By: Sam Thyne, Senior Associate, and Rhea Yactine, Paralegal
In the world of international contracting, when contracting parties enter into an arbitration agreement, they agree on a seat of the arbitration (or should).1 The choice of seat requires careful thought, especially where the parties are from different jurisdictions.
The Arbitration Act 2025 (the “2025 Act”) came into force on 1 August 2025 and amends the Arbitration Act 1996 (the “1996 Act”) with the goal of strengthening the United Kingdom’s position as an arbitral seat, by modernising aspects of the legal framework that applies to the popular dispute resolution method.2
Key considerations for choosing a seat include its reliability and how arbitration friendly the applicable law will be. Several of the changes made to the 2025 Act are aimed at clearing up areas of ambiguity that have arisen. It is hoped that the 2025 Act will make dispute resolution clearer, fairer, more efficient, effective and economical – and that these changes will attract parties to nominate London as their arbitral seat.
The 2025 Act clarifies that the law applicable to an arbitration agreement is the law the parties agreed upon or, where the parties have not agreed on a jurisdiction, the law of the seat of the arbitration.
This change has addressed an area of substantial ambiguity, as highlighted in Enka v Chubb3 where the parties had not specified the law that governs their arbitration agreement. The Supreme Court ruled in this case that if parties have not specified the law that governs their arbitration agreement, then the governing law of the contract applies.
The 2025 Act now clarifies that the law governing the contract is not necessarily considered an agreement that this law also applies to the arbitration agreement. This change encourages parties to be diligent when drafting their agreements to limit the possibility of potential disputes and streamline the arbitral process.
The 2025 Act also introduces an express carve-out for investor-state arbitration agreements to ensure that they are governed by the relevant rules and regulations of international law, and to avoid the risk of conflicting with the investor-state’s intention, where it may not wish English law to govern its disputes.
The 2025 Act also aims to limit the circumstances in which an arbitrator’s impartiality might be doubted, by imposing a duty of disclosure on arbitrators. This section codifies the Supreme Court’s judgment in Halliburton v Chubb4 (previously covered in International Quarterly, Issue 38 [1]) where the Supreme Court ruled that arbitrators have a duty of disclosure under English law.
Arbitrators who resign now benefit from immunity, except for situations where the resignation is considered “unreasonable”. The 2025 Act also grants arbitrators who have been removed by the court, immunity from incurring the costs of court proceedings except where it was proven the arbitrator acted in bad faith.
These amendments encourage arbitrators to act independently without apprehending any cost or liability consequences, thereby fostering fairness in the arbitral process.
Emergency arbitrators have been given the authority to make peremptory orders and grant parties permission to apply to court for a section 44 order. Section 44 provides that an English court may make orders in support of arbitral proceedings against third parties. With emergency arbitrations becoming more widespread, this amendment was a welcome change to the 1996 Act, giving emergency arbitrators the same authority as other arbitrators and further promoting trust in the arbitral process.
The 2025 Act now allows the parties to apply for an expedited procedure to give the tribunal power to make an award on a summary basis, where the tribunal considers there is no real prospect of success in the claim, defence or the relevant issue. Although there is no specific procedure for deciding whether there is ‘no real prospect of success’, parties and the tribunal could look to the English Civil Procedure Rules and LCIA rules when deciding an award on a summary basis. Parties can choose to opt out of this in their Arbitration Agreement or by a later agreement. This amendment to the 1996 Act was brought in an effort to promote efficiency in the arbitral process.
Under the 1996 Act, a party who objected on jurisdiction during the arbitration could challenge the award on jurisdictional grounds, which would often lead to new evidence being brought to the courts and a re-hearing of the same issues argued before the tribunal. The 2025 Act now forbids the parties from raising new grounds of objection, new evidence and arguing the same issues heard by the tribunal, unless they meet the requirements of a “reasonable diligence test”. The 2025 Act also gives the Civil Procedure Rule Committee authority to limit jurisdictional challenges from becoming full re-hearings by creating new rules. The aim of this amendment is to limit costs and boost effectiveness in arbitration by eliminating unnecessary delays and challenges.
The amendments introduced to the 1996 Act by the 2025 Act aim to improve dispute resolution by making it more transparent, equitable, and accessible. The 2025 Act seeks to enhance the efficiency and effectiveness of the process, ensuring that cases are handled in a timely and cost-effective manner.
These reforms strive to create an up to date, more streamlined and effective legal framework for resolving disputes, with the aim of continuing London’s position as a leader in international arbitration. But will it work in convincing parties to nominate London as their seat?
The ICC International Court of Arbitration’s 2024 published data revealed that the most frequently selected places of arbitration (for disputes under the ICC rules) were cities in the United Kingdom (96 cases), France (91), Switzerland (83), and the United States (72), followed by the United Arab Emirates (38), Spain (33), Brazil and Mexico (30 each), Singapore (28), and Germany (20).5 Notably the United Kingdom was the most popular seat. However, where it was not, was the difference between parties nominating the United Kingdom and another jurisdiction concerns about niche legal ambiguities? Or was it other practical considerations, such as cost, geographical proximity, ease of obtaining visitor visas for witnesses, or perhaps even cuisine preference of the parties’ negotiators?
Whether the changes will work in attracting more London seated arbitrations remains to be seen. Construction projects can run many years, and parties are inclined to hold off arbitrating until the conclusion of their projects. It could be years before disputes under arbitration agreements drafted now, under the new regime, find their way before arbitrators.
Next article [2]
Links
[1] https://www.fenwickelliott.com/research-insight/newsletters/international-quarterly/apparent-bias-applications-remove-arbitrators
[2] https://www.fenwickelliott.com/research-insight/newsletters/international-quarterly/collateral-attacks-under-the-arbitration-act-lessons-learnt-from-deinon-v-reen
[3] https://www.fenwickelliott.com/research-insight/newsletters/international-quarterly/choosing-arbitral-seat-parties
[4] https://www.fenwickelliott.com/research-insight/annual-review/2020/international-arbitration-governing-law
[5] https://www.gov.uk/government/news/boost-for-uk-economy-as-arbitration-act-receives-royal-assent
[6] https://iccwbo.org/news-publications/news/icc-dispute-resolution-statistics-2024/