London market and speciality

As we reflect on 2025, and look forward to 2026, the landscape continues to be dominated by the ongoing Russian aviation and Covid-19 business interruption (BI) litigation, and the conflicts in Ukraine and Gaza. The USA’s intervention in Venezuela now adds another dimension.  

According to the Swiss Re Institute, 2025 also marked the sixth year that insured catastrophe losses exceeded US$100bn, driven mainly by the LA wildfires and severe convective storms in the US. Conversely, 2025 was a benign season for hurricanes, with Hurricane Melissa the costliest at estimated insured losses of US$2.5bn. 

Closer to home, 2025 saw a number of court decisions relating to the Third Parties (Rights Against Insurers) Act 2010 and the Insurance Act 2015, notable claims against brokers, and some long-awaited changes to the Arbitration Act 1996 (by the Arbitration Act 2025).

Looking forward to 2026, both the Russian aviation litigation and a leading case in the Covid BI litigation are due to be heard on appeal, the latter by the Supreme Court on 11-12 February on the issue of whether insurers can make a deduction for Furlough and which is of market wide importance. As the US hurricane season comes to an end, we'll have to wait and see what the European storm season will bring. 

Articles in this section include: 

• Russian aviation litigation.
• The Third Parties (Rights Against Insurers) Act 2010
• Brokers in the firing line
• Covid-19 business interruption claims
• The Insurance Act 2015: Recent decisions
• The Arbitration Act 2025: Incremental reform for a leading seat

The Third Parties (Rights Against Insurers) Act 2010

Author: Caitlin Da Silva

The 2010 Act has been in force for over a decade, with 2025 bringing important clarity on how it works. The 2010 Act allows third-party recovery where a policyholder becomes insolvent. In essence, where an insured’s liability to a third party is covered under a policy, the insured’s rights against its insurer transfer to the third party upon a qualifying insolvency event.

As economic headwinds continue and corporate insolvencies remain elevated, the 2010 Act has never been more relevant. This year has seen four important decisions that have clarified the Act’s boundaries and the practical tools available to third-party claimants seeking to recover from insurers when the defendant has become insolvent.

Desai v Wood

The Court of Appeal’s decision in Desai v Wood/Re Boscolo Limited (in liquidation) [2025] EWCA Civ 906 addressed a crucial question: what happens when insurance proceeds are paid out before insolvency occurs?

Background

The appellants had engaged Boscolo Limited (‘Boscolo’) under a design contract incorporating the British Institute of Interior Design’s standard conditions. Boscolo maintained professional indemnity insurance, as required by the contract. After the appellants notified Boscolo of a potential professional negligence claim (but before legal proceedings had been issued), Boscolo’s insurer exercised its right under the policy to pay the policy limit of £250,000 directly to Boscolo, thereby releasing the insurer from any further liability in connection with the claim.

The appellants issued proceedings against Boscolo, claiming in excess of £700,000 in damages, and arguing that the insurance proceeds already paid out were held on trust for them. Shortly thereafter, Boscolo entered creditors’ voluntary liquidation.

The Court of Appeal’s decision

The Court confirmed that where an insurer validly indemnifies a policyholder before the insolvency event (the triggering ‘relevant event’ under the 2010 Act), those proceeds, once received, are the property of the policyholder company absolutely. This position can only be altered through express contractual wording or a clear proprietary interest in favour of the third party. No express, implied or constructive trust arose on the facts. The insurer’s liability had therefore been discharged pre-insolvency.

The Court held that there was no need to imply a term in the design contract restricting the insured’s use of the proceeds, and in any event it was not possible in this case to identify with any certainty what such a term might be. Even if such a term had been implied, it would only have assisted the appellants if it had led to a trust being imposed upon the insurance proceeds. Otherwise, they would simply have an unsecured contractual claim.

This ruling reaffirms that the 2010 Act only transfers existing rights. It cannot recreate rights that have been extinguished by an earlier payment. Once the insurer has performed its obligations under the policy, the chain of assignable rights is broken.

Practical implications

Unless there is a clear contractual or equitable basis to the contrary, insurance proceeds paid to an insolvent company form part of the company’s estate and are available for distribution to creditors generally. The decision serves as a stark reminder for contracting parties that the 2010 Act provides no magic wand where insurance monies have already been paid away.

