The Arbitration Act 2025 marks a significant milestone in the evolution of arbitration law in England, Wales, and Northern Ireland. After receiving Royal Assent on February 24, 2025, this new legislation introduces targeted reforms to modernize the well-regarded Arbitration Act 1996, strengthening London’s position as a premier hub for international commercial arbitration. The 2025 Act represents “evolution not revolution” – a careful refinement of an already robust framework to ensure it remains responsive to contemporary arbitration practices while addressing areas of uncertainty that had emerged over nearly three decades of application.

Background and Legislative Journey

The reform process began in March 2021 when the UK Government tasked the Law Commission with reviewing the Arbitration Act 1996 to ensure that the UK’s arbitration legislation remained “state of the art” for both domestic and international commercial arbitration. This initiative was partly motivated by the modernization of arbitration laws in competing jurisdictions such as Singapore, Switzerland, and Germany.
Following extensive stakeholder consultation, the Law Commission published its recommendations for amendments to the Arbitration Act 1996 on September 5, 2023. These recommendations were subsequently incorporated into the Arbitration Bill, which was initially introduced to Parliament in November 2023. However, the legislative process was temporarily delayed by the 2024 UK general election before being reintroduced by the new Labour government. The Bill finally received its final reading in Parliament on February 11, 2025, and Royal Assent on February 24, 2025.
According to the Act’s accompanying press release, England and Wales host at least 5,000 arbitrations annually (both domestic and international), generating over £2.5 billion in fees alone for the UK economy. This significant economic contribution underscores the importance of maintaining an arbitration-friendly legal framework that attracts international disputes.

Structure and Application

The Arbitration Act 2025 does not replace the existing legislation but instead amends the provisions of the Arbitration Act 1996. The 2025 Act will apply to arbitrations initiated after the date when its substantive provisions come into force, which will be specified in forthcoming regulations by the Secretary of State.

Key Reforms

1. Law Applicable to Arbitration Agreements

Perhaps the most significant reform introduced by the 2025 Act is the clarification regarding the law applicable to arbitration agreements. The 1996 Act was silent on this matter, leaving parties to rely on common law principles that had developed somewhat inconsistently over time.

The 2025 Act introduces a clear statutory rule:

• The law applicable to an arbitration agreement is the law expressly chosen by the parties.

• In the absence of such express choice, the default governing law will be the law of the seat of the arbitration.

• Importantly, an express choice of law to govern the main contract will not automatically constitute an express choice of law for the arbitration agreement.

This reform effectively overturns the approach established by the UK Supreme Court in Enka v Chubb. The new rule provides greater certainty and predictability for parties choosing London as their arbitral seat, knowing that English law – with its arbitration-friendly approach – will govern any dispute regarding the validity or scope of their arbitration agreement, unless they expressly provide otherwise.

A specific exception has been made for investor-state dispute settlement (ISDS) cases where the arbitration clause derives from a treaty or non-UK legislation, to prevent unintended consequences in non-ICSID ISDS cases.

2. Strengthening Arbitrator Powers and Immunity

The 2025 Act enhances the position of arbitrators in several important ways:

a) Express Power of Summary Disposal

The Act confirms that arbitral tribunals have the power to make awards on a summary basis for claims or issues that have “no real prospect of succeeding”. This statutory provision resolves previous uncertainty about whether tribunals possessed such inherent powers.

This reform aligns arbitration more closely with court procedures, where summary judgment is a well-established mechanism for dismissing meritless claims at an early stage. The practical impact is significant, as it may prevent parties from pursuing hopeless claims through drawn-out arbitration proceedings in the hope that opponents might settle rather than incur the time and expense of a full hearing.

b) Codification of Arbitrators’ Duty of Disclosure

The 2025 Act places the duty of disclosure established in Halliburton v Chubb on a statutory footing. This duty requires arbitrators to disclose any circumstances that might reasonably give rise to justifiable doubts about their impartiality. The codification extends this duty to pre-appointment discussions, providing greater clarity while maintaining the flexibility of case law.

c) Enhanced Arbitrator Immunity

The Act strengthens arbitrator immunity from liability in several ways:

• Extending protection to resignations (unless unreasonable)

• Providing immunity regarding costs liability in applications for an arbitrator’s removal (unless they acted in bad faith)

• Offering greater security for arbitrators to make robust decisions without fear of personal liability

These provisions aim to attract high-quality arbitrators to London-seated arbitrations by providing them with appropriate protections.

