On 24 February 2025, the Arbitration Act 2025 (“2025 Act”) received Royal Assent, implementing much-anticipated reforms to the Arbitration Act 1996 (“1996 Act”). These reforms have gained positive feedback from the arbitration community, thought to reinforce efforts to solidify the UK as one of the leading hubs for international arbitration. While facing competition from arbitration centres around the world, such as Singapore, Hong Kong, Paris, and of course Scotland within the UK, the 2025 Act introduces welcome updates for users, without deviating from the foundational principles of the well-regarded framework of the 1996 Act that extends to England, Wales, and Northern Ireland.
Key Changes:
Law applicable to the arbitration agreement: Section 1 of the 2025 Act implements a notable change to the existing framework: if the arbitration agreement does not specify a governing law, the default will now be the law of the arbitration seat.
This marks a shift from the previous stance under English common law, following the Supreme Court decision in Enka v Chubb [2020] UKSC 38. The Supreme Court had found that without an explicit choice, the law governing the broader contract would typically apply. The modification to the default rule on governing law has been widely regarded as more pragmatic and provides greater clarity and certainty compared to the previous position.
Duty of disclosure: The 2025 Act introduces an obligation for prospective or appointed arbitrators to disclose any relevant circumstances they are aware of as soon as reasonably practicable. These relevant circumstances are defined as those that might reasonably give rise to justifiable doubts about the individual’s impartiality in relation to the proceedings. Additionally, the 2025 Act emphasises that arbitrators are considered aware of circumstances that they ought to be reasonably aware of.
Power to make award on summary basis: The existing framework has now been amended by explicitly granting arbitral tribunals the power to resolve issues on a summary basis. This provides that, on an application made by a party to the proceedings, an arbitral tribunal can make an award on a summary basis, if the tribunal considers that the claim or defence has no real prospect of success.
Previously, while it was commonly understood that tribunals operating under the previous framework could exercise such authority, the lack of clear statutory backing made some tribunals hesitant to use this power. The codification of the summary powers can be seen to be particularly appealing to international businesses because it offers the potential for significant time and cost savings. By accelerating the resolution of cases with little chance of success, companies can avoid the lengthy and expensive process of prolonged arbitration proceedings.
Interim Relief: Emergency arbitration is a mechanism that allows a party in dispute to apply for urgent interim relief before an arbitral tribunal is constituted. The 2025 Act amends the 1996 Act to include that, unless otherwise agreed by the parties, the emergency arbitrator may make a peremptory order, prescribing such time for compliance with it as the emergency arbitrator considers appropriate. These powers align with those already available to the courts in litigation. This mechanism can be particularly valuable in enabling one party to prevent the other from continuing the alleged infringement until the dispute is resolved.
Jurisdictional challenge: Section 67 of the 1996 Act provides the procedure for jurisdictional challenges to awards. The 2025 Act sets out to limit the grounds in which such a challenge can be made in order to reduce expense and delays to disputing parties. The 2025 Act provides that courts are prohibited from considering evidence not presented to the tribunal unless the applicant demonstrates that they could not, with reasonable diligence, have submitted the evidence during the tribunal proceedings. In addition, subject to the court ruling otherwise in the interest of justice, evidence that was heard by the tribunal must not be re-heard by the court.
How do these changes compare to the Scottish Framework?
In Scotland, the governing framework for arbitration is established by the Arbitration (Scotland) Act 2010. This Act shares similarities with the 1996 Act, albeit with a few differences.
Unlike the 1996 Act, which did not address the law applicable to the arbitration agreement, the Scottish framework had already incorporated provisions on this matter. Similarly, while the 2025 Act now introduces a duty of disclosure, the 2010 Act enforces a duty on arbitrators to disclose any conflicts of interest. Therefore, the amendments introduced by the 2025 Act bring the two systems more closely aligned in certain respects.
One notable difference between the two governing frameworks is the introduction of the powers to make awards on a summary basis, as included in the 2025 Act. As highlighted above, the new provision has been designed to enhance the efficiency of the arbitration process, with the potential to save time and costs to business. As Scotland continues to attract international businesses for arbitration, it may be that a similar explicit provision may be introduced in Scotland in due course.
Another distinction between the frameworks is the omission of an explicit provision regarding confidentiality in the reforms introduced by the 2025 Act. This means that, unless parties agree otherwise, the confidentiality of the proceedings in England, Wales, and Northern Ireland is not automatically protected under the 2025 Act. In contrast, the Arbitration (Scotland) Act 2010 includes specific rules that preserve and reassure confidentiality to parties in arbitration proceedings, unless the parties agree otherwise (as the rule around confidentiality is a “Default” rule as opposed to a “Mandatory” rule, under the Scottish Arbitration Rules at Schedule 1 of the 2010 Act. This aspect of the Scottish framework ensures that the details of the arbitration, including any documents and evidence submitted, remain private unless the parties agree to disclose them, or certain exceptions apply.
This distinction can be particularly appealing to businesses that place a high value on confidentiality in dispute resolution. The inclusion of explicit confidentiality provisions can be a significant advantage in Scotland’s bid to attract business, offering parties privacy in ongoing proceedings.
Summary
In summary, the Arbitration Act 2025 introduces significant enhancements to the 1996 Act, including clear rules on governing law, a duty of disclosure, and the power to make awards on a summary basis, which promise efficiency and cost savings for businesses. Given the similarities between the 1996 Act and the Scottish 2010 Act, it will be interesting to watch whether similar provisions (if not there already) are introduced into the Scottish framework in due course.
If you would like to discuss your options relating to international arbitration please get in touch with Leigh Herd, Frazer Meldrum, or another member of our specialist International Arbitration team.