Makin v Protec & QBE

In Makin v Protec & QBE [2025] EWHC 895 (KB), the third-party claimant (Makin) suffered a stroke from an assault by Protec’s door supervisors in 2017. Following Protec’s liquidation, its insurer, QBE, was joined to the action pursuant to the 2010 Act. The case turned on whether QBE could rely on coverage defences to defeat the third-party claim from Makin.

The notification issue

QBE argued that it was not liable to Makin because Protec had failed to notify QBE of Makin’s claim in accordance with the terms of the policy, which required notice “as soon as practical but in any event within 30 days in the case of other damage, bodily injury, incident accident or occurrence, that may give rise to a claim under your policy”, and which QBE argued was a condition precedent. The policy expressly provided that breach would “..entitle [insurers] to refuse to deal with the relevant claim”.

The Court held that compliance with the notification provisions was a condition precedent to liability, agreeing with QBE that the condition was sufficiently clear, despite not being expressly labelled as a ‘condition precedent’. 

As a result, Makin did not have a third-party claim because Protec’s own claim under the policy failed due to late notification.

The Court took the opportunity to provide obiter commentary on the earlier Scottish Inner House decision in Scotland Gas Networks plc v QBE UK Ltd [2024] CSIH 36, which the judge referred to as being “of considerable persuasive value” but not binding on the English courts.

The Court distinguished Omega Proteins v Aspen on the basis that it was decided prior to the 2010 Act coming into force. The Court held that an incongruity may arise if liability is determined against a policyholder, whereas liability against the insurer could be open to challenge, and considered “there is no good reason to create such incongruity afresh by departing from the clear words of the 2010 Act”.

Practical implications

Third-party claimants should interrogate the insurance position early on and seek confirmation that claims and potential claims have been notified to insurers in accordance with the policy provisions and that any conditions precedent have been complied with. 

Whilst obiter only, the comments in Makin relating to the Scotland Gas decision carry an important warning for insurers. Even when insurers do not consider that they are liable to indemnify a policyholder in respect of a third-party claim, insurers should approach any coverage decisions upon which they intend to rely with considerable care. If a judgment on liability is obtained against an insolvent policyholder and a challenge to a coverage decision subsequently succeeds, insurers will find themselves liable to settle that judgment in full, without being able to challenge the underlying liability.  

Makin was also notable as the first reported application of Scotland Gas Networks plc v QBE UK in England and Wales, bringing the Scottish approach into sharper focus for English practitioners.

AmTrust Specialty v Endurance

In AmTrust Specialty Ltd v Endurance Worldwide Insurance Ltd [2025] EWCA Civ 755, the Court of Appeal grappled with a procedural but important question: can third-party claimants obtain disclosure of pre-inception communications between the insurer and policyholder to assist with policy construction?

AmTrust made an application for Extended Disclosure under PD 57AD for production of relevant pre-inception documents to enable it to interpret the policy wording and determine whether the claim was covered.

The Court of Appeal’s decision

Overturning the decision of the court at first instance, the Court of Appeal ordered disclosure of the insurance placement correspondence. It concluded that where the intention behind policy wording is genuinely in issue, pre-inception documents are relevant to construction, particularly if the policy contains an incorporation clause or lists information as ‘seen and agreed’. There is no threshold ‘relevance’ test under PD 57AD. Rather, disclosure is a multi-factor, proportionality exercise, and fairness required disclosure of the documents. 

Practical implications

It is rare for the Court of Appeal to intervene in a case-management decision in relation to a claim brought under the 2010 Act. Third-party claimants seeking to bring claims under the 2010 Act can take confidence from this decision in making applications for Extended Disclosure under PD 57AD for pre-inception communications. Conversely, policyholders and their insurers need to be aware that pre-inception correspondence (including proposal forms, schedules and broker notes) might be disclosable in claims brought by third-party claimants.  

MS Amlin Marine v King Trader

Whilst not a 2010 Act case in the traditional sense, the Court of Appeal’s decision in MS Amlin Marine NV v King Trader Limited & Ors [2025] EWCA Civ 1387 has significant implications for how the 2010 Act operates in the marine insurance context. The Court of Appeal confirmed that ‘pay first’ clauses in marine insurance policies remain valid and enforceable, even after rights transfer under the 2010 Act.

