Key Takeaways:
- On August 1, 2025, the Arbitration Act 2025 came into force across England, Wales and Northern Ireland, applying a series of incremental changes to the Arbitration Act 1996.
- The changes seek to maintain the appeal of London as a seat, by, amongst other things, strengthening court support for arbitration, and explicitly allowing for emergency arbitrations and the summary disposal of issues.
- These changes do not affect proceedings issued prior to August 1, 2025 but may impact how existing arbitration clauses function prospectively (including with respect to the law governing them). This offers a timely reminder to contracting parties to review their existing dispute resolution arrangements.
Introduction
Nearly three decades after the Arbitration Act 1996 was enacted, on August 1, 2025, the Arbitration Act 2025 came into force across England, Wales and Northern Ireland.
The Arbitration Act 1996 remains the principal statutory instrument governing arbitration. While not a comprehensive revision, the Arbitration Act 2025 makes a series of incremental changes to the 1996 Act.
This client alert describes the main changes and how these changes may impact arbitration agreements, proceedings and enforcement/set aside actions.
By default, the law of the seat governs the arbitration agreement
Section 6A has been added to the Arbitration Act to explicitly address the law governing the arbitration agreement. Unless expressly provided by the parties otherwise, Section 6A provides that the governing law of the arbitration agreement will be the law of the arbitral seat. It further states that a choice of law with respect to the main contract does not in itself constitute an explicit agreement that the same law governs the arbitration agreement.
Section 6A(3) provides that this default rule does not apply to investment treaty arbitrations. In such proceedings, the dispute resolution provisions, which may or may not specify a seat, are interpreted under international law.
As such, in practice, where a commercial contract specifies that it is governed by the law of country A, and provides for arbitrations to be seated in country B, English courts will find that the arbitration agreement is governed by the law of country B. This is irrespective of whether it states arbitrations are to be seated in England and Wales or elsewhere.
Notably, this modification reverses recent precedent. In Enka v. Chubb, the governing law of the contract was different from the legal seat. The Supreme Court of the United Kingdom decided to apply the law governing the contract to the arbitration agreement.
This amendment should also reduce conflicts between the English and French courts over these issues, given that the Arbitration Act 2025 now aligns with the position in France. For instance, the French Court of Cassation's decision in Kout Food Group affirmed that that in the absence of an express provision designating the law, the arbitration agreement is governed by French arbitration law.
Changes to the law governing the arbitration agreement are significant. For instance, the extent to which an arbitration agreement is capable of binding related entities, such as parent companies, varies significantly between jurisdictions.
Review of jurisdictional issues
Under the Supreme Court's ruling in Dallah v. Pakistan, a party could challenge jurisdiction under Section 67 of the Arbitration Act and trigger a de novo rehearing of the matter in court.
The Arbitration Act 2025 limits the scope of jurisdictional challenges under Section 67 in three ways, by excluding:
- objections not raised before the tribunal;
- evidence not put before the tribunal; and
- the rehearing of evidence (such as witness testimony) already heard by the tribunal.
There are exceptions for objections and evidence that the applicant could not with reasonable diligence have put before the tribunal and, more generally, where allowing objections and evidence would be in the interests of justice.
These changes will be implemented in due course via court rules.
The Arbitration Act 2025 also clarifies that Section 32, which governs the determination of preliminary points of jurisdiction, does not constitute an alternative route to challenge a tribunal's jurisdictional decisions. Rather, it can be used only to challenge jurisdiction prior to a tribunal issuing a ruling on the topic.
Reconsideration as a remedy in jurisdictional challenges
The Arbitration Act 2025 also provides that, should a court find that an award contains jurisdictional defects, it can remit the award to the tribunal for reconsideration. This brings the text of Section 67, governing jurisdictional challenges, into line with Sections 68 and 69, covering challenges for serious irregularities and errors of law, respectively.
