Arbitration Act 2025

On 24 February 2025, the Arbitration Act 2025 (the “2025 Act”) received Royal Assent. The much-anticipated legislation follows an in-depth review by the Law Commission into the provisions of the Arbitration Act 1996 (the “1996 Act”) and introduces important amendments to it. The main aim of the 2025 Act is to foster a more modern arbitral system and to re-establish the UK as the preferred forum for commercial arbitration, in the face of growing popularity of other fora such as Singapore, Hong Kong and Dubai.

Provisions of the 2025 Act

The 2025 Act introduces six main reforms:

• A default rule on the governing law applicable to arbitration agreements;
• A statutory duty of disclosure as to arbitrator impartiality;
• A new explicit power of summary disposal;
• Stronger provisions on arbitrator immunity;
• A new framework for jurisdictional challenges under section 67 of the 1996 Act;
• Clarification of the courts’ powers to support arbitration proceedings.

Law applicable to an arbitration agreement

There was much uncertainty following the case of Enka v Chubb in which the UK Supreme Court clarified the principles for determining which law governs an arbitration agreement where the parties have not made an express choice. It was held that, unless the parties agreed otherwise, the governing law of an arbitration agreement would be the law with which the arbitration agreement was “most closely connected”. There was concern that this approach was too complex and unpredictable, and that it could lead to a significant amount of satellite litigation.

The 2025 Act aims to put an end to this uncertainty. It introduces a new rule whereby the law of the arbitration agreement will be the law of the place chosen as the seat of arbitration, unless the parties agree otherwise. Businesses should review their current arbitration clauses in light of this change to determine which law will apply to their arbitration agreements under the new regime. For maximum certainty and clarity, the arbitration clause should expressly state which law is applicable to it.

Duty of disclosure as to impartiality

The 2025 Act codifies the duty of disclosure established by the UK Supreme Court in Halliburton v Chubb, which requires arbitrators to disclose circumstances that would or might give rise to doubts as to their impartiality. This obligation extends to circumstances that an arbitrator is actually aware of or ought reasonably to be aware of.

The 2025 Act does not outline which specific circumstances must be disclosed; this is deliberate and allows the retention of some flexibility. Arbitration is used in a wide range of sectors and the matters which may give rise to justifiable doubts as to the impartiality of an arbitrator will vary from one sector to another.

Summary disposal

In an effort to promote efficiency, the 2025 Act enables parties to apply to the arbitral tribunal for a summary decision to settle a claim, defence, or other matter where it considers that another party has “no real prospect of success”. This is similar to the summary judgment powers exercised by English courts.

The 2025 Act does not impose a specific procedure for such an application, the only requirement being that all parties be given a reasonable opportunity to make representations to the tribunal. The parties may also agree to waive their right to the summary procedure, either in their arbitration agreement or by agreement post-dispute.

Arbitrator immunity

Under the 1996 Act, arbitrators cannot be held liable for any act or omission committed in the exercise of their duties, unless it is shown that the act or omission was committed in bad faith. Arbitrators could, however, be held liable for costs incurred as a result of their resignation or dismissal.

Under the 2025 Act, arbitrators will no longer be liable for costs arising from their resignation, unless it is shown that the resignation was unreasonable. In applications for the removal of an arbitrator, arbitrators will no longer be liable for costs unless it is shown that they acted in bad faith.

Jurisdictional challenges

The 2025 Act amends the procedure for challenging an arbitral award under section 67 of the 1996 Act on the grounds that the tribunal lacked jurisdiction. Previously, an arbitral tribunal could make an award confirming its jurisdiction, and an objecting party could then make an application under section 67 to the court, which would hear the case in a full rehearing – in a sense giving the party a ‘second go’. This will no longer be the case.

The 2025 Act provides, in the interests of costs, time and fairness, that:

(1) the court should not take into account new arguments or new evidence (with limited exceptions); and

(2) evidence should not be re-examined, apart from in exceptional circumstances in the interests of justice.

Powers of the courts to support arbitration proceedings

Section 44 of the 1996 Act sets out the powers that a court may exercise in support of arbitration proceedings, for example the power to make orders for the preservation of evidence, the sale of property, and the appointment of a receiver. Orders can be made against the parties to the arbitration, but until now there has been some uncertainty as to whether orders can be made against third parties.

The 2025 Act amends section 44 of the 1996 Act to clarify that orders can be made against third parties and that a third party will have full rights of appeal in respect of any order made against it under section 44.

In addition, as emergency arbitration becomes increasingly common for parties seeking urgent interim relief, the 2025 Act also makes amendments to the 1996 Act to give emergency arbitrators further powers and the support of the courts, mirroring the powers given to ordinary arbitrators. Parties should now have greater confidence in the emergency arbitration procedure.

Next steps

While the government has not yet confirmed the date of entry into force of the 2025 Act, it will likely be imminent. Until then, the 1996 Act will continue to apply to arbitrations already commenced. In advance of enactment, it would be prudent for businesses to familiarise themselves with these reforms and how they may affect any upcoming arbitrations in England or the drafting of arbitration agreements which specify England as the seat of arbitration.

Sam Rietbergen, Trainee Solicitor, contributed to the preparation of this briefing.