Background

King Trader Limited (the Owner) time-chartered the Solomon Trader to the Bintan Mining Corporation (the Charterer). Following a grounding in 2019, the Owner and its Mutual Protection and Indemnity Club obtained an arbitration Award exceeding US$47m in Hong Kong against the charterer. The charterer entered insolvency.

The policy issued by MS Amlin to the charterer incorporated general terms including a 'pay-first' condition precedent requiring the insured to have discharged any liability before seeking recovery. The owner and club sought to pursue the insurer directly under the 2010 Act. The insurer sought declarations that the 'pay-first' clause defeated the claim, meaning that it did not have to indemnify the charterer against its liability under the award.

The Court of Appeal's decision

The owner and club appealed on three grounds:

• inconsistency with the insuring clause;
• the ‘red hand doctrine’ (onerous clause doctrine); and
• lack of incorporation.

On inconsistency, the Court of Appeal followed the established approach and held there was no conflict. The pay-first clause qualifies rather than negates the promise to indemnify. The insured’s liability may be ascertained by a final award, but the right to enforce against the insurer arises only once the insured settles the claim. The Court of Appeal emphasised that Parliament has expressly preserved pay-first clauses in marine insurance (save for death and personal injury cases) in section 9 of the 2010 Act, reflecting their accepted and longstanding place in the marine market.

On the ‘red hand doctrine’, the Court of Appeal clarified and re-labelled the principle as the ‘onerous clause doctrine’. The Court of Appeal found the doctrine inapplicable here. Pay-first provisions are not unusual in marine liability insurance. The insured was represented by a specialist broker expected to understand and explain market terms. The clause’s position within the claims conditions did not render it a ‘bolt from the blue’. The Court of Appeal declined to admit fresh market evidence on prevalence and reiterated that, in commercial contracts between sophisticated parties of broadly equal bargaining strength, it will be far less likely to find every burdensome clause to be onerous.

On incorporation, the Court of Appeal held it was untenable to suggest that the general terms (including the pay-first clause) were not part of the policy, given the certificate’s clear attachment of the policy booklet and the policy’s overall structure.

As a result, the appeal was dismissed on all three grounds and insurers were entitled to rely on the pay-first clause to avoid liability.

Practical implications

This is a clear and unequivocal endorsement of 'pay-first' clauses in marine liability insurance and provides useful consolidation of the law on contractual inconsistency and the onerous clause doctrine in a commercial setting. The judgment confirms that a well-drafted 'pay-first' condition precedent will be given effect, will survive a section 1 transfer under the 2010 Act (for non-personal injury liabilities), and is unlikely to be viewed by the courts as inconsistent with an insuring clause.

The decision recognises the common and accepted use of 'pay-to-be-paid' clauses in marine insurance. It confirms the longstanding position that the use of these clauses will be upheld by the courts, provided they have been properly incorporated within the relevant insurance policy. For marine insurers, this is very welcome clarification. For third-party claimants in the marine context, it serves as a reminder that transferred rights under the 2010 Act come with all their original conditions and limitations intact.

Brokers in the firing line

Author: Deveshi Patel

This article examines the key broker liability decisions of 2025 and claims that are currently set to be dealt in 2026. From notification failures, double insurance provisions and cover for Covid-19 business interruption claims, the cases examined in this article are likely to establish important principles that will shape E&O and professional indemnity claims.

Watford Community Housing Trust v Arthur J Gallagher Insurance Brokers Limited: Dual insurance and notification failures

On 23 March 2020, Watford Community Housing Trust inadvertently disclosed personal data relating to 3,544 tenants and employees. The policyholder was insured under three policies arranged by Gallagher: (i) a Cyber Policy (£1m limit), (ii) a Combined Policy underwritten by QBE (£5m sub-limit), and (iii) a PI Policy underwritten by Hiscox (£5m limit plus defence costs). 

Gallagher admitted that they negligently failed to advise the policyholder to notify QBE and Hiscox, with the result that they were only notified after cover had expired. QBE subsequently agreed to indemnify up to its £5m limit, however Hiscox maintained its declinature.

Gallagher contended that its breach didn’t cause the policyholder loss because each policy contained 'other insurance clauses' which limited the total indemnity recoverable to £5m. 

The Court rejected this argument, holding that all three other insurance clauses cancelled one another out, leaving the policyholder with effectively triple insurance under a horizontal layer of primary insurance providing £1m, £5m and £5m (plus defence costs). 

