Below is an abridged version of the address given by John Campbell QC of Oracle Chambers, introducing the new Arbitration Act.

Members of the Parliamentary Committee were, I think, a bit bemused to have a “legal” bill thrust into their hands, and it is fair to say that their intellectual curiosity overcame their initial reluctance to being required to grapple with concepts with which they had no familiarity at all. But they enjoyed the spectacle of lawyers arguing over both principle and detail in front of them, and by the end of the process, I hope that they were convinced that a new Act which mirrors best Arbitration practice around the world has real value to their country, rather than simply being a new way for lawyers to earn some fees (as one Member put it, without a trace of irony).

The Act of 2010 is the culmination of work stretching over more than two decades. Arbitration itself as a concept of course goes back to the very earliest times, and, I suggest, fits particularly well with the Scottish character. At its best the process of dispute resolution by a person or persons skilled in the trade or issue in question can and should be private and confidential, economical, quick and robust, capable of withstanding external scrutiny in a judicial review or other supervisory process, and satisfactory and acceptable to its users. It isn’t always like that.

The virtues of thrift and economy may not always be associated with the use of large law firms, counsel, experts and the rest, but skilful and determined argument, courage, determination, and the need to have done with differences have been marks of civilised societies since the dawn of time. There is proof of the use of Arbitration in Ancient Greece; and of course in Roman times. The Romans developed the lex arbitri and invented very sophisticated agreement and enforcement mechanisms, which they took through their empire, leaving different bits behind them in a host of different places.

The Articles of Regulation of 1695, predating the Treaty of Union by just twelve years, was in force right up until the Commencement Date of this new legislation on 7 June 2010 . It is quite a thing to stand on a bridge in legal history, as we now do.

From 1986 an ad hoc Committee set up by the then Lord Advocate had considered the reform of arbitration law in Scotland, which became part of the law of Scotland by virtue of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. It is fair to say that that piece of UK legislation for Scotland seemed like a big step at the time; the wholesale adoption for Scotland of a Code of legal rules sourced entirely elsewhere. One is left to wonder at its incorporation in a “Miscellaneous Provisions” Act, and the absence of any domestic legal colouring. Perhaps it says something about the attention which was paid by Westminster to “add-on” Scottish legislation at the time.

The Act of 1990 has not been a success; there has been no widespread adoption of its provisions, and so far as is known, a mere handful of cases (perhaps 15) in Scotland have used it, often leading to vociferous argument ab ante as to whether a dispute is truly “international” or not.

The Committee continued its work on the provisions of a modern arbitration law for domestic arbitration and, in 1996 after wide consultation, produced a draft Arbitration Bill. That Bill was not then enacted, and with the impending prospect of Labour’s electoral success and the advent of a new Devolution Settlement, no progress occurred. One can see now why this was not far up the agenda. Meantime, many other countries, large and small, had reformed or restored their arbitration laws, both international and domestic, to bring them up-to-date and make them accessible and user-friendly. Particular reference must be made to England and to the Republic of Ireland in this respect, both of which have since 1996 enacted entirely new legislation covering all aspects of arbitration, but the same applies to the major European and Commonwealth countries, and to many smaller countries in most parts of the world. Many drew their inspiration from the Model Law, some drew theirs from England. Some, like Scotland, did nothing.

Of course, the absence of modern arbitration legislation has long placed Scotland at a particular commercial disadvantage with other countries. While the evidence was and is anecdotal, there is quite sufficient to justify the claim that Scotland was seen as a legal backwater in this area, and that parties doing business in Scotland, where they were minded to provide for dispute resolution, arranged to have their disputes dealt with by the Court, or under a different Arbitration Act, not far to the south of here.

An ad hoc committee continued work from time to time on an Arbitration Bill, though never much encouraged by Government or officials, relying heavily on the work of its predecessors, and also having regard to legislative changes in many other countries, and in particular relying on experience in England, with the Arbitration Act 1996. It consulted widely on its proposals. The Bill was prepared by Lord Dervaird (again!) and tendered to the pre-devolution Government. A polite “thank you” was followed by inaction, and the Bill gathered dust on a shelf. A very sad response, as we were overtaken by new laws in Kazakhstan, some of China, and Hong Kong, small countries in South America, many of the United States, and of course by England. But that is politics.

The SNP victory in 2007 changed the political face of Scotland. The eventual outcome - cutting a rather longer story short -- was our new Bill, which has put virtually the whole of modern arbitration law in Scotland into a single statute. The aim, carried forward to 2010, was that in future anyone in Scotland, or anyone seeking to do business in Scotland, would be able to find in one place the principles governing the law of Arbitration in Scotland in language which could be readily understood. In certain respects, such as the powers of arbitral tribunals to award interest and damages, the Bill introduced much needed reforms. In other respects it has provided in statutory terms what had been, for centuries, part of the common law, somewhat remote from users and not easily available, even to lawyers, without research.

