English Arbitration Reform – Iconoclastic change or "steady as she goes"?

Introduction

On 24 February 2025, the long-awaited Arbitration Act 2025 (the Act) received Royal Assent. The reforms introduced in the Act are based on the Law Commission's 2023 recommendations for targeted reform of the Arbitration Act 1996.¹ The changes apply to any arbitration or arbitration-related court proceedings commenced on or after the day the Act comes into force (to be confirmed in due course). The reforms have been lauded by government as "ensur[ing] the UK remains the global destination of choice for the legal sector, outstripping competitors such as Singapore, Hong Kong and Paris".² 

England (and there is a meaningful distinction to be made with the other legal systems of the United Kingdom) has long been recognised as a global leader for international arbitration – the UK economy benefits from at least £2.5 billion in institutional costs and legal fees every year.³ However, it has faced growing competition from other major arbitral centres in recent years where updating of legislation has been more readily embraced.  

The package of reforms, first described by the Law Commission as comprising "a few major initiatives" alongside a number of minor corrections to the Act,⁴ will no doubt help to ensure that England remains a leading destination for commercial arbitration but critics have noted that longstanding areas of uncertainty under English curial law, such as the law of confidentiality affecting English seated arbitrations, have been left in the "too difficult box". Commentators have noted that for those steeped in the English common law, this may be fine, but others may not appreciate the fact that the Act is not comprehensive and that recourse to the text books is still needed.

We set out below five key changes from the Act which will impact international businesses using English law governed arbitration for the resolution of their disputes. 

Key reforms 

(1) Governing law of the arbitration agreement – a new default rule

The Act introduces a new rule that the governing law of the arbitration agreement shall be the same as law of the seat of the arbitration, unless the parties expressly agree otherwise. This default rule does not apply to arbitration agreements contained in a treaty or foreign legislation.

Whilst some may question whether this provision overreaches in terms of compelling the application of English law in contracts substantively governed by the laws of other jurisdictions, it nevertheless provides welcome clarification to the uncertainty that followed from the Supreme Court's decision in Enka v Chubb.⁵ It brings English law into line with the laws of other jurisdictions, and will help avoid the risk of inconsistent decisions as to the governing law (and the resulting validity) of arbitration agreements in other jurisdictions, as was the case in Kabab-Ji v Kout.⁶

Whilst it may be considered that this change simplifies the drafting process by providing a default position, it will remain prudent for parties explicitly to specify all applicable laws in their arbitration agreements. This will mitigate against the risk of jurisdictional challenge and ensure that the arbitration process proceeds efficiently.

(2) Express powers of summary disposal

The Act introduces an express power for the arbitral tribunal to make an award on a summary basis where a claim (or defence) has no real prospect of success. The parties can agree to exclude such power in their arbitration agreement. 

This is a significant development which brings the arbitral process under English law closer in line to litigation before the English courts. This amendment will provide parties on the receiving end of frivolous claims or defences with an effective means to bring about an early determination of their dispute, and thus enhance the overall efficiency and cost-effectiveness of the arbitral process.

(3) New procedure for challenges to substantive jurisdiction 

Under the new section 67 procedure, there is a move away from the established – and costly - procedure of a full re-hearing in challenges to arbitral awards on the basis of the tribunal's lack of substantive jurisdiction.⁷ The Act now provides that court rules may be made to the effect that the court will neither re-hear evidence already heard by the tribunal in respect of jurisdiction challenges made before it, nor consider any new submissions or evidence (unless such submissions and evidence could not have been raised before the tribunal with 'reasonable diligence'). 

The Act also clarifies that, where a tribunal has already ruled on its own jurisdiction, parties cannot subsequently apply to the court for a ruling on jurisdiction under section 32. 

These amendments will provide welcome finality for parties who have dealt with jurisdictional challenges during the course of the arbitration and will prevent award debtors from seeking to circumvent decisions previously made by the tribunal, even if only as a means of delaying enforcement (although it remains to be seen exactly what court rules will be created giving effect to these provisions of the Act).

(4) Enhanced powers for emergency arbitrators

Reflecting the widespread adoption of emergency arbitrator mechanisms by institutions, the Act confers on emergency arbitrators the power to: (i) issue peremptory orders to be enforced by the court; and (ii) grant permission for applications to the courts for a section 44 order in support of arbitral proceedings. The courts are also empowered to grant section 44 interim relief against third parties (including as regards the preservation of evidence). 

These changes enhance the effectiveness of interim relief available in arbitral proceedings, giving the relief that can be obtained from an emergency arbitrator more "bite", and helpfully confirm the ability of the courts to grant interim relief against third parties.

(5) Arbitrator duty of disclosure 

The Act codifies the common law duty on arbitrators to disclose circumstances that might give rise to justifiable doubts about their impartiality. This statutory duty applies both to circumstances of which the arbitrator is aware and those of which the arbitrator ought reasonably to be aware. The codification of the arbitrator's common law duty of disclosure ensures transparency and impartiality, crucial for maintaining the integrity of the arbitration process.

Conclusion

The Arbitration Act 2025 comes at a time when many other jurisdictions have revisited their arbitration frameworks as a means of remaining competitive in the global market (for instance, see our articles regarding reforms in Germany and China). These reforms highlight a trend towards more robust, transparent, and efficient arbitral processes, underscoring the importance of continuous improvement to meet the evolving needs of international businesses – and to be perceived as "up to date".

London is one of the last major arbitral centres to update its curial legislation over recent years (updates elsewhere include Singapore in 2023, Hong Kong in 2022, and Sweden and Dubai in 2018) – now that it has done so, the onus will be on practitioners to promote London as effectively as their colleagues elsewhere have done for their cities recently. That is not an insignificant challenge. 

Want to know more?

It is worth noting that the reforms to English arbitral procedure do not explicitly address issues related to confidentiality and discrimination within arbitration proceedings. See our article on these 'missing pieces' to the puzzle here.

1. https://lawcom.gov.uk/project/review-of-the-arbitration-act-1996/. 
2. Press release, 24 February 2025.
3. The King's Speech 2024, page 36.
4. Review of the Arbitration Act 1996: Final report and Bill, Law Commission 5 September 2023, 1.22. 
5. Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38.
6. Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) [2021] UKSC 48; Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) (Court of Cassation, Appeal No. 20-20.260).
7. As has been required since the Supreme Court's decision in Dallah Real Estate v Pakistan [2010] UKSC 46.