The Court rejected Gallagher's argument that a general principle of rateable proportional limits applied to each insurer's liability. Instead, the Court held that at common law an insured with multiple insurances can claim against insurers in whichever order it wishes and recover the balance from the other insurers. If an insured has paid multiple premiums for multiple primary policies, absent express contractual provision to the contrary, the insured can recover the whole of its loss up to combined limits and contribution between insurers is irrelevant to the insured's right to be indemnified.

The Court held that where insurers would have been legally obliged to indemnify the insured but for the broker's negligence, there is no need to delve into a loss of chance analysis. On this reasoning, the policyholder was legally entitled to recover an indemnity up to a combined limit of £11m. 

The decision highlights that brokers must ensure timely notification to all potentially responsive policies and failure to notify even one policy may result in liability for the full amount recoverable. Where a policyholder has multiple primary policies without rateable proportion clauses, the policyholder can recover up to the combined policy limits and if any policies which include language such as ‘if this policy did not exist’ this would not create a hierarchy amongst competing excess clauses.

Norman Hay Plc v Marsh

The issue of loss of chance was considered briefly by the Court of Appeal in the case of Norman Hay plc v Marsh Ltd [2025] EWCA Civ 58. This case concerned the alleged failure by Marsh to arrange a worldwide (including US), non- owned auto cover under Normal Hay’s group travel insurance policy. 

The Court of Appeal held that the question is not whether the putative insurer would have been entitled as a matter of law to repudiate liability, but whether as a matter of business they would have been likely to do so. 

Here the policyholder had lost its chance of recovering indemnity from the insurers, necessarily involving a loss of chance-type analysis. Consequently, the Court commented that even if an insurer was entitled in law to repudiate liability, the policyholder could still be entitled to recover damages depending on what the insurer would have done and paid under the policy, as a matter of business. 

This principle renders broker negligence claims involving failure to arrange cover rarely suitable for strike-out or summary judgment, requiring factual issues to be resolved at trial.

Covid-19 E&O claims

Brokers also continue to face significant exposure arising from potential errors and omissions made at the time of initial cover placement. In 2025, policyholders issued claims against brokers in an attempt to recover losses following the aftermath of the recent Covid BI litigation against insurers, a trend which may well continue in 2026. 

In Firmdale Holdings Ltd v Howden, the claimant hotels brought a claim against Howden alleging failure to ensure that the coverage provided was sufficient for their needs and at least as extensive as the cover that had been obtained by the previous broker for the previous year.  

In Stobo Castle Health Spa Limited v James Hallam Limited, the claimant hotel brought a claim against its broker alleging negligence in changing cover at renewal in February 2020 from RSA to Aviva, but did not extend to any newly notifiable disease, required the disease to have occurred at the premises, and had inadequate indemnity limit and period of cover. James Hallam Ltd denied that the scope of their duties towards the claimant was affected or heightened by the increasing publicity for the spread of Covid. They also asserted that the claimant during the pre-renewal process did not identify Covid nor infectious diseases as a particular concern. Furthermore, there was no possibility of obtaining a commercially acceptable premium for specific cover against Covid risks. The proceedings are currently stayed until 31 March 2026 to allow for settlement discussions. 

The Stonegate litigation before Mr Justice Butcher had previously held that pursuant to the ‘Single Business Interruption Loss’ clause, the most Stonegate could recover was £2.5m per occurrence, not £2.5m per premises. Stonegate have now issued proceedings in Barley Pub Company Limited & Others v Marsh Limited, alleging that Marsh breached its duties by failing to ensure that each subsidiary company was listed as an insured, incorrectly defined the insured as Stonegate Pub Company Limited only and failed to arrange a composite policy, leading to irrecoverable Covid-19 business interruption losses totalling over £250m.

In London Dockside Ltd & Ors v Property Insurance Initiatives Ltd, the claims involve hotel property claimants alleging errors and omissions arising from broker representations in respect of special ‘difference in conditions’ (DIC) arrangements with AXA. The broker Property Insurance Initiatives Limited (PII) represented to Aprirose Limited that it had reached a DIC Agreement with AXA whereby if PII placed insurance with AXA, AXA would ensure cover was at least as advantageous as if placed through any other broker. Between 23 April and 2 May 2018, PII sent emails stating cover would be "as broad as provided elsewhere (this will include the Willis wording, Marsh wording, and Aon wording, etc.)" 

