A new UK Arbitration Act 2025: The draft Arbitration Bill receives Royal Assent

The Arbitration Act 2025 received Royal Assent on Monday 24 February 2025. It is set to come into force through regulations on a day to be appointed by the Secretary of State.

The new Act will apply to arbitration proceedings commenced after the date of its entry into force (as well as to court proceedings brought in respect of arbitration proceedings commenced after that date).

Although the new Act is a culmination of a Law Commission review and consultation, the aim has always been to fine-tune rather than to overhaul the Act, with the aim of ensuring that the UK continues to be a leading destination for commercial arbitration. This objective is borne out by the reforms that have been introduced.

What will change?

The reforms to the Arbitration Act 1996 largely reflect the recommendations made by the Law Commission in its Final Report dated 6 September 2023. As summarised in our previous blogpost here, the key reforms contained in the new Act are as follows:

• Codification of arbitrators' duty of disclosure: Prospective and sitting arbitrators must disclose any relevant circumstances of which they become aware which might reasonably give rise to justifiable doubts as to their impartiality in relation to the (potential) proceedings. This duty is based on what the arbitrator ought reasonably to know rather than just actual knowledge.
• Strengthening of arbitrator immunity around resignation and removal: Arbitrators should incur no liability (i) for resignation unless the resignation is proved to be unreasonable, and (ii) in respect of the costs of an application for their removal, unless they have acted in bad faith.
• Introduction of a power of summary disposal: The Bill gives a tribunal the power to make an award on a summary basis (upon an application made by a party) if it considers that a party has no real prospect of succeeding on the claim/defence or issue.
• Improvements to the framework and procedure for challenges under section 67: The Bill permits new court rules which would prevent the Court from re-hearing evidence that has already been heard by a tribunal and would restrict parties' ability to raise new grounds or evidence, subject to the Court ruling otherwise in the interests of justice. 
• Introduction of a new default rule regarding the governing law of an arbitration agreement: Unless the parties expressly agree otherwise, the law of the arbitration agreement shall be the seat of the arbitration.
• Clarification of the court's powers in support of arbitral proceedings and in support of emergency arbitrators: The Bill confirms that orders under s44 of the Act (e.g. for the preservation of evidence) are available against third parties. The Bill also empowers emergency arbitrators both to: (i) issue peremptory orders (which can result in court-ordered compliance under s42 of the Act); and (ii) give permission for applications to the Court under s44(4).
• Jurisdictional objections: The Bill also amends s32 of the Act (determination of a preliminary point of jurisdiction) so that it is only available where a tribunal has not already made a ruling on jurisdiction. The Bill also amends the Act so that an arbitral tribunal has the power to award costs despite a finding that it has no substantive jurisdiction.

Comment

Although it is unlikely that the enactment of the Act will lead to any immediate significant changes in arbitral practice or procedure, there are a number of practical impacts for parties and others involved in arbitration to consider. For example:

• Parties may wish to include an express law of the arbitration agreement in their contracts, particularly where their contract is governed by English law but the seat is not in England.
• Parties planning on bringing jurisdictional objections may wish to give careful thought to their approach based on the range of available options (e.g. whether to bring a preliminary objection to jurisdiction under s32, whether to participate in the arbitration and bring their jurisdictional challenge and/or whether to bring a s67 challenge after the arbitration has concluded).  
• Parties may wish to consider whether they should invoke the tribunal's power of summary disposal (in the appropriate cases).
• Although the codification of arbitrators' duty of disclosure does not depart from current practice, it is a reminder for arbitrators carefully to consider what disclosures they make and to ensure that they make inquiries where appropriate.
• Arbitral institutions may wish to revisit their rules to consider whether any changes are desirable for the purposes of consistency with the Act (e.g. in relation to any existing provisions on summary disposal and the law of the arbitration agreement).
   

Andrew Cannon, Global Co-Head of our International Arbitration practice commented: "It is excellent news that this new Arbitration Act 2025 has now been adopted and granted Royal Assent. The changes will ensure that the arbitration legislation in England & Wales remains at the forefront of modern arbitral law and that London secures its place as a pre-eminent seat of arbitration. It has been a commendably efficient process, from the Law Commission's initial paper and the comprehensive consultation process that followed, through to the Bill's passage in and ultimate adoption by Parliament. Although the reforms are aimed at fine-tuning rather than comprehensively reforming the Act, parties should soon see real efficiency benefits – particularly when it comes to jurisdictional objections in the courts and the new power for tribunals summarily to dispose of cases and issues. We are excited to talk to our clients about the changes."

For more information, please contact Andrew Cannon, Liz Kantor, or your usual Herbert Smith Freehills contact.