The English Arbitration Act 2025: Developments in the Lex Arbitri of a Leading Jurisdiction for International Arbitration

Will the Arbitration Act 1996 in Its Original Guise Continue to Apply?

Yes. The Arbitration Act 2025 (AA 2025) does not render the Arbitration Act 1996 (AA 1996) obsolete. To the contrary, the AA 1996 in its original guise will continue to govern arbitration proceedings seated in England and Wales that were commenced before the AA 2025 entered into force.

This remains a positive thing for existing international arbitrations seated in England and Wales. The AA 1996 embodies the jurisdiction’s arbitration-friendly statutory policy. It is expressly founded on the notion of party autonomy, striving to honour how parties agree to have their disputes resolved. It also limits the bases for challenging arbitral awards and restricts the extent to which the English court can intervene in arbitral proceedings. That is why the AA 2025 did not set out to demolish and rebuild the legal framework of the AA 1996 entirely but only to ‘fine tune’ it.

When Do the Amendments Introduced by the Arbitration Act 2025 Start to Apply?

Subject to any transitional arrangements put in place by the Secretary of State, the AA 2025’s amendments will start to apply to all arbitral proceedings seated in England and Wales that are commenced after its entry into force. It does not matter if the arbitration agreement giving rise to those proceedings is dated earlier; in terms of the AA 2025’s temporal application what matters is the date on which the arbitral proceedings themselves are commenced. This means that clients’ pre-existing contractual relationships, as well as disputes that are already crystallised but have not yet been submitted to arbitration, can benefit from the amendments introduced by the AA 2025.

What Particularly Noteworthy Amendments Does the Arbitration Act 2025 Introduce?

