The Arbitration Act 2025 ("the Act") received Royal Assent earlier this year (on 24 February 2025) and is due to come into force shortly. Arbitration in the United Kingdom, particularly through London-seated arbitrations, continues to be an attractive forum for business and individuals to settle disputes owing to its flexibility of approach, time efficiency, confidentiality and access to arbitrators with specific expertise. The Act, amends the previous Arbitration Act 1996 in order to modernise dispute resolution in the UK and reinforce the UK's position as an efficient global leader in international arbitration.
The Act will apply to arbitration proceedings initiated after the Act's entry into force. We briefly set out below some of the key changes to be implemented by the Act of which clients and practitioners alike should be aware.
Key Changes
1. Governing Law
a. Replacing the common law test in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, section 6A of the Act provides that the law of the seat of the arbitration will apply to the arbitration agreement unless the parties expressly agree otherwise. This governing law of the arbitration will impact:
i. The issues to be arbitrated.
ii. The scope and validity of the arbitration.
iii. The separability of the arbitration clause from the main contract.
iv. The enforceability of the arbitral award.
b. While this change provides certainty and should reduce satellite litigation, parties should be aware that an express choice of law to govern the main contract will no longer constitute an express choice of law to govern the arbitration. Express choices of the applicable law to the arbitration agreement should be included in the contract should parties seek to avoid the law of a particular jurisdiction.
2. Codification of Arbitrators' Duty of Disclosure
a. Section 23A of the Act imposes an ongoing statutory obligation on potential and appointed arbitrators to disclose, as soon as reasonably practical, any circumstances that might raise doubts about their impartiality. This change codifies the test established in Halliburton v Chubb [2020] UKSC 48 and bolsters the already established duty of arbitrators to act fairly and impartially under section 33 of the 1996 Act. This duty cannot be contracted out of by the parties. It will be interesting to examine how this duty develops within different industries, as the likelihood of circumstances that threaten an arbitrator's impartiality will vary between sectors.
3. Immunity of Arbitrators
a. By virtue of section 24(5A) of the Act, the court may not order the arbitrator to pay costs in proceedings under this section unless any act or omission of the arbitrator in connection with the proceedings is shown to have been in bad faith. Further, under section 29 of the Act, an arbitrator's resignation does not give rise to any liability for the arbitrator unless it is shown that the resignation was, in all the circumstances, unreasonable. These protections allow arbitrators to act impartially and consistently with their statutory obligations without fear of personal liability, preventing undue pressure from parties to the arbitration.
4. Summary Dismissal
a. Under section 39A, arbitrators now have the power to issue awards if, upon application by one of the parties, the tribunal determines that the party has no real prospect of success following representations made by each party. This power enables arbitrators to expedite decisions on hopeless claims or defences. One should note, however, that parties can contractually agree to opt out of this provision. Moreover, parties should be mindful of subsequent enforcement issues in foreign jurisdictions, and the possible risk of a foreign enforcement court finding the unsuccessful party not to have been afforded sufficient opportunities to put forward their case.
5. Limitation on Jurisdictional Challenges
a. Section 32 (1A) establishes that an application under section 32 of the Arbitration Act 1996 (Determination of preliminary point of jurisdiction) must not be considered to the extent that it is in respect of a question on which the tribunal has already ruled. In practice, this means that if an arbitral tribunal has ruled on its own jurisdiction, the parties cannot then apply for a jurisdictional ruling from the court under section 32. Furthermore, where an arbitral tribunal rules that it does not have the jurisdiction to resolve a dispute, the arbitration must come to an end and the tribunal can award costs on the arbitration proceedings up until that point.
b. By virtue of section 67 (3B) – (3C) of the Act, jurisdictional objections to an arbitral award in a challenge before the English courts can now only be raised if they could not have been identified with reasonable diligence during the arbitration process. Further, new evidence is only admissible if that evidence could not have been found with reasonable diligence at the time of the arbitration. Previous evidence will not be reheard during a section 67 hearing unless the court deems it necessary in the interests of justice. Section 67 challenges previously involved a full re-hearing of the evidence. This change in the law will now prevent unsuccessful parties from having a second bite of the cherry by shoehorning new evidence or arguments into a jurisdiction challenge.
6. Emergency Arbitrators
a. Under section 41A of the Act, where parties have agreed to the appointment of an emergency arbitrator and a party fails, without showing sufficient cause, to comply with any order of direction of the emergency arbitrator (without the agreement of the other parties), the emergency arbitrator may make a peremptory order. In effect this extends the powers given to arbitrators under section 44 of the 1996 Act to emergency arbitrators.
While these changes will undoubtedly make arbitrations in England and Wales more time and cost efficient, it will be interesting to see how cases develop under the new Act, particularly with respect to the new statutory duty of arbitrators' disclosure and the new power of summary dismissal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