However, the ‘Aprirose Policy Review Form’ endorsement provided that the policy would be "amended/endorsed as appropriate so as to provide cover as broad, at the time of a claim, as may be agreed elsewhere by Real Estate Speciality Unit, London, AXA UK plc," with amendments taking effect from the date stamped and signed by an authorised AXA representative, with no retrospective cover. This endorsement therefore established a mechanism requiring specific agreement for prospective amendments only, rather than an automatic matching of the broadest available AXA wording.

When the policyholders suffered Covid-19 losses in March 2020, AXA rejected business interruption claims, confirming there was no variation of wording and no obligation to indemnify pursuant to any separate agreement. 

The policyholders allege PII breached its duties by failing to arrange insurance on terms affording cover as wide as other AXA wordings (including the ‘resilience’ wording which provided Covid-19 cover), failed to carry out adequate gap analysis, and incorrectly advised that cover would be as wide as any other AXA wording, with claimed losses estimated at approximately £1.5m per hotel. 

It remains to be seen how this case will be determined, given that PII argue in its defence that the policyholders could not reasonably have been expected, at the time of policy placement, to have in mind that the 'resilience' wording would respond to Covid-19 losses. In addition, that the possibility of a pandemic with consequences of the magnitude of Covid-19 was so remote that very few reasonable hotel operators would have chosen to insure against such an eventuality. These causation defences remain to be tested at trial.

The allegations in Delta Portfolio Property LLP & Others v Property Insurance Initiatives Ltd (in liquidation) were very similar but that matter settled on 11 December.   

What to expect in 2026

Looking ahead to 2026, the London insurance market should anticipate increased broker negligence claims, particularly in the sectors most affected by the Covid- 19 pandemic, such as commercial property, hospitality, and leisure. Policyholders will undoubtedly be encouraged by claimant lawyers to pursue similar claims, while brokers' professional indemnity insurers are likely to respond with tightened terms and increased premiums.

The Insurance Act 2015: Recent decisions

Author: Laura Brown

Last year, there were two Court of Appeal decisions which provided clarification on the Insurance Act 2015 (the 2015 Act). Lonham Group Ltd v Scotbeef Ltd [2025] EWCA Civ 203 addressed the distinction between pre-contractual representations and ongoing policy obligations and Delos Shipholding SA & Ors v Allianz Global Corporate and Speciality SE & Ors addressed the remedies available when policyholders breach their duty of fair presentation. 

We reported at the time on Scotbeef in our quarterly edition of Perils and on Delos Shipping in London Market Quarterly.

Lonham Group Ltd v Scotbeef Ltd [2025] EWCA Civ 203

Background

D&S Storage Limited transferred mould-contaminated meat to Scotbeef Limited, which could not be sold. D&S attempted to limit liability to £25,000 using Food Storage and Distribution Federation terms, but the court found these terms were not incorporated, resulting in judgment for the full £395,588. 

D&S's subsequent insolvency led Scotbeef to pursue D&S's insurer directly under the Third Parties (Rights Against Insurers) Act 2010. The insurer contested liability, arguing D&S had breached a condition precedent. The policy's ‘duty of assured’ clause ‘the Clause’) required D&S to: 

• Declare all trading conditions at policy inception.
• Trade under declared conditions.
• Ensure trading conditions were incorporated into all contracts during the policy period.

The Court of Appeal's decision

The High Court initially found the entire Clause (subclauses, 1–3) constituted pre-contractual representations under Part 2 of the 2015 Act, preventing the insurer from denying liability without claiming proportionate remedies under section 8 (for example, adjusting the premium or reducing the amount paid on the claim).

The Court of Appeal overturned this decision, holding that whilst the first sub-clause was a pre-contractual representation, the subsequent sub-clauses at (2) and (3) were warranties and conditions precedent governed by Part 3 of the 2015 Act (section 10). The Court of Appeal emphasised that these clauses focused on ongoing business operations, were positioned under ‘General Conditions, Exclusions and Observance’, and were explicitly stated as conditions precedent to liability.

D&S having failed to incorporate the required terms into their contract with Scotbeef, they had breached these conditions precedent. Under section 10(2), this entitled the insurer to avoid the claim entirely.

