Arbitration Act 2025 enacted in England and Wales

Why should I read this?

Following a review and consultation process led by the Law Commission, the Arbitration Act 2025 (the ‘2025 Act’) amending the Arbitration Act 1996 (the ‘1996 Act’) has been enacted, although it is yet to come into force. The 2025 Act and the 1996 Act apply to any arbitration seated within England and Wales as well as to some foreign seated arbitrations. Therefore businesses that are parties to contracts providing for London-seated arbitration as a method of dispute resolution should take note of the enacted changes, as they will apply automatically to any arbitration (falling within the scope of the 1996 Act) which is commenced after the 2025 Act comes into force.

What should I do?

Parties to London-seated arbitrations should feel reassured by the enhancements and clarifications made by the 2025 Act and it is unlikely that any large-scale reviews or amendments to existing contracts will be required. Potential actions arising out of some of the changes include:

• If you wish for your arbitration agreement to be governed by a particular law which is different to the law of the seat it will be necessary to specify this in your arbitration clause. It will not be enough to identify the desired law in a separate governing law clause. This is due to a new default rule stating that, unless the parties expressly agree otherwise, the law of the arbitration agreement shall be the law of the seat of the arbitration[1]
• You should feel further empowered to request summary disposal by the tribunal of a claim/ defence or particular issue that has no real prospect of succeeding, as this power is now enshrined in a new provision of the 2025 Act[2]. Arbitral tribunals have always possessed this power under English law but this recent codification is expected to bolster its use by tribunals, leading to more efficient outcomes for parties
• The 2025 Act contains express reference to emergency arbitrators and to the power of emergency arbitrators (where appointed under applicable rules) to make a peremptory order which is enforceable by the court[3]. In cases of urgency, you should feel encouraged to make use of emergency arbitrator mechanisms (where appropriate and available under institutional rules) given the express recognition that emergency arbitrators have a number of pathways open to them where an order they have made is ignored

What else do I need to know about the 2025 Act?

The 2025 Act makes a number of additional amendments to the 1996 Act which improve the interaction of various provisions and, in some cases, reverse the effect of problematic case law:

• The arbitral tribunal: The 2025 Act has clarified various uncertainties which resulted from case law concerning arbitrators’ duties and liabilities
  • It codifies a pre-existing common law duty[4] on arbitrators to disclose potential conflicts of interest (i.e. circumstances that might reasonably give rise to justifiable doubts as to the individual’s impartiality in relation to the proceedings, or potential proceedings, concerned)[5]. This is a mandatory provision which applies prior to appointment and remains a continuing duty
  • There is also a new section which provides that an arbitrator would not be liable for the costs of a court application to remove them, unless the arbitrator is shown to have acted in bad faith[6]. This would reverse case law that suggested arbitrators could be liable for adverse costs orders under such circumstances[7]
  • Finally, a resignation would not give rise to liability for an arbitrator unless it was unreasonable (and subject to agreement between the parties as to the arbitrator’s fees and expenses)[8]
• Jurisdiction of the tribunal
  • Section 32 of the 1996 Act (which allows parties to apply to court to determine a preliminary question as to the substantive jurisdiction of the tribunal) has been amended to make clear that it is only available as a pathway before the tribunal has ruled on its own jurisdiction[9]. Where a tribunal has already made a ruling on its own jurisdiction, a party disagreeing with that ruling must challenge it through section 67 of the 1996 Act
  • Section 67 of the 1996 Act has itself been amended to make provision for new rules of court which would provide that (in relation to an objection to the tribunal’s substantive jurisdiction on which the tribunal has already ruled) new grounds for objection and evidence must not be put before the court[10] and any evidence that was heard by the tribunal must not be re-heard by the court
  • The remedies available to the court following a challenge under section 67 of the 1996 Act have also been expanded to include remitting the award to the tribunal, in whole or in part, for reconsideration, and declaring the award to be of no effect, in whole or in part (in addition to the existing remedies of confirming, varying or setting aside the award)[11]
  • Note that the time limit of 28 days to challenge an award will begin to run from the date a party is notified of the outcome of any arbitral appeal or review, from the date of a material correction to an award or from the date of notification that the tribunal has decided not to grant an application for a material correction[12]
• Court powers in support of arbitral proceedings: Section 44 of the 1996 Act[13] has been amended to confirm explicitly that such orders can be made against third parties (who do not require the court’s consent to appeal)
• When do the amendments made by the 2025 Act not apply? The provisions of the 2025 Act will not apply to:
  • any arbitral proceedings commenced before the 2025 Act comes into force (these are pre-commencement arbitral proceedings and will remain subject to the unamended provisions of the Arbitration Act 1996)
  • court proceedings (whenever commenced) in connection with pre-commencement arbitral proceedings or an award made in pre-commencement arbitral proceedings, or
  • any other court proceedings commenced before the day on which the section making the amendment comes into force

The incremental changes, clarifications and streamlining of procedures offered by the 2025 Act are an important step in ensuring that London remains a leading centre of international arbitration. Further, England’s position as a pro-arbitration and pro-party autonomy jurisdiction has been further bolstered by the willingness of the legislature to reverse the effects of a number of high profile cases which had attracted criticism from the international arbitration community. We expect the 2025 Act to come into force shortly following regulations appointed by the Secretary of State. If you are considering using arbitration as a method of dispute resolution in any of your business contracts we would be delighted to discuss the impact of the 2025 Act in further detail. 

Further reading on the 2025 Act

Arbitration Act 2025

Arbitration Act 2025 - Parliamentary Bills - UK Parliament

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[1] Section 1(2), Arbitration Act 2025

[2] Section 7, Arbitration Act 2025

[3] Section 8(2), Arbitration Act 2025

[4] See the case of Halliburton v Chubb [2020] UKSC 48

[5] Section 2(2), Arbitration Act 2025

[6] Section 3(2), Arbitration Act 2025

[7] See for example Cofely Ltd v Bingham [2016] EWHC 540 (Comm); C Ltd v D [2020] EWHC 1283 (Comm)

[8] Section 4(3), Arbitration Act 2025

[9] Section 5, Arbitration Act 2025

[10] Unless the applicant did not know and could not with reasonable diligence have discovered the ground or put the evidence before the tribunal

[11] Section 10(3), Arbitration Act 2025

[12] Section 12, Arbitration Act 2025 amending section 70, Arbitration Act 1996

[13] Section 44 gives the court the power to make orders for: taking of witness evidence, preservation of evidence, orders relating to relevant property, sale of goods, interim injunctions, and the appointment of a receiver