SJ Interview: Hannah Ambrose

What sets Herbert Smith Freehills's arbitration practice apart from its rivals?

It's an increasingly crowded market. You've got all the big players as well as the boutique firms. But we have a truly global group practice. We have 20 offices worldwide, not with just a smattering of people that do a bit of arbitration, but with really credible expertise and a great book of cases in each of those offices.

We're also a very collaborative and culturally diverse practice, and an incredibly dynamic group of partners and associates. That makes a big difference, because clients really do benefit from the links between the different offices. We regularly work in cross-office teams. We draw together expertise that works for a particular client – whether it's culturally, whether it's where the centre of gravity of the dispute is, whether it's the legal issues that come up. So whether it's a commercial arbitration or a public international law matter, we can put together a strong cross-office team, and that works really well.

Clients quite rightly expect technical expertise from their lawyers. But we're also at the forefront of the firm's pricing strategy. We've collated over a decade of data on our cases, which really helps us price more effectively and efficiently and allows us to be more innovative in terms of what we can offer to clients.

That's a really strong differentiator. Because it's data-based there's comfort on our side – for example, if we're putting some skin in the game – and comfort on the client side that that there is substance behind the fee proposals we're making. It makes our pricing proposals a lot more credible than some of our competitors.

Moving on to the Law Commission report: what prompted the report? Were there specific issues or problems within the Arbitration Act?

Over the 30 or so years since it was passed, it really has stood the test of time and so nobody went into the process of reform thinking that it needed to be root and branch or revolutionary. London has really established itself the go to place for arbitration off the back of the Act.

Hence what the consultation process has given rise to is more tweaking around the edges. It fixes some of the things which I think a large body of practitioners generally agreed were points where clarity could be helpful. Particularly where the common law has developed and that development could be cemented into a piece of legislation – for example, arbitrator disclosures.

There were some issues which it was clear should be tackled but where the outcome in terms of proposed reform was always likely to be more controversial. In the area of the governing law of the arbitration agreement, the development of the common law had led to a disparity between England and some other countries. So you would see a different approach, for example, between how the French courts and the English courts would approach the issue. Most people agreed this should be addressed in legislation, however the question of how was less clear-cut.  

The Law Commission has worked hard to engage with a spectrum of different stakeholders to get to the heart of what practitioners, users, the judiciary and the Bar, think about these more controversial issues, and has set out very careful thorough analysis.

So while the reform proposals, or elements of them, may have their detractors, those proposals come from a solid base. There are a couple of points where I would have personally chosen to go the other way. For example, the point about whether confidentiality should be enshrined in legislation, rather than being an implied duty in common law.

I would have favoured including it, although colleagues disagree. It's easier to advise international users of arbitration on the question of confidentiality – which comes up a lot – on the basis of legislation, rather than on the basis of an implied duty. Reflecting the position under common law in a legislative provision would have been helpful to users and a positive differentiator for London as a seat.

But even there, I can see the critical thinking that's gone into the Law Commission's analysis of this issue.

Of the recommendations made in the report, which will have the greatest impact on your practice?

If I'm choosing one, I would go with the changes the Law Commission has proposed to emergency arbitrator orders and awards, because that's an area in which, over the last few years, clients have been particularly interested. They want to know what the arbitral process can offer them in an emergency, to protect their position, before they have their tribunal fully constituted. Previously, that was the point where we always had to go to the courts, because we were unable to get an interim resolution within the arbitration process before there was an arbitral tribunal.

Institutions then responded to that need by putting provisions into their rules where you can appoint an emergency arbitrator, and you can get an order or sometimes an award quickly to "hold the ring". But there was a difficulty around whether those emergency arbitrator decisions could or would be enforced by the court. The Law Commission has tackled that issue, and they've taken a very balanced approach. They haven't applied the entirety of the legislation to emergency arbitrators, which I think was the appropriate way to go, but the decision of an emergency arbitrator can now receive some degree of enforcement support from the English courts.

That's a really positive step forward and, again, puts London at the forefront of international arbitral seats.

When are the commission’s recommendations likely to be implemented?

