Arbitration Reform - A Perspective from the UK

The UK is widely recognized as an arbitration-friendly jurisdiction, offering a robust legal framework that supports and facilitates the arbitration process. Arbitration in England and Wales and Northern Ireland is governed by the Arbitration Act 1996 (“Arbitration Act”). The Arbitration Act has provided a clear and predictable legal environment, ensuring that arbitration agreements and awards are respected and enforced.

However, to maintain the UK’s status as a leading jurisdiction for international arbitration, the United Kingdom (“UK”) seeks to modernise its arbitration process with the passing of the new Arbitration Act 2025 which inserts amendments into the Arbitration Act.

Journey to Reform

Reform of the Arbitration Act has been on the horizon since 2021, when the Ministry of Justice asked the Law Commission of England and Wales (“Law Commission”) to conduct a review of the Arbitration Act and consider whether any amendments should be made to it “to ensure that it is fit for purpose and that it continues to promote the UK as a leading destination for commercial arbitrations”. The Law Commission’s review sought to “ensure that the Act remains state of the art, both for domestic arbitrations, and in support of London as the world’s first choice for international commercial arbitration”. Instead of suggesting a full overhaul of the legal framework for arbitration, the Law Commission proposed targeted amendments to the Arbitration Act. Arbitration practitioners were consulted by the Law Commission as part of its review, and were given the opportunity to respond to the Law Commission’s First and Second consultation papers. Subsequently, in September 2023, the Law Commission laid its Final Report and Bill before Parliament, setting out its final recommended amendments to the Arbitration Act.

Although the Arbitration Bill [HL] 2023-24 was introduced in the House of Lords in November 2023 and was amended by a special public bill committee, it fell when Parliament was prorogued in May 2024 ahead of a General Election in the UK. After the election of a new government in July 2024, the Arbitration Bill [HL] 2024-25 was re-introduced before the House of Lords on 18 July 2024, in substantially the same form as under the previous government. Subsequently, after passing through the House of Lords and the House of Commons, on 11 February 2025 the Arbitration Bill passed its third reading and on 24 February 2025 it received Royal Assent, which means it has entered the UK statute book and the Arbitration Act 2025 (“2025 Act”) has now become law. 

When Will the Amendments to the Arbitration Act Apply to Proceedings?

Sections 1 to 14 of the 2025 Act will come into force on a commencement date (or dates) specified by the Secretary of State by way of a statutory instrument (or instruments). 

Each amendment made by sections 1 to 14 of the 2025 Act will only apply to arbitration or arbitration-related court proceedings commenced on or after the date on which the relevant section comes into force. Additionally, the amendments will not apply to court proceedings (whenever commenced) which are connected to arbitration proceedings (or awards made in such proceedings) that commenced prior to the relevant section entering into force.

Amendments to the Arbitration Act

Once the relevant sections of the 2025 Act enter into force, several amendments will be made to the Arbitration Act. The main changes will be as follows: 

1. The law governing the arbitration agreement 

The common law approach for determining the governing law of an arbitration agreement was set out by the Supreme Court in Enka v. Chubb Russia and Chubb Europe, [2020] UKSC 38, 9 October 2020 (“Enka v Chubb”). In summary, the Supreme Court held that: 

• If the arbitration agreement is contained within a contract that specifies the governing law of the contract, but no governing law has been specified for the arbitration agreement itself, then generally the governing law of the contract will apply to the arbitration agreement; 
• If the seat of arbitration is in a different country to the governing law of the remainder of the contract, this would not by itself negate the assumption that the parties intended the governing law of the contract to apply to the arbitration agreement; and
• If no governing law has been specified in the contract or the arbitration agreement, then the court must determine which law is most closely connected to the arbitration agreement, which will generally be the law of the seat if a seat has been specified in the arbitration agreement.

Section 1 of the 2025 Act will insert a new section 6A into the Arbitration Act and will replace the common law position in Enka v. Chubb. The new section 6A will contain a default rule that the law applicable to an arbitration agreement will be the law that the parties expressly agree will apply to the arbitration agreement, or if the parties have not made an express choice, the law of the seat of the arbitration. It also confirms that the governing law of the contract in which the arbitration agreement is contained would not constitute an express choice of law to govern the arbitration agreement. 

2. A statutory duty of disclosure

Section 2 of the 2025 Act will insert a new section 23A into the Arbitration Act, which will codify the general duty of disclosure that the Supreme Court set out in Halliburton v. Chubb Bermuda [2020] UKSC 48, 27 November 2020. The new section 23A will require an arbitrator to disclose “circumstances that might reasonably give rise to justifiable doubts as to the individual’s impartiality in relation to the proceedings, or potential proceedings” of which the arbitrator is aware or ought reasonable be aware. This duty of disclosure applies both prior to and after the arbitrator’s appointment.

