The new Arbitration Act 2025 (“the Act”) will come into force in full on 1 August 2025, introducing key reforms to the arbitration framework in England, Wales and Northern Ireland. It modernises the Arbitration Act 1996, enhancing clarity and reinforcing the UK’s status as a global arbitration hub.
Sherina Petit, Nishant Singh, Muizz Drabu and Joao Bofill provide insights into the newly enacted legislation.
Key reforms under the Act
Largely based on the Law Commission’s 2023 recommendations, the Act aims to solidify London’s competitive edge in international arbitration. Arbitration contributes an estimated £2.5bn annually to the UK economy, and the reforms address crucial aspects of efficiency, transparency and fairness. Notable provisions of the Act are outlined below.
Governing law of arbitration agreements
The Act establishes that arbitration agreements are governed by the law of the seat unless expressly agreed otherwise (section 6). This is a departure from Enka v Chubb, which the Law Commission criticised as “complex and unpredictable”. If the Law Commission’s assessment is correct, this default rule in favour of the law of the seat will reduce potential disputes in relation to the governing law of arbitration agreements and lead to more arbitration agreements governed by the law of England and Wales. However, there is also an exception to this rule with respect to investor-state arbitrations arising from a treaty or foreign legislation (sections 6A(3) and (4)).
This approach aligns with the London Court of International Arbitration (LCIA) Rules but contrasts with the International Chamber of Commerce (ICC) Rules, which do not include an equivalent provision.
Arbitrators’ duties and immunities
The Act codifies the duty of disclosure (section 23A) established in Halliburton v Chubb, ordering arbitrators to reveal any circumstances that might reasonably raise doubts about their impartiality. The duty to disclose also applies to pre-appointment discussions, as well as disclosures made at the time of the appointment. This provision follows the example of the UNCITRAL Model Law, foreign legislations (such as those of Scotland, Sweden and Switzerland), and institutional rules, such as the ICC and LCIA.
In addition, the Act strengthens arbitrators’ immunity concerning resignation (section 25), unless deemed unreasonable, and also limits cost liability upon removal (section 24), unless bad faith is demonstrated (section 24(5A)).
Summary awards
The Act includes the power to issue summary awards where a claim “has no real prospect” of success (section 39A), mirroring the test used in English courts. This provision is expected to streamline proceedings by enabling early dismissal of unmeritorious claims. However, it must be applied with regard to the duty to ensure each party has a reasonable opportunity to present its case (Section 39A(3)). Nonetheless, there is an opt-out option to this through an arbitration agreement or subsequent agreements.
Emergency arbitration
The Act amends the existing framework and enhances court support for emergency arbitrators, ensuring they can issue enforceable orders in the same way as orders of normal arbitrators (sections 41A, 44). Among other things, it allows emergency arbitrators to issue peremptory orders within prescribed timeframes in cases of non-compliance.
Challenge procedures
Jurisdictional challenges under section 67 are now subject to a refined procedure. Courts will not consider new grounds or rehear evidence already examined by the tribunal unless the applicant could not, with reasonable diligence, have presented the grounds or the evidence earlier (section 67(3C)). This marks a significant departure from the position in Dallah v Pakistan, which held that challenges under section 67 would result in a full rehearing, including the potential for new evidence to be presented. However, courts have the discretion to override this provision if deemed necessary in the interest of justice.
Orders against third parties
The Act aligns arbitration with court procedure by enhancing powers under section 44 and allowing court orders against third parties in support of arbitration proceedings, such as those who hold relevant evidence. Third parties also receive full rights of appeal, thus not requiring leave of the court to bring an appeal.
Repeal of provisions relating to domestic arbitration agreements
The Act also repeals previously unused sections 85 to 87 relating to domestic arbitration agreements that have never been brought into force, thus making it more concise.
Determination of a preliminary point of jurisdiction
The Act also amends sections 32 and 45, concerning the determination of the preliminary points of jurisdiction and law, respectively. An application to the court for a determination on these issues (jurisdiction or law) will require either the agreement of the parties or the permission of the tribunal. These amendments also remove further conditions previously required to satisfy the court to entertain an application for determination of the preliminary issues concerning jurisdiction or law.
Commencement and transitional provision
The Act will apply to all arbitral proceedings commenced after 1 August, as well as to court proceedings and subsequent awards. The amendments will also apply to existing arbitration agreements.
Comment
The arbitration community has welcomed the Act as a significant step in strengthening London’s global leadership in arbitration. By streamlining processes and upholding efficiency, impartiality and a pro-arbitration approach, the Act bolsters confidence in London as a premier arbitration centre, enhancing its ability to compete with key rivals such as Singapore, Paris and Hong Kong.
The authors would like to thank Nick Ong and Advika Gemawat for their assistance in the preparation of this article.
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