Client Updates
Summary
The Arbitration Act 2025, which received Royal Assent on 24 February 2025, has introduced a number of significant amendments to the Arbitration Act 1996 (which applies in England & Wales and Northern Ireland, but not in Scotland).1 This includes establishing a new test for determining the law governing arbitration agreements (reversing the Supreme Court's 2020 ruling in Enka v Chubb), codifying arbitrators' duty of disclosure, strengthening arbitrator immunity, empowering arbitrators to summarily dispose of meritless claims, and recognising and enhancing the role of emergency arbitrators. The Act also simplifies and streamlines certain court procedures in relation to arbitration.
While these represent important refinements to England's arbitration law, some other major issues have been left for future development, including arbitral confidentiality, a proposed prohibition against discrimination in arbitrator appointments, and the regulation of third-party funding.
Background
The Arbitration Act 1996 has been widely praised for its flexibility and clarity, and has contributed to positioning London as an internationally preferred destination for arbitration (worth an estimated £2.5 billion a year to the UK economy in fees alone). The Act is notable for being one of the few arbitration laws in the developed world not to closely follow the UNCITRAL Model Law on International Commercial Arbitration. However, the Act has not been substantially updated since it first came into force almost 30 years ago.
The review of the Arbitration Act 1996 began in 2021. The England & Wales Law Commission published a series of reports on updating the Act in 2022 and 2023, noting a general consensus amongst consultees that "the Act works well, and that root and branch reform is not needed or warranted". Accordingly, the Law Commission proposed only what it described as "a few major initiatives, and a very small number of minor corrections".2
The majority of the Law Commission's recommendations were reflected in a bill introduced to Parliament in 2023. The bill was delayed by the General Election in 2024 but subsequently reintroduced by the new government and passed by both houses without substantial amendment.3
Key Amendments to the Act
The key changes to the Arbitration Act 1996 are as follows:
- New Rule for the Law Governing the Arbitration Agreement (change to section 6 of the Arbitration Act 1996). The Act introduces a new rule for determining the governing law of the parties' arbitration agreement, providing that this shall be either (i) the law expressly chosen by the parties to govern the arbitration agreement (not the agreement as a whole), or (ii) in the absence of such a choice, the law of the seat of the arbitration. This change is intended both to simplify the determination of the governing law, following significant criticism of the Supreme Court's 2020 ruling in Enka v Chubb, and to avoid the risk of foreign laws inadvertently undermining the validity or scope of the parties' arbitration agreement (as well as the application of the Arbitration Act) in English-seated arbitrations. An exception is made for investor-state arbitration (which is generally governed by international law).
- Arbitrators' Duty of Disclosure Codified (change to section 24 of the Arbitration Act 1996). This change, based on the Supreme Court's 2020 decision in Halliburton v Chubb, codifies for the first time the duty of disclosure for arbitrators, requiring arbitrators to disclose both prior to their appointment and during the course of the arbitration any relevant circumstances that might reasonably give rise to justifiable doubts as to their impartiality.
- Arbitrator Immunity Strengthened (change to sections 24(5), 25 and 29(1) of the Arbitration Act 1996). The Act strengthens the immunity of arbitrators from liability for acts or omissions in the discharge of their functions, including by providing that the court may not order an arbitrator to pay costs in proceedings for their removal unless they are shown to have committed an act or omission in bad faith.
- Arbitrators Given Power to Issue Summary Awards (change to section 39 of the Arbitration Act 1996). The Act grants arbitrators for the first time the express power to issue awards on a summary basis (subject to the power of the parties to agree otherwise) where they believe a party has no real prospect of succeeding on a claim or issue, or in the defence of a claim or issue.
- Court's Powers with Respect to Third Parties Clarified (change to section 44 of the Arbitration Act 1996). The court's powers to support arbitration proceedings have been clarified by confirming that orders under section 44 of the Arbitration Act in support of arbitration can be made against third parties (with those third parties having the usual rights of appeal against such orders).
- Emergency Arbitrators (change to section 44 of the Arbitration Act 1996). The Act expressly recognises the role of emergency arbitrators for the first time, confirming that they may issue peremptory orders that can be enforced by the court, and that they may grant permission for parties to apply to the court for orders under section 44 of the Arbitration Act (e.g. for an order for the preservation of evidence, or an interim injunction).
