The Arbitration Act 2025 – Key changes to the rules governing arbitration in England and Wales

Since 1996, the framework for arbitration in England and Wales has been provided by the Arbitration Act 1996 (the "AA 1996").

In 2021, the Law Commission was tasked by the Ministry of Justice with reviewing AA 1996, to determine whether any amendments were required to ensure that it remains fit for purpose and continued to promote England and Wales as a leading centre for commercial arbitration.

After a lengthy consultation and legislative process, the result of that work is the new Arbitration Act 2025 (the "2025 Act"), which received royal assent on 24 February 2025. It does not represent new law yet, but will be enacted through rules of court as soon as practicable.

The 2025 Act will make a number of changes to AA 1996, the most significant of which are explained below.

Section 67 of AA 1996 allows a party to challenge an arbitration award, by making an application to the English courts on the ground that the tribunal lacked substantive jurisdiction.

As the law currently stands, a section 67 application takes the form of a full rehearing by the court. This is so even if the arbitral tribunal has determined the question of its jurisdiction following a full hearing on the issue.

This effectively provides a party challenging the jurisdiction of a tribunal with a second bite of the cherry, accompanied with the opportunity to seek to improve its arguments and to obtain new evidence to address any deficiencies in its case based on the reasons given in the tribunal's decision.

The Law Commission's report acknowledged a prevailing view that this was an area in need of reform and has addressed the issue accordingly.

The 2025 Act disposes of the automatic right to a full rehearing. Instead, it directs that rules of court are to be made pursuant to which, unless the interests of justice require otherwise, (a) there shall be no re-hearing of evidence that was put before the tribunal and (b) no new grounds of objection or new evidence will be considered unless the appellant can show that the ground for objection or evidence could not have been put before the tribunal, using reasonable diligence. 

Under English law, the arbitration agreement is severable from the contract in which it is contained. As such, there has long been a debate as to which law governs the arbitration agreement in the absence of an express choice.

Many users of arbitration may (not unreasonably) assume that the parties' choice of law to govern the underlying contract would also govern the arbitration agreement. Indeed, this was the position adopted in common law, as confirmed by the Supreme Court in the case of Enka v Chubb. However, this principle was subject to a number of exceptions, creating a complex and uncertain picture.

The 2025 Act resolves this uncertainty by confirming that, in the absence of an express choice of law to govern the arbitration agreement, it shall be governed by the law of the seat of the arbitration.

This reflects the position under certain institutional rules of arbitration, including the LMAA and LCIA rules. However, other rules, notably the ICC rules, are silent on the issue.

This is significant because the law of the arbitration agreement will be applicable, for example, to disputes as to whether a party is bound by the arbitration agreement, the validity of the arbitration agreement and the extent to which an arbitration award can be challenged on appeal.

Parties would therefore be well advised to include an express choice of law to govern their arbitration agreements or, alternatively, to expressly state the seat of any arbitration. 

Under AA 1996, there was no express power for a tribunal to dispose of issues summarily. 

Tribunals do have an implicit power of summary disposal, pursuant to the general powers under AA 1996 and also under certain institutional rules. However, there is sometimes perceived to be a reluctance on the part of tribunals to use this power for fear of being accused of breaching the duty to give each party a reasonable opportunity to put its case.

The 2025 Act introduces a new express power for the tribunal to dispose of an issue on a summary basis, if a party has no real prospect of succeeding on that issue. This is broadly in line with the test for the English courts to issue summary judgment.

This amendment is intended to encourage the efficient resolution of disputes. Part of the Law Commission's rationale in this respect, is to reassure arbitrators and foreign courts asked to enforce awards made in England as to the propriety of summary disposal.

The Supreme Court decision in Halliburton v Chubb confirmed that arbitrators have a common law duty to disclose any circumstances that may reasonably give rise to doubts as to their impartiality.

The 2025 Act places this duty on a statutory basis and arguably goes further, clarifying that the duty of disclosure extends to what the arbitrator ought reasonably to have known, as opposed to simply what was within their actual knowledge. 

The 2025 Act has strengthened arbitrators' immunity from liability to the parties.

A distinction has been made between the arbitrator's liability in the event of (a) their resignation and (b) an application for their removal.

In the case of resignation, arbitrators will not face any liability to the parties unless the resignation is found to be unreasonable.

In the case of an application for the arbitrator's removal, there will be no liability unless the arbitrator is found to have acted in bad faith.

Certain institutional arbitration rules allow the parties to appoint an emergency arbitrator, including the LCIA and ICC. 

The Law Commission considered, but ultimately rejected, the possibility of amending AA 1996 to provide for the appointment of emergency arbitrators.

However, the 2025 Act will amend the existing legislation to extend certain powers to apply to emergency arbitrators.

Under the 2025 Act, emergency arbitrators will be entitled to make peremptory orders, which can be enforced by the court in the event of non-compliance.

Emergency arbitrators will also have the power to grant the parties permission to apply to the court for an order under section 44 of AA 1996. This includes, for example applications relating to the preservation of evidence and the taking of witness evidence.

The 2025 Act amounts to fine tuning of the AA 1996, rather than a comprehensive overhaul.

The changes will improve the efficiency of the arbitral process and have generally been welcomed by the arbitration community.

That said, the changes made by the 2025 Act are significant. Users of arbitration would be well advised to consider whether it would be prudent to amend the arbitration agreements in their contracts in light of the incoming regime.