The Arbitration Act 2025: Modernising and Streamlining English-Seated Arbitration

The 2025 Act marks the culmination of the Law Commission’s efforts (which began as early as March 2021) to reform the procedural framework governing arbitral proceedings in England and Wales. The Law Commission’s recommendations for reform were issued on 6 September 2023, with the Arbitration Bill issued in November 2023. Now, after four years of consideration and considerable input from the arbitral community in London and elsewhere, the reforms to the 1996 Act have been enacted with the hope that they will make arbitration “fairer and more efficient by simplifying procedures”, clarify uncertain areas of the law and ultimately “turbocharge” London’s position as a leading international arbitration venue.¹

In this article we focus on seven principal changes introduced by the 2025 Act:

1. clarification of the law applicable to the arbitration agreement (6A);
2. immunity of arbitrators (24(5A), s.25 and s.29);
3. impartiality of arbitrators and duty of disclosure (23A);
4. powers of summary disposal (39A);
5. empowering emergency arbitrators (41A and s.44);
6. court powers exercisable in support of arbitral proceedings in respect of third parties (44); and
7. new procedure for jurisdictional challenges (67).

Key changes (include practical considerations where relevant)

• clarification of the law applicable to the arbitration agreement (6A)

The 2025 Act updates the 1996 Act to provide that the law applicable to an arbitration agreement shall be:

1. the law the parties expressly agree applies to the arbitration agreement itself; or, where no such agreement is made
2. the law of the seat of the relevant arbitration.

The changes make it clear that an express agreement between the parties that a particular law applies to the contract of which the arbitration agreement forms a part is not an express agreement that that law also applies to the arbitration agreement. This change in having a simple choice of law rule removes the uncertainty created by the previous common law position, as most recently explained by the Supreme Court in Enka v Chubb (as discussed in our previous Insight).

This change provides much needed clarity and it is hoped that it will improve arbitral efficiency by limiting the cope for satellite disputes on applicable law. However, parties should be alive to the importance of carefully drafted arbitration agreements. It is not sufficient to include a governing law clause applicable to the whole contract and assume that that governing law also applies to the separate arbitration agreement. On the contrary, section 6A(2) provides that a choice of law in the underlying or ‘matrix’ contract does not amount to an express agreement that that law also applies to the arbitration agreement. If commercial parties are concerned as to the choice of law governing the arbitration agreement, they should therefore seek to ensure that contracts contain:

1. a clear governing law clause that applies to the contract as a whole; and,
2. where the contract contains an arbitration agreement, also specify expressly the governing law of the arbitration agreement and seat of the arbitration.

There is an express carve out for investor-state arbitrations, which are not subject to the new rule introduced by the 2025 Act.² This carve out ensures that, where arbitration agreements are formed pursuant to investment treaties, there is clarity that they will be interpreted under applicable rules and principles of public international law. This reflects the realities of investor-state arbitrations, which are typically governed by different frameworks and often arise from treaties offering a standing invitation for investors to arbitrate disputes, but which typically fail to specify an applicable law for the arbitration agreement. The carve-out to Section 6A neutralises the risk of conflicts between the 1996 Act and the intention of host states who may not have intended for English law to govern certain disputes.

• impartiality of arbitrators and duty of disclosure (23A)

The 2025 Act also brings welcome clarity to the law by setting forth a prospective arbitrator’s and arbitrator’s duty to disclose any relevant circumstances that “might reasonably give rise to justifiable doubts as to the individual’s impartiality”.³ This wording, introduced as a new s23.A of the 1996 Act, mirrors that used by leading arbitral rule including Rules 5.4 and 5.5 of the LCIA Arbitration Rules 2020 and reflects an increasing trend towards greater disclosure and transparency in international arbitration.

• immunity of arbitrators (24(5A), s.25 and s.29)

The immunity from suit provisions for arbitrators set out in the 1996 Act has been extended to apply to scenarios where an arbitrator resigns, save that “unreasonable” resignations do not benefit from this immunity. Section 4(3)(b) of the 2025 Act provides that the arbitrator’s resignation must be shown to be “in all the circumstances, unreasonable” before an arbitrator may face liability but, notably, the 2025 Act provides no further guidance on what is considered an “unreasonable” resignation.

Arbitrators removed by the court under s.24 of the 1996 Act are also immune from being ordered to pay costs of such court proceedings, unless an act or omission of the arbitrator in connection with those proceedings is shown to have been in bad faith.

