Written by Jennie Wild and Eli Baxter.
The Arbitration Act 2025 (the “2025 Act”) received Royal Assent on 24 February 2025.1 It aims to reform and modernise the UK’s arbitral framework to ensure “proceedings on our shores remain robust and respected internationally”.2 The current Government’s motivation was made clear by the oft-cited statistics in the Bill’s legislative passage: c. 5,000 arbitrations take place in England and Wales each year, contributing at least £2.5 billion to the economy in fees, making the 2025 Act part of the “growth agenda”.3
Arbitration is deeply rooted in the UK – common in Anglo-Saxon times, developed in Norman times, a London arbitration centre from the 14th Century, an Arbitration Act as early as 16984 and now a very common and familiar part of industry and commerce. The modern appeal is largely due to the Arbitration Act 1996 (the “1996 Act”), the supervisory backing of the English Courts, and the New York Convention enforcement guarantees. But there is always room for improvement, and the 2025 Act brings just that.
The 2025 Act was subject to significant scrutiny: it was the subject of a Law Commission review beginning in 2021 (including two consultations), taken through Parliament by two Governments and the subject of a Special Public Bill Committee. Parliament variously described the process as “lawyers seeking to build perfection on perfection”5 and “painstaking and thorough”,6 which might say something more about the Government’s view of lawyers than the benefits of the process, but nevertheless the main point is clear – the reforms were well thought out. As Lord Beith stated on its Third Reading: “Not much legislation gets all that”.
Such scrutiny might suggest difficulties, but in fact the opposite is true: the Bill enjoyed broad support and followed the Parliamentary procedure for non-controversial Law Commission Bills.7
The 2025 Act amends the 1996 Act and introduces new provisions. It largely adopts the Law Commission’s recommendations.8
As expanded below, the key changes introduced by the 2025 Act include:
(i) Governing law: A new default rule that the governing law of an arbitration agreement will be the law of the seat, unless the parties have chosen otherwise.
(ii) Summary disposal: A new power to make arbitral awards on a summary basis where the claim or defence has no real prospect of success. This may prove to be the most important and notable change.
(iii) Section 67 challenges: A new framework for challenging awards under section 67 of the 1996 Act.
(iv) Duty of disclosure: The codification of best practice in relation to arbitrator’s common law duty of impartiality and disclosure.
(v) Arbitrator immunity: The strengthening of arbitrator immunity in respect of resignation and applications for removal, to ensure arbitrators can rule without fear.
(vi) Emergency Arbitrators: New provisions relating to ‘Emergency Arbitrators’ and their powers, which will be familiar to those operating under the ICC Rules.
The Amendments
Governing law
A new Section 6A to the 1996 Act adds a default rule – arbitration agreements will be governed by the law of the seat, unless the parties expressly agree otherwise. When in force, this will change the current law (Enka v Chubb9) being that, in arbitrations seated in England & Wales with a choice of foreign substantive law, the arbitration agreement will be governed by such foreign law.
The Law Commission, and a number of consultees, including the Bar Council, were strongly in favour of amending the law. Its typical effect is that many arbitrations seated in England & Wales are governed by foreign law, which may not be as supportive of arbitration, thereby diminishing the view of England & Wales as a “safe seat”, and sometimes leading to curious outcomes (see also the recent discussion in UniCredit v RusChemAlliance).10
Summary disposal
A new section 39A to the 1996 Act will provide arbitrators with the express power to dispose of claims on a summary basis if a party has “no real prospect of succeeding” with its claim or defence.11 It is designed to save time and cost. This power is exercisable only on the application of one of the parties, and the parties can expressly choose to opt-out.12 There is no prescriptive procedure for such applications, rather parties are to be afforded a reasonable opportunity to make representations to the tribunal.13
The new power mirrors the test for summary judgment under CPR r.24.3, such that the associated body of law is likely to be relevant to arbitrations with a seat in England & Wales. This view was endorsed by the Law Commission, who suggested s39A should bear the same threshold for success – namely a realistic (and not fanciful) prospect.14
Section 67 challenges
The 2025 Act amends the procedure for challenging awards on the basis of jurisdiction under section 67 of the 1996 Act.15 Where a tribunal has already ruled on an objection to its jurisdiction, a court will not: (i) entertain any new grounds or evidence unless the applicant could not, with reasonable diligence, have discovered the ground; or (ii) re-hear evidence already heard by the tribunal, save in the interests of justice.16
These amendments mean that any section 67 challenge is now better regarded as an appeal, rather than a re-hearing. Unsuccessful applicants cannot simply re-run their arguments before the court. This is a notable departure from the rule established in Dallah v Government of Pakistan,17 in which the Supreme Court held that a section 67 challenge is by way of a full rehearing. The Law Commission felt that this departure was justified on the grounds of costs, delay and, most importantly, fairness.18 Under the old system, arbitral awards effectively ‘coached’ unsuccessful parties on how to reformulate their arguments before the court, making the arbitral proceedings a time-consuming ‘dress rehearsal’.19
Duty of disclosure
A new section 23A codifies best practice and an arbitrator’s common law duty of disclosure laid down in Halliburton v Chubb:20 namely, arbitrators are under a continuing obligation to disclose any relevant circumstances that “might reasonably give rise to justifiable doubts as to the individual’s impartiality”.21 This duty extends to both what an arbitrator actually knows, or ought reasonably to know.22 The Law Commission felt that statutory codification was in line with international best practice, made the rule more accessible and of clearer application, and was drafted so as to make clear that disclosure applies to pre-appointment discussions.23
Arbitrator immunity
The 2025 Act extends the scope of arbitrator immunity in two ways. First, under a new section 24(5A), an arbitrator cannot be ordered to pay costs in removal proceedings unless they have acted in bad faith. The Law Commission recommended that the meaning of ‘bad faith’ ought to align with that under section 29(1) of the 1996 Act. This recommendation was adopted, and the 1996 Act now includes a cross-reference between section 29 and the new section 24(5A).
