March 2024 – The Arbitration Act 2025 received Royal Assent in England
Dr. iur. Tetiana Bersheda, LLM (Cambridge), avocate in Switzerland and solicitor in England and Wales
The Arbitration Act 2025 officially received Royal Assent on 24 February 2025, marking the completion of its passage through Parliament. However, its substantive provisions will only come into force at a date to be later specified by the Secretary of State in further regulation. The new Act closely follows the recommendations made by the Law Commission in response to a government request to review the Arbitration Act 1996 and ensure its continued relevance in promoting the UK as a leading hub for international commercial arbitration which represents £2.5 billion industry in England and Wales.
By way of a broad overview, the following major initiatives made their way to the new Act:
Codification of an arbitrator’s duty of disclosure: The existing statutory duty for arbitrators to disclose any factors which might affect their impartiality has been codified and clarified. It is noteworthy that the new Act does not provide a codified statutory duty of independence for arbitrators ;
Strengthening arbitrator immunity around resignation and applications for removal: The Act extends the immunity of arbitrators from civil claims, including to protect arbitrators who resign (other than unreasonably) ;
Introduction of a power of summary disposal: Summary disposal (or “early determination”) is already provided for by arbitral institutions such as the ICC and the LCIA. In the absence of an explicit provision in the 1996 Act addressing summary disposals by arbitrators, the Law Commission identified that such position was fertile ground for “due process paranoia”, in which the arbitrators’ duty to allow the parties to put their case was felt to discourage the use of summary disposal. The Act therefore creates an explicit power for arbitrators to summarily dispose of proceedings where the claim or defence has “no real prospect” of success ;
A revised framework for challenges under section 67: Section 67 of the 1996 Act (“Section 67”) allows parties to challenge an arbitral award on the grounds that the tribunal did not have substantive jurisdiction. In Dallah v. Pakistan ([2010] UKSC 46), the Supreme Court held that parties challenging a tribunal’s jurisdiction are entitled to a full re-hearing, and not just a review of the tribunal’s decision. That has been the position in England and Wales since then. The Law Commission’s view was that this created needless inefficiencies, and delayed the achievement of certainty for the parties. The Act addresses this by (i) preventing a party to a Section 67 challenge from submitting any new evidence or grounds for objection that was not put before the tribunal; and (ii) preventing a court from rehearing evidence heard by the tribunal, save when it would be in the interests of justice to do so. This should help to limit the delays that can be caused by jurisdiction challenges;
A new rule on the governing law of an arbitration agreement: In the recent case of UniCredit Bank v RusChem ([2024] UKSC 30), the UK Supreme Court upheld the decision in Enka v Chubb ([2020] EWCA Civ 57) that where an arbitration clause is silent as to governing law, the choice of law in the broader contract generally applies to the arbitration agreement. The Law Commission however identified this position as problematic, as cases seated in England and Wales can unintentionally be governed by a foreign law which is less supportive of arbitration. In those cases, non-mandatory provisions of the 1996 Act would not apply to the arbitration. The Act has now reversed this position: where no agreement is made as to the governing law of the arbitration agreement specifically, the arbitration will be governed by the law of the seat; and
Clarification of court powers in support of arbitral proceedings and in support of emergency arbitrators: Most of the institutional arbitration rules already provide for the appointment of emergency arbitrators in scenarios where the arbitral tribunal is not fully formed but there is an issue that must be resolved urgently. The 1996 Act had no provisions addressing this situation. Under the new Act, emergency arbitrators have the same powers as arbitrators in relation to Section 44 of the 1996 Act (which includes powers related to evidence and interim orders) and peremptory orders.
The new Act strengthens the arbitration-friendliness of England. It has introduced some important changes, in particular the Act introduces a new rule for determining the governing law of the parties’ arbitration agreement, providing that this shall be either (i) the law expressly chosen by the parties to govern the arbitration agreement (not the agreement as a whole), or (ii) in the absence of such a choice, the law of the seat of the arbitration. However, there are also some missed opportunities, in particular around the use of technology, including artificial intelligence.
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