The Act passed through the Scottish Parliamentary process, surviving scrutiny by a rigorous and, it has to be said, sceptical Committee, who at first declared it as “unfit for purpose”. That was a blow, of course, but also a wake up call. Many of the Act’s provisions replicate international norms in arbitration, and it is a striking feature of that Act that it owes so much to private research done by the Chartered Institute and others, into “best practice” across the world.

However, the Act also has two unique features, found nowhere else in the world. Those are, firstly, that it collects together all the procedural aspects for the actual conduct of an Arbitration in the “Scottish Arbitration Rules” so that the commercial user (and arbitration practitioner) need only consider the Rules, ignoring, if they wish, the detailed underlying law. And it is all to be found in one place.

The second unique characteristic is that for the first, or maybe the second time in the world, as far as we know, an attempt has been made to frame a confidentiality provision which has some teeth. Rule 25 provides that disclosure of confidential information, which is itself defined, is to be actionable unless a range of criteria are met. These are common sense – to comply with any other enactment, to perform public functions, to protect a party’s lawful interests, in the public interest or the interests of justice, and where absolute privilege applies. Of course these leave some room for argument; but the difference is that the tribunal is required to inform parties of this obligation, and that reasonable steps must be taken to prevent unauthorised disclosure of confidential information, and that the statute actually spells it out, rather than leaving a sort of fudged “common law obligation” to be obeyed by the parties, or not.

One important matter has been omitted from the Act. It concerns express provision for dealing with smaller cases, for example those involving consumers and small businesses. Politically it is essential that the Act be seen to benefit the entire community at all levels and also that it be seen as a user-friendly process. To this end, the Scottish Branch of the Chartered Institute has drafted new Short-Form Rules to cover smaller arbitrations. These are now finalised, and ready for publication. They are capable of adaptation to suit particular circumstances, and it is hoped, for example, that the agricultural rent review community and consumer interests (to give just two examples) may see its way to make use of them in an adapted form. Provided they are consistent with the Act it is hard to see any reason why they should not be made use of in this way.

So, what do we have? Across the world, there are eight large International Arbitration Centres. London, Stockholm, Paris, Switzerland, Vienna, Dubai/UAE, Singapore, Hong Kong and Sydney. All have their own Arbitration Centres, staffed by skilled people with a keen eye on a growing market. Of course there are many others in smaller places, attracting less business, and of less significance in economic and prestige terms. We should not be mesmerised by the large and ritzy appearance of only those few places. They all come with a price tag. They are populated by busy lawyers and Arbitrators who ply their trade ion a determined fashion, when they are not buzzing from continent to continent. The industry is huge, and highly competitive. Everyone says, usually out loud, that their methods, skills, people, facilities and the rest are the best.

There is an Arbitration Conference somewhere in the world nearly every week. It is difficult to avoid the conclusion that International Commercial Arbitration is growing into a cousin of large scale litigation, and perhaps taking on the appearance of a dinosaur. The succession of near mandatory processes from pre-trial briefs, to immensely detailed pleadings, through the nightmare of US style discovery processes, to lengthy oral hearings, to post trial briefs, Awards and then court challenges all occupy a large space in the dispute resolution firmament and employ many people, not always economically. This is not exactly how it was meant to be. But Arbitration is unquestionably the preferred method of resolution of disputes of an international character.

Can we do something different, and make our own mark?

With the passage of this Act, Scotland has bravely taken the best of modern practice and, I hope discarded some of the worst, as well as chunks of its history. We have a country which has well trained and very capable lawyers with a huge range of international connections; a long arbitral tradition; fine facilities; good transport links; lineage and history; golf; whisky; bagpipes and scenery; distinctive tourist attractions; ancient universities and some of the world’s nicest people. What do we need, in addition, to make this work for us?

In the 21st century, a country seems to be successful as an arbitral centre not because it has the Model Law (adapted or otherwise) or because it does its own thing. As it happens, we now do both.

I suggest, in closing, that a successful arbitration country needs eight things

a robust, comprehensible and up-to-date Arbitration Act, easily found, easily applied, and easily understood;

The constructive support of, but not interference by its courts, staffed by honest and competent judges who understand that arbitration and litigation are different things;

-a determined neutrality amongst its arbitrators;
-a good business infrastructure, and the availability of high quality legal, accounting, engineering and other professional expertise;
-a good living environment for business visitors with decent transport, hotels, food, telecoms, flights, shopping (arbitrators do not always travel alone!);
-easy accessibility from the other arbitration centres where arbitration lawyers and arbitrators practice;
-cost-effective arbitration itself via lower institutional fees, lower rates for arbitrators/counsel, and lower support costs, than say, London
-a well run arbitration centre with a strong marketing capability, good facilities, and well resourced;

I think they are all here. A little application by those in the community with an interest in this subject, and we may just have fund the answer.