I think there's a lot of motivation amongst the arbitration community to do what they can to help push through these changes as soon as possible, even though they are not, as I say, hugely dramatic. My sense is that there's a general impetus behind the reform, even from people who don't necessarily agree with all of the Commission's recommendations , rather than have it languish at the back of the queue. We would hope that the Government prioritises this area keeping London at the forefront of international arbitration – so fingers crossed it is included in the King's Speech on 7 November.

Were there any significant omissions or surprises in the report?

There was the issue of confidentiality, although not everybody would agree with me that that was an omission. One of the points which came out in the Commission’s second consultation paper was the suggestion that there would be a general ban on discrimination in arbitration. Well-motivated as it was, it took people slightly by surprise. There wasn't much flesh on the bones of that particular proposal.

Although people could get behind its sentiment, being unable to see how the commission envisaged this would play out in a piece of legislation made people reluctant to support it. They wanted to see that, if there was going to be a general ban, it would be effective. Who would police it? How would you enforce a claim? Who would it be against – for example, the tribunal or an institution or one of the parties? Who would How would it work with our employment appeals tribunals? Which body would decide these matters? Significantly, would changes provide opportunity for unwarranted disruption, delays and parallel proceedings?

The Law Commission appears to be slightly disappointed that there is no provision on discrimination in their recommendations. But they have succeeded in drawing further attention on an important issue, which has been on people's minds for a number of years. To see that there could have been a legislative response to it, really does focus the mind.

So notwithstanding the fact there's no recommendation, it was still very positive that the Law Commission brought the issue to the floor in the first place.

Broadly speaking, who are the winners and the losers from the report?

It is a win for people who like to arbitrate in London.

London was in a really strong position as we went into this consultation process. While there are some positive changes in the report, the legislative framework stays as it is and that is what has made London so attractive for international users of arbitration. The winners are the people who don't have the rug pulled from under them and find themselves dealing with an entirely new regime.

They've got a regime that works, they've got solid jurisprudence concerning the interpretation of those provisions, and they've got some changes that modernise the emergency arbitrator provision that I mentioned.

The legislation is also going to recognise that arbitrators can issue a summary award, which I think is a real win for users and a differentiator for London.

I'm not sure that there are losers, so to speak. Coming back to the confidentiality point, it is hard to explain to international clients how confidentiality works in terms of London seat of arbitration proceedings. It would have been nice to be able to point to a statutory provision, albeit one that needed to leave a degree of flexibility for the law to develop. That would have made it a bit easier for practitioners.

For transactional colleagues, who are used to putting arbitration clauses into documents, the point about the law of the arbitration agreement is relevant. When the law of the arbitration agreement is not specified, it's going to follow the law of the seat. That may feel counterintuitive in terms of how a transactional lawyer would think about these things. When you apply a particular governing law to a contract, you expect it to govern all the provisions. The idea of a separable arbitration clause that might be governed by a different law is an odd one in itself for those less familiar with arbitration.

So there's an education piece there, though I don't think anybody's necessarily losing in that. And it does mean that English law generally follows a number of other jurisdictions in terms of how they would identify the law of an arbitration agreement where the parties have not explicitly agreed it.

Finally, what potential issues or challenges do you see arising from the proposed recommendations?

The non-retrospective effect of that particular change – regarding the law of the arbitration agreement – is going to mean that we will have a degree of divergence in terms of how the courts will approach different cases. That will play out when those arguments are made in arbitrations too. In terms of identifying the law of the arbitration, the common law will apply to arbitration agreements concluded before the date of the reform, and to arbitration agreements in which the seat is not specified (even if concluded after the date of the reform), and the new default rule will apply to arbitration agreements concluded after the reform takes effect.

With the changes on section 67, it will be interesting to see whether they do have a big practical impact. Essentially, this was a very polarised issue. On the one side, there was the view that parties shouldn't be allowed a full rehearing on the issue of jurisdiction when the decision has already been made by the tribunal (the law as it stands permits a full re-hearing). And on the other, the view that a tribunal's decision as to its own jurisdiction should not be given undue deference when it is possible that it does not have jurisdiction. Given the degree of polarisation, there's a degree of compromise in the way that the Law Commission has come out, by way of rules to be developed imposing limitations on the ability to get a full re-hearing where the issue of jurisdiction has been heard fully by the tribunal. It will be interesting to see what practical difference this compromise position will make.

 

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