ARBITRATION ACT 2025: KEY REFORMS AND IMPLICATIONS

The full English and Vietnamese version: HERE

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The Arbitration Act 2025 (New Act) received Royal Assent on 24 February 2025, introducing significant reforms to the arbitration process in England and Wales. The Secretary of State will determine an effective date for the New Act.

The New Act aims to facilitate arbitration procedures and enhance London’s attractiveness as a preferred seat of arbitration compared to Hong Kong or Paris.

1. New default rule on the governing law of arbitration agreements

The law governing an arbitration agreement is determined as follows:

(a) The law expressly agreed upon by the parties as applicable to the arbitration agreement; or

(b) In the absence of such an agreement, the law of the arbitral seat applies.

This clarification applies irrespective of the governing law of the underlying contract and replaces the common law in the Supreme Court’s decision in Enka v Chubb[1] with a statutory rule. For example, where the arbitration is seated in England and Wales, then the agreement to arbitrate will usually be governed by the law of England and Wales. By inserting section 6A(2) of the New Act, any law chosen to govern the main contract does not count as an express choice of law to govern the agreement to arbitrate, which also enhances the doctrine of separability.

2. Arbitrators’ duty of disclosure

An arbitrator must, as soon as reasonably practical, disclose to the parties to the arbitral proceedings any relevant circumstances of which the arbitrator is, or becomes, aware.

“Relevant circumstances” refer to any factors that might reasonably give rise to justifiable doubts as to the individual’s impartiality in relation to the proceedings, or potential proceedings, concerned. This is a codification of the principles established in Halliburton v Chubb case law.[2]

3. Arbitrator immunity in cases of resignation or removal

Under the 1996 Act, arbitrators risked losing their immunity and facing liability if they resigned or were removed by court order at a party’s request. The New Act now strengthens arbitrator immunity, ensuring that arbitrators:

• are only held liable for resignation if it is proven to be unreasonable in the circumstances;
• are only held liable for removal if it is established that they acted in bad faith.

In several UK cases law, arbitrators can potentially find themselves liable for costs/damages incurred by an application for their removal.[3] Under Explanatory Notes related to the Arbitration Bill by the House of Lords dated 6 November 2024, the reform under the New Law could help an arbitrator no longer be liable for their removal or resignation unless the arbitrator has acted in bad faith or the resignation is shown by a complaint to be unreasonable.[4]

4. Court’s power in support of arbitral proceedings and emergency arbitrators.

Courts have powers to make orders in supporting arbitral proceedings, such as interim relief (e.g., the preservation of evidence) against third parties.

Furthermore, the Arbitration Act 2025 facilitates the enforceability of emergency arbitrator orders by confirming that parties can seek assistance from the English courts to convert peremptory orders issued by emergency arbitrators into English Court orders.

5. Jurisdictional objections and procedure for challenges under section 67 (challenges for lack of jurisdiction)

An application for the court’s determination of a preliminary point of jurisdiction must not be considered if the tribunal has already ruled on jurisdiction.

This new change prevents the courts from rehearing evidence already examined by the tribunal and restricts parties from introducing new arguments or evidence. This is codified from the Dallah v Government of Pakistan case law, where a challenge under Section 67 of the Arbitration Act 1996 was by way of full rehearing with the submission of new evidence and arguments.[5]

Key procedural limitations regarding the court’s intervention in arbitral proceedings include:

• A ground for the objection that was not raised before the tribunal must not be raised before the court unless the applicant shows that, at the time the applicant took part in the proceedings, the applicant did not know and could not, with reasonable diligence, have discovered the ground.
• Evidence that was not put before the tribunal must not be considered by the court unless the applicant shows that, at the time the applicant took part in the proceedings, the applicant could not, with reasonable diligence, have put the evidence before the tribunal.
• Evidence that the tribunal heard must not be re-heard by the court.

7. Summary disposal

Tribunal has power to make an award on a summary basis where they determine that

• A party has no realistic prospect of success on a claim or issue; or
• A party has no realistic prospect of successfully defending a claim or issue.

Which reforms Vietnam should consider applying?

Vietnam is currently in the process of amending the Law on Commercial Arbitration 2010, and the reforms introduced by the Arbitration Act 2025 could serve as a reference point to enhance Vietnam’s arbitration framework, positioning it as a more attractive arbitration seat.

1. Firstly, one key reform that Vietnam could adopt is the default rule on the governing law of arbitration agreements. Under the Arbitration Act 2025, if the parties have not expressly agreed on a governing law, the law of the seat of arbitration will apply.

Determining the applicable law of arbitration agreement is essential because it answers important questions like who is the party to the arbitration agreement, the arbitrability, the validity of that agreement.

Before the Arbitration Act 2025, there are two approaches when determining the applicable arbitration agreement without the parties’ choice of law. The first approach confirmed by the Enka v Chubb case, the express choice of law governing the whole contract would refer to the implied choice of the arbitration agreement. The second approach could be found that the law of the seat could govern the arbitration agreement without an express choice. The second approach was also reflected in Kabab v Kout when the court held that the English law as the law of the main contract does not render parties’ intention to submit an arbitration agreement to the English Law.[6]

In contrast, the Law on Commercial Arbitration 2010 (LCA) does not clearly stipulate a default rule, leading to potential disputes over whether the governing law should be that of the arbitral seat or the underlying contract.

