Reform of the English Arbitration Act 1996: what it means for practitioners

Introduction

The English Arbitration Act 1996 has long been regarded as the cornerstone of modern arbitration law. It establishes a comprehensive legal framework for resolving disputes outside of the court system, seeking to promote efficiency, flexibility and party autonomy while ensuring fairness and impartiality in arbitral proceedings. Over the years, the Act has gained significant recognition both domestically and internationally, with the UK remaining one of the most preferred jurisdictions for arbitration globally.

However, as arbitration continues to evolve and the landscape of international dispute resolution changes, it has become apparent that certain provisions of the Act are in need of reform to align them with contemporary practices and to address new challenges. With the rise of digital technologies, increased calls for transparency, and heightened concerns about accessibility and accountability in arbitration, the UK government has taken steps to modernise the Arbitration Act 1996.

This reform is driven by the desire to retain the UK's leading position in the field of arbitration while adapting to the changing demands of arbitration practitioners, businesses, and the wider international legal community. Following extensive consultations, the Arbitration (Reform) Bill, which passed through the House of Lords in November 2024 and is now in the House of Commons ('Reform Bill'), introduces several important changes that are analysed in further detail below.[1]

According to the UK Parliament's website, the Reform Bill has passed both the House of Commons and the House of Lords and now awaits Royal Assent. Consequently, it is very likely that it will become an Act of Parliament during the first quarter of 2025.

Key reforms and their impact on practitioners

Applicable law to arbitration agreements

One of the most notable changes introduced by the Reform Bill is that parties must specify the governing law of an arbitration agreement. Under the newly added section 6A to Clause 1:

The law applicable to an arbitration agreement is —

(i) the law that the parties expressly agree applies to the arbitration agreement, or

(ii) where no such agreement is made, the law of the seat of the arbitration in question.[2]

This change resolves long-standing ambiguities that have often resulted in jurisdictional disputes,[3] particularly when the governing law of the arbitration agreement (or the law of the seat of the arbitration) differs from that of the underlying contract. Consequently, this change increases predictability and will likely reduce litigation over jurisdictional issues. Practitioners should be mindful of this legislative change when they are faced with arbitration agreements that do not specify the applicable law, but which indicate the seat of arbitration.

Emergency arbitrators and interim relief

The Reform Bill gives emergency arbitrators express powers to ensure compliance with their orders before the arbitral tribunal is constituted. Under the newly added section 41A, emergency arbitrators are empowered to grant interim measures (as long as the parties have agreed to the application of rules that provide for the appointment of an emergency arbitrator) and the courts are given the authority to enforce orders issued by emergency arbitrators.[4] This eliminates ambiguity about the legal status of emergency arbitrators and bolsters the confidence of parties relying on interim measures, such as freezing or preservation orders.

By incorporating this feature, the Reform Bill brings the UK in line with modern arbitration rules such as those of the International Chamber of Commerce, the Singapore International Arbitration Centre and the London Court of International Arbitration, by strengthening the enforceability of awards — particularly in the context of interim and emergency measures and cross-border disputes — and therefore is expected to enhance the UK's competitiveness as a venue for both domestic and international arbitration.

Summary awards

A hallmark of the reforms is the enhancement of administrative efficiency. The Reform Bill introduces a new section 39A,[5] which permits arbitral tribunals (on application by one of the parties giving notice to the other party to the arbitration) to issue summary awards where a party's claim or defence has no real prospect of success. Additionally, the Reform Bill allows arbitral tribunals to expedite proceedings and reduce costs by addressing clear-cut issues early.

This provision mirrors summary judgment procedures in English civil litigation,[6] allowing tribunals to expedite proceedings by resolving manifestly unmeritorious claims early. Practitioners must incorporate this tool strategically, as it can mitigate costs and streamline disputes, particularly in sectors such as construction and finance, where clear-cut claims frequently arise.

Streamlining challenges to arbitral awards

The Arbitration Act 1996 allows only a very small number of challenges to arbitral awards, based on the substantive jurisdiction of the arbitral tribunal,[7] the existence of a serious irregularity[8] and appeals on a point of law.[9] This limited scope for challenging arbitral awards has been one of the strengths of the system, ensuring that arbitration awards remain final and binding. However, there has been ongoing concern regarding the procedure for challenging arbitral awards, as well as with the time limits.

The Reform Bill revises the procedures for challenging arbitral awards under section 67, which deals with challenges based on a tribunal's substantive jurisdiction. Key changes include the following:

Courts are now empowered to remit matters back to the arbitral tribunal rather than setting aside the award.[10] In fact, the Reform Bill states that the court must not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration.[11]

New procedural rules limit the ability to raise objections not previously brought before the arbitral tribunal, discouraging frivolous challenges.[12] This ensures that arbitration remains party-driven and limits the risk of parallel litigation undermining the process. For practitioners, the reform reinforces the importance of thorough preparation before tribunal hearings, as opportunities for judicial recourse are now more circumscribed.

Furthermore, the Reform Bill refines the timelines for challenging arbitral awards. Section 70[13] introduces an 'applicable date' framework, tying challenge deadlines to the conclusion of arbitral review processes or the issuance of corrections. By clarifying procedural milestones, these provisions aim to reduce tactical delays often employed to frustrate proceedings. Practitioners shall adapt to the stricter timelines, ensuring that procedural compliance remains a priority throughout the arbitration lifecycle.

