The Arbitration Act 2025 (the “2025 Act”) came into force on 1st August 2025, and implements the most significant reform of the statutory framework for arbitration in England and Wales since the Arbitration Act 1996 (the “1996 Act”).
The main objectives of the 2025 Act are to enhance fairness and efficiency of London seated arbitrations, and further embed London’s status as a leading global hub for arbitration.
The 2025 Act changes will primarily affect parties to London seated arbitration agreements, where proceedings are commenced on or after 1st August 2025. The changes will be also be a key consideration for those negotiating arbitration agreements. Arbitral proceedings commenced before 1 August 2025 will not be affected.
Key changes
1. Applicable law
The 2025 Act introduces new rules for determining the law applicable to an arbitration agreement i.e., (in brief):
- contracting parties remain free to agree the law governing the arbitration agreement;
- where (i) is not agreed, the law applicable to arbitration agreements is the law of the seat of the arbitration; and
- agreement of the law governing the main contract(s) will not constitute agreement that the same law applies to the agreement to arbitrate.
In end effect, arbitration agreements are now governed by the law of the arbitral seat, unless the parties explicitly agree otherwise.[1]
This is a helpful clarification. It reduces scope for argument relative to the previous rules at English common law. It also and broadens the range of arbitrations supported by the English statutory arbitration framework. For example:
- Up to 2020 the rule in Sulamérica Cia Nacional de Seguros SA v Enesa Engenharia SA and others [2012] EWCA Civ 638 applied. This meant that absent express or implied agreement, the law applicable to the arbitration agreement would typically be the system of law with the ‘most real connection’. This proved a source of satellite disputes, and the English courts’ application of this test attracted criticism as being less than consistent.
- In 2020, the Supreme Court’s 2020 decision in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38 revised the previous common law rules. This gave considerable weight to the choice of law governing the main contract. Often the choice of law governing the main contract would be extended to the arbitration agreement. As a result, parties to contracts governed by other systems of law were not afforded the support and clarity of the 1996 Act.[2]
The 2025 Act changes resolve these issues. London seated arbitration agreements that are silent on which law applies to the arbitration agreement will now typically be governed by English law – even if the wider contractual and factual matrix concerns different jurisdictions and/or governing law.
2. Summary disposal
Arbitral tribunals now have the power to summarily dismiss claims or defences that do not have real prospects of success where parties have not agreed to exclude this power. Section 7 of the 2025 Act[3] establishes clear powers for tribunals to issue an award on a summary basis – either dismissing such a claim or defence entirely, or to resolve a specific issue,
This is designed to minimise time and costs spent where a party’s case is clearly without merit, either overall or on a specific issue. The new powers also harmonise English arbitration procedure with English civil litigation procedure on this point,[4] and empowers tribunals to efficiently dispatch spurious claims and defences.
The changes are a welcome addition to the procedural tools available to keep costs proportionate, streamline arbitral proceedings, and minimise the impact of nuisance claims, defences, and satellite disputes.
3. Jurisdictional challenge
Prior to the 2025 Act, challenge of an arbitral award on the basis that the tribunal lacked substantive jurisdiction could involve a full ‘rehearing’ in court – typically a costly and time-consuming process. The 2025 Act addresses this by adopting a review-based model to reduce the need for full rehearing of arbitrated disputes.
Following the 2025 Act, if the arbitral tribunal has already ruled on its jurisdiction, and the objecting party participated in that process, then the grounds and evidence available for jurisdictional challenge are restricted.[5] For example, such a jurisdictional challenge:
- cannot be based on new ground(s) or evidence – unless the applicant shows that it did not know, and could not reasonably have discovered these during the arbitration proceedings; and
- cannot involve the Court rehearing evidence that was heard by the arbitral tribunal.
This bolsters the tribunal’s decision-making competence, and reduces the risk of parties tactically engaging through arbitration, only to later duplicate the time and cost involved by litigating matters it could have reasonably discovered during arbitration.
