Arbitration Act 2025 receives Royal Assent, strengthening UK arbitration
The long-awaited reforms to the Arbitration Act 1996 (the “1996 Act”) have finally become law, with the Arbitration Act 2025 [1] (the “2025 Act”) receiving Royal Assent on 24 February 2025. The reforms’ legislative journey began in November 2021, when the Law Commission initiated a consultation that concluded in September 2023, with the publication of its final report and proposed arbitration bill.
As envisaged in our blog following the Law Commission’s initial announcement on reviewing the 1996 Act, the 2025 Act introduces welcome clarifications for arbitration practitioners while largely preserving the framework of the 1996 Act. In other words, it’s business as usual for arbitration practitioners — just as the Law Commission intended. The reforms aim to ensure that the UK, and London in particular, retains and strengthens its position as a leading destination for commercial arbitration.
The exact date on which the reforms will come into force is yet to be confirmed (and is to be set by the Secretary of State). In the meantime, arbitrations started before the 2025 Act’s effective date will continue under the 1996 Act, including any related court challenges.
Key reforms
Law governing arbitration agreements
One of the most significant reforms introduced by the 2025 Act is the new default rule that, where parties do not specify the governing law of the arbitration agreement, the law of the arbitration seat will apply.
This change appears to respond to criticisms of the existing approach following the Supreme Court’s decision in Enka v Chubb [2020] UKSC 38, which established that, in the absence of an express choice of law for the arbitration agreement, it would generally be governed by the law of the underlying contract. The Law Commission viewed this approach as “legally complex” and potentially leading to unpredictable outcomes. In contrast, the straightforward default rule adopted was considered easier to apply and would promote greater consistency.
In most arbitrations seated in London the underlying contract is governed by English law. Best drafting practice has always been to expressly state the intended governing law of the arbitration agreement itself, to avoid the issues that have in the past arisen where there is no governing law set out in the arbitration agreement and the governing law stated for the main contract differs from the law of the seat or the contractual governing law is unclear. This reform promotes certainty and will ensure that where an arbitration is seated in England the arbitration agreement will also be governed by English law, unless the parties have selected another law.
Procedure for jurisdictional challenges
The 2025 Act updates the framework for jurisdictional challenges under Section 67 of the 1996 Act, which deals with challenges to arbitral awards on the grounds that the tribunal lacked jurisdiction. Under the current framework, such challenges result in a full rehearing before the English court.
The 2025 Act introduces a more streamlined approach, preventing parties who participated in the arbitration and challenged the tribunal’s jurisdiction from rearguing the same issues in court. Instead, the court will only consider new jurisdictional objections or evidence if they could not have been presented to the tribunal with reasonable diligence. Previously submitted evidence will only be reconsidered if necessary in the interests of justice. Accordingly, under the new regime, jurisdictional challenges will be treated as appeals of the tribunal’s decision rather than entirely new hearings.
This reform aims to reduce delays and minimise costs for parties involved in such jurisdictional challenges in the English court, which in any event rarely succeed.
Power to make awards on a summary basis
The 2025 Act introduces a new provision empowering London-seated tribunals to summarily dismiss unmeritorious claims or defences. The reform adopts the “no real prospect of success” threshold, fully aligning with the English courts’ well established summary judgment test. While the parties will still be able to opt out from this provision, the reform removes any uncertainty as to the tribunal's authority to use summary procedures.
It will be interesting to see whether this reform leads to more parties expressly excluding summary determination in their arbitration agreements.
Enhanced court powers in support of arbitration proceedings
The 2025 Act clarifies that the English courts' powers, under section 44 of the 1996 Act, to issue orders in support of arbitration proceedings, extend to third parties. This resolves previous uncertainties from conflicting case law. This provision confirms that, unless parties agree otherwise, the courts have the same authority to grant interim relief against third parties in arbitration as they do in litigation.
Relatedly, the 2025 Act strengthens the role of emergency arbitrators (arbitrators appointed on an interim basis to make urgent orders prior to the constitution of the tribunal) by confirming that parties can seek court assistance to convert the emergency arbitrator’s peremptory orders into enforceable English court orders.
Duty of disclosure
The arbitrator’s ongoing duty to disclose any circumstances that might reasonably raise doubts about their impartiality is well established in arbitral practice and aligns with the Supreme Court’s guidance in Halliburton v Chubb [2020] UKSC 48. The 2025 Act goes a step further by formally codifying this duty, reinforcing its importance in arbitration.
Arbitrator immunity
The 2025 Act also expands arbitrator immunity, shielding arbitrators from liability except in cases of serious misconduct. The provisions introduced with the 2025 Act protect arbitrators from cost liability if removed by the court, except in cases of bad faith. This new approach also ensures arbitrators are not responsible for costs upon resignation unless such resignation is deemed unreasonable.
Comment
London remains a leading arbitration centre globally and this refreshed legislative framework for English arbitration has been positively received by the international arbitration community. Competition amongst the international arbitration hubs is fierce and the passing of the 2025 Act demonstrates that London is keeping up to date. The reforms introduced by the 2025 Act, while unlikely to bring immediate significant changes to arbitral practice or procedure, were designed with this objective in mind and, in that sense, represent a welcome development.
Footnote