- New Framework for Jurisdictional Challenges (change to sections 61 and 67 of the Arbitration Act 1996). The Act provides a stricter framework for challenging arbitrators' decisions on jurisdiction under section 67 of the Arbitration Act, providing that, where the tribunal has already ruled on its own substantive jurisdiction, the court should not re-hear the evidence or hear new evidence (unless it is newly available), and should not hear new objections (unless they were not previously known to the applicant or reasonably discoverable), unless the court considers that doing so is in the interests of justice.
A Few Missed Opportunities?
While the Act makes a number of significant refinements and improvements, some issues remain outstanding for future consideration, despite proposals for reform from consultees. These include:
- Arbitral Confidentiality. The Act does not alter the current absence of any express provision in the Arbitration Act 1996 on the confidentiality of English-seated arbitrations. This means that confidentiality in such proceedings will remain based on an implied duty (or the parties' express contractual terms).4
- Technology. The Act is silent on remote hearings or provision of electronic documentation, which have significantly altered arbitral practices since the Arbitration Act was passed nearly 30 years ago.5 The Act also does not address the issues of artificial intelligence and automation in dispute resolution (perhaps given the rapid pace of change in this field).6
- Arbitrators' Duty of Independence. While arbitrators' duty of disclosure has been codified, as described above, the Act does not provide a codified statutory duty of independence for arbitrators.7
- Discrimination in Arbitrator Appointments. The Act does not introduce any new provisions to prohibit discrimination in the appointment of arbitrators, as had been suggested (but not ultimately recommended by the Law Commission).8 Accordingly, the law in this area remains as set out in the Supreme Court's 2011 decision in Hashwani v Jivraj (which held that the UK's anti-discrimination laws do not apply to the appointment of arbitrators).
- Third-party funding. The Act does not introduce any regulation of third-party funding (including, for example, to require parties to disclose that they are in receipt of third-party funding).9 The law in this area remains in a state of flux following the Supreme Court's 2023 decision in R (on the application of PACCAR Inc) v Competition Appeal Tribunal.
Comments
The Arbitration Act 2025 is a timely and welcome intervention, serving as a fine-tuning rather than an overhaul of the law of arbitration in England & Wales and Northern Ireland. The modernisation of the Act should help to maintain London's position as a leading seat of international arbitration, while recognising that overall the Arbitration Act 1996 continues to serve parties well. However, as noted above, there a few areas in which the Act could arguably have been a little more ambitious.
Once the Arbitration Act 2025 comes into force (on a date to be determined by regulation), its provisions will apply to any arbitration or court proceedings in connection with arbitral proceedings commenced on or after (but not before) that date.10 Accordingly, parties with arbitration agreements providing for arbitration seated in England & Wales or Northern Ireland will want to carefully consider the impact of the amendments on their future disputes (including, for example, the new rule concerning the governing law of their arbitration agreement).
Footnotes
1. See Ministry of Justice, Press Release, 24 February 2025, https://www.gov.uk/government/news/boost-for-uk-economy-as-arbitration-act-receives-royal-assent. The Act will come into force on a date to be determined by regulation.
2. Law Commission, "Review of the Arbitration Act 1996: Final Report and Bill", available at https://lawcom.gov.uk/project/review-of-the-arbitration-act-1996/.
3. Id. See also Parliamentary Bills, Arbitration Act 2025, Stages, available at https://bills.parliament.uk/bills/3733/stages.
4. Law Commission, "Review of the Arbitration Act 1996: Final Report and Bill", item 2.25, PDF p. 21, available at https://lawcom.gov.uk/project/review-of-the-arbitration-act-1996/.
5. Id., item 11.61, PDF p. 132.
6. Id., item 3.4, PDF p. 178.
7. Id., item 3.25, PDF p. 25.
8. Id., item 4.66, PDF p. 51.
9. Id., list of other consultee suggestions, item 3.6. See also items 3.4-3.57, PDF pp. 178–182.
10. Arbitration Act 2025, s. 17.
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