The new Arbitration Act 2025 received Royal Assent on 24 February 2025 and is set to take effect later this year. This Act will amend the 1996 Arbitration Act, incorporating recommendations from the Law Commission to clarify its provisions and reduce ambiguities. The goal is to modernize arbitration procedures in London, ensuring it remains a competitive venue for international arbitration.
Among the 15 reforms introduced by the new Act, several key changes are particularly relevant for members in maritime arbitrations. Firstly, the Act establishes a new default rule regarding the governing law for arbitration agreements. Under this rule, the law of the arbitration seat will be assumed applicable, even if the chosen seat is outside England and Wales or is not explicitly designated.
This modification simplifies the previous complex common law rules, making it clearer for contracts, such as charter parties, which might only mention London as the arbitration location. Additionally, the Act empowers tribunals to issue summary awards in cases where a claim or specific dispute issue lacks a real prospect of success, which could notably expedite simple payment claims, like unpaid freight. Notably, emergency arbitrators will now have the authority to issue peremptory orders, granting them parity with non-emergency arbitrators in court enforcement matters.
The Act also introduces stricter disclosure obligations for arbitrators to maintain impartiality and limits the re-hearing rights of losing parties in jurisdictional challenges. This refined framework is expected to shorten the section 67 process, potentially reducing costs for parties involved. The overall perspective of the Club suggests that these changes do not drastically alter the existing legal landscape but emphasize the necessity for members to consider the 2025 Act when drafting arbitration clauses.
It is crucial to specify both the seat of arbitration and the applicable law, especially if opting for a jurisdiction outside England. Lastly, members should note that the LMAA Terms 2021 will require updates to align with the new Act, although current practices are expected to remain effective. When initiating arbitration, it is essential to ensure proper service of notice, explicitly defining recipients to avoid disputes over authority.