Lastly, the Reform Bill states that appeals to the Court of Appeal following High Court decisions will require explicit permission from either the High Court or the Court of Appeal[14] (as is the general rule in English civil litigation).[15]

Enforcement of awards

The Reform Bill reaffirms the UK's pro-arbitration stance by streamlining court procedures related to enforcement. The emphasis on maintaining arbitral autonomy while ensuring robust enforcement aligns with international obligations under the New York Convention, further enhancing the UK's reputation as an arbitration-friendly jurisdiction.

For practitioners, the changes under the Reform Bill offer predictability and clarity, both on securing compliance with awards and on advising clients on enforcement strategies. The recognition of summary awards and emergency arbitrator orders as enforceable instruments further empowers practitioners to deploy creative solutions tailored to their clients' needs.

Other important changes to the Arbitration Act 1996

The Reform Bill codifies the duty of disclosure for arbitrators. Under section 23A, when approached by an individual for a potential appointment, or as soon as is reasonably practicable, arbitrators have a legal obligation to disclose any circumstances that might reasonably give rise to justifiable doubts as to the arbitrator's impartiality in relation to the proceedings.[16]

The Reform Bill significantly enhances the protection of arbitrators by extending their immunity. Previously, arbitrators could face liability for costs incurred during proceedings to remove them. The new provisions shield arbitrators from such costs unless bad faith is proven.[17]

In an effort to modernise and unify arbitration law, section 15 of the Reform Bill repeals outdated provisions specific to domestic arbitration agreements.[18] Historically, domestic arbitration was subject to different rules, reflecting a perceived dichotomy between domestic and international arbitration. This change recognises the diminishing importance of this distinction in a globalised legal environment.

Wider implications of the Reform Bill

The Reform Bill introduces important changes to English arbitration at an international level; practitioners have predicted that it will significantly influence domestic and international arbitration.[19]

The UK has long been a preferred seat for arbitration, prized for its arbitration-friendly judicial system, adherence to the New York Convention, and the perceived neutrality of English law. The Reform Bill further bolsters this reputation by aligning the 1996 Arbitration Act with contemporary international standards and leading arbitral institutions.

Also, the introduction of emergency arbitrators and summary awards demonstrates the UK's willingness to innovate and adapt to global arbitration trends. This responsiveness enhances the UK's appeal to commercial parties seeking efficient, cutting-edge dispute resolution mechanisms. For multinational entities and legal practitioners, these reforms provide renewed confidence in England and Wales as a reliable forum for resolving cross-border disputes efficiently and effectively.

Moreover, the introduction of a new section[20] clarifying the law applicable to arbitration agreements, enhances predictability for parties in multi-jurisdictional disputes. By decoupling the substantive law governing the contract from the arbitration agreement, this change prevents ambiguities that could otherwise lead to satellite litigation. This provision is particularly impactful for global businesses that frequently encounter disputes spanning diverse legal systems.

The timing of the Reform Bill coincides with significant economic and geopolitical shifts, including Brexit's impact on cross-border trade and the evolving role of the UK in international markets. By enhancing its arbitration framework, the UK signals its commitment to remaining a key player in global commerce, particularly as it seeks to establish bilateral trade agreements and strengthen ties with non-European markets. For emerging economies and foreign investors, the Reform Bill provides reassurance that England and Wales remain an accessible and dependable forum for resolving disputes, irrespective of broader political uncertainties.

In the end, all of these reforms will secure London's position as one of the most important arbitration hubs in the international market. The Reform Bill meets the requirements of the modern practice of arbitration concerning efficiency and enforceability, and ensures that the UK does not lose out when it comes to global competition for the seats of arbitration. For practitioners all over the world, these changes solidify the UK as the preferred, modern, and progressive jurisdiction for international arbitration.

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[1] An updated version of the Reform Bill can be accessed through the official website of the UK Parliament

[2] Arbitration Bill [HL] 2024, s 6A.

[3] Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) UKSC (United Kingdom) 48 (2021) and Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb UKSC (United Kingdom) 38 (2020).

[4] Arbitration Bill [HL] 2024, s 41A.

[5] Arbitration Bill [HL] 2024, s 39A.

[6] Civil Procedure (Amendment) Rules 2000, Pt 24.

[7] Arbitration Act 1996, s 67.

[8] Arbitration Act 1996, s 68.

[9] Arbitration Act 1996, s 69.

[10] Arbitration Bill [HL] 2024, s 67(3)(c).

[11] Arbitration Bill [HL] 2024, s 67(3A).

[12] Arbitration Bill [HL] 2024, s 67(3C).

[13] Arbitration Bill [HL] 2024, s 70.

[14] Arbitration Bill [HL] 2024, s 13.

[15] Civil Procedure (Amendment) Rules 2000, Pt 52(3).

[16] Arbitration Bill [HL] 2024, s 23A.

[17] Arbitration Bill [HL] 2024, s 24(5A).

[18] Arbitration Bill [HL] 2024, s 15.

[19] D. Gultutan, 'The UK Law Commission's Reforms Proposed to the English Arbitration Act 1996: Bonum, Malum Et Turpe', Public and Private International Law Bulletin (2024), 44, p 197 et seq.

[20] Arbitration Bill [HL] 2024, s 6A.