These changes recognise that arbitrators may have good reasons to step down from an appointment and they remove the risk that parties may apply for an arbitrator to be removed as a means of putting illegitimate pressure on them through potential associated costs awards. These changes mark progress in supporting arbitrators to make robust and impartial decisions without the fear of being sued by a disappointed losing party. As such, the conclusiveness of the arbitral process is also aided.

• powers of summary disposal (39A)

A further effort to promote efficiency comes in the form of provisions dealing with the summary disposal of issues. New s.39 provides that arbitral tribunals may, on an application from a party, make a summary award in relation to a claim or defence (or a particular part thereof) where it considers, as relevant: (i) a party has no real prospect of success; or (ii) a party has no real prospect of a successful defence.

In deciding that the test is ‘no real prospect of success’ both parties and arbitral tribunals may be inclined to have regard to the English Civil Procedure Rules which use identical language in various provisions, including most notably in dealing with applications for summary judgment under Part 24. By contrast, institutional rules typically use the more international standard of ‘manifestly without merit’ (see, for example, the LCIA Rules 2020, Article 22.1(viii)). It will be interesting to observe how this plays out in practice and whether there is a difference between the two standards. On the face of it, the ‘no real prospect of success’ standard seems to us to set a lower hurdle than the ‘manifestly without merit’ standard.

Notably, these are non-mandatory provisions of the 1996 Act and parties selecting institutional rules or the UNCITRAL Arbitration Rules will have agreed otherwise to those rules. Nonetheless, these provisions are welcome as they will give arbitrators sitting in London the comfort, as sometimes doubt has been expressed, that they have the power to dispose summarily of meritless claims.

• empowering emergency arbitrators (41A and s.44)

Parties are increasingly seeking to use emergency arbitrators when they need urgent interim relief. The 2025 Act empowers emergency arbitrators to (i) make peremptory orders, and (ii) grant parties permission to apply to court for a section 44 order (see below). These powers are welcome as enforceability of emergency arbitrators’ orders has been perceived to be a concern and these provisions provide parties with real assistance in terms of seeking to give effect to decisions of emergency arbitrators.

• court powers exercisable in support of arbitral proceedings in respect of third parties (44)

Resolving any previous confusion,⁴ section 9 of the 2025 Act amends section 44 of the 1996 Act to clarify that, where an English court is making orders in support of arbitral proceedings, it may do so against third parties. For example this might include orders in relation to interim injunctions.

• new procedure for jurisdictional challenges (67)

Under the 1996 Act, challenges to an arbitral award on jurisdictional grounds before the court under s.67 may effectively result in a full re-run of the jurisdictional arguments made before the arbitral tribunal because the court is required to decide whether the tribunal had jurisdiction de novo at a full re-hearing.⁵ The 2025 Act, however, grants powers to the Civil Procedure Rule Committee to promulgate rules of court to seek to limit jurisdictional challenges becoming full re-hearings. This is likely to enhance cost-efficiency and fairness but questions remain as to how these new rules (which have not yet been published) will interact with the current position as decided by the Supreme Court in Dallah.

Further, under the new procedure, when a section 67 challenge is brought where a party has participated in an arbitration in which the tribunal determined jurisdictional challenge, that party will be unable to raise any new grounds or evidence at court unless the court makes a ruling to the contrary, applying an interests of justice test.

What’s next?

The 2025 Act will come into force through Regulations to be made by the Secretary of State.

It is worth noting that, subject to any such Regulations being made, the 2025 Act does not apply to:

1. arbitral proceedings commenced before the date on which the section making the amendment comes into force;
2. court proceedings (whenever commenced) in connection with any such pre-commencement arbitral proceedings, or any related award; or
3. any other court proceedings commenced before the date on which the section making the amendment comes into force.

Given the 2025 Act has received Royal Assent, it will likely only be a short period of time before the enacting Regulations are made. We would therefore encourage parties to familiarise themselves with the changes introduced by the 2025 Act.

It is clear that the 2025 Act is not a radical departure from the position under the 1996 Act — it is more evolution rather than revolution. The 2025 Act does, however, bring greater efficiency and finality to London-seated arbitration and will ensure the continuing success of international arbitration.

*Iona Gilby is a Trainee Solicitor in our London Office.

¹ https://www.gov.uk/government/news/boost-for-uk-economy-as-arbitration-act-receives-royal-assent.

² See what will become s.6A(3) Arbitration Act 1996.

³ s.2 Arbitration Act 2025.

⁴ See for example Dtek Trading SA v Morozov [2017] EWHC 94 (Comm).

⁵ Dallah Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46.