Changes to English arbitration law will require parties to reconsider the provisions of their arbitration agreements and will also provide a mechanism for the summary disposal of disputes

Whilst not imposing ‘root and branch reform’ important changes have been made by recent amendments to English arbitration law by the Arbitration Act 2025 (AA 2025), the aims of which are to simplify certain aspects of arbitration procedure making it more efficient and thereby maintaining London’s position as a forum of choice for international arbitration disputes. In this article, we consider the main changes made by the AA 2025 and as a result, why parties will need to check their arbitration agreements to ensure that their governing law provisions are clearly provided for. 

The AA 2025 makes a number of important amendments to the Arbitration Act 1996 (AA 1996) which will affect all users of arbitration. These amendments will be discussed in further detail below and include, amongst others, changes to the governing law of arbitration agreements, an arbitrator's duty of disclosure and immunity, the tribunal’s power to dispose summarily of a claim, court enforcement of orders made by emergency arbitrators, court orders against third parties in aid of arbitration and challenges to jurisdiction under s.67 of the AA 1996.  Several of the changes are mandatory, as opposed to the choice of the parties, and where this is the case, we will highlight this. 

Commencement of the new provisions

The AA 2025 received royal assent on 24 February 2025 and will amend existing provisions of the AA 1996 when the relevant statutory instrument is made bringing it into force. This date has yet to be determined. 

The AA 2025 amendments will only apply to arbitrations commenced on or following the day that the relevant section comes into force. As stated above, this is yet to be determined but means that parties to an existing arbitration agreement but where the arbitration itself has not yet commenced, may be subject to the changes.  Likewise, where the amendment relates to an application made before a court, the amendment will apply only to those court proceedings commenced once the AA 2025 is in force   and the arbitration also started after that date. We therefore advise parties to reconsider their current arrangements, in addition to future agreements, in light of the amendments and seek advise where appropriate. 

Key changes

Governing Law of arbitration agreements

The AA 2025 introduces a new default rule (as new section 6A of the AA 1996) that an arbitration agreement shall be governed by the law of the seat of arbitration in the absence of an express agreement to the contrary. This rule will apply irrespective of where the arbitration is seated. 

In addition, section 6A makes it clear that if the parties have stipulated a law governing the main law of the contract, but not the law governing the arbitration agreement, the new rule in the AA 2025 will apply and in that scenario the law of the arbitration agreement will be the law of the seat of the arbitration. This means that the law of the arbitration agreement will not always follow the governing law of the contract itself.

Section 6A, however disapplies the above rule in relation to an agreement to arbitrate contained in a treaty, or in legislation of a country or territory outside the United Kingdom. This means that the rule will not apply to investment treaty arbitrations.  

The rule still preserves parties’ choice, a central feature of English contract law, and retains the link between law of the seat and governing law where the parties opt for English law and law of the seat. This is intended to bring certainty by reversing the approach adopted by the Supreme Court in Enka v Chubb, and ensure that more London-seated arbitrations will benefit from the pro-arbitration approach of English law. What is interesting is that the amendment does not deal with the situation where the parties have not determined both the seat and the governing law of the arbitration. In this situation, it seems likely that the common law will have to step into this vacuum if necessary. 

Duty to disclose

Arbitrators have a common law legal duty to disclose to the parties any circumstances which might reasonably give rise to justifiable doubts about their impartiality. 

The AA 2025 codifies this duty to disclose in a new section 23A of the AA 1996, adopting the Supreme Court’s approach in Halliburton v Chubb. Under this new section an arbitrator must, as soon as reasonably practical, disclose to the person who approached them regarding their possible appointment any relevant circumstances of which the individual is, or becomes, aware, and as soon as reasonably practical, disclose to the parties to the arbitral proceedings any relevant circumstances of which the arbitrator is, or becomes, aware. The term “relevant circumstances” includes circumstances that might reasonably give rise to justifiable doubts as to the individual’s impartiality in relation to the proceedings, or potential proceedings. The arbitrator is to be treated as being aware of circumstances of which the “individual ought reasonably to be aware”. The duty of disclosure is based on what the arbitrator knew or ought reasonably to know, a point which was not dealt with in the Halliburton decision. 

The duty is a continuing one and also applies after the arbitrator’s appointment. This is a mandatory provision and therefore, the parties are unable to contract out of it. 

The section does not set out what the arbitrator must disclose as it is recognised that this will differ between sector, type of dispute and what may be required by institutional rules.  

Duty of immunity

The position of an arbitrator has been strengthened regarding immunity in relation to applications for their removal and resignation. The AA 1996 already protected arbitrators from liability in relation to the performance of their duties unless they acted in bad faith. The amendments resulting from the AA 2025 go further than this and now protect the arbitrator in additional situations:

• Firstly, where a party has applied to the court to remove an arbitrator, the court may not order the arbitrator to pay the costs of the application unless any act or omission of the arbitrator in connection with the proceedings is shown to have been in bad faith. This reverses case law which held that an arbitrator could be liable for such costs. 
• Secondly, in the situation where an arbitrator resigns, they will have no liability to the parties in respect of this unless it can be shown that the resignation ‘in all the circumstances’ was unreasonable. 

