Arbitration Act 2025 | Part 2: Key Improvements
The Arbitration Act 2025 is now an official new piece of legislation having received royal assent on 24 February 2025 ("2025 Act"). The new law, which refines and modernises the previous Arbitration Act 1996 ("1996 Act"), will come into force "through regulations as soon as practicable". Having examined the five most impactful changes for businesses in Part 1 of our Series on the 2025 Act, in this Part 2, we look at the remaining improvements and how they may impact parties, arbitrators, and other arbitral stakeholders.
The changes discussed in this Legal Update are:
- Statutory duty of disclosure for arbitrators
- Extended arbitrator immunity against liability for resignations and the costs of the application to court for their removal
- Clarification regarding tribunals' cost awards
- Clarification that section 44 (courts' powers supporting arbitration) applies to third parties
- Simplified section 32 (jurisdiction) and section 45 (points of law) applications
- Award challenges – amended court remedies and timings
- Correction of the appeal regime
- Repeal of sections concerning domestic arbitration agreements
WHICH ARBITRATIONS AND COURT PROCEEDINGS ARE IMPACTED?
The reforms will not apply retrospectively to (i) arbitrations which have already been commenced before the date on which the reforms take effect ("Implementation Date") and (ii) related court proceedings concerning arbitrations which began before the Implementation Date (including awards made in such arbitrations). The reforms will apply to all other arbitrations and court proceedings which begin on or after the Implementation Date1.
THE CHANGES AND THEIR IMPACT
1. STATUTORY DUTY OF DISCLOSURE FOR ARBITRATORS
Arbitrators are expressly required to disclose to the parties any circumstances that might reasonably give rise to justifiable doubts as to their impartiality (being a codification of the current common law duty). Arbitrators, parties, counsel and institutions will be interested to know that (i) this duty now clearly applies to prospective arbitrators as well as those who have already been appointed and (ii) arbitrators must now disclose what they actually know and what they ought reasonably to know (the latter point not having been addressed in case law to date).
The nature of the actual disclosure required is likely to be developed in case law and/or addressed in arbitral rules and so is a matter that arbitral institutions may need to consider (the LCIA, for example, has confirmed that the new law largely aligns with existing LCIA practice).
2. EXTENDED ARBITRATOR IMMUNITY
Under the new law, an arbitrator will not be liable for (i) his/her resignation, unless the resignation is proved, in all the circumstances, to be unreasonable; or (ii) the costs of any application for their removal, unless it is shown that he/she has acted in bad faith. This should reassure arbitrators that they can make their decisions and act independently without fear of reprisal from a disappointed party so long as they are acting in good faith and reasonably, which should in turn increase the overall legitimacy of the arbitral process.
3. CLARIFICATION REGARDING TRIBUNALS’ COST AWARDS
Section 61 of the Act has been amended to clarify that tribunals can make costs awards even if they declare that they have no jurisdiction. This should be welcomed by arbitrators who can now confidently issue appropriate costs awards even if they (or a court) have ruled that the tribunal has no substantive jurisdiction (or has exceeded its jurisdiction). Parties need to be mindful, however, that if they commence arbitration without a proper basis for jurisdiction (e.g. with no valid arbitration agreement (“AA”) or a claim falls outside the scope of the AA) then they can still be liable for the wasted costs incurred.
4. SECTION 44 APPLIES TO THIRD PARTIES
It was uncertain in English case law whether the courts’ powers supporting an arbitration – i.e. interim injunctions, taking witness evidence, preserving evidence etc. – extended to third parties (being those not involved in the arbitral proceedings). The new law clarifies that section 44 does apply to third parties, who (unlike arbitral parties) do not need the court’s permission to appeal a section 44 decision. Since arbitrators do not have the power to make orders directly against third parties, this is an important means by which the parties can seek the support of the English courts to enhance the effectiveness of their arbitral proceedings (for example by ordering particular witnesses to attend to give evidence), whether they are English-seated or foreign-seated.
5. SIMPLIFIED SECTION 32 AND SECTION 45 APPLICATIONS
Applications for the court to determine (i) a preliminary point of jurisdiction (section 32) and (ii) a preliminary point of law (section 45) have been streamlined so that either party agreement or tribunal permission is required (with no other conditions). Under the 1996 Act, the court also had to be satisfied with a number of other factors (including promptness and substantial costs savings etc.) which, in practice, meant that those sections were rarely used.
Time will tell whether this simpler procedure will encourage a higher number of section 32 and/or section 45 applications. Now that these applications face fewer hurdles, parties wishing to minimise court intervention may wish to weigh up the advantages and disadvantages of opting out of section 45 in their AA (since, unlike section 32, section 45 is a non-mandatory provision of the 2025 Act).
6. Award challenges – amendED court remedies and timings
Sections 67, 68 and 69 provide three grounds for challenging an arbitral award. Until this new law, there were fewer remedies available for challenges on jurisdictional grounds under section 67 than for challenges based on serious irregularity or appeals on a question of English law. The new law brings needed consistency by ensuring that the full range of remedies are available for all three types of challenges.
Arbitral stakeholders thus need to be aware that if a section 67 application is successful, the court can now remit the award to the tribunal for reconsideration, unless it determines that it would be inappropriate to do so, in which case it can set aside the award or declare it to be of no effect in whole or in part. As with the 1996 Act, the court also has the power to confirm or vary awards (in whole or in part), if appropriate.
The 2025 Act additionally clarifies that the 28-day time limit for section 67, 68 and/or 69 challenges runs only after the conclusion of any arbitral process of appeal or correction. This corrects a timing anomaly under the 1996 Act, which has been considered and picked up in recent case law. It means, for example, that if there has been an application for a correction or additional award (under section 57), which is material to the relevant challenge application, then time runs from the date of that correction or additional award (or the date when the parties were first notified of the tribunal's decision to reject the application). This promotes fairness and legal certainty and should help parties effectively plan their case strategy.
7. CORRECTION OF THE Appeal regime
Under the 1996 Act, an appeal to the Court of Appeal is only possible if it is expressly permitted in the legislation. However, the intended regime was that appeals should be permitted unless any restrictions apply, being a point picked up in case law which the new law codifies. The 2025 Act now offers parties, counsel and arbitrators much-needed clarity on the ability to bring arbitration appeals and the restrictions surrounding the same.
8. Repeal of sections concerning domestic arbitration agreements
As a minor amendment, the 2025 Act also repeals prior provisions relating to domestic arbitration agreements (sections 85 to 87) that were never brought into force and for which there has been no demand. As the 2025 Act applies equally to domestic and international arbitrations, this is a helpful tidy up of the legislation.
COMMENT
Arbitral stakeholders should welcome these targeted refinements to the 1996 Act which promote cheaper, fairer, more efficient arbitrations and which offer ideal protections and clarifications for arbitrators who are at the heart of the UK's multi-billion arbitration economy.
WHAT NEXT…?
If you missed our report on the five key changes for UK and international businesses, we recommend reading Part 1, which covers: the new statutory rule for the law governing the AA, a new s67 procedure to challenge awards, clarification in relation to jurisdictional challenges, express power of summary disposal and empowerment of emergency arbitrators.
In Part 3, we will explore why no amendments were made to section 69 of the 1996 Act (appeal on a point of law) and other topics currently affecting arbitral stakeholders which were not canvassed in the 2025 Act, including: corruption, confidentiality, discrimination, and third-party funding.
