Our guide to the new Arbitration Act 2025

Unless the parties have agreed otherwise, a new default rule provides that the arbitration agreement will be governed by the law of the seat of the arbitration i.e., the location selected by the parties as the legal place of the arbitration. This replaces the current rule that the governing law of the arbitration agreement will align with that of the main contract, unless the parties have agreed otherwise. The government hopes that this new rule will offer greater certainty and reduce the prospect of satellite litigation to determine governing law, which can be slow and costly for contracting parties.

The new default rule will apply to all arbitration agreements, regardless of when they were entered into, other than where arbitrations or court proceedings are commenced before the Act comes into effect. However, one change that has been made following sector feedback on the Bill’s previous iteration is that the Act now includes a carve-out from this new rule for cases involving arbitration agreements arising from treaties or non-UK legislation, which is particularly relevant to international investment arbitrations.

Unlike the court system, the people who determine the outcome of the arbitration, the tribunal members, are appointed following nominations by the parties, meaning that they have some input into who will decide the issues in dispute. However, inevitably there can be some caution around agreeing to an appointment of an arbitrator suggested by an opponent. Under the Act, the arbitral tribunal is required to disclose circumstances which may “reasonably give rise to justifiable doubts” as to their impartiality. This express duty of disclosure goes further than the provisions in the 1996 Act and requires the tribunal to consider its actual knowledge as well as what it ought reasonably to know. By supporting the existing duty of impartiality contained within the 1996 Act, it is hoped that codifying the duty of disclosure in this way will provide greater certainty on all sides.

In a bid to improve efficiency, reduce costs and avoid nuisance claims, the Act contains a new right for a party to apply for an order dismissing a matter summarily i.e., without the parties having to go through the full arbitration process where it considers another party has “no real prospect of succeeding” on a claim, defence or issue. Although the arbitral tribunal already has a general power to dispose of a matter summarily, the 1996 Act did not feature any explicit provisions in this respect. The new power, which is available to parties who have not otherwise agreed to exclude it, therefore seeks to address issues with the existing arbitration process.

For several years, there has been conflicting case law on whether court orders in support of arbitrations (such as orders preserving evidence or granting interim injunctions) can be granted against third parties. To resolve this uncertainty, the Act makes clear that the court can order relief against third parties in the same way as it can in normal court proceedings, which provides welcome clarity on the position.

Before the constitution of an arbitral tribunal, emergency arbitration (which is available under some sets of arbitral rules) offers parties a short-term solution to obtain urgent interim relief. Since this is not dealt with in the 1996 Act, the Act implements two changes to promote the enforcement of awards made by emergency arbitrators. Under the Act, emergency arbitrators will have the same powers as the arbitral tribunal to issue peremptory orders and to allow parties to make a court application requiring that an order is complied with.

A revised framework is set out by the Act for courts to deal with a party’s challenge to an arbitral tribunal’s authority on grounds of a lack of substantive jurisdiction, where such a challenge has already been made and ruled on in the arbitration. The updated approach will be similar to an appeal, as opposed to a full hearing of the issue. This seeks to address the Law Commission’s concerns that the existing regime, which allows for jurisdictional challenges to be heard in full before the court, is costly, time-consuming and allows for ‘two bites of the cherry’ where there has already been a full hearing on the matter before the arbitral tribunal.