Navigating the New Arbitration Landscape: Insights into the UK’s 2025 Arbitration Act
05. 03. 2025
On 24 February 2025, the United Kingdom’s Arbitration Bill received Royal Assent, marking the amendment of the nearly three-decade-old Arbitration Act 1996 [subsequently referred to as the “Arbitration Act 2025”or the”Act“].
The Arbitration Act 2025 introduces several key changes and new mechanisms designed to modernize UK arbitration law, offering enhanced tools for courts and arbitrators to ensure faster and more efficient dispute resolution. The primary goal of these amendments is to maintain the UK’s arbitration framework as “world leading and fit for purpose in a rapidly evolving global business environment,”[1] while reinforcing the preference for English law as the governing law in arbitration agreements.
The path to the Act’s enactment began with the introduction of the first draft of the Bill to Parliament on 21 November 2023, closely following recommendations made by the Law Commission. After undergoing review, the Bill was read for the third time on 11 February 2025, and following Royal Assent, it was formally passed into law. The Arbitration Act 2025 will come into force at soon as practicable, in line with the statutory regulations to be issued.
The key changes introduced by the Arbitration Act 2025 include:
- A new provision defining the default law governing the arbitration agreement;
- An expanded scope of arbitrator immunity in cases of resignation or removal applications;
- Clarification of the court’s power to rule on the preliminary jurisdiction of the arbitral tribunal;
- Granting the arbitral tribunal the power to issue awards on a summary basis;
- Provisions empowering emergency arbitrators;
- Amendments regarding the challenges to an award based on the lack of substantive jurisdiction of the tribunal.
These key changes are addressed below in more detail.
A new provision defining the default law governing the arbitration agreement
Under the Arbitration Act 2025, if the Parties do not choose the law applicable to the arbitration agreement, that agreement shall be governed by the law of the seat. For example, if the Parties agree on LCIA arbitration seated in London, such agreement shall be governed by English law. If they choose Paris, however, French law will apply. This shall have no effect on the law applicable to the contract.
An expanded scope of arbitrator immunity in cases of resignation or removal applications
The Act limits the court’s ability to order an arbitrator to bear the costs of proceedings related to their removal, restricting it to cases where the arbitrator’s actions or omissions are found to be in bad faith. Hence, the court will be likely to order the arbitrator to bear the costs of proceedings related to their removal, for instance if the arbitrator purposefully started neglecting their duties, but not if the arbitrator was removed due to extended hospitalisation that made them unable to perform their duties.
Furthermore, the amended provisions narrow the scope of arbitrator’s liability in case of resignation. The arbitrator may be held liable solely in cases established by the parties as unreasonable resignation.
Clarification of the court’s power to rule on the preliminary jurisdiction of the arbitral tribunal
The Act clarifies the power of the court to rule on the jurisdiction of the arbitral tribunal to hear the dispute (preliminary jurisdiction). The court will assess such cases only when the arbitral tribunal has not already ruled on its own jurisdiction. For example, if during the proceedings respondent has argued that the tribunal lacks jurisdiction because the arbitration agreement points to a different institution and the tribunal issued a ruling confirming its jurisdiction, the court will reject such a claim raised subsequently before .
If the arbitral tribunal has already ruled, a party may challenge the jurisdiction of the Tribunal to hear the case on its merits (substantive jurisdiction) before the court under section 67 of the Act (challenging the award on the basis of the lack of substantive jurisdiction), by for instance arguing that the law leaves such claim to exclusive jurisdiction of the courts.
Granting the arbitral tribunal the power to issue awards on a summary basis
The Arbitration Act 2025 introduces a new voluntarily mechanism for issuing an award on a summary basis in section 39A. Upon application by one of the arbitrating parties, the tribunal may exercise its discretion to adopt the expedited procedure to assess whether a party has a real prospect of succeeding on the claim or defence its claim. If there is no such prospect, an award on summary basis will be issued. However, parties may agree that such an award on summary basis is not possible in their arbitration agreement.
Provisions empowering the emergency arbitrators
The Act grants emergency arbitrators powers that were previously reserved for regularly established arbitral tribunals.
First, emergency arbitrators are empowered to issue a peremptory order if a party fails to comply with their initial order. Second, they are authorized to apply to the court for a compliance order if the party disregards the peremptory order. Last, instead of issuing a peremptory order, emergency arbitrators may apply directly to the court to issue an order that can also extend to third parties, such as ordering them to provide relevant evidence.[2]
Amendments regarding the challenges to an award based on the lack of substantive jurisdiction of the tribunal
The Arbitration Act 2025 introduces a broader range of actions available to the courts in response to challenges regarding a tribunal’s substantive jurisdiction or its decision on the merits in cases where such jurisdiction was absent. In addition to the previously available options of confirming, varying, or setting aside an award, the Act grants the court the power to remit the award to the tribunal, in part or in whole, for reconsideration, or to declare the award null and void, in part or in whole.
This amendment aligns the mechanisms of challenging an award with the other remedies for challenge of the award available in cases of allegations of serious irregularity (section 68) and appeals on the point of law (section 69).
In cases of challenges to the award on the basis of the lack of substantive jurisdiction on which the tribunal already ruled the Act amends the rules of the court to limit the grounds for objections that can be raised before the court. No full rehearing of the case will occur before the court. The court will not reconsider evidence already examined by the tribunal, and it will only hear new evidence or grounds for challenge that could not have been presented to the tribunal.
Other amendments provided in the Arbitration Act 2025 include:
- Codification of duty of disclosure of the arbitrators. The act obligates the arbitrators to disclose any circumstances that might raise doubts to the arbitrator’s impartiality in relation to the proceedings.
- Granting the arbitral tribunal the power to award costs of the proceedings when it was found not to have substantive jurisdiction over the dispute or in excess of such jurisdiction.
- Clarification of the time limit for challenging the award in section 70 of the Act. Section 70 stipulates that a party must first exhaust any available arbitral process for appealing, reviewing, or correcting the award, or for issuing an additional award, before initiating a challenge. The 28-day time limit for bringing a challenge will begin from the date any appeal, review, additional award, or its correction is issued. If no recourse to the arbitral tribunal is available, the time limit will start from the date the award is issued.
- The amendments to sections 32 and 45 of the Arbitration Act 1996 that require either the agreement of the parties or the permission of the tribunal to apply to the court for a preliminary ruling on jurisdiction or a preliminary point of law. The amendments eliminate the need to satisfy the court on a list of required matters, but retains the court’s general discretion in deciding whether to grant the application.
- Correction of the drafting error clarifying that full appeal rights to the Court of Appeal are available under all sections of Part 1, except for those sections that explicitly require High Court permission for an appeal, in line with the decision of the House of Lords in Inco Europe v First Choice Distribution (2000).
[2] Arbitration Bill House of Lords Explanatory Notes, 6 November 2024 (Bill 57), Commentary of the provisions of the Bill: Clause 9 para. 34 https://publications.parliament.uk/pa/bills/cbill/59-01/0057/en/240057en.pdf