enhance the effectiveness of emergency arbitrators and give them better access to court enforcement (as currently enjoyed by non-emergency arbitrators).
- Revising the framework for challenges to an arbitral tribunal’s jurisdiction under section 67 of the 1996 Act. This will allow new rules of court to provide that such applications should contain no new evidence or new arguments. That will avoid jurisdiction challenges becoming a full rehearing, thereby preventing further delay and costs.
SLAPP Bill
To the disappointment of some, Labour could not commit to a timetable for bringing standalone legislation for a bill on strategic lawsuits against public participation (SLAPPs). Former Prime Minister, Rishi Sunak, had previously backed a Labour backbench MP’s attempt to ban SLAPPs, but this failed to pass before the election.
Despite this, a Labour justice minister in the House of Lords, Frederick Ponsonby, stated that the government would be conducting a review of SLAPPs. He added that, while it was important to outlaw abusive SLAPPs, at the same time there was a “need to protect access to justice for legitimate claims”. While acknowledging the need to urgently tackle SLAPPs in law, he could not commit to separate legislation.
SLAPPs have received widespread criticism, and are defined om a previous policy paper as “legal actions typically brought by corporations or individuals with the intention of harassing, intimidating and financially or psychologically exhausting opponents via improper use of the legal system.”
Employment Rights Bill
A major piece of legislation being introduced by the government is the “New Deal for Working People”. This significant reform to employment law includes an array of new day one employment rights for employees, banning so-called “exploitative” zero hours contracts, ending fire and rehire, and a new single-status of worker instead of the current three-tier system.
They have also promised to reform pay by making the minimum wage a “genuine living wage”, strengthen statutory sick pay, and ban unpaid internships which aren’t part of an education or training course.
We covered this topic in more detail here.
Litigation Funding
Finally, another pressing concern for litigators is litigation funding. However, this is unlikely to be addressed this year. Justice Minister Lord Ponsonby has outlined that a review of third-party litigation funding is currently being undertaken by the Civil Justice Council which should report by the summer of 2025.
The previous government had introduced the Litigation Funding Agreements (Enforceability) Bill in March following the UK Supreme Court’s Paccar judgment in 2023. However, this failed to pass due to the July government election, and was also missed out in the King’s Speech.
The current Labour government has signalled its desire to reverse Paccar, which equated a litigation fundings agreement with a damages-based agreement. This was a significant decision because LFAs entitle the funder to a percentage of any damages and/or proceeds which are recovered by the claimant. By amounting them to a DBA, there was concern that LFAs which were drafted prior to the Paccar decision would be held to be unenforceable DBAs.
Our thoughts
The new Labour government’s legal reforms represent a complex picture of both progress, but also a level of uncertainty. The Arbitration Bill, a key focus in the King’s Speech, aims to update the Arbitration Act 1996, enhancing clarity, efficiency, and impartiality in dispute resolution. This move underscores Labour’s commitment to maintaining the UK’s leading position in global arbitration, which is vital given its significant economic impact.
However, the absence of immediate action on pressing issues such as SLAPPs and litigation funding leaves some outstanding concerns unresolved – for the time being. The government’s promise to review SLAPPs and the anticipated report on third-party litigation funding reflect an acknowledgment of these challenges, but legislative action may be slow. Meanwhile, the “New Deal for Working People” promises significant employment law reforms, indicating a shift towards stronger worker protections. Overall, while there are promising developments, the legal community will need to remain engaged and proactive to address the unresolved issues effectively.
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