The Arbitration Act 2025 Is In Force: Key Reforms and Implications

Introduction

The 2024 chapter of this guide told the story of the amendments to the Arbitration Act 1996 (the “1996 Act”). It traced the journey from the Law Commission’s multi-step review process – including its first consultation paper in September 2022, followed by a second in March 2023, both of which attracted spirited and detailed responses from a wide range of stakeholders within the arbitration community – to the ultimate introduction of the Arbitration Bill (the “Bill”) in Parliament on 21 November 2023, and the premature shelving pending the 2024 general election. The new Labour government promptly reintroduced the Bill in substantially identical terms soon after taking office in 2024, confirming cross-party consensus on the need to modernise the 1996 Act, and to safeguard England and Wales’ pride of place among the premier jurisdictions for arbitration.

The Arbitration Act 2025 (the “2025 Act”) received Royal Assent and came into force on 1 August 2025, pursuant to the Commencement Regulations. It introduces a suite of targeted and pragmatic amendments to the 1996 Act, aimed at enhancing legal certainty, procedural efficiency and the global standing of English arbitration, while preserving the foundational principles that have long underpinned London’s appeal as a seat of choice.

The 2025 Act applies to arbitrations commenced after its effective date of 1 August 2025 and does not affect proceedings already under way. This chapter summarises the key amendments introduced by the 2025 Act and their potential implications.

Governing Law of Arbitration Agreements

One of the headline reforms introduced by the 2025 Act is the clarification of the law governing arbitration agreements.

The question of what law governs an arbitration agreement when the arbitration agreement does not expressly set out an explicit (or implicit) choice of substantive law has long bedeviled arbitration practitioners. Two popular answers have developed in the literature:

• the first is that the law of the main or “matrix” contract should govern the arbitration agreement as well; and
• the second is that the law of the seat should govern the substantive law of the arbitration agreement.

Section 6A establishes a default rule that endorses the second camp: in the absence of express party agreement to the contrary, the law of the seat will govern the arbitration agreement. In practical terms, this means that English law will apply to arbitration agreements seated in England and Wales unless the parties have made a different choice. Importantly, party autonomy remains paramount. Section 6A operates only as a fallback and does not override any express choice of law made by the parties. The provision aligns with the default position under the London Court of International Arbitration (LCIA) Rules 2020 (Rule 16.4) and is expected to reduce satellite litigation over governing law disputes.

This reform marks a deliberate departure from the position articulated in Enka v Chubb, where the Supreme Court famously inferred the governing law of the arbitration agreement from the law of the underlying contract in the absence of express choice. While the Supreme Court in Enka invoked common business sense as one of the rationales for its ultimate decision, commentators have since noted that the decision itself could lead to perhaps unintended results.

For example, where the matrix contract is governed by a foreign law, where the arbitration agreement is silent on choice of substantive law, and where the seat is in England and Wales, under Enka the applicable foreign law would govern any disputes relating to the scope and effect of the arbitration agreement. Regular business users – and not arbitration lawyers – may not anticipate that outcome when they agree to a contract that says all arbitrations will take place in (for example) London. Section 6A of the 2025 Act seeks to remedy that uncertainty and reinforce the supportive stance of English law towards arbitration. Parties, arbitration practitioners and those tasked with drafting arbitration agreements (frequently at short notice) should take note: if the parties intend for the arbitration agreement to be governed by a law other than that of the seat, they are well advised to clearly and expressly state that choice in the arbitration agreement.

Challenges to Jurisdiction and the Award

The 2025 Act introduces a number of reforms to the framework governing jurisdictional challenges. The 1996 Act provided for a dual-track approach to jurisdictional challenges: parties could raise jurisdictional objections to the tribunal under Section 32 during pendency of the arbitration, and could subsequently seek a full re-hearing before the courts under Section 67. This potentially resulted in a party getting two challenges, causing unnecessary delay and costs.

The 2025 Act clarifies the operation of Section 32, restricting recourse to the courts to those limited instances where the tribunal has not yet ruled on its jurisdiction. The 1996 Act allowed a Section 32 challenge with the tribunal’s permission even where the tribunal had ruled. Under the 2025 Act, where the tribunal has already decided a jurisdictional challenge, any challenge to the jurisdiction in court must proceed under Section 67. Crucially, the 2025 Act now restricts the scope of such challenges: applicants are no longer entitled to a full re-hearing and may not introduce new evidence or arguments that were not presented to the tribunal, save for two narrowly defined exceptions.

Further amendments limit the court’s discretion to set aside awards. A court must now be satisfied that it would be inappropriate to remit the matter to the tribunal before exercising its power to declare an award of no effect.

The 2025 Act confirms that where a tribunal is found to lack jurisdiction – whether by its own ruling or by the court – it may nonetheless determine the costs incurred in the proceedings up to that point. This ensures procedural fairness and provides clarity on cost allocation in jurisdictional disputes. Overall, these amendments aim to reinforce the finality of arbitral decisions and reduce judicial intervention.

Summary Judgment

The 2025 Act introduces a new Section 39A, which expressly empowers arbitral tribunals to dispose of claims or defences on a summary basis where they lack real prospects of success. The test mirrors that applied by the English courts under Rule 24.3(a) of the Civil Procedure Rules, thereby aligning arbitral procedure more closely with domestic English litigation standards.