Summary Disposal

In a bold move, designed to mirror other jurisdictions, the AA 2025 introduces, in section 39A, an express statutory power for arbitrators to dispose summarily of any claim, defence or jurisdictional objection which has no real prospect of success – the same test as summary judgment under English court proceedings. 

The application can be made by one party but must be on notice to the others. Before exercising this power, the section specifically states that the “tribunal must afford the parties a reasonable opportunity to make representations to the tribunal”.

The provision is non-mandatory, so parties may choose to opt-out or else to replace it with another mechanism, such as the summary mechanism appearing in many institutional  arbitration rules. 

The aim behind the introduction of such a clear statutory power is that parties and tribunals should be encouraged to consider summary disposal more often as a means to dispose of unmeritorious claims, defences or arguments, and thereby reduce the costs and duration of arbitration in appropriate cases. It  remains to be seen how often the new statutory power is used and whether parties opt out and decided instead to follow the higher test set out in many institutional rules, such as the LCIA, HKIAC and SIAC, where claims can only be disposed of where they are ‘manifestly without legal merit’ or ‘manifestly outside the jurisdiction’ of the tribunal.

Clarification of powers of the Court to support arbitration

Various powers used by the courts in support of arbitral proceedings against third parties, and in support of emergency arbitration by enforcing peremptory orders of Emergency Arbitrators (EAs) have been clarified by the AA 2025. These powers are non-mandatory. 

The AA 1996 already granted power to the court to make orders in support of arbitration in the same way it could in domestic proceedings in relation to certain relief, including taking or preserving evidence, inspection or sampling of property, and interim injunctions, amongst others. However, there was ambiguity in the caselaw regarding whether these powers could apply to orders against third parties as well as parties to the arbitration. The AA 2025 has now clarified that these orders do extend to third parties, as they would in domestic litigation, who will now have full rights of appeal.

EAs  are a relatively new creation and post-date the coming into force of the AA 1996. Changes to the AA 1996 accommodate EAs, in two respects: (1) allowing court enforcement of peremptory orders made by EAs in the same way as for ordinary tribunals;  and (2) allowing EAs to give a party permission to approach the court for urgent relief (such as an injunction) under section 44(4) of the Act. Both changes are intended to support the EA process and offer further options for situations where an EA’s order for interim relief is ignored.

Revised framework for challenge under s.67 AA 1996

The AA 2025 makes provision for new court rules to be introduced to adopt a revised framework for challenges under section 67 of the 1996 Act. These are intended to allow a more cost-efficient process for challenges to arbitral awards on the basis that the tribunal lacked substantive jurisdiction. The UK Supreme Court in Dallah Real Estate v Pakistan [2010] UKSC 46, held that such a challenge is potentially by way of a full rehearing, where the decision of the tribunal on its own jurisdiction is of no legal or evidential value.

Many considered that the current section 67 procedure resulted in unnecessary duplication of time, costs, and created issues of unfairness between the parties. In particular, where a party had challenged jurisdiction before the tribunal, which had ruled on the issue, whether it was appropriate for a further challenge before the court to incur the time and costs of a full rehearing.

Section 67 has now been amended to provide that a full rehearing under section 67 should not be allowed if a party has already disputed the jurisdiction of the tribunal and the tribunal has already ruled on the matter. In this scenario, the court will not entertain any new grounds of objection or new evidence unless they could not, with reasonable diligence, have been put before the tribunal, and evidence will not be reheard, save in the interests of justice. This approach aims to be both practical and protect parties who have received arbitration awards in their favour from dealing with strategic challenges to the jurisdiction of the tribunal that would result in unnecessary additional time and costs to both sides. Further amendments have also been made to s.32 AA 1996 which complement this change. The remedies available under s.67 have also been amended so that they mirror those available under s.68 and s.69 including  remitting the award to the tribunal, in whole or in part, for reconsideration, setting the award aside in whole or in part or declaring the award to be of no effect, in whole or in part.

The amendments to s.67 are all mandatory provisions. 

The Civil Procedure Rules Committee will now be responsible for carrying out the changes to the Court rules. The fact that these changes will be procedural in nature will also allow them to be tweaked if deemed necessary at a later date without parliamentary amendment.

Practical steps to take now

While the AA 2025 has received royal assent various regulations in the form of statutory instruments are still required to be published before the new provisions to come into force. We will keep you updated as to when this will occur.

In the meantime, there are some clear practical implications for parties drafting arbitration agreements or who are parties to arbitration agreements. We therefore advise parties to reconsider their current arrangements, in addition to future agreements, in light of the amendments and seek advice where appropriate. 

It is important that contracting parties:

1. Review their arbitration clauses and ensure that they include a governing law clause and not just a choice of seat;
2. If the arbitration agreement already contains a governing law clause a party should ensure that the choice of law is clear; and
3. Parties should consider (or reconsider) whether the seat of arbitration chosen is supportive of arbitration and provides the appropriate protections and interim relief measures which may be required (such as the availability of an Anti-suit injunction). 
4. Parties can decide at the outset whether they would like to take advantage of the new statutory summary disposal mechanism, and if so,  expressly provide for it in their agreement to arbitrate. Conversely, they may wish to expressly disapply the provision as it is non-mandatory. 

If you would like to discuss whether your arbitration agreements could be affected by the changes enacted by the AA 2025 please reach out to any of the authors of this article or to your usual Bird & Bird Disputes contact.