Under Article 14.2 of the LCA, the Tribunal shall decide to apply the law it sees as most appropriate if the parties have not agreed on the applicable law. In practice, if the arbitration is seated in Vietnam, the Tribunal tends to apply Vietnamese law to govern the arbitration agreement. However, if the arbitration is seated outside of Vietnam, “the law governing the arbitration should be the law of the country has the closest connection to civil relations involving foreign elements”.[7] This probably implies either the law of the underlying contract or the law of the seat, which leads to uncertainty.

2. Secondly, concerning court intervention in arbitration, Vietnam could benefit from the reforms under the Arbitration Act 2025, which aim to limit judicial interference in matters already decided by the arbitral tribunal. Although Article 71.4 of the Law on Commercial Arbitration 2010 states that courts shall not review the merits of a dispute, there have been instances where courts have overstepped their role. Adopting a more restrictive approach to court intervention, in line with the Arbitration Act 2025, could reinforce arbitration’s autonomy and efficiency.

3. However, some reforms in the Arbitration Act 2025 may require further study before being incorporated into Vietnam’s legal framework. For example, regarding arbitrator liability, Article 49.5 of the Law on Commercial Arbitration 2010 still holds arbitrators liable for damages arising from interim measures issued by the tribunal. In contrast, the Arbitration Act 2025 grants arbitrators stronger immunity unless they act in bad faith or resign unreasonably. Adopting a similar approach in Vietnam would require careful consideration to balance arbitrator accountability with judicial protection.

4. Additionally, Vietnam currently does not have provisions on emergency arbitration. As a result, the reforms under the Arbitration Act 2025, which strengthen court support for enforcing emergency arbitrator decisions, may not yet be suitable for Vietnam’s legal system. Before adopting such provisions, Vietnam would need to introduce a legal framework for emergency arbitration and develop mechanisms for enforcing emergency arbitrator decisions.

The Influence of the Arbitration Act 2025 to International arbitration

1. The Arbitration Act 2025 may influence how courts in the UK review and enforce arbitral awards, particularly in cases where jurisdictional challenges are raised.

2. Other jurisdictions may look to the UK as a model for procedural reforms in enforcement under the New York Convention 1958, ensuring consistency in international arbitration practice. Furthermore, international arbitrators who have arbitration seated in the UK (such as at LCIA) should adopt the changes mentioned under the Arbitration Act 2025.

3. Arbitration institution in the UK may revisit their rules to consider whether any changes should be made for consistency with the Arbitration Act 2025 (for example, the law of arbitration agreement, the summary disposal, the emergency arbitrator’s conducts…).

4. Leading arbitration hubs such as Singapore, Hong Kong, and Paris may evaluate whether their own arbitration laws and institutional rules should incorporate similar reforms to remain competitive. If the default rule on the law governing arbitration agreements under the Arbitration Act 2025 proves effective, other jurisdictions may follow suit to bring more clarity to parties engaging in international arbitration.

5. Arbitrators should carefully consider what disclosures they should make and ensure that they disclose appropriately and timely.

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References:

• UK Arbitration Act 2025: https://www.legislation.gov.uk/ukpga/2025/4/contents/enacted
• House of Commons’ Report on Arbitration Bill 2024-25, https://researchbriefings.files.parliament.uk/documents/CBP-10134/CBP-10134.pdf
• Explanatory Notes related to the Arbitration Bill by House of Lords dated 6 November 2024, https://publications.parliament.uk/pa/bills/cbill/59-01/0057/en/240057en.pdf
• Publications by UK Parliament under Arbitration Act 2025, https://bills.parliament.uk/bills/3733/publications
• Enka v Chubb [2020] UKSC 38: https://www.supremecourt.uk/cases/uksc-2020-0091
• Halliburton v Chubb [2020] UKSC 48: https://www.supremecourt.uk/cases/uksc-2018-0100
• Cofely Ltd v. Bingham [2016] EWHC 540 (Comm): https://www.trans-lex.org/312060/_/cofely-limited-v-anthony-bingham-et-al-[2016]-ewhc-240-/
• C Ltd v. D [2020] EWHC 1283 (Comm), [2020] Costs LR 955: https://www.casemine.com/judgement/uk/5ecb46ed2c94e005a3091547
• Dallah v Pakistan [2010] UKSC 46: https://www.supremecourt.uk/cases/uksc-2009-0165
• Kabab-Ji (Lebanon) v Kout Food Group (Kuwait) [2020] Paris Court of Appeal, Pôle 1 - chambre 1, No. 17/22943 at pp. 5.
• Goldsmith QC, Lord and others, ‘Kabab-Ji and the Law of the Arbitration Agreement: French and English Courts Clash Once Again’ (Debevoise & Plimpton LLP) https://www.debevoise.com/insights/publications/2020/07/kabab-ji-and-the-law-of-the-arbitration-agreement
• Thang Pham, 2023 Vietnam ADR Week Recap: Governing Law of The Arbitration Agreement – A Comparative Law Perspective, Kluwer Arbitration, https://arbitrationblog.kluwerarbitration.com/2023/07/09/2023-vietnam-adr-week-recap-governing-law-of-the-arbitration-agreement-a-comparative-law-perspective/.