The Arbitration Act 2025 (the Act) has completed its passage through Parliament and received Royal Assent last week (on Monday, 24 February 2025).
The Act will come into force through regulations on a day to be selected by the Secretary of State and will apply to arbitrations started after that date and seated in England, Wales or Northern Ireland.
Although the Act represents the biggest change in arbitration law in those jurisdictions for over 30 years, it is perhaps best seen as introducing important targeted amendments to the previous position rather than initiating a wholesale revolution.
That said, all arbitration users and practitioners should be aware of the Act’s key provisions, which will have a major impact on London-seated arbitrations and generate considerable amounts of new case law and commentary in the coming years.
The Act is based closely on recommendations made by the Law Commission (the statutory body tasked by the UK government with reviewing the law). Although the existing arbitration law was already seen as arbitration-friendly and has helped London to become one of the world’s pre-eminent arbitration centres, it is more than 30 years old, and so the UK government decided to update it to ensure that modern UK arbitration law remains fit for purpose.
Reed Smith was one of the law firms that fed into, and was quoted in, the reports prepared by the Law Commission upon which the Act was based. At the time that those reports were issued, Reed Smith also published a series of thought leadership pieces dealing with the proposed changes.
In the coming weeks, Reed Smith will publish a series of articles dealing with the Act’s following key provisions:
- Summary disposal of issues: The Act introduces a new power for an arbitral tribunal to make an award on a summary basis upon an application by one of the parties if there is “no real prospect of success”, which is the same threshold applied in court proceedings in England and Wales. This is a significant change to London-seated arbitration and could have significant implications when deciding whether to choose London as an arbitral seat and for case strategy.
- Changes in the method used to determine the law applicable to the arbitration agreement: The Act introduces a default rule that an arbitration agreement is governed by the law of the seat unless expressly agreed otherwise by the parties. This new statutory rule replaces the previous common law position established by the UK Supreme Court in Enka v. Chubb (2020), which held that an arbitration agreement is typically governed by the law of the underlying contract unless expressly stated otherwise. Again, this is a major change in English arbitration law.
- New procedure regarding challenges in the courts to an arbitral award on jurisdictional grounds (that is, changes to jurisdictional challenges under section 67 of the Arbitration Act 1996): The Act prevents the courts from entertaining any new grounds of objection or any new evidence, or re-hearing evidence already heard by the arbitral tribunal, subject to certain limited exceptions. This will prevent the losing party before an arbitral tribunal from seeking an expensive full re-hearing before a judge.
- Further clarity on jurisdictional objections: The Act provides that if an arbitral tribunal has ruled on its jurisdiction, the parties cannot then apply for a jurisdictional ruling from the court under section 32 (determination of preliminary point of jurisdiction) of the Arbitration Act 1996. Further, if the arbitral tribunal has ruled that it has no jurisdiction to resolve a dispute, then the arbitration must come to an end and the tribunal can award the costs of the arbitration proceedings up until that point, notwithstanding the tribunal’s lack of substantive jurisdiction.
- Impartiality of arbitrators: The Act introduces a statutory and ongoing duty on prospective and sitting arbitrators to disclose, as soon as reasonably practicable, any circumstances that might reasonably give rise to justifiable doubts as to their impartiality.
- Immunity of arbitrators: The Act provides that an arbitrator will not be liable for the costs of an application to court for their removal, unless the arbitrator has acted in bad faith, and will be immune from the consequences of resignation, provided the resignation was not unreasonable.
- Court powers exercisable in support of arbitral proceedings and emergency arbitrators: The Act makes it clear that court orders made under section 44 (court powers exercisable in support of arbitral proceedings) of the Arbitration Act 1996 – that is, court orders regarding the taking of witness evidence, preservation of evidence, relevant property, the sale of goods, interim injunctions and the appointment of a receiver – can now be made against third parties. Further, the existing scheme in relation to non-compliance with an arbitrator’s order, including the possibility of issuing a peremptory order or applying to court to order compliance, has been extended to emergency arbitrators.
We look forward to providing our further thoughts on these important topics and their practical impacts on your business in our forthcoming series of detailed articles.
The contents of this communication are for informational purposes only and do not constitute legal advice. Prior results do not guarantee a similar outcome in the future.
Reed Smith LLP is licensed to operate as a foreign law practice in Singapore under the name and style Reed Smith Pte Ltd (hereafter collectively, "Reed Smith"). Where advice on Singapore law is required, we will refer the matter to and work with Reed Smith's Formal Law Alliance partner in Singapore, Resource Law LLC, where necessary.
Client Alert 2025-070
