Arbitration Act 2025: Reforms to the UK’s arbitration framework

On 24 February 2025, the UK Arbitration Act 2025 (AA 2025) received royal assent. It will come into force at a later date through a statutory instrument. The AA 2025 reforms certain aspects of the Arbitration Act 1996 (AA 1996) in line with the UK Law Commission's recommendations, aiming to maintain England’s status as a leading hub for arbitration services. 

Arbitration represents an important cornerstone of England’s global market leading centre for dispute resolution. The Law Commission estimates that in England and Wales alone, there are at least 5,000 arbitrations annually, which generate at least £2.5bn for the UK economy in arbitrator and legal fees alone. The introduction of the AA 2025 underscores the UK government's commitment to maintaining England’s position as a pre-eminent centre for dispute resolution as highlighted in the King's Speech on 17 July 2024.

The amendments under the AA 2025 represent an evolution rather than a revolution to the UK’s arbitration framework. We set out below the key changes represented under the AA 2025.

Key reforms introduced by the Arbitration Bill

1. Applicable law of arbitration agreements

Over recent years, there have been numerous cases around the globe that have grappled with the question of what law governs the arbitration agreement. Arbitration agreements are treated as separate from the substantive agreement in which they often sit (as enshrined in s7 AA 1996). As per Saville J “An arbitration clause in a commercial contract … is an agreement inside an agreement” (Union of India v McDonnell Douglas Corp (1993)). Certain important procedural issues, however, can arise from what law is said to govern the arbitration agreement itself.

The UK Supreme Court determined in Enka v Chubb (2020) that the starting point will be that absent any other express agreement in the arbitration agreement itself, where parties have selected a governing law clause to govern the substantive obligations in an agreement, that will be deemed to be the governing law of the arbitration agreement itself.

This position is now amended under s1 AA 2025 which introduces a new s6A AA 1996, stipulating that the default rule is that the law governing the arbitration agreement is the law of the seat of arbitration, unless the parties explicitly agree otherwise. This change aims to provide greater certainty and reduce disputes over what the applicable law of the arbitration agreement is.

2. Summary disposal

S7 AA 2025 introduces a new s39A AA 1996 providing an express power for tribunals to summarily dispose of issues deemed as having no real prospect of success. While that power has always been available although not expressly provided for, it's anticipated that the new proposed express power will empower tribunals to dismiss hopeless claims or defences. Parties have long been concerned that arbitration lacks a statutory summary disposal power akin to the summary judgment procedures provided for under the Civil Procedure Rules in court proceedings.

It will be telling to see how this provision is applied in practice. Under the amendments to the SIAC Rules in 2016 in Singapore, an express power was provided permitting tribunals to dismiss claims or defences that are manifestly without legal merit or outside of the tribunal’s jurisdiction. The uptake hasn't been extensive, as reported in the SIAC Annual Reports. In 2023, SIAC reported that it had received nine applications for early determination (having received 663 new cases in 2023). Three of those applications were allowed to proceed. Of the three which were allowed to proceed, one application was granted, one was rejected and one was withdrawn.

3. Extension of court’s powers in support of arbitration proceedings in respect of third parties

Under s44 AA 1996, the court has discretion to take steps in support of arbitration proceedings including matters relating to: (1) the taking of evidence; (2) preservation of evidence; and (3) the granting of interim relief.  

While it has long been the case that the powers under s44 AA 1996 extend to third parties domiciled in the jurisdiction (for example as provided for in A v C (2020)), s9 AA 2025 seeks to expressly provide that the court’s powers extends to third parties.  

4. Emergency arbitrators

Since the inception of the AA 1996, many arbitral centres around the world have adopted rules allowing for the appointment of emergency arbitrators to provide parties with immediate interim relief before the constitution of the tribunal. For example, emergency arbitrator procedures were adopted by the LCIA in the 2014 version of its rules.

S8 AA 2025 seeks to amend AA 1996 by expressly providing a framework for the enforcement of emergency arbitrator orders or awards strengthening the efficacy of emergency relief in arbitration proceedings. 

5. Challenges to jurisdictional decisions

S10 AA 2025 seeks to amend s67 AA 1996 concerning challenges to a tribunal's jurisdiction. The reforms aim to streamline procedures and enhance procedural efficiency by limiting the introduction of new grounds or evidence and restricting the ability to re-hear evidence during jurisdictional challenges.

6. Duty of disclosure

In Halliburton v Chubb (2020), the UK Supreme Court recognised a tribunal’s duty of impartiality. S2 AA 2025 introduces a new s23 AA 1996 which provides an express duty on tribunals to disclose to the parties any circumstances that might give rise to justifiable doubts as to their impartiality as soon as reasonably practicable. The express duty is an ongoing requirement.

7. Immunity of arbitrators

S3 AA 2025 extends the immunity of arbitrators to cover resignation and protection from costs liability in removal proceedings, provided they have not acted in bad faith. This measure aims to protect arbitrators from undue legal exposure, thereby encouraging qualified individuals to serve in this capacity.

Implications for the UK's arbitration landscape

The Arbitration Act 2025 represents a significant step forward in the evolution of the UK's arbitration framework. By implementing these reforms, the UK aims to maintain its status as a global leading centre for arbitration, offering a modern, efficient, and fair system for resolving disputes.

For more information about:

• What is arbitration and how it can benefit you, please see here.
• How the UK courts can assist parties in international arbitration, please see here.

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