Passage of the English Arbitration Act 2025 into Law

The Arbitration Act 2025 (the “2025 Act”) received Royal Asset on 24 February 2025. The 2025 Act introduces “targeted reforms” of the Arbitration Act 1996 (the “1996 Act”), which governs arbitration in England, Wales and Northern Ireland. This article gives an overview of the key features of the 2025 Act and its expected impact on arbitration.  The primary provisions of the 2025 Act will come into force when the necessary statutory instruments are introduced.

Background to the 2025 Act

At the request of the Ministry of Justice, the Law Commission commenced a review of the 1996 Act in 2022, leading to two consultation papers (including an appended draft bill) in September 2023. Originally introduced as a bill by the Conservative government, the 2025 Act was unable to complete its passage through the Houses of Parliament before the 2024 general election. The bill was since re-introduced by the Labour government, enjoying cross-party political support as well as the backing of the Charted Institute of Arbitrators. The UK Ministry of Justice’s press release underlines that the goal of the 2025 Act is to set London up to continue to compete with other key arbitral jurisdictions such as Singapore, Hong Kong and Paris, as well as to support the wider UK legal sector.

Key Provisions - and what they mean for practitioners  

The 2025 Act primarily codifies common law into a single piece of legislation, making the 1996 Act more user-friendly by reducing the number of rulings which must be referenced alongside. Additionally, it tidies up a number of irregularities within the 1996 Act. However, in a couple of key regards it also amends the existing common law position.

The Law of the Arbitration Agreement

Section 1 of the 2025 Act amends and codifies the position regarding the law governing the arbitration agreement. For cross-border contracts, the law of the contract itself may differ from the law of the seat and/or the law governing the arbitration agreement. Where parties fail to set out the law governing the arbitration agreement (or where it is not addressed in the incorporated arbitral rules), different jurisdictions take different approaches. The proper law of the arbitration agreement will impact how the agreement to arbitrate is interpreted, and a difference in governing law may significantly affect the course of the arbitration, leading to different positions as to whether the dispute is arbitrable or who the parties are.

The Supreme Court set the existing position in Enka v Chubb (2020), with the Court deciding that, where there is no express or implied choice of law in or directed to in the arbitration agreement, the governing law of the arbitration agreement will generally be the law selected by the parties as the law of the main contract. The practical impact of the ruling is that, for a number of English-seated arbitrations under foreign-law contracts, the arbitration agreement could be interpreted as being governed by a foreign law.

The 2025 Act amends the position in common law through the insertion of a new Section 6A into the 1996 Act, providing that the law applicable to the arbitration agreement is the law that the parties expressly agree applies to the arbitration agreement or, where no such agreement is made, the law of the seat (Section 1(2) of the 2025 Act). This amendment brings clarity that, for arbitrations seated in England and Wales, the governing law of the arbitration agreement will be English law unless agreed otherwise by the parties.

However, under Section 1(2) of the 2025 Act, this new provision does not apply to a standing offer to submit disputes to arbitration where the offer is contained in a treaty or legislation of a country or territory outside the UK. Investor-treaty disputes arising under bilateral or multilateral investment agreements will therefore typically not be covered by this provision.

Impartiality of Arbitrators and Duty of Disclosure

Section 2 of the 2025 Act introduces a new Section 23A to the 1996 Act, codifying an arbitrator’s duty of disclosure of any circumstances that might reasonably give rise to justifiable doubts as to the individual’s impartiality in relation to the proceedings. The duty of disclosure is both up-front and ongoing. The new Section 23A is similar to the wording in many commonly-used arbitral rules, for example Sections 5.4 and 5.5 of the LCIA Arbitration Rules 2020, and will continue to be complemented by the widely-utilised soft-law instrument the IBA Guidelines on Conflicts of Interest in International Arbitration. The 2025 Act follows the approach of the Supreme Court in Halliburton v Chubb (2020) which found that arbitrators have a continuing legal duty of disclosure and additionally that this duty is mandatory (i.e., parties cannot agree to waive the duty to disclose).

Immunity of Arbitrators

The existing Section 29(1) of the 1996 Act provides that, unless the act or omission is shown to have been in bad faith, an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his or her functions as an arbitrator.  Sections 3 and 4 of the 2025 Act expand the scope of arbitrator immunity, introducing new provisions exempting an arbitrator removed by the court from paying costs (except where an act or omission by the arbitrator was in bad faith) and ensuring an arbitrator’s resignation does not give rise to liability for costs (unless the resignation was in all the circumstances unreasonable). These amendments confirm arbitrator immunity in all but severe cases of malpractice and may disallow some of the small number of rulings which have awarded costs against arbitrators. The new provisions in the 2025 Act more fulsomely codify Rule 10 of the Chartered Institute of Arbitrator’s London Centenary Principles for an effective and efficient seat in international arbitration, which provides for a “clear right to arbitrator immunity from civil liability for anything done or omitted to be done by the arbitrator in good faith in his or her capacity as an arbitrator.”

Court Determination of the Jurisdiction of the Tribunal

The existing (although rarely-utilised) provisions of Section 32 of the 1996 Act allow, on the application of a party to the proceedings, for the court to determine the substantive jurisdiction of the tribunal if (amongst others points) all parties agree in writing or the application is made with the permission of the tribunal. Section 14 of the 2025 Act removes the other points from Section 32 as well as from the similar Section 45 regarding application to the court on a preliminary point of law.  