3. Arbitrator immunity will be extended

Sections 3 and 4 of the 2025 Act will extend the scope of arbitrator immunity contained in sections 24 and 25 of the Arbitration Act. Firstly, section 3 of the 2025 Act will confirm that if proceedings have been brought for the removal of the arbitrator, the court may not order an arbitrator to pay the costs of these proceedings, unless the underlying act or omission of the arbitrator is shown to have been in bad faith. Secondly, section 4 of the 2025 Act will provide that when an arbitrator resigns, this will not give rise to any liability to the parties unless the arbitrator’s resignation is shown to be unreasonable in all the circumstances. However, the parties and the arbitrator will still be able to agree on the arbitrator’s entitlement to any fees or expenses under section 25(1) of the Arbitration Act, and the court may still make an order for payment or repayment of the arbitrator’s fees under section 25(3) of the Arbitration Act.

4. Power to make awards on a summary basis

Early determination or summary disposal procedures are included in many institutional rules, including in the LCIA, SIAC and HKIAC rules, but the Arbitration Act lacked an express provision covering this.

Section 7 of the 2025 Act will insert a new section 39A into the Arbitration Act, which will grant arbitral tribunals the power to make an award on a summary basis, following an application made by a party, if the tribunal considers that a party has no real prospect of succeeding on the claim or issue or in the defence of the claim or issue. Parties can agree to exclude the power of summary disposal. 

5. Emergency arbitrators

It is possible under various institutional rules, including the LCIA, ICC and CIArb rules, to appoint emergency arbitrators on an interim basis before the arbitral tribunal is fully constituted. However, there were no provisions in the Arbitration Act which dealt with this. 

Section 8 of the 2025 Act will insert a new section 41A into the Arbitration Act and will amend other sections, which will support the enforcement of peremptory orders made by emergency arbitrators, where the appointment of emergency arbitrators is permitted under the applicable rules of the arbitration. These provisions will grant enforcement powers to emergency arbitrators for peremptory orders and will grant emergency arbitrators the power to permit the parties to apply to the court under section 44 of the Arbitration Act.

6. Third parties and Section 44 of the Arbitration Act

Section 9 of the 2025 Act will amend section 44 of the Arbitration Act to clarify that the court can exercise its powers contained in section 44 in relation to a party or a third party. These powers include making orders in relation to the taking of witness evidence and preservation of evidence. Additionally, section 9 of the 2025 Act will amend section 44(7) of the Arbitration Act, to clarify that a third party does not require the court’s permission for an appeal of a decision under section 44.

7. Challenging a tribunal’s jurisdiction 

A party may ask the court to rule on whether a tribunal has jurisdiction by: 

• Invoking section 32 of the Arbitration Act, through which the court can decide as a preliminary point whether a tribunal has jurisdiction (subject to all the parties agreeing to or the tribunal permitting such an application); or 
• Invoking section 67 of the Arbitration Act and challenging the tribunal’s ruling on jurisdiction in an award. Under this procedure, it is presently possible for a full rehearing on jurisdiction to take place before the court even if a full hearing on jurisdiction has taken place before the tribunal. 

Section 5 of the 2025 Act will amend section 32 of the Arbitration Act to clarify that section 32 can only be invoked if the tribunal has not yet ruled on its jurisdiction. 

Sections 10 and 11 of the 2025 Act will amend section 67 of the Arbitration Act to clarify the procedure and remedies for challenging the award in relation to jurisdiction. The effect of the amended procedure is that if a tribunal has ruled on its own jurisdiction, and a party has taken part in the arbitral proceedings, then unless it is in the interest of justice, the court will not:

• Hear new grounds of objection or new evidence, unless such a ground or evidence could not have been put before the tribunal through acting with reasonable diligence; or 
• Rehear evidence. The new remedies will include that a court may remit the award for reconsideration or declare the award to be of no effect.

Conclusion

Once the relevant sections of the 2025 Act enter into force, several important changes will be made to the Arbitration Act that should make arbitration in the UK more efficient, transparent, and attractive for both domestic and international parties. As a result, it is hoped that the UK will remain a first choice for international arbitration and dispute resolution.

About the author

Saskia Wolters is an Associate in the London office of Clyde & Co, specialising in complex international arbitration and commercial litigation, relating to energy, international trade and financial services. She has extensive experience of disputes in the English courts and of international arbitrations under LCIA and ICC rules.