On 24 February 2025, the Arbitration Act 2025 (the 2025 Act) received Royal Assent and will come into force on a date to be confirmed. The 2025 Act will insert a number of amendments into the Arbitration Act 1996 with the aim of modernising the Arbitration Act 1996 in order to enhance the status of England and Wales as a leading international forum for dispute resolution. The reforms follow modernisation efforts by other popular arbitration forums, including Hong Kong and Singapore, and aim to ensure London’s competitiveness as a seat for international arbitrations.
This article summarises the key reforms and their practical implications for contract drafting and arbitral procedure.
When will the 2025 Act come into force?
The reforms in the 2025 Act will come into force through regulations on a day to be appointed by the Secretary of State.
What are the key reforms in the 2025 Act?
The 2025 Act is the product of recommendations made by the Law Commission designed to promote England and Wales’s status as a world leading destination for commercial arbitration. The key reforms include:1
- Introduction of a power of summary dismissal: Confirms the power of the tribunal to issue awards on a summary basis (upon an application made by a party) if the arbitrators consider that a party has no real prospect of success on the relevant issue, thereby potentially improving efficiency and reducing costs.
- A new rule on the governing law of an arbitration agreement: Establishes a default rule that, absent a choice of law clause, the law of the seat of the arbitration governs the arbitration agreement. This change promotes legal certainty for parties and ensures that they can rely on the laws of England and Wales for London-seated arbitrations thereby speeding up arbitrations.
- A revised framework and procedure for challenges under section 67 (challenges for lack of jurisdiction): The changes facilitate new court rules to prevent the courts from re-hearing evidence that has already been before the tribunal and to restrict parties’ ability to raise news grounds/evidence.
- Clarification of court powers in support of arbitral proceedings and in support of emergency arbitrators: Strengthens the role of emergency arbitrators by granting them authority to issue peremptory orders, ensuring that emergency arbitrators have the same access to court enforcement as non-emergency arbitrators. This will help in the efficient resolution of disputes in time-sensitive circumstances.
- Codification of arbitrators’ duty of disclosure: Imposes a statutory obligation on arbitrators to disclose any circumstances that might raise doubts over their impartiality, codifying the test in Halliburton v Chubb2.
- Strengthening arbitrator immunity around resignation and applications for removal: Enhances protections for arbitrators against liability arising from resignation or removal, supporting impartial decision-making.
What are the Government’s motivations behind these reforms?
As stated in the Government’s press release here the new law is intended to re-enforce England and Wales’s status as the “global destination of choice for the legal sector”. The new law “makes arbitration fairer and more efficient by simplifying procedures to reduce costs and protecting arbitrators from unreasonable lawsuits. It also strengthens the courts’ powers to support emergency arbitration so time-sensitive decisions can be made more easily.” 3
What are the practical implications to arbitral practice and procedure arising from the 2025 Act?
The changes introduced by the 2025 Act are relatively limited “mindful of the consensus that the [Arbitration Act 1996] works well, and that root and branch reform is not needed or wanted”4. However, there are some important practical implications which include:
- Summary dismissal power: Parties now have greater access to summary dismissal for claims with no real prospect of success.
- Governing law of an arbitration agreement: Parties who have English law governed contracts but have selected another seat, should consider whether to include an express law governing the arbitration agreement.
- Arbitrators’ duty of disclosure: Arbitrators should carefully consider any circumstance which might reasonably give rise to justifiable doubts as to their impartiality and make appropriate inquiries and disclosures where required.