1. Settling the debate on the law applicable to arbitration agreements
   
   The AA 2025 introduces a new statutory rule providing that, in the absence of an express choice of law clause specifically applicable to the agreement to arbitrate recorded in the arbitration clause of the parties’ main agreement, the arbitration agreement shall be governed by the law of the arbitral seat, not by the applicable substantive law governing the parties’ substantive rights and obligations in the main agreement. Put differently, if parties wish to have disputes arising out of or in connection with the main agreement referred to arbitration seated in London, and, at the same time, wish their arbitration agreement to be governed by a law other than English law, they will now have to make that choice expressly, whether or not English law is the substantive law applicable to the main agreement. Absent that choice, English law would be the default law governing the arbitration agreement by virtue of London being the agreed arbitral seat. This new rule is a corollary of one of the cornerstones of international arbitration, namely that the agreement to arbitrate recorded in an arbitration clause is separate and independent from the main agreement that contains it. This has important practical implications for arbitration users. It is indeed the law governing the arbitration agreement which, in principle, will determine, among other things: (i) how the parties’ agreement to arbitrate is to be construed, (ii) whether a non-signatory party may be joined in proceedings instituted under that arbitration agreement, (iii) whether a particular dispute is arbitrable, and (iv) what disputes might fall within the scope of the arbitration agreement.
2. Imposing a duty of impartiality on arbitrators
   The AA 2025 introduces a new statutory rule codifying the English common law duty of impartiality on arbitrators. The new rule imposes this duty on arbitrators prior to their appointment; for example, when they are first approached in connection with their possible appointment. It also imposes this duty on arbitrators after their appointment, such that it is an ongoing duty that persists until they become functus officio. To fulfil their duty in both respects, arbitrators (including prospective arbitrators) must disclose circumstances that might reasonably give rise to justifiable doubts as their impartiality in relation to the arbitration. Importantly, that duty extends to circumstances of which the arbitrator (or prospective arbitrator) is aware and of which they ought reasonably to be aware. The new rule does not set out what needs to be disclosed and in what circumstances. However, it was drafted intentionally in that way to reflect that practices differ across industries and jurisdictions. This is another welcome amendment that reinforces international arbitration as a dispute resolution mechanism for ensuring a level playing field between disputing parties.
3. Extending the immunity of arbitrators
   Arbitrators already enjoyed immunity from suit under the AA 1996. Amendments introduced by the AA 2025 now extend that immunity so that an arbitrator will not be liable for any actions or omissions in the (purported) discharge of their duties unless they acted in bad faith. Similarly, an arbitrator will not be liable for the costs of a party’s application to court to be removed unless the arbitrator has acted in bad faith.  These are beneficial amendments because, by mitigating their exposure to collateral challenges by parties who are unhappy with their rulings, arbitrators can continue to make robust and impartial decisions.
4. Protecting the competence of arbitral tribunals to rule on their own jurisdiction
   It is a fundamental principle of internation arbitration worldwide that an arbitral tribunal has jurisdiction to rule on its own jurisdiction (commonly referred to as the ‘competence-competence’ principle).  The AA 2025 reinforces that principle by limiting the intervention of the English court into questions concerning an arbitral tribunal’s jurisdiction in two main ways.  First, the AA 2025 precludes a disputing party from applying to the English court to decide whether an arbitral tribunal has jurisdiction by way of a preliminary point of law in circumstances where the arbitral tribunal itself has already decided the same jurisdictional question.  Second, the AA 2025 empowers the Civil Procedure Rules Committee to draft new Civil Procedure Rules that preclude the English court from considering an application to challenge an arbitral tribunal’s award based on its (alleged) lack of jurisdiction in circumstances where that challenge is based on the same legal grounds and/or evidence that were raised (or could have been raised) before the arbitral tribunal—in other words, there can be no ‘retrial’ before the English court on jurisdictional issues already decided by the arbitral tribunal unless it is necessary in the interests of justice.  These amendments are particularly attractive for guarding against parties enjoying a second bite of the same apple, while still granting the English court the final say on de novo jurisdictional issues.
5. Empowering arbitral tribunals to dismiss claims and defences summarily
   While most institutional arbitration rules already allow arbitral tribunals to dismiss manifestly unmeritorious claims summarily to avoid wasting time and costs in protracted arbitral proceedings, the AA 1996—like most national arbitration laws—made no express provision for this.  Arbitrators were, therefore, sometimes reluctant to take advantage of their powers of summary disposal under institutional rules for fear of having their decisions challenged before the court at the arbitral seat on due process grounds.  However, the AA 2025 has now introduced a new statutory rule empowering arbitral tribunals to dispose of claims or defences that lack any real prospect of success at an early stage in the arbitration.  This should improve the efficiency of international arbitrations seated in England and Wales (including ad hoc arbitration proceedings, for which no set of institutional rules envisaging the summary disposition of claims or defence exists), particularly to prevent parties incurring unnecessary time and costs engaging with spurious claims or defences.  That said, arbitral tribunals must take care to ensure that summary disposal does not become a routine step invoked by one party simply to delay the proceedings.
6. Extending the English court’s powers to support arbitral proceedings
   The English court has long endeavoured to support arbitrations seated in England and, in certain specific circumstances, even outside England. This support is now enhanced by two amendments introduced by the AA 2025. First, in laying to rest much legal uncertainty, the AA 2025 clarifies that the English court can exercise its powers to support arbitral proceedings over third parties, even if they are not a party the arbitration. This includes the court’s powers relating to the taking and preservation of evidence, property orders, sale of goods, interim injunctions and appointing receivers. Second, it empowers emergency arbitrators appointed under the rules that the parties have selected in the resolution of their disputes to make a peremptory order, and, in cases of non-compliance, ensures that the order can be enforced by the English court (in the same way as the English court would enforce orders of ‘normal’, i.e., non-emergency, arbitral tribunals).

Conclusion

As is clear, the AA 2025 introduces several noteworthy amendments to the AA 1996, particularly in strengthening the powers of arbitrators and emergency arbitrators, enhancing support for arbitral proceedings seated within the jurisdiction of the courts of England and Wales, and updating statute in line with developments in international arbitral practice and English common law. That said, certain proposed amendments to the AA 1996 did not make the final cut of the AA 2025. For example, despite the Law Commission having advocated hard for a prohibition of discrimination in the appointment of arbitrators, the AA 2025 features no such provision (for instance, one requiring that an arbitrator have a nationality different from the parties).

Nevertheless, the amendments that have been introduced by the AA 2025 present strategic reforms to the AA 1996 that posit England and Wales as one of the most robust, arbitration-friendly jurisdictions worldwide. It is also good news for arbitration users that we should see the benefits of these amendments imminently, with the UK government having indicated that they will be enacted through regulations as soon as possible.