Arbitration Act 2025 – What policyholders can expect       

In the biggest legislative development in the field of arbitration in England for thirty years, the English Arbitration Bill received Royal Assent on 24 February 2025 and was enacted as the Arbitration Act 2025 (the Act). The date on which the Act will come into force is to be determined, but the Government has indicated that this will be “as soon as practicable”.

Rather than replacing the existing statutory framework, the Act amends and adds to the Arbitration Act 1996.

The intention of the Act is to reinforce England’s position as the best place to resolve disputes by arbitration. We consider below how the developments may affect policyholders.

Power to make award on summary basis

The Act codifies the power under which an arbitral tribunal may make a summary award in relation to a claim or issue if the tribunal considers that a party has “no real prospect of succeeding”. This brings welcome clarity, the previous position as to whether a tribunal had such power being uncertain.

This will not markedly change practice for parties used to arbitrating disputes under the LCIA rules, which have previously provided that a tribunal may find a claim is (i) inadmissible; (ii) manifestly without merit; or (iii) manifestly outside the jurisdiction of the tribunal. This change will therefore have the greatest impact on parties arbitrating under ad hoc rules, and offers those parties an opportunity to save time and resources when faced with unmeritorious claims or unmeritorious defences.

Applicable law

Previously, the common law has provided that the law governing an arbitration agreement will be determined by the law governing the underlying contract, unless otherwise provided.

The new approach under the Act provides that, absent express agreement, the law of the seat of the arbitration shall apply, and an express choice of law governing the underlying contract will not constitute an express choice in relation to the arbitration agreement.

While this may seem to lay observers like a technical point, the change in approach is significant. The previous (and criticised) position meant that parties to a non-English law contract, but with a London-seated arbitration agreement (which did not specify the law applying to the arbitration agreement), found that the arbitration agreement was not governed by English law. Parties would therefore not benefit from the full protection and support of English law, which generally seeks to uphold references to arbitration.

Jurisdictional challenges

The Act limits the scope to challenge an award on jurisdictional grounds such that the court will not hear objections which have not been first raised with the arbitral tribunal, or consider evidence that was not put before the arbitral tribunal, save where the applicant shows they did not know and could not with reasonable diligence have discovered that ground, or put the evidence before the tribunal during the arbitration proceedings. It will also not rehear evidence that was heard by the arbitral tribunal, unless the interests of justice dictate otherwise.

These changes represent a significant restriction on a party’s right to challenge substantive jurisdiction.

Upon hearing a jurisdictional challenge the court now has a menu of remedies, including remitting the award to the tribunal for reconsideration or declaring that the award (in whole or in part) has no effect.

In reducing the scope of jurisdictional challenges, parties should have more certainty that an arbitral award will be final.

Codification of Arbitrator’s duty of disclosure

The common law duty of an arbitrator to disclose circumstances that might reasonably give rise to justifiable doubts as to their impartiality has now been codified such that a proposed arbitrator must as soon as reasonably practicable disclose to the referrer (where disclosure is prior to appointment), or to the parties (where disclosure is after appointment), any circumstances which reasonably give rise to justifiable doubts to impartiality.

We would expect this codification to result in earlier disclosures, reducing the risk that a party will apply to remove an arbitrator, potentially scuppering the process.

Emergency Arbitrators

The Act provides welcome certainty as to the enforceability of final awards made by an emergency arbitrator, empowering them to make final awards which can be enforced by the courts.

Conclusion

It can be seen that the Act has introduced a number of changes that should increase the efficiency of the arbitral process and the certainty and enforceability of arbitral awards.

Where policyholders are referring adverse coverage decisions by insurers to dispute resolution, these changes should be welcomed, in the expectation that final decisions will be reached more quickly and economically.

Matthew King is an Associate at Fenchurch Law, Singapore.