Arbitration Act 2025 receives Royal Assent

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On 24 February, the Arbitration Act 2025 (the Act) received Royal Assent. The Act seeks to update arbitration law in England and Wales, and Northern Ireland, to ensure that it remains “state of the art” and continues to promote the UK as a leading destination for commercial arbitration. To that end, it implements reforms in line with recommendations made by the Law Commission in its review of the Arbitration Act 1996 (the 96 Act). For more information on the Law Commission review and the progress of the Arbitration Bill to this point, please see our previous articles:

• King’s speech 2024 includes reform of Arbitration Act (July 2024)
• Arbitration Act 1996 – Evolution not revolution (September 2023)
• Arbitration Act 1996 – Law Commission issues second consultation paper (April 2023)
• Arbitration Act 1996 – consultation launched on proposed reforms (September 2022)

The key reforms in the Act are as follows:

Governing law of an arbitration agreement – unless the parties agree otherwise, the governing law of an arbitration agreement (as distinct from the governing law of any substantive contract in which it may sit) will be the law of the seat of arbitration. This new rule will apply regardless of whether the seat of arbitration is England & Wales or elsewhere, and introduces certainty in an area which has seen a number of appellate court decisions in recent years. This legislative change should therefore reduce the scope for satellite litigation and forum shopping in international disputes, of the sort illustrated in our recent article: Supreme Court revisits governing law of an arbitration agreement.    

Arbitrator’s duty of disclosure – the Act codifies recent Supreme Court case law on the arbitrator’s duty of disclosure by providing that arbitrators and prospective arbitrators must, as soon as reasonably practical, disclose any circumstances of which they are aware (or ought reasonably to have been aware) that might reasonably give rise to justifiable doubts as to their impartiality in relation to the proceedings.

Arbitrator immunity – the Act provides certain protections for arbitrators, giving them protection from liability for resignation or removal except where they have acted in bad faith.

Summary awards – the Act introduces a non-mandatory express power for a tribunal to make an award on a summary basis where the tribunal considers a party has no real prospect of success on a claim or particular issue (or the defence thereof). Although arbitrators arguably already had the power to make summary awards under their wide-ranging general arbitral powers, so-called “due process paranoia” meant that they were often reluctant to do so lest it lead to challenge to the award. Making the power express should remove this perceived reticence.   

Emergency arbitrators – the Act empowers emergency arbitrators appointed under the rules of arbitral institutions to make peremptory orders to enforce compliance. 

One bite at the cherry – the Act also modifies s.32 of the 96 Act so that a court may only rule on a preliminary point of jurisdiction where the tribunal has not already done so. Similarly, the Act lays the groundwork for new rules of court to be introduced that would prevent the court from re-hearing evidence on a challenge under s.67 of the 96 Act where the tribunal has already ruled on its jurisdiction.   

The Ministry of Justice has said that the Act will be commenced through regulations as soon as possible. The new provisions will apply to arbitrations commenced after that date.   

The implications of the new Act

While many of the changes introduced by the Act will impact on the procedure of arbitrations once they are on foot, a number of the legislative changes also have potential implications for parties inserting arbitration agreements into new contracts after the Act enters into force. In particular, those drafting arbitration agreements should consider:

• specifying the governing law of their arbitration agreement (as distinct from the governing law of the main contract) – particularly where this may differ from the seat of arbitration;
• whether to opt out of the new non-mandatory provisions, for instance those relating to summary awards and emergency arbitrators.     

For more information, please contact Gordon Bell or Tom Price.