Arbitration in Scotland
Scots arbitration grew along with the growth of commerce and of the law in the 19th century with public works contracts becoming a major feature; mirroring the development of liberal thought, the Scottish judiciary never exercised the same degree of control of arbitration as was the case in England until 1979 (see also below). However, the extent of judicial supervision did increase; the freedom to decide according to equitable principles was removed by a House of Lords decision in 1835, and the Court held that an error of law on the face of an award was grounds for reduction (set aside).
Further, supervision of awards was effectively exercised by strict interpretation of the related submission agreements: inter alia, it was held in 1852 that there was no implied power for an arbiter to award damages. The courts also decided that their jurisdiction could not be ousted by an arbitration agreement unless it named the arbiter. Not all 19th and early 20th century “news” was “bad news”: the arbiter’s procedural flexibility was largely upheld (with what we now term “natural justice” being seen as fundamental) as was the validity of an arbitration agreement which excluded the jurisdiction of the Court. Whereas the payment of arbiters had previously been prohibited, that prohibition was, very fortunately, rendered obsolete in 1913.
Throughout this period of development of arbitration law in Scotland, the topic was substantially ignored by the legislators: other than an Act of 1598 and art.25 of the Articles of Regulation 1695, the statute book is silent until the Arbitration (Scotland) Act 1894 (short and dealing only with three minor issues) and again so until 1972 when “stated case” procedure was introduced and then 1990 when the UNCITRAL Model Law of 1985 became the law for international commercial arbitrations conducted in Scotland It would be fair to say that the development of the Scots law of arbitration suffered for the want of a legislature with sufficient parliamentary time to address matters of civil procedure, and Scottish arbitration, failing to keep up with best practice, fell from favour.
However, that changed with the reconstitution of the Scottish Parliament in 1999, which, after dealing with a backlog of law reform, passed the Arbitration (Scotland) Act 2010. The new act is modelled on the Arbitration Act 1996 applicable in England and Wales, but with a number of improvements and innovations, including strict (but optional) statute based confidentiality provisions.
Scotland now has a world class arbitration regime, which whilst innovative, will feel instantly familiar to practitioners of international arbitration.