Section 5 of the 2025 Act introduces new wording to confirm that a Section 32 application to the court to determine the jurisdiction of the tribunal is an alternative to the tribunal taking a decision on the matter and not an appeal of a decision. This enforces the courts’ respect for the principle of kompetenz-kompetenz, i.e., that it is for the tribunal to determine its own jurisdiction, as set out within Section 30 of the 1996 Act. However, the amendment to Section 32 will not affect the route of later challenging an award as to its substantive jurisdiction, which remains available under Section 67 of the 1996 Act.

Power to Award Costs despite no Substantive Jurisdiction

Section 6 of the 2025 Act confirms the power of the tribunal to award costs where the tribunal (or, alternatively, the court) finds that the tribunal has no substantive jurisdiction. This codifies the existing approach taken in international arbitration that the submission of a jurisdictional dispute to the tribunal constitutes a submission to the kompetenz-kompetenz of the tribunal, which includes the power of the tribunal to award costs.

Power to make Awards on a Summary Basis

Section 7 of the 2025 Act provides an express power (unless parties agree otherwise) for tribunals to, on the application of a party, make an award on a claim or a part of a claim on a summary basis.  Such a power is already contained within the provisions of many arbitral rules such as those of the LCIA, SCC, HKIAC and SIAC. The new Section 39A of the 1996 Act will allow the tribunal to make an award or decision on a summary basis if it considers that a party has no real prospect of succeeding or defending a claim or issue. The new Section 39A(3) clarifies that before exercising its powers to do so, the tribunal must afford the parties a reasonable opportunity to make representations to the tribunal. Together the provisions of Section 7 of the 2025 Act give tribunals additional support to expedite proceedings, bring unmeritorious arguments to a close and shut down time-wasting tactics.  

Emergency Arbitrators

Emergency arbitrators are arbitrators appointed on an interim basis to make urgent orders prior to the constitution of the tribunal. Most major arbitral rules provide for emergency arbitrators, for example there are provisions for the appointment and powers of such arbitrators in the ICC, LCIA, SCC, DIAC, HKIAC and SIAC rules. Section 8 of the 2025 Act introduces a new Section 41A which will apply where the parties have agreed to apply arbitral rules providing for an emergency arbitrator and an emergency arbitrator has been so appointed.  Section 41A(2) allows the emergency arbitrator, where a party has failed to comply with the emergency arbitrator’s order or directions, to make a peremptory order prescribing a time period for compliance in the same effect, unless otherwise agreed by the parties. Section 8 of the 2025 Act additionally introduces references to an “emergency arbitrator” as an alternative to “tribunal” throughout other provisions of the 1996 Act.  

Court Powers in respect of Third Parties

Section 9 of the 2025 Act adds new wording to Section 44 of the 1996 Act to confirm that, where a court is making orders in support of arbitration proceedings (i.e., interim or conservatory measures), it may do so against third parties, as with litigation. On a practical level, the amendment confirms the courts’ ability to ensure the effectiveness of the arbitral process, and third parties will typically include employees and directors, affiliated companies or financial institutions. Importantly, the amendment confirms the third parties may also appeal the measure without the leave of the court.

Challenging the Award

Sections 10, 11 and 12 of the 2025 Act deal with amendments to sections of the 1996 Act relating to challenging the award. Where an award is challenged on the basis that the tribunal does not have jurisdiction under Section 67 of the 1996 Act, the amendment brings the remedies in line with Sections 68 and 69 of the 1996 Act, tidying up an assumed historic typo. Section 12 of the 2025 Act amends the provisions in Section 70 of the 1996 Act to clarify when the time limit for challenging an award commences.

Section 11 of the 2025 Act addresses and curtails the impact of the Supreme Court’s Dallah v Pakistan (2010) ruling, which addressed the limit of the court’s deference to a tribunal’s decision on its own jurisdiction. The Supreme Court set out that, where a party applies to a court to challenge an award on the basis that the tribunal lacks substantive jurisdiction under Section 67 of the 1996 Act, the court will consider the application in a full rehearing even if the tribunal heard the matter in full. Section 11 of the 2025 Act seeks to curtail this, providing that for such cases procedural rules of court may be introduced to prevent grounds of objection or evidence not previously before the tribunal from being introduced (unless the applicant could not have done so through reasonable diligence) and to prevent evidence that was heard by the tribunal from being re-heard by the court. Section 11 of the 2025 Act was one of the more controversial areas of reform, with some arguing these decisions are best left to the court to consider on an individual basis and it will be interesting to see how the court interprets and applies this provision in practice.

Conclusion

The reforms set out in the 2025 Act seek to make the 1996 Act more user-friendly, largely codifying established principles and tidying up accepted errors. However, in a couple of key areas, including with regards to the proper law of the arbitration agreement and the challenging of an arbitral award, the reforms seek to amend decisions in common law. The 2025 Act as a whole is geared towards updating the 1996 Act following some 30 years of judicial rulings, cementing London’s position as one of the most popular seats globally in international arbitration. 

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