4. Emergency arbitrators’ powers
The 2025 Act introduces a new mechanism for emergency arbitrators.[6] This provides clear powers for emergency arbitrators to issue peremptory orders, which prescribe a time for compliance with the emergency arbitrator’s original order. The 2025 Act changes also give clarity on the enforceability of peremptory orders.
Together, these add clarity to the rules governing emergency arbitrators’ powers, and boost the appeal of London as a seat for arbitral dispute resolution. They also have important implications for parties seeking interim relief to protect commercial interests and construction timescales – particularly in situations where there is insufficient time for constitution of a full arbitral tribunal.
5. Arbitrators’ immunity
Under the 1996 Act, arbitrators enjoy broad immunity. Arbitrators are typically not liable for anything done or omitted in the discharge of their functions as an arbitrator, unless the arbitrator acted (or failed to act) in bad faith.[7]
The 2025 Act expands arbitrators’ existing immunity under Section 3 – subject to similar exceptions regarding bad faith, a court which removes an arbitrator typically cannot order the arbitrator to pay costs.[8] This applies similarly to arbitrators who have reasonably resigned.[9]
6. Codified disclosure duties
Prospective and appointed arbitrators now have codified duties to disclose circumstances that “might reasonably give rise to justifiable doubts” as to their impartiality.
This duty of disclosure is broad and builds on the existing standard in Halliburton Company v Chubb Bermuda Insurance [2020] UKSC 48 – the duties apply both before,[10] and after[11] appointment. Such circumstances must be disclosed promptly where:
- a prospective arbitrator is approached in connection with a potential appointment;
- where an appointed arbitrator becomes aware of the same after they are appointed; and
- the duties apply irrespective of agreement between the parties to the contrary.
Guidance on what circumstances must be disclosed in specific situations is set out in the Rules of Ethics for International Arbitrators (1987), and the IBA’s Guidelines on Conflicts of Interest in International Arbitration (25 May 2024). For example, where an arbitrator “currently or regularly advises a party”, and “derives significant financial income therefrom.”[12]
If an arbitrator’s failure to disclose in line with the new duties is discovered during proceedings, parties may apply under section 24(1)(a) of the 1996 Act to remove the arbitrator. If discovered after an arbitral award, parties may challenge the award by an application under section 68 of the 1996 Act.
This change is particularly relevant given the continued expansion of the number of professional arbitrators acting in advisory and arbitral capacities in close knit construction and commercial circles. Accordingly, thorough due diligence on potential arbitrators’ backgrounds is vital to minimise the risk of actual (or reasonably inferred) bias that might undermine arbitral proceedings and/or any resulting award.
Comment
The 2025 Act offers a useful reform of the English statutory framework for arbitration. It implements measures to streamline arbitral proceedings, uphold robust impartiality requirements for arbitrators, and offers helpful interim measures for clients to protect their interests where time is of the essence. The changes cement London’s role as a key hub for international arbitration, and keeps pace with rules in competing jurisdictions.
To take advantage of the reforms, construction parties will need to ensure their contractual arrangements align with the latest changes, and deploy the 2025 Act provisions robustly where disputes cannot be resolved amicably.
[1] Arbitration Act 1996, section 6A; Arbitration Act 2025, section 1(2).
[2] Arbitration Act 1996, section 4(5).
[3] Arbitration Act 1996, section 39A as amended; Arbitration Act 2025 section 7.
[4] C.f., Civil Procedure Rule 24.3 which provides grounds for ‘summary judgment’ in English civil litigation.
[5] Arbitration Act 1996, section 67 as amended; Arbitration Act 2025, section 11.
[6] Arbitration Act 1996, section 41A; Arbitration Act 2025, section 8.
[7] Arbitration Act 1996, Section 29(1).
[8] Arbitration Act 2025, section 3.
[9] Arbitration Act 1996, section 25 (as amended); Arbitration Act 2025, section 4.
[10] Arbitration Act 1996 as amended; Arbitration Act 2025, section 23A(1).
[11] Arbitration Act 1996 as amended; Arbitration Act 2025, section 23A(2).
[12] IBA Guidelines on Conflicts of Interest in International Arbitration, Approved by the IBA Council, 25 May 2024, Part II (1) 1.4.