As under Sections 68 and 69, this remedy is accompanied by text indicating awards should not be set aside unless remitting them would be inappropriate. It will be instructive to monitor in what circumstances courts will consider it appropriate to give a tribunal a second chance to determine their own jurisdiction.
New powers for emergency arbitrators
The Arbitration Act 2025 introduces provisions to expressly recognize the authority of emergency arbitrators where parties have agreed to rules providing for their appointment, via amendments to Sections 42 and 44 of the 1996 Act (governing court support of arbitral tribunals), and adding Section 41A, explicitly empowering emergency arbitrators to make peremptory orders. This aligns the powers of emergency arbitrators with those of a fully constituted arbitral tribunal and reflects contemporary international practice.
Decisions on a summary basis
The newly introduced Section 39A empowers tribunals to issue a summary award, with respect to specific claims or issues, to save time and costs. A tribunal may do so where, having heard both parties, it determines that a party has "no real prospect of succeeding on the claim or issue" or "in the defence of the claim or issue." This aligns with the threshold test used for summary judgment in English courts.
This is not a mandatory provision and may be excluded by party agreement, including through the agreement to contrary arbitration rules. Time will tell the extent to which this section comes to be relied upon.
Confirmation of judicial powers over third parties
Other amendments to Section 44 of the 1996 Act confirm that parties to arbitration can ask a court to make orders against non-parties, including to obtain or preserve evidence or property. It remains to be seen whether this will encourage greater recourse to English courts to obtain freezing orders and Norwich Pharmacal orders for disclosure in support of arbitral proceedings.
Confirmation of arbitrators' duties of disclosure
Section 23A of the Arbitration Act 2025 specifies that an arbitrator must, as soon as reasonably practical, disclose any relevant circumstances that might reasonably give rise to "justifiable doubts" as to their impartiality. The duty covers both what arbitrators know, and what they ought reasonably to be aware of. This codifies what the Supreme Court found to be a "cardinal duty" implied into arbitration agreements in Halliburton v. Chubb.
Arbitrator Immunity
An addition to Section 24 of the 1996 Act, governing the removal of arbitrators, provides that a court may not order an arbitrator to pay costs in connection with an application for their removal unless it is demonstrated that the arbitrator was acting in "bad faith." In Section 25 of the 1996 Act, covering resignations, new text states that an arbitrator will not be liable for the costs associated with their resignation unless, considering all the circumstances, the resignation is found to have been "unreasonable."
Clarifications as to counting the 28 days to challenge awards
There had been a number of disputes about how exactly the 28-day limitation period for challenges or appeals under Sections 67, 68, and 69 should be counted in various scenarios. The Arbitration Act 2025 amends Section 70 to address, specifically, a number of these scenarios—where, for instance, there is a material correction or additional award—in an attempt to reduce disagreements over the timeliness of challenges.
In short:
- Proceedings commenced prior to August 1, 2025, are unaffected. They will be conducted in accordance with the old rules and will not be impacted by the above changes. Court proceedings related to these arbitral proceedings are similarly unaffected, irrespective of when they are commenced.
- Proceedings commenced after August 1, 2025, will be governed by the amended legal regime described above.1 So too will court proceedings associated with these proceedings, if commenced after August 1, 2025.
This focus on proceedings in Section 17 of the Arbitration Act 2025, in determining commencement, means that the effect of existing arbitration clauses will, in certain cases, have been changed by the Arbitration Act 2025. Importantly, arbitration agreements that would have been governed by a foreign law despite a London seat (under Enka v. Chubb), may now be governed by English law. This may have various effects, including the possibility that the ability to initiate proceedings against related entities involved in a transaction has been limited.
CONCLUSION
The Arbitration Act 2025 provides a timely reminder to contracting parties to review arbitration clauses and governing laws in existing contracts to ensure any arbitrations will proceed in the manner intended.
Footnote
1. Save in respect of the amendments to the scope of jurisdictional review under Section 67, which are to be effected by revised court rules.
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.
