The Arbitration Act 2025 and Business Dispute Resolution  

Key Points

• The Arbitration Act 2025 came into force on 1 August 2025, amending the Arbitration Act 1996 for all arbitrations commenced on or after that date.
• Arbitrators now have an express statutory power to dismiss claims, defences, and jurisdictional objections that have no real prospect of success, without waiting for a full hearing.
• A new default rule means the law governing the arbitration agreement automatically aligns with the arbitration seat, removing a long-standing source of uncertainty in cross-border contracts.
• The duty on Arbitrators to disclose any circumstances that might cast doubt on their impartiality has been placed on a statutory footing for the first time, taking effect from the moment an arbitrator is first approached.
• Businesses with existing contracts containing arbitration clauses should review those clauses to assess how the 2025 Act affects them and whether any express opt-out or opt-in provisions are needed.

The Arbitration Act 2025 makes a series of targeted but significant changes to the law governing arbitration in England, Wales and Northern Ireland. For any business that resolves disputes through arbitration, the changes require attention.

The Act received Royal Assent on 24 February 2025 and came into force on 1 August 2025. It amends rather than replaces the Arbitration Act 1996, but the amendments address some of the most commercially consequential aspects of the arbitration process: how governing law is determined, when a claim can be dismissed early, how challenges to arbitrator impartiality are managed, and how courts support emergency proceedings.

This article explains each of the main changes and what they mean for businesses operating in England and Wales.

The Legal Background

Arbitration in England and Wales has been governed by the Arbitration Act 1996 for nearly thirty years. Following a detailed review, the Law Commission published its final report in 2023, concluding that targeted reforms were needed to maintain England and Wales as a leading seat for international and domestic arbitration. The 2025 Act implements those recommendations.

The 2025 Act does not overhaul the architecture of the 1996 Act. The general duties of the tribunal and the parties, the rules on the appointment, challenge, and removal of arbitrators, and the procedures for challenging awards all remain in their existing form. What the 2025 Act does is address specific pressure points that practitioners and businesses identified as causing costs, delays, or uncertainty.

Governing Law of the Arbitration Agreement

Section 1 of the 2025 Act inserts a new section 6A into the 1996 Act, establishing a default rule that the law governing an arbitration agreement is the law of the arbitration seat. This applies unless the parties have expressly agreed otherwise.

Before the 2025 Act, the governing law of an Arbitration Agreement was determined by a conflicts analysis that produced inconsistent results, particularly in contracts containing a choice-of-law clause pointing to a law other than the law of the seat. The Supreme Court addressed this in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, but the analysis that followed was complex and generated further litigation. The new default rule removes that uncertainty for contracts entered into on or after 1 August 2025, and for pre-existing contracts where no governing law for the arbitration agreement had been expressly agreed.

For businesses with London-seated arbitration clauses, English law will now govern the arbitration agreement as a matter of statutory default. Any party that prefers a different outcome should state that expressly in the arbitration clause.

Summary Disposal of Unmeritorious Claims

Section 7 of the 2025 Act inserts a new section 39A into the 1996 Act, giving arbitrators an express power to dismiss any claim, defence, or jurisdictional objection on a summary basis where it has no real prospect of success. The test mirrors the summary judgment standard applied by the English courts under Part 24 of the Civil Procedure Rules.

This power did not previously exist in statute. While many arbitral institutions provided for it in their procedural rules, the absence of a statutory basis created what practitioners called due process paranoia: a reluctance by arbitrators to use summary disposal for fear that doing so would expose the award to challenge on grounds of procedural unfairness. Section 39A removes that concern.

The power is not mandatory. Parties can agree to disapply it, and the tribunal must give all parties a reasonable opportunity to make representations before exercising it. It applies to individual issues within a case as well as to an entire claim, which means it can be used to dispose of a single defence or a jurisdictional argument without bringing the whole proceedings to an end.

Arbitrator Disclosure and Impartiality

Section 3 of the 2025 Act inserts a new section 23A into the 1996 Act, placing the arbitrator’s duty of disclosure on a statutory footing. An arbitrator must disclose any circumstances that might reasonably give rise to justifiable doubts about their impartiality. That duty arises from the moment the arbitrator is first approached about the appointment, not only once they have accepted it.

The duty continues throughout the arbitration. If circumstances arise after the appointment that would have required disclosure at the outset, the arbitrator must disclose them without delay. A failure to comply will be a relevant factor in any subsequent application to remove the arbitrator under section 24 of the 1996 Act.

The practical effect is that impartiality concerns are more likely to surface early, when they are less disruptive and less expensive to resolve. Arbitrators and parties appointing them should conduct more thorough due diligence at the outset of proceedings.

