Crash Course on the Arbitration Act 2025

The Arbitration Act 2025 is now one month old. If you haven’t already got on top of this new legislation and how it may impact your arbitration agreements and arbitral proceedings and awards going forwards, here’s a quick recap on the main changes and why they matter.

Why did we need a new arbitration law?

• Arbitration is big business: The Law Commission estimates that there are at least 5,000 arbitrations every year in England and Wales, worth at least £2.5 billion in arbitrator and legal fees alone.
• London is a leading centre for arbitration: London was recently ranked equal first with Singapore as the world’s most preferred seat for international arbitration[1].  
• The Arbitration Act 1996 (AA96) is over 25 years old: Other countries competing for a greater share of the international arbitration market have enacted or revised their arbitration legislation more recently.
• Targeted reform needed: In 2021, the Law Commission was asked to review the AA96. It found that AA96 generally worked well but made a number of recommendations for targeted reform.

When does the Arbitration Act 2025 apply?

• The Arbitration Act 2025 came into force on 1 August 2025 and introduces a number of amendments and insertions into the AA96.
• It applies in the following circumstances:
  • To arbitration agreements, whenever made.
  • To arbitrations commenced on or after 1 August 2025. 
  • To court proceedings relating to either: (i) arbitral proceedings commenced on or after 1 August 2025; or (ii) awards in relation to arbitral proceedings commenced on or after 1 August 2025 

What are the three key changes?

1. Law applicable to the arbitration agreement 
   • The law of the arbitration agreement is the law that governs the parties’ agreement to submit their dispute to arbitration and will therefore be relevant in the context of any disputes arising in connection with the existence or scope of the parties’ agreement to arbitrate. 
   • The new default position is that the governing law of an arbitration agreement shall be the same as the law of the seat of the arbitration, unless the parties expressly agree otherwise. 
   • This is a departure from the position established in Enka v Chubb (2020), which aligned the law of the arbitration agreement to the law governing the underlying contract. 
   • This change will be particularly significant when the choice of seat is not consistent with the governing law of the underlying contract in which the arbitration agreement sits e.g. a contract governed by the laws of Singapore which contains an arbitration clause setting out that the seat for the arbitration shall be London. 
   • If parties wish to preserve the applicability of English law to the arbitration agreement itself, they should either select London as the seat of the arbitration or (when selecting a seat in a different jurisdiction) expressly specify that English law governs the arbitration agreement.
2. Summary awards 
   • Arbitrators now have the power to make an award on a summary basis to dispose of a claim or a particular issue arising in a claim where such claim or issue has “no real prospect of succeeding”.
   • The no real prospect of success threshold is the same as that applied in court proceedings in England and Wales.
   • Arbitrators can only make awards on a summary basis upon an application by one of the arbitrating parties.
   • The provision is not mandatory - the arbitrating parties can agree to disapply it. 
   • This procedure both differs from and is additional to the early determination procedures already present in the rules of major arbitral institutions. For example, Article 22.1(viii) of the LCIA Rules allows the tribunal to make a determination where a claim or defence is “manifestly without merit”. 
3. Procedure for challenging the award
   • The scope for making jurisdictional challenges under section 67 of the AA96 have been narrowed with the introduction of a refined procedure.
   • The revised approach applies to applications made under section 67 of the AA96 challenging the jurisdiction of the arbitral tribunal when: (i) the applicant participated in the arbitration proceedings; and (ii) the tribunal has already ruled on the jurisdictional objection.
   • In these circumstances, the court can rule that: (i) no new grounds for objection can be raised unless they could not have been discovered with reasonable diligence during the arbitration; (ii) no new evidence can be put before the court unless it could not with reasonable diligence have been submitted to the tribunal; and (iii) evidence that was heard by the tribunal must not be re-heard by the court, unless any of the above is necessary in the interests of justice.
   • This departs from the previous position set out in Dallah v Pakistan (2010) in which the Supreme Court held that, even where the question of the tribunal’s jurisdiction has been fully debated before the tribunal, a challenge under section 67 would involve a full rehearing before the court.
   • This change is expected to reduce the duration and costs of many jurisdictional challenges in the English courts.

What other changes should I be aware of?

In addition to some other minor amendments to the AA96 (such as minor clarifications, corrections of drafting errors and repealing unused sections), the new legislation also includes the following:

• Additional powers for emergency arbitrators, ensuring they can issue enforceable orders in the same way as normal arbitrators.
• Codification of the duty on arbitrators to disclose circumstances that might reasonably give rise to justifiable doubts as to their impartiality (established in Halliburton v Chubb (2020)).
• Bolstering the immunity of arbitrators in the event the parties apply to the court for their removal, providing that the arbitrator will now not be liable for the costs of the application unless they acted in bad faith.
• Broadening the power of the courts to make certain orders in support of arbitration proceedings to orders against third parties (such as those who hold relevant evidence).
• Clarification that the remedies available pursuant to a section 67 jurisdictional challenge are the same as for appeals for serious irregularity and appeals on a point of law.

Final comment

Although it remains to be seen how some of the new procedures will work in practice, the Arbitration Act 2025 has generally been welcomed by the arbitration community as a significant step in strengthening London’s position as a globally-recognised arbitration hub.

Footnotes

[1] Study by Queen Mary University: https://www.qmul.ac.uk/arbitration/research/2021-international-arbitration-survey/