3. Revised Framework for Jurisdictional Challenges

The 2025 Act introduces significant changes to the procedure for challenges to an award for lack of substantive jurisdiction under Section 67 of the 1996 Act. The key amendments include:

• A prohibition on raising objections that were not raised before the arbitral tribunal, unless the applicant could not reasonably have discovered the ground during the arbitration.

• Restrictions on introducing evidence that was not presented to the tribunal, unless it could not reasonably have been obtained during the arbitration.

• Prevention of rehearings of evidence that was already heard by the tribunal.

These restrictions are subject to a statutory exception where the court may rule otherwise in the “interests of justice”. The reforms effectively limit the scope of Section 67 challenges and eliminate the previous approach of de novo court review of the tribunal’s jurisdiction. This change is likely to reduce the cost and increase the efficiency of jurisdictional challenges, while discouraging unmeritorious applications.

4. Empowerment of Emergency Arbitrators

The 2025 Act formally recognizes the role of emergency arbitrators, who can grant urgent interim relief before the constitution of the full arbitral tribunal. This statutory recognition enhances the enforceability of emergency arbitrator decisions and aligns English law with contemporary arbitration practice, where emergency arbitration has become increasingly common.

5. Court Powers in Support of Arbitral Proceedings

The Act clarifies the court’s powers exercisable in support of arbitral proceedings, particularly with respect to third parties. This includes powers related to the taking of evidence and preservation of assets, which can be crucial in complex international disputes. These provisions reinforce the supportive role of English courts in the arbitration process while respecting the autonomy of the arbitral tribunal.

Practical Implications for Users

The Arbitration Act 2025 has several important practical implications for businesses and arbitration practitioners:

1. Enhanced Efficiency and Reduced Costs

The introduction of summary disposal powers and the streamlining of jurisdictional challenges should lead to more efficient arbitration proceedings with reduced costs. Parties will be able to eliminate unmeritorious claims at an earlier stage, avoiding the expense of full hearings on issues with no real prospect of success.

2. Greater Certainty on Applicable Law

The clear rule on the law applicable to arbitration agreements provides greater certainty for parties drafting arbitration clauses. However, parties should review their existing arbitration agreements in light of this change to understand which law will now apply. For maximum clarity, parties may wish to explicitly state the law that should govern their arbitration agreement.

3. Reinforced Position of London as an Arbitral Seat

The reforms collectively reinforce London’s position as a leading center for international arbitration by addressing specific areas where its legislative framework needed modernization. The changes align with international best practices while maintaining the distinctive features that have made English arbitration law attractive to international parties.

4. Impact on Existing Arbitration Agreements

The 2025 Act will apply to arbitrations commenced after the provisions come into force, regardless of when the arbitration agreement was made. Parties with existing arbitration agreements should therefore consider whether any amendments are necessary to reflect the new legal framework, particularly regarding the applicable law of the arbitration agreement.

Matters Not Addressed by the 2025 Act

Despite its comprehensive nature, the 2025 Act does not address certain issues that were considered during the consultation process:

1. Arbitral confidentiality: The Act does not include specific provisions on confidentiality in arbitration, leaving this matter to continue to be governed by common law principles.
2. Discrimination in arbitrator appointments: A proposed prohibition against discrimination in arbitrator appointments was not included in the final legislation.
3. Regulation of third-party funding: The Act does not address the regulation of third-party funding in arbitration, which remains subject to existing legal principles.

These omissions suggest areas that may be considered for future legislative attention as arbitration practice continues to evolve.

Conclusion

The Arbitration Act 2025 represents a significant yet measured update to English arbitration law. While preserving the foundations that have made the Arbitration Act 1996 successful for nearly three decades, the 2025 Act introduces targeted reforms that address specific areas of uncertainty and modernize the legal framework in line with international best practices.

The reforms strengthen arbitrator powers, enhance procedural efficiency, provide greater legal certainty, and reinforce the supportive role of the courts. Collectively, these changes should further cement London’s position as a premier venue for international commercial arbitration in an increasingly competitive global landscape.

For businesses and practitioners, the 2025 Act offers a more streamlined and predictable framework for resolving disputes through arbitration, ultimately supporting the fundamental objective of providing “fairer and more efficient” dispute resolution. As the provisions of the Act come into force, parties engaging in arbitration in England, Wales, and Northern Ireland will benefit from a legal regime that combines time-tested principles with modern innovations, ensuring that English arbitration law remains “state of the art” for years to come.