The UK Arbitration Act 2025, which received Royal Assent on 24 February 2025 (the “Act”), introduces several significant reforms aimed at modernizing the arbitration process and reinforcing the UK's position as a leading destination for dispute resolution by providing amendments to the Arbitration Act 1996 (the “AA 1996”).
Key Changes Introduced by the Arbitration Act 2025:
1. Law Governing the Arbitration Agreement
• The Act establishes a new statutory rule that the law governing the arbitration agreement will default to the law of the seat of arbitration, unless the parties have expressly agreed otherwise.
• Previously, following the Supreme Court’s decision in Enka v Chubb, an arbitration agreement was typically governed by the law of the underlying contract unless expressly stated otherwise.
• The change aims to enhance legal certainty and streamline arbitration proceedings.
2. Jurisdictional Challenges
• The Act clarifies that if a tribunal has ruled on its jurisdiction and the challenging party participated in the arbitration proceedings, parties cannot seek a separate court ruling on the same issue.
• Instead, they must choose between applying for a court ruling under Section 32 of the AA 1996 or challenging the tribunal's jurisdictional decision under Section 67 of the AA 1996.
• New jurisdictional objections cannot be raised in the English courts unless they could not have been discovered with reasonable diligence during the arbitration.
• New evidence is only admissible if it could not have been submitted earlier with reasonable diligence.
• Previously submitted evidence will not be re-heard unless the court deems it necessary in the interests of justice.
• This change is expected to reduce the duration and costs of many jurisdictional challenges in the English courts.
3. Summary Disposal
• Arbitrators are now explicitly empowered to summarily dismiss claims, defences, or issues that have no real prospect of success.
• This aligns with the threshold test used for summary judgment in the English courts. However, parties retain the option to opt out if they prefer.
• This provision aims to enhance the efficiency of arbitration by allowing for the expedited resolution of unmeritorious claims.
4. Interim Relief
• The Act clarifies that, unless otherwise agreed by the parties, courts have the same authority to order relief against third parties in arbitration as they do in court litigation.
• This resolves long-standing uncertainty about the English courts’ powers to issue orders against third parties by way of interim relief in support of arbitration proceedings.
5. Emergency Arbitrators
• The Act strengthens the role of emergency arbitrators by granting them powers similar to those of regular arbitrators, including the enforcement of peremptory orders and the ability to seek court assistance.
• This enhancement ensures that urgent matters can be addressed effectively within the arbitration framework.
6. Other Notable Changes
• Arbitrators now have a duty to disclose any circumstances that might reasonably cast doubt on their impartiality.
• Arbitrators are now granted extended immunity from liability in the event of resignations and for the costs of applications seeking their removal.
• Court procedures related to arbitration have been simplified to improve clarity, reduce delays, and minimize costs for parties involved.
To summarise, the Act is designed to make arbitration in the UK more efficient, fair, and attractive to both domestic and international businesses, thereby supporting economic growth and maintaining the UK's competitive edge in legal services.
The Act can be read here: https://www.legislation.gov.uk/ukpga/2025/4/enacted
