Clifford Chance

Reforms to English Arbitration Act 1996 to enter into force on 1 August 2025

The Arbitration Act 2025 (the 2025 Act) introduces limited reforms to the Arbitration Act 1996 (the 1996 Act), with the aim of enhancing the efficiency and user experience of arbitrating disputes in London.

Background

The Law Commission began a consultation into the 1996 Act early in 2022 and produced its proposals for limited reforms in September 2023. As discussed in our earlier blog, the Commission's proposals reflected the views of stakeholders that the 1996 Act required only relatively minor updates rather than a radical overhaul.

An Arbitration Bill based closely on the Commission's recommendations was first introduced into Parliament late in 2023 and was re-introduced in July 2024 following the General Election. The Bill passed through various readings in the House of Commons and House of Lords largely unchanged.

Scope

The amendments to the 1996 Act will apply in relation to arbitrations and related court proceedings commenced on or after 1 August 2025, regardless of when the arbitration agreement was made.

As such, the amendments to the 1996 Act do not apply to:

1. arbitration proceedings commenced prior to 1 August 2025 ('pre-commencement arbitrations');
2. court proceedings (whenever commenced) in connection with pre-commencement arbitrations or awards made in pre-commencement arbitrations; or
3. any other court proceedings commenced prior to 1 August 2025.

Key Provisions

1. Governing law of arbitration agreement: The 2025 Act introduces a new section 6A to the 1996 Act, which provides that an arbitration agreement will be governed by the law expressly agreed by the parties to apply, failing which, it will be governed by the law of the seat of the arbitration (section 6A(1), 1996 Act). This reverses the previous rule confirmed by the UK Supreme Court in Enka Insaat ve Sanayi AS v OOO "Insurance Company Chubb", which treated an express choice of the governing law of a matrix contract as an implied choice of governing law of an arbitration agreement contained therein.
   There is a carve out to the new governing law provision in respect of arbitration agreements contained in treaties or legislation of a country our territory outside the UK (section 6A(3), 1996 Act).
2. Section 67 (challenging the award: substantive jurisdiction): The 2025 Act also adds a new section 67(3B) and (3C) to the 1996 Act, with the effect of limiting the circumstances under which a party challenging an award on the basis of a tribunal's substantive jurisdiction can rely on: (i) new grounds of objection or new evidence, unless it could not with reasonable diligence have been put before the tribunal; or (ii) evidence already heard by the tribunal, in each case, subject to the court ruling otherwise in the "interests of justice".
   Previously, a challenge to an award brought under section 67 entailed a full rehearing of the matter, regardless of whether the same issues were heard before the tribunal, which had the potential to generate significant additional costs.
3. Arbitrator disclosure of conflicts: A new section 23A to the 1996 Act provides for the codification of arbitrators' continuing duty under common law to disclose circumstances which might reasonably give rise to justifiable doubts as to their impartiality (for more on the duty, see our earlier briefing 'Supreme Court clarifies test of arbitrator impartiality and arbitrators' duty of disclosure'). The duty of disclosure is based on what the arbitrator 'ought reasonably to be aware' (section 23A(3)(b), 1996 Act).
4. Summary disposal: A new section 39A to the 1996 Act expressly empowers tribunals to (unless otherwise agreed by the parties), on the application of a party, issue an award on a summary basis. A tribunal could dispose of a claim or defence on a summary basis where it deems that a party has 'no real prospect of succeeding' on the issue. This is a welcome update which introduces a summary disposal or early determination procedure already found in the rules of numerous leading arbitral institutions.
5. Section 44 (court powers exercisable in support of arbitral proceedings): The 2025 Act amends sections 44(1) and (7) of the 1996 Act, such that orders made under section 44 can be made against third parties (for example, an order in respect of the preservation of evidence). Third parties would have a right to appeal without requiring the court's consent which, by contrast, a party to arbitration must obtain.

Comment

The amendments to the 1996 Act are long-awaited, measured updates to the existing regime, enhancing the efficiency and user experience of arbitrating disputes in London, while recognising and preserving the fundamentals of the 1996 Act that contributed to its success. These are welcome changes which should help to maintain London's position as a world-leading seat of arbitration.

The 2025 Act can be found here.