This reform codifies a power that many tribunals have long exercised in practice, and is intended to enhance procedural efficiency by enabling early dismissal of unmeritorious claims. Parties retain the ability to opt out of the application of this provision, and the tribunal must ensure that all parties are afforded a reasonable opportunity to make representations before any summary determination is made.

The provision is expected to reduce the time and cost associated with resolving disputes, particularly where certain issues can be disposed of without the need for full evidentiary hearings. It also serves to deter vexatious or tactical claims that may otherwise burden the arbitral process.

Third Parties

The 2025 Act resolves long-standing ambiguity surrounding the courts’ powers under Section 44 in relation to third parties. Before the amendment, case law left open the question of whether courts could issue orders against individuals or entities not party to the arbitration agreement.

The new legislation puts that uncertainty to rest. Courts are now expressly authorised to make orders against third parties in support of arbitral proceedings, bringing the arbitral framework into alignment with the broader powers available in litigation. These orders may include:

• interim injunctions;
• directions for the preservation or collection of evidence; and
• orders concerning the sale of goods.

Importantly, the 2025 Act also introduces a procedural safeguard: third parties subject to such orders are granted a direct right of appeal, without the need to seek permission from the court. This ensures that the expanded powers are balanced by appropriate protections for those drawn into arbitration-related proceedings.

Emergency Arbitrators

The 2025 Act formally recognises the role of emergency arbitrators – an established feature of modern arbitral practice. While the 1996 Act predated the emergence of emergency arbitrator mechanisms, the new legislation brings English arbitration law into alignment with institutional rules that permit such appointments in circumstances where the tribunal has not yet been constituted.

Under the updated framework, where the applicable arbitral rules provide for the appointment of an emergency arbitrator, and such an appointment has been made, the emergency arbitrator is expressly empowered to issue peremptory orders. These orders may be enforced by the courts where a party fails to comply without sufficient cause.

This reform enhances the effectiveness of interim relief in urgent cases and ensures that emergency arbitrators have access to the same enforcement mechanisms as fully constituted tribunals. It reflects the commitment to maintaining a responsive and modern arbitration regime capable of meeting the demands of complex, time-sensitive disputes.

Duty of Disclosure

The 2025 Act introduces a new Section 23A, which codifies the duty of disclosure owed by both current and prospective arbitrators. The provision requires disclosure of any circumstances that might reasonably give rise to justifiable doubts as to the arbitrator’s impartiality – mirroring the standard articulated by the UK Supreme Court in Halliburton v Chubb. Importantly, the duty extends not only to matters of which the arbitrator is actually aware but also to those of which they ought reasonably to be aware.

The wording of the new section reinforces the continuing nature of the disclosure obligation and reflects a broader consensus within the arbitration community: while absolute independence may be unattainable, transparency is essential to maintaining confidence in the process. The reform is also consistent with international best practice, aligning the English arbitration framework with the UNCITRAL Model Law, various institutional rules, and the legislation of other leading arbitral jurisdictions.

By codifying and clarifying the disclosure standard, the 2025 Act aims to ensure that parties are equipped with the information necessary to make informed decisions about the composition of the tribunal without imposing an unduly onerous burden on arbitrators.

Arbitrator Immunity

The 2025 Act introduces targeted enhancements to the statutory protections afforded to arbitrators, reinforcing the UK’s reputation as a safe and attractive seat for international arbitration. These reforms clarify and extend the scope of immunity in two key respects: resignation and removal.

First, it confirms that arbitrators are not liable for resigning from their appointment unless the resignation is found to be unreasonable in all circumstances. This codifies a balanced approach, which protects arbitrators from undue exposure while preserving recourse in cases of unjustified withdrawal.

Second, where an arbitrator is removed following a successful application by a party, the court may not order the arbitrator to bear the costs of the removal unless their conduct is shown to have been in bad faith. This reverses the previous common law position and provides greater certainty for arbitrators who act in good faith throughout the process.

Together, these provisions broaden and strengthen the existing immunity framework under the 1996 Act, which already shielded arbitrators from liability for acts or omissions in the discharge of their functions, save for those involving bad faith. The 2025 Act builds on that foundation, ensuring that arbitrators are not exposed to personal financial consequences merely for stepping down or being removed despite acting in good faith. These changes will hopefully encourage experienced practitioners to accept appointments without undue concern over personal liability.

Conclusion

The 2025 Act marks a measured yet meaningful evolution of the legislative framework governing arbitration in England and Wales. By codifying established practices, clarifying procedural uncertainties and introducing targeted reforms – many of which were previewed in the authors’ 2023 chapter – the coming in to force of the 2025 Act and the entire process illustrates the value of the Law Commission’s consultative process and its responsiveness to stakeholder feedback. From summary disposal and emergency arbitrators to enhanced disclosure obligations and third-party relief, the reforms reflect a jurisdiction attuned to the practical needs of arbitration users.

Crucially, the Act achieves these goals without unsettling the foundational principles that have long underpinned the success of the 1996 Act. As other arbitral centres continue to modernise, the UK’s commitment to maintaining a robust, efficient and internationally competitive arbitration regime ensures that London remains a seat of choice for commercial parties worldwide.