Arbitration Act 2025 Receives Royal Assent
On 24 February 2025, the Arbitration Act 2025 received Royal Assent.
The Act implements the recommendations of the Law Commission for reform to the arbitral framework in England and Wales and Northern Ireland.
It addresses the following matters: Law applicable to arbitration agreement; Impartiality: duty of disclosure; Immunity of arbitrator: application for removal; Immunity of arbitrator: resignation; Court determination of jurisdiction of tribunal; Power to award costs despite no substantive jurisdiction; Power to make award on summary basis; Emergency arbitrators; Court powers exercisable in support of arbitral proceedings in respect of third parties; Challenging the award: remedies available to the court; Procedure on challenge under section 67 of the Arbitration Act 1996; Challenging the award: time limit; Appeals to Court of Appeal from High Court decisions; Requirements to be met for court to consider applications; Repeal of provisions relating to domestic arbitration agreements.
Readers of the EAPIL Blog are likely to be most interested in the new rule on determining the law applicable to arbitration agreements. The arbitration community and the Law Commission had expressed dissatisfaction with the common law choice of law rules, which have been the subject of three UK Supreme Court judgments since 2020 – Enka (2020), Kabab-Ji (2021) and UniCredit (2024). We have covered some of these developments extensively on the EAPIL Blog, including two symposia on the Law Commission’s reform proposals in this area and the UKSC UniCredit judgment.
The rule that ultimately found its way into the Act is similar to the Law Commission’s proposal and reads as follows:
6A Law applicable to arbitration agreement
(1) The law applicable to an arbitration agreement is—
(a) the law that the parties expressly agree applies to the arbitration agreement, or
(b) where no such agreement is made, the law of the seat of the arbitration in question.
(2) For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not constitute express agreement that that law also applies to the arbitration agreement.
(3) Subsection (1) does not apply to an arbitration agreement derived from a standing offer to submit disputes to arbitration where the offer is contained in—
(a) a treaty, or
(b) legislation of a country or territory outside the United Kingdom.
(4) In this section—
“legislation” includes any provision of a legislative character;
“treaty” includes any international agreement (and any protocol or annex to a treaty or international agreement).
As discussed in the two symposia, this rule raises many questions. For instance, which issues are covered by this rule? What amounts to an express agreement by the parties for this purpose? Is it a good idea to have two different choice of law rules for arbitration agreements, one in the new section 6A and another in section 103(2)(b), which implements Article V(1)(a) of the New York Convention? The uncertainties that existed under the common law rules have been replaced with new uncertainties presented by the new statutory rule. Judgment from English courts interpreting and applying this rule are keenly awaited.