Key implications

This decision clarifies that the characterisation of policy terms depends on their substance and timing, not on the presence or lack of headings. Pre-contractual statements are representations, whilst ongoing obligations are warranties or conditions precedent. The different parts of the 2015 Act provide different remedies: breaches of fair presentation (Part 2) may lead to proportionate remedies, whilst breaches of warranties and conditions precedent (Part 3) can result in complete denial of coverage.

Delos Shipholding SA & Ors v Allianz Global Corporate and Speciality SE & Ors

The 2015 Act requires policyholders to make a fair presentation of risk, disclosing every material circumstance. Schedule 1 provides that if the insurer would have entered the contract on different terms, the contract is treated as if entered on those terms. However, the Act is silent on whether insureds can avoid non-disclosure consequences by demonstrating they would have complied with alternative terms had they been imposed.

The court's rejection of hypothetical compliance

In Delos Shipholding, the claimant policyholders argued that even if the insurer would have imposed an additional condition (requiring resignation of a nominee director), they should receive indemnity because they would have complied had that term it been imposed.

The Court of Appeal decisively rejected this approach. The Court held that the 2015 Act requires a notional change to contract terms but does not contemplate further hypothetical inquiry into ‘what the insured would have done’. The contract is treated as if entered on the terms the insurer would have required, and if those terms have not been complied with, the insurer may reject the claim.

The Court of Appeal reasoned that allowing proof of hypothetical compliance would introduce unnecessary complexity and circularity, lacking support in the Act's language or structure.

Practical implications

Where fair presentation would have led to the imposition of additional terms by the insurer, the policy is treated as if those terms were in place. If the insured has not complied, the insurer is not liable, regardless of what the insured claims it would have done. Policyholders cannot avoid non-disclosure consequences by arguing after the event that they would have complied with additional requirements.

What can we take from these two cases? 

Whilst addressing different aspects of the 2015 Act, these cases share important common themes.

Both decisions demonstrate the Court of Appeal's commitment to applying the 2015 Act strictly without introducing additional interpretation layers. In Lonham, the Court rejected arguments that the clause contracted out of the Act. In Delos, the Court refused to read in a hypothetical compliance requirement.

Both cases reject attempts to cure breaches after the fact. In Lonham, D&S could not escape consequences of failing to incorporate required terms. In Delos, policyholders could not avoid non-disclosure consequences by arguing they would have complied with alternative terms. Compliance must be actual, not hypothetical.

Lonham highlights the importance of careful policy drafting. The Court's analysis turned on clause positioning and explicit statements about conditions precedent. Insurers should ensure policy terms clearly indicate whether they are pre-contractual representations or ongoing obligations.

These decisions reinforce the importance of full disclosure at placement and renewal, understanding policy obligations, and actual compliance with policy terms.

Insurers should ensure clear distinction between pre-contractual representations and ongoing obligations in their policy wordings. Policyholders and brokers must ensure comprehensive disclosure of all material circumstances and maintain strict compliance with ongoing policy obligations. All parties should recognise that the 2015 Act will be applied strictly, with limited scope for retrospective remediation.

The Arbitration Act 2025: Incremental reform for a leading seat

Authors: Francis Mackie and Deveshi Patel

The UK has been at the forefront of international arbitration, with the Arbitration Act 1996 being instrumental in securing London's status as a leading seat for international arbitration. The changes to the Arbitration Act 1996 came into force as of 1 August 2025 through the Arbitration Act 2025 (the ‘2025 Act’) and intends to build on and address some of the ‘gaps’ within the 1996 Arbitration Act. 

This article addresses the most important changes to the way in which arbitrations proceed under English law, and some would say that these changes are long overdue. 

Third parties

Under the 1996 Act there was uncertainty about whether the Court had power to make orders against third parties under section 44 of that Act. This has now been remedied in the 2025 Act. 

The new rule is that the Court may make orders compelling third parties to engage with the arbitration process, for example an order from the Court may relate to the grant of interim injunctions for the preservation of evidence. However, the 2025 Act also provides an express right for third parties to appeal such a Court order against them.

Summary judgment

The 2025 Act now expressly introduces a power that any tribunal may issue summary awards where a claim or defence has no real prospect of success. The Law Commission's aims are twofold:

1. to prevent parties with weak cases from abusing the arbitral process, and
2. to provide arbitrators with clear reassurance that making a summary award will not breach their duty to give each party a reasonable opportunity to present their case or give rise to a ground for challenging the award.

