What Does the New English Arbitration Act 2025 mean for Parties?

“New law to turbocharge [England’s] position as the world-leader in arbitration” – that is how the UK government has described the new English Arbitration Act 2025 (AA25), which received Royal Assent (i.e. being passed by Parliament) on 24 February, and is expected to come into force imminently. But what does it mean for parties and those involved in arbitration?

In this article we look beyond the headline, analyse the changes, and discuss the impact they will have.

Background

The changes brought in by the AA25 follow the Law Commission’s 2022- 2023 Review, on which we wrote in our earlier article ‘Reform of the 1996 Arbitration Act – The Six Key Proposed Amendments’¹. These changes subsequently became the subject of the Arbitration Bill put before parliament by the previous UK government in 2023. Since that time, the UK saw a change in government, which slowed the passage of the Bill through parliament. The Bill was recently picked up by this parliament and taken through the parliamentary process, resulting in the Act we now have.

The AA25 seeks to modernise the 1996 Arbitration Act (AA96) and addresses a number of issues parties and courts have had to grapple with in recent years. However, it is important to note that the AA25 is not a significant departure from the long-established principles in the AA96. Instead, the changes provide clarity; confirm the pro-arbitration stance of this jurisdiction; and will bolster London’s reputation as a premier arbitration seat.

Summary of key changes

The key amendments the AA25 makes to AA96, are set out here, all of which we delve into in more detail below:

1. Clarification of the law applicable to arbitration agreements.
2. Providing tribunals with summary judgment style powers.
3. A wider and clearer duty on arbitrators to disclose circumstances they may raise doubts on their impartiality.
4. Increased court powers to support arbitration including emergency arbitrations and obtaining evidence from third parties.
5. Greater protection against liability for arbitrators when resigning or being removed.
6. Limiting Section 67 Challenges.

Key changes in detail

1. Clarity on the Governing Law of an Arbitration Agreement

The issue of governing law of an arbitration agreement arises when the applicable law of the contract differs from the seat of arbitration (e.g., Swiss law contract, English seat of arbitration), or is silent on that choice of governing law. Following the decision of the UK Supreme Court in Enka v Chubb [2020] UKSC 38, the issue was widely debated, and it was universally agreed that a move away from common law principles to a more codified regime would be helpful on this point.

A new section 6A in the AA25 introduces a default position, which will end uncertainty and aligns English arbitration legislation with many Institutional Rules, e.g. the LCIA’s rules. Section 6A provides that in the absence of an express agreement by the parties, and by default, the governing law of the arbitration agreement will be the law of the seat of the arbitration.

Moreover, section 6A confirms that where the governing law is agreed

in the underlying contract, this will not of itself result in that law applying to the arbitration agreement. This amendment brings clarity, and the consistent rule makes commercial sense, which will be welcomed by many.

2. Summary Disposal

The AA96 does not contain any express provision for summary disposal in arbitration. The changes brought in by the new section 39A in the AA25 gives arbitrators a default power of summary disposal, exercisable on application by a party, and subject to a test of there being “no real prospect of success” on the relevant issue and apply equally to the claim and the defence.

This reform will help resolve disputes more efficiently both in terms of costs and time, and reflects the approach taken by a number of Institutional Rules. The change also helpfully aligns arbitration with the position in English litigation.

1. Arbitrators’ Statutory Duty of Disclosure

The AA96 provides that arbitrators must be impartial (section 33). Under English law, arbitrators have a continuing duty to disclose “any relevant circumstances”, which may reasonably give rise to justifiable doubts as to their impartiality, as established by the Supreme Court in Halliburton v Chubb [2020] UKSC 48.

The AA25 codifies this duty, and in addition, the new statutory duty of disclosure is objective i.e. based on what the arbitrator ought reasonably to be aware (rather than, subjective i.e. based on actual knowledge).

Importantly, the new provision also provides that the duty will commence from the time the arbitrator is approached to act.

It is hoped that these changes will encourage early disclosure and help reduce the number of arbitrator challenges, thereby saving all parties and those involved time and money.

2. Empowering Courts to Support Arbitration

In a change that will be welcomed by parties and practitioners, the courts’ supportive powers of arbitration are further enhanced by an amendment to Section 44, which provides that the court can make orders “in relation to a party or any other person” i.e. to third parties.

3. Enhanced Arbitrator Immunity

The AA25 amends section 24 AA96 and provides that resignation by an arbitrator will not result in liability unless the resignation was unreasonable. Further that an arbitrator will not be required to pay the costs of proceedings to remove them unless their refusal was unreasonable.

These reforms will support and encourage those wishing to act as arbitrators.

4. Limiting Scope for Challenges to Awards under Section 67

Section 67 of the AA96 enables a party to challenge the tribunal’s jurisdiction to hear the arbitration (or part of it) during the arbitration. If they are unsuccessful, they can later challenge the award in court claiming that the tribunal lacked jurisdiction.

The changes brought in by the AA25 Act provide that a challenging party can only make new objections, or present new evidence relating to jurisdiction, if it can demonstrate that these could not have been raised on the earlier challenge for example, they are facts that subsequently came to light.

In a departure from the Supreme Court judgment in Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46, the AA25 provides that there should be no rehearing of oral evidence, unless the court determines it necessary in the interests of justice. This provision is aimed at preventing tactical appeals intended to cause delays by effectively holding a re-hearing of the issues.

Conclusion

The changes made to the AA96 are the result of careful debate, consultations, and submissions by a range of those involved in the arbitration process, including HFW. As a result, the AA25 is thankfully not a case of throwing the baby out with the bath water, but a clear and more measured response recognising the benefits provided by the AA96, as well as the changes that were required following developments taking place over the last almost 30 years.

In catering for the evolving needs of business and ensuring smoother resolution of disputes by arbitration, the AA25 will help maintain England’s position as a leading forum for commercial arbitration and wider Disputes.

It is worth noting that the changes will not apply to arbitrations commenced before the AA25 comes into force i.e. the AA96 will apply instead.

Footnote

1. Reform of the 1996 English Arbitration Act – The Six Key Proposed Amendments – HFW