The Arbitration Act 2025 - Key Changes

The Arbitration Bill, first introduced into Parliament in November 2023 and then reintroduced in July 2024, was the result of the Law Commission’s review of the Arbitration Act 1996 (1996 Act). The Law Commission’s final report recommended only limited amendments to the 1996 Act. Having received the Royal Assent on 24 February, the Arbitration Act 2025 (2025 Act) will enter into force on a date to be announced by the Secretary of State. It will apply to all arbitration proceedings commenced after its official entry into force.

Key changes:

• New rule on the law applicable to arbitration agreements

The 2025 Act simplifies the process by which the law applicable to an arbitration agreement is identified by introducing a new default rule.

The new Section 6A provides that if the parties expressly agree on the governing law of the arbitration agreement, this will apply. However, in the absence of an express agreement, the law of the seat of the arbitration will apply to the arbitration agreement.

Section 6A also clarifies that the governing law chosen for the underlying contract does not constitute express agreement that the same law will apply to the arbitration agreement.

The new default rule replaces the previous common law position established in Enka v. Chubb [2020] to the effect that an arbitration agreement is typically governed by the law of the underlying contract unless expressly stated otherwise.

Parties are therefore advised to include the choice of the governing law in the arbitration agreement itself in addition to a clause setting out the governing law for the underlying contract.

• Arbitrators’ power of summary disposal

A new Section 39A of the 2025 Act grants tribunals the power to summarily dismiss unmeritorious claims or defences.

A party applying for summary dismissal will have to convince the tribunal that a claim, defence, or particular issue has ‘no real prospect of succeeding'. This is similar to the test applied by courts in England and Wales.

Parties must be given a reasonable opportunity to present their case before summary dismissal is ordered.

Parties can opt out of this new power, either in the arbitration agreement itself or subsequently.

• More power to emergency arbitrators

The 2025 Act confers emergency arbitrators the same powers as a fully constituted tribunal to:

1. enforce peremptory orders; and
2. allow the parties to apply to court for orders in support of arbitral proceedings.

This change is to support certain arbitral rules (2021 ICC Rules and 2020 LCIA Rules), which permit the appointment of emergency arbitrators.

• Clarity on the court powers in support of arbitration

The 2025 Act clarifies that court orders made under Section 44, i.e. court orders regarding the taking of witness evidence, preservation of evidence, relevant property, the sale of goods, interim injunctions and the appointment of a receiver – can be made “in relation to a party or any other person”.

• Changes to a party’s rights to challenge a tribunal’s jurisdiction

Under the 2025 Act, provision is made for the introduction of new court rules limiting the scope of jurisdictional challenges under Section 67 (where an award is challenged on jurisdictional grounds). Subject to the drafting of any new court rules, the intention is to prevent courts from:

1. entertaining new grounds of objection or new evidence (unless the applicant can demonstrate that, even with reasonable diligence, the ground or evidence could not have been presented to the tribunal); or
2. rehearing any evidence,

unless it would be in the interests of justice to do so.

This is in contrast with the 1996 Act, which allows the court to reassess both the facts and legal issues.

The 2025 Act also provides that parties cannot apply to court for a jurisdictional ruling under Section 32 (determination of a preliminary point of jurisdiction) if a tribunal has already ruled on its jurisdiction. Further, if the tribunal has ruled that it has no jurisdiction, the arbitration must come to an end and the tribunal can award costs up until that point, notwithstanding the tribunal’s lack of substantive jurisdiction.

• Arbitrators’ duty of disclosure

The 2025 Act introduces a new statutory duty on individuals approached for appointment as arbitrators, as well as sitting arbitrators, to disclose ‘circumstances that might reasonably give rise to justifiable doubts as to [their] impartiality in relation to the proceedings, or potential proceedings, concerned’'. Disclosure must be made as soon as reasonably practical.

These new statutory provisions codified the principle established in Halliburton v Chubb [2020], while extending the duty of disclosure to relevant circumstances of which the arbitrator ‘ought reasonably to be aware’.

The provision is mandatory, meaning it cannot be waived by party agreement.

• Arbitrators’ immunity

The 2025 Act broadens the scope of arbitrators’ immunity as follows:

1. arbitrators are protected from liability for resignation unless such resignation is “in all circumstances, unreasonable”; and
2. where a party applies to court to remove the arbitrator, the arbitrator cannot be ordered to pay the costs of the application for their removal unless “any act or omission of the arbitrator in connection with the proceedings is shown to have been in bad faith”..

These provisions aim to ensure that arbitrators can act independently without incurring costs or liability, while maintaining necessary safeguards.

Commentary

The 2025 Act modernises the 1996 Act, clarifies key legal issues, and further strengthens the already robust arbitration framework in England, Wales, and Northern Ireland. By enhancing legal clarity and reinforcing key procedural safeguards, the new provisions are expected to be a welcome development for arbitration users.