Introduction
The United Kingdom has long been a hub for international arbitration. The Arbitration Act 1996 provided the foundation for dispute resolution. However, after nearly three decades, significant reforms have been introduced with the Arbitration Act 2025. This new legislation aims to modernize arbitration in England and Wales, enhancing efficiency, predictability, and alignment with international best practices.
Background and Legislative Reform
The Arbitration Act 2025 follows recommendations from the Law Commission of England and Wales, which began a review process in 2023. While the 1996 Act was successful, the review identified areas for improvement. The new Act introduces targeted amendments without overhauling the entire framework. This ensures that London remains a premier seat for arbitration.
The Act received Royal Assent on February 24, 2025, and applies to arbitrations and arbitration-related court proceedings commenced after its enactment.
Key Changes Introduced by the Arbitration Act 2025
Governing Law of the Arbitration Agreement
A major change is the introduction of a default rule for the governing law of arbitration agreements. The Act adds Section 6A, stating that unless parties agree otherwise, the law of the seat of arbitration governs the arbitration agreement. This eliminates past uncertainties, such as those in Enka v Chubb, which required complex legal analysis when an arbitration clause lacked a governing law provision.
Recognition of Emergency Arbitrators
For the first time, the Act formally recognizes emergency arbitrators. The addition of Section 41A grants them powers equivalent to a fully constituted tribunal. Courts can now enforce peremptory orders issued by emergency arbitrators, addressing concerns about their enforceability, especially for urgent interim relief.
Summary Disposal of Claims
The Act introduces an express summary disposal mechanism. Under Section 39A, tribunals can summarily dismiss claims or defenses with no real prospect of success. Previously, this was only available under specific institutional rules. Now, it applies to all arbitrations in England and Wales, reducing time and costs associated with weak claims.
Enhanced Arbitrator Impartiality and Disclosure
The Act strengthens disclosure requirements for arbitrators. Section 23A codifies the duty of disclosure, following principles established in Halliburton v Chubb. Arbitrators must now disclose any circumstances that might reasonably raise doubts about their impartiality. This ensures greater transparency and trust in the arbitration process.
Streamlined Jurisdictional Challenges
Changes to Section 67 streamline challenges to a tribunal’s jurisdiction. Previously, parties could seek a full rehearing of jurisdictional issues. The new rules prevent the introduction of new arguments or evidence unless a party demonstrates reasonable diligence. This reform discourages tactical objections aimed at delaying proceedings.
Court Powers in Support of Arbitration
The Act clarifies the powers of English courts to issue orders against third parties in support of arbitration. Amendments to Section 44 ensure courts can order evidence preservation, witness examination, and injunctions. This brings clarity to an area previously affected by conflicting case law.
Strengthened Arbitrator Immunity
The Act enhances protections for arbitrators. They are now shielded from liability for resignation unless it is deemed unreasonable. Additionally, they are immune from cost orders in court proceedings related to their removal unless they acted in bad faith. Amendments to Sections 24, 25, and 29 ensure arbitrators can act without fear of personal liability.
Implications for Businesses and Arbitration Practitioners
The Arbitration Act 2025 enhances London’s status as a global arbitration center by reducing procedural inefficiencies and reinforcing arbitrators’ powers. Businesses and legal practitioners should consider the following practical implications:
- Review arbitration clauses: Ensure agreements specify the governing law to avoid unintended applications of the default rule.
- Strategic use of summary disposal: Evaluate when to apply or challenge the new summary disposal mechanism.
- Utilization of emergency arbitration: Increased confidence in emergency arbitration mechanisms due to enforceability improvements.
- Jurisdictional objections: Carefully plan challenges, as re-litigation is now restricted.
Conclusion
The Arbitration Act 2025 marks a significant evolution in UK arbitration law. By refining key aspects of the 1996 Act, it ensures that arbitration in England and Wales remains at the forefront of global dispute resolution.
With clearer rules on governing law, stronger emergency arbitrator enforcement, and streamlined court procedures, the Act provides an improved framework balancing efficiency, fairness, and legal certainty. As businesses and arbitration practitioners adapt, the UK arbitration community can expect a more robust and competitive dispute resolution landscape.
Get in Touch
This analysis is authored by our Arbitration Counsel Dr Karen Seif, Partner Matthew Page, Associate Payel Mazumdar and Associate Dimitry Mednikov providing key insights into the impact of the Arbitration Act 2025. To discuss how these changes may affect your arbitration agreements or dispute resolution strategy, schedule a consultation with Dr Karen today.
