The United Kingdom has recently enacted the Arbitration Act of 2025, introducing targeted amendments to strengthen its position as a premier seat for international arbitration. Following an extensive review process, the amendments received royal assent on February 24, 2025. Rather than a complete overhaul, these revisions aim to refine and clarify existing principles, ensuring that the UK remains a preferred jurisdiction for arbitration.
Some of the key amendments include the introduction of a default seat-centric rule, providing clarity on the earlier decision in Enka Insaat Ve Sanayi AS v OOO “Insurance Company Chubb” & Ors, and empowering arbitral tribunals to issue summary awards. The Act also enhances arbitrators’ duty to disclose circumstances that may give rise to justifiable doubts about their impartiality.
Some of these reforms may offer valuable insights for India as it continues to refine its arbitration framework.
Default Seat-Centric Rule
One of the significant amendments is the introduction of Section 6A to the UK’s Arbitration Act 2025, which explicitly clarifies the seat-centric approach to governing law disputes. This amendment seeks to dispel any lingering uncertainty in view of Enka v. Chubb, which the Second Consultation Paper described as “complex and unpredictable”.
According to the amendment, in the absence of an express choice of law in the arbitration clause of the main contract, the arbitration agreement shall be governed by the law of the seat rather than the governing law of the main agreement. In other words, for parties in the UK, it is advisable to clearly specify the governing law of the contract as well as the arbitration agreement. Otherwise, by default, the law of the seat will apply to the arbitration agreement.
This amendment seeks to uphold the principle of Kompetenz-Kompetenz while ensuring public utility and retaining arbitrations seated in the UK.
Interestingly, India was at the forefront of this approach, having adopted it much earlier. In the landmark decision of Bharat Aluminium Co. (BALCO) v. Kaiser Aluminium (2012), the Constitution Bench of the Supreme Court unequivocally established that Part I of the Arbitration and Conciliation Act, 1996, applies exclusively to arbitrations seated in India and has no application to foreign-seated arbitrations.
Applying the law of the seat to arbitrations, even when the governing law of the contract is different, is crucial. It allows the seat court the flexibility to determine key issues such as the arbitrability of a dispute, whether a dispute falls within the scope of the arbitration agreement, the involvement of non-signatories in arbitration, and the interpretation of the arbitration clause.
Restricted Power of Appeal
Section 67 of the Arbitration Act 1996 has been amended, restricting challenges to an arbitral award on jurisdictional grounds. The Act now prevents courts from entertaining new grounds of objection, admitting new evidence, or rehearing evidence already considered by the arbitral tribunal, except in limited circumstances where the applicant could not, with reasonable diligence, have discovered the grounds or presented the evidence earlier. This change aims to prevent losing parties from seeking costly full rehearings before a judge.
Previously, under Dallah v Pakistan [2010] UKSC 46, even if the tribunal had fully debated its jurisdiction, a challenge under Section 67 resulted in a complete rehearing before the court. Clause 11 of the 2025 Act departs from this position, ensuring that evidence heard by the tribunal is not reconsidered by the court.
This development serves as an important lesson for India, where there is growing deliberation on expanding judicial powers under Section 34 of the Arbitration and Conciliation Act, 1996, akin to a first appeal. Additionally, the Arbitration and Conciliation (Amendment) Bill, 2024, proposes extending the principle of patent illegality to international commercial arbitration. I have consistently cautioned against both these proposals, as they would significantly undermine India’s attractiveness as an arbitral seat. The UK’s decision to limit judicial intervention in arbitration should prompt India to reconsider this course of action.
Introduction of Summary Awards
A significant amendment in the UK’s Arbitration Act 2025 is the introduction of summary awards, allowing arbitral tribunals to summarily dismiss claims or defenses that lack merit. Under this mechanism, a party may apply for a summary award, and if the tribunal determines that the opposing party’s case has no realistic prospect of success, it can resolve the matter without proceeding to a full hearing. This provision is discretionary, and parties have the option to opt out.
This amendment brings arbitration closer to the efficiency mechanisms available in litigation. In the UK, summary judgment has long been an established feature of civil procedure, enabling courts to swiftly dispose of unmeritorious claims. Since the 2025 Act does not prescribe a specific procedure, it grants arbitral tribunals greater flexibility. The primary objective of this reform is to enhance efficiency while minimizing unnecessary costs and delays.
India may find this amendment particularly instructive, as the concept of summary disposal already exists in Indian commercial litigation under Order 13A of the Commercial Courts Act, 2015. This provision allows courts to grant summary judgment in cases where a party’s claim is evidently weak, thereby preventing protracted litigation. Given this precedent, introducing a similar mechanism in Indian arbitration law would be a logical progression.
A well-defined summary award procedure would streamline arbitration, curbing frivolous claims and reducing unnecessary delays. Since Indian courts already have a framework for summary disposal in commercial cases, extending this principle to arbitration could enhance efficiency, lower costs, and strengthen India’s position as an arbitration-friendly jurisdiction.
Court’s Power to Act Against Third Parties
Clause 9 of the 2025 Act extends the scope of Section 44 of the 1996 Act to third parties—entities that are not party to the arbitration proceedings. This expansion empowers courts to issue orders in support of arbitration on matters such as the taking of witness evidence, preservation of evidence, property-related directives, sale of goods subject to arbitration, interim injunctions, and the appointment of receivers against such third parties.
Incorporating a similar provision into the Indian Arbitration and Conciliation Act, 1996, could significantly strengthen its framework by allowing courts to enforce orders against third parties during the pendency of arbitration. This would enhance the effectiveness of arbitration in India, ensuring that proceedings are not frustrated by the inability to secure necessary interim reliefs against third parties/non-signatories.
Small Repairs
The UK’s Arbitration Act 2025 was brought about by a year-long process by the Law Commission, which was cognizant that the Act worked well and accordingly confined their recommendations to a “few major initiatives, and a very small number of minor corrections”, underscoring the importance of measured, incremental reforms rather than sweeping changes. India should take note of this approach, ensuring that amendments to its arbitration framework are targeted and do not create uncertainty for businesses and litigants. Frequent or large-scale changes to arbitration law can deter parties from choosing India as a seat for arbitration, as stability and predictability are key considerations in international dispute resolution.
Rather than making frequent, large-scale amendments that may unsettle stakeholders, India should focus on incremental, well-considered reforms that reinforce its arbitration ecosystem. The UK’s recent amendments serve as a valuable reference point for such future developments.
———————–
This Article first appeared in Bar and Bench on 21.03.2025. The view the original article, please follow the link – https://www.barandbench.com/columns/the-united-kingdoms-arbitration-act-2025-key-amendments-and-lessons-for-india
