Arbitration Act 2025

The Arbitration Act 2025 (“AA 2025”) received Royal Assent on 24 February 2025 and will be brought fully into force via statutory instrument shortly. The AA 2025 amends and modernises the Arbitration Act 1996 (“AA 1996”) in a number of important ways with the stated aim of maintaining the UK, and London in particular, as a leading global centre for international dispute resolution.

What is the Arbitration Act 2025?

The AA1996 provides a comprehensive framework of rules which facilitate and support arbitration in England & Wales. The AA 1996 has generally been seen as a successful piece of legislation. Following two public consultations and a comprehensive report by the Law Commission a number of improvements, revisions and refinements were recommended to the AA 1996 which have largely now been adopted into the new Act. The AA 2025 accordingly revises and modernises the AA 1996.

What changes has the Arbitration Act 2025 brought in?

The most significant changes brought into effect by the new Act include revisions to:

• Law applicable to the arbitration agreement
• Arbitrators duty of disclosure
• Arbitrator’s indemnities
• Awards on a summary basis
• Emergency arbitration
• Court powers in support of arbitration
• Powers in relation to costs awards
• Challenges to awards – jurisdiction (section 67)
• Challenges to awards – time limits

• Law applicable to the arbitration agreement

The AA 2025 inserts a new section 6A providing that where there is an absence of a choice of law clause in the arbitration agreement the law applicable to the arbitration agreement is the law of the seat of the arbitration (i.e. the jurisdiction in which an arbitration is deemed legally to take place and the award issued, regardless of the geographical location of the tribunal and/or any hearings). The new rule will apply to all arbitration agreements regardless of when they were entered into save for those where proceedings have been commenced before the Act came into force. The additional clarity which the revision brings is aimed at reducing satellite litigation arising from disputes over governing law which can be costly and time consuming to resolve.

• Arbitrators duty of disclosure

Whilst arbitrators have always been subject to a duty of impartiality under the AA 1996, section 23A of the new AA 2025 introduces a new statutory duty of disclosure on arbitrators requiring an arbitrator to disclose to the parties any circumstances which might reasonably give rise to justifiable doubts as to their impartiality. The duty goes beyond disclosing what the arbitrator actually knows to circumstances which the arbitrator ought reasonably to have known. The duty is intended to be a continuing obligation. This marks an extension of good practice which many arbitrators will be following in practical terms in any event.

• Arbitrator’s indemnities

The AA 2025 amends sections 24, 25 and 29 of the 1996 Act and provides enhanced protection for arbitrators following removal or resignation from their role. Revised section 24 includes provision for an indemnity against a costs order should the arbitrator be removed from their role after an application made by either party to the Court. This indemnity will be lost if it is demonstrated that the arbitrator has acted in bad faith. The revised provisions further ensure and clarify that arbitrators will not be liable on resignation (unless the resignation was unreasonable). These provisions are welcome additional support for arbitrators with the objective of improving impartial and independent decision making.

• Awards on a Summary Basis

A number of institutional arbitral bodies contain procedures for early determination of claims which are akin to the Court’s powers to issue summary judgment. For instance the rules of the London Court of International Arbitration (LCIA) have a procedure empowering arbitrators following application by a party to determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is ‘manifestly without merit’ and to issue an award on that basis. However, the Arbitration Act 1996 contains no such provision which can mean protracted proceedings and additional costs are incurred before an award is obtained notwithstanding an opponent’s ‘manifestly without merit case’. The AA 2025 introduces a new section 39A which expressly provides that arbitrators have the power to make a summary award on a claim or an issue if there is no real prospect of success. The power will only be engaged on application by one of the parties but will give arbitrators a powerful additional tool which will significantly improve efficiency and save costs. The section is not mandatory and accordingly the parties can agree should they choose to do so to exclude this section.

• Emergency Arbitration

The AA 2025 introduces into the 1996 Act the concept of emergency arbitration. Sections 41, 42, 44 and 82 of the Act have been revised in various respects to reflect this development.  Where arbitration rules (such as the LCIA or ICC rules) provide for emergency arbitrators to be appointed before the arbitral tribunal is formed in order to deal with urgent issues, a new section 41A introduces provision for arbitrators appointed on an emergency basis to have the same powers as an arbitrator appointed in the normal manner. The new rules further clarify that peremptory orders issued by emergency arbitrators will be enforced through the Court.

• Court powers in support of arbitration

The new Act makes clear that Court orders made pursuant to section 44 of the 1996 Act (such as orders preserving evidence, ordering inspection, issuing interim injunctions or in respect to sale of goods) extend not only to the parties to the arbitration agreement but can also be made against third parties (i.e. parties who are not party to the arbitration agreement).  This brings welcome clarity to an area which has been subject to various conflicting case authorities. The new Act further protects the rights of third parties to appeal against such decisions.

• Powers in relation to costs awards

Section 6 of the new Act amends Section 61 of the 1996 Act to enable the arbitrators to award costs even where the arbitration has otherwise ended and the tribunal has no substantive jurisdiction. This provision is not mandatory and can be amended or excluded through agreement by the parties.

• Challenges to awards – jurisdiction (section 67)

The new Act seeks to streamline the procedures for challenging an award under section 67 of the 1996 Act. In cases where an objection has been made that the arbitrators lacked jurisdiction (for instance arising from argument that there was not a valid arbitration agreement) and the arbitrators have previously ruled on this then any subsequent section 67 challenge by a party who participated in the arbitral proceedings will not be by way of a full rehearing before the Court. The Court will now remit the award to the Tribunal for reconsideration if a section 67 application is successful unless it is inappropriate to do so in which case awards can be set aside or null and void in whole or in part. New sub-sections 3B and 3C make clear that the court will not consider new grounds of objection or new evidence which could have been put before the arbitrators who previously ruled on the matter and evidence will not be re-heard unless exceptionally the interests of justice demand this. Again the intention behind the amendments is to improve the efficiency of arbitration by removing unnecessary and potentially duplicated hearings.

• Challenges to awards – Time limits

It is also worth noting that the 2025 Act helpfully also clarifies section 70 of the 1996 Act which provides for a 28 day period for challenging an award under section 67 (and sections 68 and 69). Time ordinarily starts running from the date the Award is made. However the 2025 Act contains express provision that in cases where the arbitrators have made a material correction to an award or added to the award time will run from the date of that correction or addition. Alternatively where there has been an application to correct or add to the Award which has not succeeded time will run from date the applicant was notified of the decision.

Conclusion

The Arbitration Act 2025 is a generally welcome evolution for the widely praised and successful arbitration framework laid down by the1996 Act. The main changes referenced above are intended to deliver increased efficiency and speed, reduce costs and provide greater clarity in the conduct of arbitration. Whilst not as radical as some practitioners sought (in particular a failure to address the rise of AI and its impact on arbitral proceedings is a topic which will need to be addressed by legislation sooner rather than later) the changes referenced above are nevertheless significant revisions to the 1996 Act which should help the UK, and London in particular, retain its leading position as a global destination of choice for dispute resolution and for international arbitration in particular.

If you have any questions about the topics raised in this article, please get in touch.