The new Arbitration Act 2025 has now been entered into the statute book and is expected to come into force soon, paving the way for a modernised arbitral framework in the UK.
The intention behind the Arbitration Act 2025 is to ensure that the UK remains a competitive and leading destination for arbitration in the eyes of international legal business. According to the Law Commission, arbitrations are worth at least £2.5 billion to the British economy every year. Updating the Arbitration Act 1996 – now well over 25 years old – was considered to be crucial to protecting this sector and developing it further.
Key takeaways from the new Act include:
- The applicable law of the arbitration agreement is now the law of the seat of arbitration unless the parties have expressly agreed otherwise. Previously, the law of the relevant underlying contract had been implied as the governing law of the arbitration agreement. Absent any contrary agreement in the contract, if the arbitration is seated in London then the law of England and Wales will be implied. Extra care will need to be taken when drafting arbitration agreements if there is an intention for any particular dispute to be governed by the law of a particular jurisdiction.
- Unless parties to the arbitration avail themselves of the ability to opt out of this rule by agreement, arbitral tribunals now have the express power to make an award on a summary basis if they determine that a particular issue, claim or defence has no real prospect of success. This is the same test employed by the English courts and would provide confident parties with a route to faster resolution of their dispute.
- Third parties beware: the court has now been granted express powers to make orders against third parties in support of arbitral proceedings, in line with the powers it has in ordinary court proceedings. By way of example, this would include orders in relation to interim injunctions and third-party disclosure, increasing the number of available avenues for investigation and case-building.
- Parties should take even greater care to comply with orders or directions of Emergency Arbitrators (EA), as EAs can now make peremptory orders (i.e. final orders) in the event of non-compliance. The courts will also now have the express power to make orders enforcing an EA’s peremptory order.
- As regards challenges to a tribunal’s jurisdiction, other than in certain specific circumstances, no new evidence, arguments or re-hearing will be permitted by the court. This is an entirely new direction from the position that had developed under case law, which used to allow a full re-hearing in the event of a challenge.
- Arbitrators will be grateful for certain extended immunity conferred on them by the Act, protecting them from disgruntled parties if they step down from the tribunal, either by resignation or removal. Conversely, arbitrators are now under a positive statutory duty to disclose any relevant circumstances which might reasonably bring their impartiality into question. The existing general duty established by case law has been codified and the duty applies from the first enquiry an arbitrator receives about a potential appointment.
As can been seen from the above, the new Act marks an evolution rather than a revolution. Interestingly, the changes do not include several other provisions that had previously been considered by the Law Commission, such as a presumption of confidentiality. While the common law position and the incorporation of the rules of certain arbitral institutions (such as the LCIA Rules) might achieve this objective, the parties should consider the point carefully if they want a specific level of confidentiality in their arbitrations.
Should you wish to discuss anything in this note or commercial arbitration generally, please do get in touch with our International Arbitration team.
