The substantive provisions of the Arbitration Act 2025 (the “2025 Act”) entered into force on 1 August 2025 via The Arbitration Act 2025 (Commencement) Regulations 2025.
The long-awaited 2025 Act amends the Arbitration Act 1996 (the “1996 Act”), which was reviewed by the Law Commission with the aim of reinforcing London’s status as a leading destination for international arbitration, and to align the UK’s legislation with recent reforms in other global arbitration hubs. The Law Commission’s full report is available here.
The 2025 Act follows earlier reform efforts by the previous government, which were shelved following the 2024 election. Soon after the new government took office, it reintroduced an almost identical bill to the House of Lords, where it received strong cross-party support. Baker McKenzie produced a progress tracker for the Arbitration Bill, which tracked its progress through parliament. The latest version of the tracker is available here.
The new provisions apply to arbitrations and arbitration-related court proceedings starting on or after 1 August 2025. We have summarised the key changes introduced by the 2025 Act below, and would encourage you to reach out to our team should you have any questions about the impact of the new provisions.
Governing Law
Where the arbitration agreement is silent as to the governing law, it will be governed by the law of the seat.
This provision departs from the previously applied test established in Enka v Chubb, whereby the law of the matrix contract was implied as the governing law of the arbitration agreement in circumstances where the parties had not expressly provided for it. Under the common law position, many arbitration agreements ended up being governed by foreign law, even in circumstances where the seat of the arbitration was England and Wales. The 2025 Act seeks to remedy this and in turn provide greater certainty, in particular in English-seated arbitrations where the law is supportive of arbitration generally.
As a result, careful thought should be given to the governing law of an arbitration agreement at the drafting stage. If the parties intend for any potential dispute about the arbitration agreement itself to be governed by the law of a jurisdiction distinct from the seat, this must be expressly provided for in the arbitration agreement.
Challenges to Jurisdiction and the Award
The 2025 Act makes a number of updates concerning challenges.
It provides clarity on the application of section 32 of the 1996 Act (“Determining a preliminary point of jurisdiction”), as amended. Under the new provisions, a challenge may only be made to the court where the tribunal has not yet ruled on an objection to its jurisdiction. Where the tribunal has already ruled on the issue, a party may only bring a challenge under section 67 of the 1996 Act (“Challenging the award: substantive jurisdiction”), as amended.
Additional wording has also been added to this section to limit the ability of the court to set aside an award or declare it to be of no effect, i.e. a court must not exercise its power to do so unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration. Additionally, the 2025 Act provides for new rules of procedure in respect of an application under section 67. Notably, an applicant will not be entitled to a full re-hearing where a tribunal has already ruled on the challenge, nor will the applicant be permitted to rely on any evidence or argument that was not heard by the tribunal at the original hearing (subject to two narrow exceptions).
The 2025 Act also provides that where a tribunal is determined (by itself or a court) not have to jurisdiction over a dispute, the tribunal can nevertheless determine the award of costs of the arbitral proceedings up until that point in time.
As we noted in the Arbitration Bill Progress Tracker, the new provisions will have implications for how a party may challenge the tribunal’s substantive jurisdiction, and the remedies available to it.
Arbitrators’ Duty of Disclosure
Arbitrators will now be bound by a statutory duty to disclose, on a continuing basis, any circumstances that “might reasonably give rise to justifiable doubts” about their impartiality. This includes circumstances which the arbitrator has actual knowledge of, or ought reasonably to have known. This statutory duty is consistent with the general duty of disclosure that was already incumbent on arbitrators per the test established in Halliburton v Chubb, but is seen to strengthen it.
The wording of this update is grounded in the consensus that complete independence is neither realistic nor achievable, but that arbitrators still need to disclose any connections to the proceedings in order to allow the parties to make informed decisions about their choice of arbitrator (without imposing too onerous of a duty on arbitrators). The update also aligns the UK’s legislation with the UNCITRAL model law, some arbitral rules and other foreign legislation, all of which already contain a codified duty of disclosure.
Arbitrator Immunity
The new provisions strengthen existing protections for arbitrators. Under the 1996 Act, arbitrators were protected from liability for any actions or omissions in the discharge of their functions, unless that act or omission could be shown to have been in bad faith. The 2025 Act broadens the scope of these protections to include circumstances where an arbitrator:
- is removed following a successful application by a party to the arbitration. The arbitrator will be protected from liability for the costs of the removal application (though the bad faith exception still applies). This amendment reverses the common law position whereby the court could order the arbitrator to pay those costs.
- resigns of their own accord. In this circumstance, an arbitrator will not incur liability unless the resignation is found to be unreasonable taking into account all of the circumstances.
In recommending the additional protections, the Law Commission emphasised the importance of arbitrator immunity in order to support arbitrators to make robust and impartial decisions without fear that a party will seek retribution, and to promote finality by preventing a party who is disappointed with the outcome of the proceedings from bringing an action against the arbitrator/s.
Summary Judgment
Arbitrators are now expressly empowered to issue summary awards where a claim or defence has no real prospect of success (i.e. the same test applied by the English courts). Note, however, that this provision is not mandatory – parties have the option to ‘opt out’ of this default rule.
By codifying arbitrators’ existing power to issue summary awards, it is hoped that this will bolster efforts to prevent vexatious claims from progressing and unnecessary costs being incurred.
Emergency Arbitrators
The new provisions apply if an arbitration is governed by arbitral rules that provide for the appointment of emergency arbitrators where the tribunal has not yet been fully constituted, and an emergency arbitrator has been appointed pursuant to those rules.
The 1996 Act did not provide for emergency arbitrators because the practice of appointing an emergency arbitrator on an interim basis to deal with urgent applications post-dated the introduction of the Act.
The 2025 Act expressly recognises this practice and provides that emergency arbitrators may issue peremptory orders where a party fails to comply (without showing sufficient cause) with any order or directions of the emergency arbitrator. In addition, the court is now expressly empowered to enforce such orders made by emergency arbitrators.
Third Parties
There was some uncertainty under existing case law as to whether the court had the power to make orders against third parties under section 44 of the 1996 Act. This has been remedied by the 2025 Act.
The new legislation brings into alignment the powers of the court in respect of third parties in arbitral proceedings with the powers of the court in litigation proceedings. In other words, the court may make orders compelling third parties to engage with the arbitration process. Such an order may relate to the grant of interim injunctions, the preservation and collection of evidence or the sale of goods, for example.
Importantly, the 2025 Act also provides an express right of appeal for third parties subject to such an order without having to apply for leave of the court.
Conclusions
These changes aim to address shortcomings in the 1996 Act, while preserving the existing workable framework for English-seated arbitrations. The 2025 Act is the culmination of considerable consultation by the Law Commission with the arbitration community, and reflects, in almost identical terms, many of its recommendations for reform.
The Government hopes the 2025 Act will help London remain a leading centre for international arbitration, especially amid growing competition from Paris and Singapore.
Should you have any questions about the 2025 Act or its implications, please get it touch with our team.
