The New Arbitration Act 2025 – Key changes for maritime arbitrations
The new Arbitration Act 2025 received Royal Assent on 24 February 2025 and will come into force most likely at some point later this year. The 2025 Act will not be a standalone Act but, rather, inserts amendments to the 1996 Act so as to enact the recommendations of the Law Commission codifying the common law position and eliminating ambiguity. As such, the 2025 Act will modernise arbitration in London to maintain its competitiveness as a seat for international arbitrations.
The Act introduces 15 reforms however the key changes that Members need to be aware of are:
- The Act introduces a new, default rule regarding the governing law applicable to arbitration agreements. The applicable law will, under the 2025 Act, now be assumed to be the law of the seat in question. Significantly, the rule applies even if the parties’ chosen seat of arbitration is outside England and Wales, or where no seat has been designated or determined. This replaces the complex common law rules established by the UK Supreme Court in Enka v Chubb (2020). Therefore, for example, if the charterparty only states that arbitration is to be in London but does not expressly state that English law will apply, the default position will be for English law to be applicable.
- There is now an express power for tribunals to make an award on a summary basis where the claim, or a particular issue within a dispute, has no real prospect of success. For example, this may be of interest in unpaid freight claims where charterers have not paid freight that has been deemed earned and payable. The procedure for how this will be conducted has not been specified in the Act, leaving it for the parties to decide with the tribunal. However, the provision is not mandatory and parties can agree to disapply it.
- The Act grants emergency arbitrators authority to issue peremptory orders, which ensures that they have the same access to court enforcement as non-emergency arbitrators to assist with the resolution of time-sensitive matters. This allows parties to enforce orders of emergency arbitrators more easily by confirming that English courts can convert peremptory orders of emergency arbitrators into court orders for use in enforcement actions.
- Additionally, there are duties on arbitrators to disclose to a party approaching them for appointment any “circumstances that might reasonably give rise to justifiable doubts as to [their] impartiality in relation to the proceedings, or potential proceedings, concerned”. This confirms the test in Halliburton v Chubb (2020).
- The Act also limits the circumstances in which a losing party can obtain a re-hearing of the case before the courts concerning challenges pursuant to section 67 (lack of jurisdiction). There is a revised framework and procedure for such challenges that means that under the 2025 Act courts will not re-hear evidence or entertain new grounds of objection or new evidence. Whilst section 67 challenges are rare, in West’s experience, this is likely to result in a significantly shorter section 67 process and costs savings for the parties.
How will these changes impact Members?
In the Club’s view, the 2025 Act broadly reflects “business as usual” and does not introduce large scale revisions to the 1996 Act and English common law position. However, once enacted, Members will need to take the 2025 Act above into account when drafting their charter party law and jurisdiction clauses which should state not only the seat of the arbitration (e.g “arbitration in London”) but also which law should apply to the arbitration. This is particularly important if the parties choose London Arbitration but want the arbitration procedure to be subject to, for example, Singaporean law, since otherwise the new default rule will apply.
Therefore, in arbitrations commenced after the Act comes into effect, parties will have the option, for example, of exercising the right to apply for a summary award. This may be particularly useful for matters involving freight disputes or undisputed hire that do not need a full arbitration.
It is worth bearing in mind that the LMAA Terms 2021 have yet to be updated so as to dovetail with the 2025 Act. In this regard, the LMAA comments:
“The LMAA wholeheartedly welcomes the Arbitration Act 2025. It was appropriate to review the 1996 Act 25 years after its introduction. The international community can be reassured that we take stock periodically of the law applicable to London arbitration. The Law Commissioner and her team did a first class job of consulting and reporting. We were very pleased that they regarded the 1996 Act as still fit for purpose. For maritime disputes, it works very effectively in conjunction with the LMAA Terms. The revisions to the Act are useful and well-judged. When we next review the LMAA Terms, we will have them in mind, but they are likely to have little direct effect on maritime arbitration, because mostly they deal with matters already covered by the Terms and the current practice of maritime arbitrators.”
A reminder to parties when commencing arbitration
Members are also reminded of the importance of serving a notice of arbitration effectively, ensuring the person receiving it has authority to accept it (see our article). It may be worth including provisions in the charter party which state who arbitration notices are to be sent to, including any (eg central mailbox) email addresses, to ensure effective and binding service.
Members are also reminded that the LMAA’s Intermediate Claims Procedure is a useful tool where the amount in dispute and/or the complexity of the issues in dispute does not warrant the full LMAA procedure – see here.
If Members have any questions or concerns about the changes, please contact your claims handler or one of the defence team.