Court Powers and Emergency Arbitration

Section 8 of the 2025 Act amends section 44 of the 1996 Act to confirm that the court’s supportive powers extend to emergency arbitrators. Before the 2025 Act, the position was uncertain: section 44 gave courts the power to make orders in support of arbitral proceedings, but it was not clear whether an emergency arbitrator appointed under institutional rules fell within that definition. The amendment resolves the point.

Section 9 extends those powers to orders against third parties. Previously, the court could issue only supporting orders against the parties to the arbitration. The amendment allows the court to direct third parties, such as witnesses or document custodians, to provide evidence in support of arbitral proceedings, bringing the court’s supportive role closer to its powers in ordinary litigation.

Restrictions on Section 67 Challenges

Section 11 of the 2025 Act amends section 67 of the 1996 Act, which allows a party to challenge an award on the ground that the tribunal lacked substantive jurisdiction. Under the previous regime, a section 67 challenge was conducted as a full rehearing in court: a party could run its entire jurisdictional case again before a judge, introduce new arguments, and present evidence not put before the Tribunal.

Where the Tribunal has already ruled on its jurisdiction, and the objecting party participated in the arbitration, any section 67 challenge proceeds by way of review only, not a fresh hearing. The court examines whether the tribunal was right on the material before it, rather than allowing the challenger to present a new case. This substantially restricts the tactical use of jurisdiction challenges to delay or reopen concluded proceedings.

What This Means for Business Contracts

Contracts entered into before 1 August 2025 with arbitration clauses should be checked to see whether the governing law default in section 1 of the 2025 Act affects the previously intended position. If the parties assumed, without expressly stating it, that a particular law governed the arbitration agreement, that assumption may now be overtaken by the new statutory default.

Contracts entered into after 1 August 2025 should be drafted with the new framework in mind. If the summary disposal power is unwelcome, the clause should disapply it. If the parties want to preserve the older full rehearing model for section 67 challenges, that should be addressed, though the practical scope for doing so is limited. Any business intending to use London-seated arbitration as its primary dispute resolution method should take legal advice to ensure its standard form contracts reflect the current statutory position.

Policy and Future Direction

The 2025 Act represents calibrated modernisation rather than a wholesale revision of arbitration law. The Law Commission’s position throughout its review was that the 1996 Act had served England and Wales well, and that reform should be targeted rather than disruptive. The direction of travel is toward greater efficiency, lower costs, and greater finality for arbitral decisions.

The restriction on section 67 challenges is the clearest expression of that principle: it limits a party’s ability to use court proceedings as a pressure tactic after an unfavourable jurisdictional award. Further changes to the court rules governing section 67 challenges are expected to follow the primary legislation, and practitioners should keep this area under review.

Frequently Asked Questions

Does the 2025 Act apply to contracts signed before 1 August 2025?

Yes, the Act applies to arbitrations commenced on or after 1 August 2025, regardless of when the underlying contract was signed. The governing law default in section 1 applies to pre-existing arbitration agreements unless the parties had expressly agreed on a governing law for the arbitration clause before the Act came into force.

Can parties agree to exclude the summary disposal power?

Yes, parties can disapply the new summary disposal power in their arbitration agreement or by subsequent agreement once a dispute has arisen. The power conferred by section 39A of the 1996 Act is non-mandatory, meaning parties retain full freedom to contract out of it.

What happens if an arbitrator fails to disclose a conflict of interest under the new rules?

A failure to disclose is a relevant factor in any subsequent application to challenge the arbitrator’s appointment under section 24 of the 1996 Act. It will not automatically invalidate the appointment, but it strengthens an application for removal where the undisclosed circumstances would have given rise to justifiable doubts about impartiality.

Does the Act change how commercial contracts should be drafted going forward?

Yes. Contracts with arbitration clauses signed after 1 August 2025 should be reviewed to ensure they reflect the new default positions on governing law and summary disposal. Where parties want outcomes that differ from the statutory defaults, those positions should be stated expressly in the arbitration clause rather than left to inference.

This article does not constitute legal advice. To discuss the impact of the Arbitration Act 2025 on your contracts or any arbitration proceedings, contact 43Legal at info@43legal.com or call 0121 249 2400. 

Melissa Danks is the founder of 43Legal. She has over 20 years’ experience as a solicitor working within the legal sector dealing with issues relating to risk management, dispute resolution, and advising in-house counsel in SMEs and large companies. Melissa has extensive expertise in providing practical, valuable, modern legal advice on large commercial projects, joint ventures, data protection and GDPR compliance, franchises, and commercial contracts. She has worked with stakeholders in multiple market sectors, including IT, legal, manufacturing, retail, hospitality, logistics and construction. When not providing legal advice and growing her law firm, Melissa spends her time running, walking in the countryside, reading and enjoying downtime with close friends and family.