This standard reflects that applied in English civil procedure and aligns with the rules of many leading institutional rules (such as the LCIA and ICC rules). However, this provision is not mandatory, and the parties have an option to ‘opt out’ of this rule.

Governing law

The current Arbitration Act 1996 is silent as to governing law. As from 1 August 2025, if the arbitration agreement is silent as to governing law, the changes introduced by the 2025 Act requires that it will be governed by the law of the seat of the arbitration. Moving forward, the governing law of the arbitration will be the seat of arbitration, unless the law is specifically provided for in the arbitration agreement by the parties.

From a practical perspective, it continues to be good practice to avoid all uncertainty by including an express clause setting out the choice of governing law of the arbitration agreement (particularly where parties wish for this to differ from the law of the seat).

The arbitrator's duty of disclosure

Arbitrators will now be under a statutory duty to disclose, on a continuing basis, any circumstances that might ‘reasonably give rise to justifiable doubts’ about their impartiality. This includes circumstances in which the arbitrator has actual knowledge of, or ought reasonably to have known. However, to maintain flexibility the 2025 Act does not prescribe what information needs to be disclosed to comply with this duty. 

The changes introduced seek to bring the UK's legislation on arbitration in line with international best practice, including the UNCITRAL model law, ICC Rules, the LCIA Rules and the IBA Rules on Conflicts of Interest. The 2025 Act goes further insofar as it imposes an obligation on arbitrators to conduct diligent enquiries into the existence of relevant circumstances before and after accepting appointments.

Challenging the jurisdiction and the award

The 2025 Act introduces changes whereby the Court may address the question of whether the tribunal may address a preliminary point of jurisdiction, along with other changes in procedure.

Under the reforms:

• A party cannot raise a ground for objection before the Court unless it raised it before the tribunal (save where the party did not know and could not with reasonable diligence have discovered the ground during the arbitration).
• A party cannot rely on evidence before the Court unless it was put before the tribunal.
• Evidence that was heard by the tribunal must not be re-heard by the Court.

This amendment limits the Court's ability to rehear evidence already presented to the tribunal and restricts parties from introducing new grounds or evidence at the award stage. The aim of this reform is to promote finality and efficiency in English law arbitrations by reducing costs and avoiding unnecessary delays. It will ensure procedural fairness by preventing parties, who have already had their case examined during the arbitration phase, from attempting to refine or reargue their position in Court.

Arbitrator's immunity

There are some provisions in the 2025 Act which strengthen the existing immunity protections of arbitrators. 

Section 3 of the 2025 Act clarifies that an arbitrator will only be liable for costs associated with their removal where it can be shown that they acted or omitted to act in bad faith. Section 4 of the 2025 Act provides that an arbitrator will only be liable for costs associated with their resignation in circumstances where their resignation was, in all the circumstances, unreasonable.

The Law Commission proposed these reforms to ensure arbitrators can make decisions without fear of accruing personal liability. The introduction of a higher threshold for liability in cases of removal (bad faith) compared to the reasonableness test for resignations is a proportionate safeguard, given the potential for such claims to otherwise undermine confidence in the arbitral process.

‘Emergency arbitrators’

The 2025 Act introduces provisions as to when an arbitration is governed by arbitral rules that provide for the appointment of emergency arbitrators, where the tribunal has not yet been fully constituted, and where an emergency arbitrator has been appointed pursuant to those rules. The previous 1996 Act did not provide for any rules concerning ‘emergency arbitrators’, and as a result, the 2025 Act introduces such rules, which are capable of being ‘post-dated’ to prior to the 2025 Act.

Concluding remarks

The 1996 Act required some degree of modernisation, particularly since competitor seats, for example, Singapore, Switzerland and Germany, have recently taken steps to modernise their arbitration laws.

As can be seen from the above, the changes introduced into UK arbitrations by the 2025 Act are mainly procedural, with a view to enacting many of the Court decisions since the introduction of the 1996 Act. This is a testament to the success of the 1996 Act and the strength of London's international arbitration market. 

Some of the changes are clearly beneficial, such as the Summary Judgment revisions and the imposition of a default position with regard to governing law. It will be interesting to see how ‘third parties’ react to Court judgments compelling their engagement with arbitration processes, and how that law develops.