Second, under a new section 29(4), arbitrators will not incur liability for resignation unless their resignation is shown to be unreasonable. The Law Commission did not define an ‘unreasonable’ resignation, concluding that this will vary according to the circumstances and is therefore a matter best left to the courts.24
Emergency arbitrators
The 2025 Act introduces the concept of emergency arbitration into the 1996 Act. Pursuant to a new section 41A, emergency arbitrators will possess the same powers as a fully constituted tribunal to enforce their peremptory orders and to grant parties permission to apply to the court for a section 44 order.25 Sections 41, 42, 44, and 82 of the 1996 Act have been revised to reflect this development, variously inserting references to “emergency arbitrator”.
Conclusion
It seems likely the 2025 Act will further strengthen the framework of support, hopefully making the UK an attractive place to arbitrate disputes, particularly in the wake of arbitral reforms in Singapore, Hong Kong and Dubai.26 It has certainly strengthened the competition: France swiftly followed with a reform agenda.27
The Law Commission has done much to improve our laws (the Sale of Goods Act 1979, Unfair Contract Terms Act 1977, Latent Damage Act 1986, Contracts (Rights of Third Parties) Act 1999, Consumer Rights Act 2015 and Insurance Act 2015, to name but some). The 2025 Act should rightly sit in the trophy cabinet – long may they continue!
A copy of this article can be downloaded here.
1 We are waiting on secondary legislation to bring the substantive provisions into force (the Government says this will occur “as soon as practicable”: Ministry of Justice, ‘Boost for UK economy as Arbitration Act receives Royal Assent (24 February 2025). The press release can be accessed here: www.gov.uk/government/news/boost-for-uk-economy-asarbitration-act-receives-royal-assent
2 Second Reading, House of Commons, Sir Nicholas Dakin.
3 Eg Second Reading, House of Commons, Sir Nicholas Dakin.
4 See the interesting background explained by Sir Nicholas Dakin, the Parliamentary Under-Secretary of State for Justice, in the Commons Second Reading.
5 Lords Third Reading, Lord Thomas.
6 Commons Second Reading, Sir Nicholas Dakin.
7 A procedure adopted by the House of Lords Rules Committee in October 2010 (see HL Hansard, 7 October 2010 col 224 and 11 November 2024, House of Commons Research Briefing: The Law Commission and Law Commission bill procedures).
8 Law Commission, Review of the Arbitration Act 1996 (Law Com No 413, 2023) (“The Report”).
9 [2020] UKSC 38.
10 The Report, paras 12.17, 12.34, and 12.44. [2024] UKSC 30.
11 Section 39A(1)(a) and (b) of the 1996 Act.
12 Section 39A(1) of the 1996 Act.
13 Section 39A(3) of the 1996 Act.
14 The Report, para 6.38, reciting the well-known principles from commentary in The White Book.
15 Section 67(3B) – (3D) of the 1996 Act.
16 Section 67(3C) of the 1996 Act.
17 [2010] UKSC 46.
18 The Report, para 9.16
19 The Report, para 9.17.
20 [2020] UKSC 48.
21 Section 23A of the 1996 Act.
22 Section 23A(3)(b) of the 1996 Act.
23 The Report, para 3.66 – 3.67.
24 The Report, para 5.33.
25 Under section 44(4) of the 1996 Act.
26 Eg see Hansard (Lords 30 July 2024) Vol 839 Column 950.
27 The French Ministry of Justice launched a working group to review and modernize the arbitral legal framework in November 2024.
