The 2025 Arbitration Act becomes law
After a long legislative process that began in March 2021, the new Arbitration Act has received Royal Assent. The 2025 Arbitration Act codifies established case law and introduces some practical improvements to the arbitration framework set by the 1996 Act.
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The Act will come into effect on a date determined by the Secretary of State, applying to arbitrations and related court proceedings from that point forward. Below, we outline the most important changes.
Law applicable to the arbitration agreement
The new section 6A of the 2025 Act provides that in the absence of any agreement between the parties, the law applicable to the arbitration agreement shall be the law of the seat of the arbitration. This provision marks a departure from the English law position previously set by the UKSC in Enka v Chubb (Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38) where it was held that the parties’ express choice of English law as the law governing the main contract extended to the arbitration agreement as well.
The 2025 Act clarifies however that this new provision shall not apply in the case of arbitration clauses in treaties and national legislation that operate as standing offers to arbitrate disputes (which is mainly the case in investor-State arbitrations).
Arbitrators' Duty of Disclosure
The 2025 Act also imposes new statutory duties of disclosure to arbitrators. In line with the UKSC judgment in Halliburton v Chubb (Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48), arbitrators will henceforth be required to disclose (as soon as reasonably practical) to persons that approach them over possible arbitrator appointments and/or parties to the proceedings any "circumstances that might reasonably give rise to justifiable doubts as to [their] impartiality in relation to the proceedings, or potential proceedings, concerned.” (see new section 23A as set out in the 2025 Act)
Power to make award on summary basis
One of the key aspects of the 2025 Act is the express power given to tribunals to make an award on a summary basis for a claim or a particular issue arising in a claim where there is "no real prospect" of success. This 'expedited' procedure may be familiar to arbitration users as it is already available under the rules of major arbitral institutions, such as the LCIA and SIAC. It is worth noting that this provision (section 39A) is not mandatory and can therefore be disapplied by agreement of the parties.
Emergency Arbitrators
The 1996 Arbitration Act provides that if a party fails to comply with any order/directions from the tribunal, the tribunal may make a peremptory order requiring the party to comply within a prescribed timeframe. Section 41A of the 2025 Act now extends this power to emergency arbitrators. The new law also empowers emergency arbitrators to grant permission to a party to apply to the court for a section 44 order (e.g. for the preservation of evidence, the taking of witness evidence and other matters).
In addition, under the 2025 Act, the court is now empowered to issue orders in support of emergency arbitrators in line with the powers the court was already afforded in relation to regular (non-emergency) arbitration proceedings under the 1996 Arbitration Act.
Court determination of the tribunal's jurisdiction
The new law also clarifies that the court must not consider an application to determine any question as to the substantive jurisdiction of the tribunal if and to the extent the tribunal has already ruled on the same question.
Challenge of awards under Section 67
The 2025 Act makes important amendments to section 67 of the 1996 Arbitration Act relating to the challenge of an award on jurisdictional grounds. In particular, in cases where a party has objected to the tribunal's jurisdiction and the tribunal has already ruled on the objection, any application under section 67 by a party who participated in the arbitration should not result in a full rehearing of the evidence. Instead, the court shall not entertain any new grounds for the objection, or any new evidence, unless (i) this is warranted "in the interests of justice"; and (ii) the party making the objection did not know and could not, with reasonable diligence, have discovered the ground/submitted the evidence before the arbitral tribunal.
Immunity of Arbitrators
Finally, the 2025 Act provides a series of amendments to Sections 24 and 29 of the 1996 Arbitration Act relating to the immunity of arbitrators. Importantly, under the new law (i) an arbitrator shall not liable to pay costs in proceedings for their removal unless they acted in bad faith; and (ii) the resignation of an arbitrator shall not give rise to any liability unless it can be shown that the resignation was unreasonable.
Concluding Remarks
The 2025 Act has been welcomed by the arbitration community as a balanced and measured effort to modernise and clarify aspects of the legislation without extensively revising the (already successful) 1996 Arbitration Act.
In proposing various amendments to the 1996 Arbitration Act, the Law Commission invited input from various stakeholders, who inter alia suggested that the new law should address issues such as: the confidentiality of arbitration proceedings, the "neutral nationality" of arbitrators (i.e. whether the arbitrators should have a nationality different from the parties) and the reform of section 69 (appeal on a point of law) from an "opt-out" to an "opt-in" provision. However, the Law Commission decided not to propose any further changes to the legislation in these regards and as a result it rests on commercial parties to agree tailored provisions on any key procedural points not covered under statute (or other arbitral rules of their choice).
Parties currently negotiating contracts with clauses providing for London-seated arbitrations should take into account the recent reforms and make any necessary updates to their standard clauses.