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The new act now in force reshapes arbitration with stricter rules on agreements, arbitrator duties and court powers ¨C urging Chinese businesses to adapt their strategies

As economic globalisation progresses, Chinese enterprises are increasingly employing international commercial arbitration as a dispute resolution mechanism. Although Asia-Pacific cities such as Hong Kong and Singapore are common arbitration venues, London remains the preferred choice in sectors including finance, insurance, shipping and shipbuilding.

On 24 February 2025, the UK Arbitration Act 2025 received royal assent and is set to come into force. The act introduces significant changes in areas such as the applicable law to arbitration agreements, the disclosure obligations of arbitrators, the conduct of arbitration proceedings and the support provided by courts to the arbitration process.

Chinese enterprises should take note of these developments and assess the impact of the reforms on the drafting of arbitration clauses, the selection of arbitrators, the progression of arbitration proceedings and post-award remedies.

Key revisions

Revision of the rules determining the applicable law to arbitration agreements. In international commercial arbitration, the choice of applicable law is a crucial issue that may affect both the validity of the arbitration agreement and the arbitrability of the dispute.

Prior to these revisions, the UK Supreme Court, in Enka v Chubb (2020), established the following position: If the parties do not expressly agree on the applicable law to the arbitration agreement, the law governing the main contract agreed by the parties should be regarded as applicable to the arbitration agreement, unless such an application would render the arbitration agreement invalid. If uncertainty still remains, the law most closely connected to the arbitration agreement ¨C typically the law of the arbitration seat ¨C is applied.

This decision sparked considerable controversy, with many arguing that the legal principle set out in Enka v Chubb (2020) was complex and unpredictable.

In response, the Arbitration Act 2025 provides that the arbitration agreement shall primarily be governed by the express agreement of the parties. If no such agreement exists, the law of the arbitration seat applies, and any choice of law for the main contract does not amount to an express agreement regarding the arbitration agreement.

Enhancement of arbitrators¡¯ disclosure obligations. Balancing disclosure obligations with transparency is a significant challenge for arbitrators. Section 33 of the Arbitration Act 1996 established the duty of impartiality for arbitrators, and the UK Supreme Court, in Halliburton v Chubb (2020), made further clarification regarding their disclosure obligations.

The newly introduced section 23A of the Arbitration Act 2025 establishes that arbitrators¡¯ disclosure obligations are continuous. Arbitrators must, both prior to their appointment and throughout their tenure, continuously disclose any circumstances that might reasonably give rise to doubts about their impartiality, including those they are aware of, or should be aware of.

The act also explicitly provides that these disclosure obligations are mandatory and cannot be waived by agreement between the parties.

The courts may issue orders to non-parties in support of arbitration proceedings. Article 44 of the Arbitration Act 1996 permits the courts to issue orders for obtaining witness testimony, preserving evidence, safeguarding assets, granting interim injunctions and similar measures. Such orders were originally directed solely at the parties to the arbitration.

The Arbitration Act 2025 expands the scope of article 44 to clearly allow courts to issue orders not only to the arbitration parties but also to non-parties. British courts may now issue orders to third parties ¨C such as banks that hold evidence or safeguard relevant assets ¨C to support arbitration proceedings.

Court recognition of the arbitral tribunal¡¯s jurisdiction is also addressed. Under article 32 of the Arbitration Act 1996, with the unanimous consent of the arbitration parties or with the tribunal¡¯s permission, and provided that the court considers the requirements to be met, parties may submit objections to the tribunal¡¯s jurisdiction during the arbitration proceedings.

The new clause 1A under article 32 of the Arbitration Act 2025 further restricts this right by clarifying that an application to the court may only be made if the tribunal has not yet ruled on its jurisdiction. If an objection to jurisdiction is rejected by the tribunal, a challenge can only be brought after an award is rendered, in accordance with article 67 or other provisions. The Arbitration Act 2025 also revises and refines provisions on arbitrator immunity, emergency arbitrators, expedited arbitration procedures and post-arbitration remedies.

Observations, recommendations

It is believed that the implementation of the Arbitration Act 2025 will further enhance the efficiency and fairness of arbitration proceedings under UK law. Other jurisdictions may also draw on the British legislative experience to improve their own arbitration frameworks. Meanwhile, Chinese enterprises should consider the following:

1. Due to significant changes in UK legal principles regarding the applicable law for arbitration agreements, Chinese enterprises should clearly stipulate the applicable law when entering into arbitration agreements or main contracts designating the UK as the arbitration seat;
2. For already signed arbitration agreements involving the UK, it is advisable to engage legal counsel to reassess their provisions and update the agreements if necessary; and
3. When formulating strategies for forthcoming arbitration proceedings involving the UK, the changes introduced by the Arbitration Act 2025 should be carefully considered.

Shen Peng is a partner at Guantao Law Firm. He can be contacted by phone at +86 186 1810 6591 and by email at peng.shen@guantao.com
Zhang Chuyao is an associate at Guantao Law Firm. She can be contacted by phone at +86 182 0156 1601 and by email at zcy@guantao.com