The Arbitration Act 2025 (AA 2025) applies to arbitrations commenced on or after 1 August 2025. It does not replace the Arbitration Act 1996 (AA 1996), but supplements sections of it. The AA 1996 remains the primary legislation governing arbitrations in England, Wales, and Northern Ireland. For policyholders, the AA 2025 brings enhanced certainty, transparency and procedural efficiency.
The applicable law of the arbitration agreement – as opposed to the law governing the substantive dispute – will now be the law of the seat, unless the policy expressly states otherwise (Section 1 AA 2025, adding Section 6A to the AA 1996). This provision reverses the UK Supreme Court’s controversial decision in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, which had held that, in the absence of an express choice by the parties, the arbitration agreement would ordinarily be governed by the substantive law of the contract (and which we reported on here).
In “Bermuda Form” insurance policies, the arbitral seat commonly differs from the policy’s governing law. Policy provisions typically provide for London-seated (or sometimes Toronto, Vancouver, or Bermuda-seated) arbitration, governed by New York substantive law, subject to certain, contractually specified interpretive provisos. Given the new default rule under AA 2025, policyholders should check the terms of their insurance policies to ensure that where they are agreeing to a London-seated arbitration, they have also expressly specified the law governing the arbitration agreement, if it is intended to be something other than English law. While the AA 2025 amendments may affect the law governing the arbitration agreement, they do not affect the law governing the substantive coverage dispute.
The AA 2025 codifies the duty of disclosure recognised by the UK Supreme Court in Halliburton Co v Chubb Bermuda Insurance Ltd [2020] UKSC 48, which we reported on here, by expressly requiring arbitrators to disclose any circumstances that might reasonably give rise to justifiable doubts about their impartiality (Section 2 AA 2025, adding Section 23A to the AA 1996). This includes circumstances of which they are aware, as well as those of which they ought reasonably to be aware, which clarifies the scope of the duty articulated in Halliburton. This statutory duty will be welcomed by policyholders, where defendant insurers often repeatedly appoint the same arbitrators from a small specialist pool. Arbitrators are now statutorily required to proactively consider their impartiality to ensure compliance with the duty, whereas their important obligations in this regard were previously imposed by the common law.
In line with Section 34(1) of the AA 1996, pursuant to which arbitrators have the power to decide all procedural and evidential matters, arbitrators now also have express statutory powers of summary disposal (Section 7 AA 2025, adding Section 39A to the AA 1996). This expressly permits disposal of issues, claims or defences where arbitrators consider a party has no real prospect of success. The provision is non-mandatory, so parties can decide whether to exclude it and policyholders should have this provision in mind when placing or renewing their policies.
In light of the AA 2025 enhancements, policyholders should consider whether the dispute resolution provisions contained in their policies align with their intentions. The enhancements are focused on London-seated arbitrations being resolved more swiftly, equitably and with greater certainty attaching to the arbitral process.
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