On 1 August 2025, the new Arbitration Act 2025 (the 'Act') enters into force bringing a number of amendments to the Arbitration Act 1996 that aim to 'turbocharge [the] UK's position as the world-leader in arbitration'1. It is set to apply to arbitrations commenced after the Act comes into force, and so has no immediate impact on ongoing arbitrations. That said, it does apply to arbitration agreements 'whenever made' so it is important to consider any impact it may have on existing arbitration agreements and review and/or update any agreements that may be affected.
The legislative changes to the UK's arbitration framework follow on from a detailed and lengthy consultation process conducted by the Law Commission, which Withers' Arbitration team engaged with.
In this article, we review the key changes to the Act and explore their practical implications.
The Act clarifies the default law applicable to the arbitration
Once the Act comes into force, there will be greater clarity over the law of the seat of a newly commenced arbitration. A new section 6A introduces a default rule pursuant to which, in the absence of the parties' agreement to the contrary, the law applicable to the arbitration agreement shall be the law of the seat of the arbitration. In practice, this means that English law will apply to an English-seated arbitration where no choice of law has been made in the arbitration agreement. Party autonomy is evidently retained, as section 6A operates only as a fallback in the absence of express agreement by the parties.
This rule is expected to reduce the number of disputes in this jurisdiction that relate to the law governing an arbitration agreement, establishing a straightforward statutory rule to replace the current, more nuanced, common law rule under Enka v Chubb2. The amendment also largely mirrors the default position under the LCIA Rules 2020 (Rule 16.4).
Given the potentially wide impact of this change, parties with English law-governed contracts where the seat is in another jurisdiction and no governing law is specified for the arbitration agreement would be well advised to review their arbitration clause in order to ensure it reflects the law they want to govern their arbitration agreement. In some instances, re-negotiating and amending the existing arbitration clause may be appropriate.
It is worth noting that the new default rule applies to commercial arbitration, and it may also apply to commercial contracts containing arbitration clauses that involve a State party. The Explanatory Notes to the Act elaborate that '[t]his means, for example, that non-ICSID investor-state arbitration agreements will tend not to be covered by the default rule in section 6A(1). However, investor-state agreements which arise under commercial contracts (rather than treaties or foreign legislation) will remain to be captured by the default rule in inserted section 6A(1)'3.
The Act introduces express summary dismissal powers
A new section 39A introduces the express power to make an award on a summary basis if a Tribunal finds, on the application of a party to the proceedings (upon notice to the other party or parties), that the other party (or parties) has (or have) no real prospects of succeeding on a claim, issue or defence. Whilst the procedure may be opted out of and parties are in any event to be given a 'reasonable opportunity to make representations', this new power is expected to improve efficiency of proceedings where it applies by either disposing of claims meeting the relevant threshold, or narrowing the issues. This is intended to reduce the costs of arbitration in relevant cases.
The new summary dismissal powers also bring the arbitration test in line with the existing English summary judgment test which applies 'no real prospect of success' (CPR 24.3(a)). It is therefore likely that, at least by analogy, English authorities on summary judgment will become applicable to, or at least highly persuasive in, summary dismissal applications brought under section 39A of the updated Act. This is an important tool for parties and arbitrators to find ways to conclude proceedings quickly. It will be interesting to see how widely and effectively it is used.
The Act strengthens arbitrators' immunity and impartiality
Another feature which should maintain the UK's position as an attractive hub for international arbitration are the new rules intended to safeguard arbitrators' immunity and impartiality.
With regard to the former, the Act clarifies that arbitrators are immune from incurring liability for their resignation unless such resignation is proven to be unreasonable in all the circumstances4. Similarly, where an arbitrator is removed, the court may not order them to pay the costs of an application to remove them unless any act or omission of the arbitrator is shown to have been in bad faith5. These updates clarify that reasonable resignations and good faith conduct by arbitrators will not result in personal financial implications for them should they resign or be removed.
The Act also codifies in a new section 23A a current and prospective arbitrator's duty of disclosure in respect of 'circumstances that might reasonably give rise to justifiable doubts as to the individual's impartiality in relation to the proceedings'6. The latter threshold comes from Halliburton v Chubb7. It is important to note that this duty is extended by the Act to circumstances of which the relevant arbitrator 'ought reasonably to be aware'.
For a comparative analysis on arbitrators' independence and impartiality, see our previous article here.
The Act amends the rules applicable to jurisdictional challenges
Under the 1996 Act, it was possible for parties to challenge the substantive jurisdiction of an arbitral tribunal under section 32 of the Act as a preliminary point, in the arbitration proceedings themselves and then possibly again before the English court by way of (potentially) a full re-hearing of substantive jurisdiction issues under section 67 of the 1996 Act. The new Act introduces some important clarifications and amendments in this area.
First, the Act provides that the court may not consider an application to challenge a tribunal's substantive jurisdiction under section 32 to the extent that the application relates to a question on which the tribunal has already ruled as a preliminary point8. This amendment to section 32 means that in future, it can only be invoked in place of the tribunal making its own determination on its jurisdiction. In practice, given many institutional rules require any challenge to the jurisdiction of the tribunal to be made to the tribunal first (with very limited exceptions)9, this will mean that the tribunal's decision on its jurisdiction will be considered final unless or until the award is later challenged under section 67 of the Act.
Second, the remedies available under section 67 have been expanded. Currently, a court ruling on a tribunal's lack of jurisdiction once an award has been rendered can confirm, vary or set aside (in whole or in part) the award10. Once the new Act comes into force, a court deciding that a tribunal lacked jurisdiction can also remit the award for (full or partial) reconsideration. Crucially, however, a court may not use its powers to set aside or declare that the award is of no effect unless 'it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration'11. This is similar to the wording found in sections 68 and 69 of the Act.
Third, the Act envisages new court rules to prevent the court from rehearing evidence under a section 67 application that has already been heard by a tribunal and to restrict new evidence, subject to the court ruling otherwise 'in the interests of justice'12.
And finally, the Act confirms that arbitral tribunals may make an order for costs in cases where there is a finding that they lack jurisdiction (subject to any agreement of the parties)13.
These changes promote efficiency while reinforcing the principle that tribunals have a right to rule on their own jurisdiction. Importantly however, these new rules do not bind parties who did not take part in the arbitral proceedings14, thereby properly limiting a 'second bite at the cherry' to those who have had prior opportunity to raise matters.
In summary, the new Act is likely to have a notable and positive impact on future arbitration matters. Its key reforms streamline and enhance some of the current procedures which should strengthen the position of this jurisdiction as a global arbitration hub.
Footnotes
1 See the Government's press release, 24 February 2025. See also, the Arbitration Act 2025 (Commencement) Regulations 2025.
2 Enka v Chubb [2020] UKSC 38.
3 Explanatory Notes to the Arbitration Act which received Royal Assent on 24 February 2025 (c. 4), available here (the 'Explanatory Notes'), para 17.
4 New sub-section (4) to section 29.
5 New sub-section (5A) to section 24.
6 New section (23A).
7 Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd [2020] UKSC 48.
8 New sub-section (1A) to section 32.
9 See for example Article 23.5 of LCIA Rules 2020 or Article 6(3) of the ICC Rules 2021.
10 Arbitration Act 1996, section 67(3).
11 Amended sub-section (3) and new sub-section (3A) to section 67.
12 New sub-section (3C) to section 67.
13 New sub-section (1A) to section 61.
14 New sub-section (3B) to section 67.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
