THE AUTHORS:
Adam Leese, Associate at Clyde & Co
Iffah Umairah Md Farid, Associate at Clyde & Co
Clyde & Co’s Young Arbitration Group provides a unique insight into international arbitration issues through the lens of young international arbitration practitioners working across different jurisdictions. In this series with Daily Jus, Clyde & Co examines notable arbitral developments from around the world, offering a jurisdiction-by-jurisdiction analysis of key cases, legislative reforms, and emerging trends that shaped international arbitration over the past year.
This article considers section 6A of the Arbitration Act 2025 (the “AA 2025”) in respect of the governing law of arbitration agreements and the renewed focus on what constitutes the parties’ express agreement when choosing the governing law of arbitration agreements.
A Brief Introduction to AA 2025
The AA 2025 received royal assent on 24 February 2025 after passing through the UK’s House of Commons and House of Lords, before entering into force on 1 August 2025. The AA 2025 was the result of the Law Commission of England and Wales’ review of the arbitration landscape in the UK, including the Arbitration Act 1996 (the “AA 1996”), with the goal of ensuring that the AA 1996: “is fit for purpose and that it continues to promote the UK as a leading destination for commercial arbitrations.”
The AA 1996 gave arbitrations in England, Wales, and Northern Ireland a robust statutory framework. However, the evolution of common law introduced certain challenges for English-seated arbitrations. One such challenge was the uncertainty surrounding the governing law of arbitration agreements. The AA 2025 seeks to address this by delivering clarity on this issue.
Governing Law and Arbitration Agreements
Previously, the AA 1996 and leading authority Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38 (“Enka”) set a default position that the governing law of an arbitration agreement was either:
- The law expressly agreed by the parties to apply; or
- In the absence of express agreement, the governing law of the main contract.
This rule was criticised for being complex as it was subject to various exceptions. The Law Commission proposed replacing Enka with a simpler rule, as the decision led to inconsistent outcomes, increased legal costs, and resulted in foreign governing law applying in scenarios where a deliberate choice was made to arbitrate in England and Wales (an arbitration-friendly jurisdiction).
The AA 2025 reforms this position at section 6A, as follows:
- The law applicable to an arbitration agreement is –
- The law that the parties expressly agree applies to the arbitration agreement, or
- Where no such agreement is made, the law of the seat of the arbitration in question.
The result is that Enka is reversed by section 6A(1) where there is a choice of law for the substantive agreement but not for the arbitration clause. Section 6A(1) means that, in the absence of express agreement between the parties, the governing law of the arbitration agreement will follow the seat of the arbitration – not the governing law of the main contract. There is a limited exception to section 6A’s application for certain types of investment treaty arbitration clauses.
This reform aligns English law with other major arbitration jurisdictions and helps provide certainty in the absence of express agreement between the parties; however, there is arguably still some room for interpretation as to what constitutes an “express” agreement, and a review of recent case law may assist to demonstrate this.
Express Agreement in Light of the Arbitration Act 2025
Recent years have seen a series of high-profile disputes land in the English courts regarding the governing law of arbitration agreements, including UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30 (“UniCredit”).
UniCredit concerned a dispute over whether, in the absence of an express agreement between the parties, the governing law of the arbitration agreement followed that of the main contract (English law) or the seat of the arbitration (in this case, France).
The UK’s Supreme Court followed Enka in deciding that the arbitration agreement was governed by English law despite uncertainties around what constituted the parties’ “express” choice of law for governing laws. The Court ruled that a choice of governing law for the substantive agreement was not merely an implied choice of law for the arbitration agreement but took effect as an express choice of that law.
Section 6A of the AA 2025 states the following:
- The law applicable to an arbitration agreement is –
[…]- For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not, of itself constitute express agreement that that law also applies to the arbitration agreement.
Section 6A(2) effectively reverses the Supreme Court’s decision in UniCredit regarding what constitutes “express” consent. It clearly provides that the agreed governing law of the main contract does not “of itself” constitute the governing law of the arbitration agreement. Consequently, the courts of England and Wales are required to look beyond the governing law provision of a contract to determine what the parties have “expressly agreed’. It is therefore still uncertain as to what now constitutes an “express agreement” to the governing law of an arbitration agreement. In UniCredit, the relevant governing law provision in the main contract contained the words “non-contractual and other obligations”. The Supreme Court expressed that the interpretation of this wording could be extended to incorporate the arbitration agreement, so that a governing law clause in the main contract referring to the arbitration agreement could constitute express consent to the governing law of that agreement. Other scenarios can also come to light: for example, would correspondence identifying the choice of law by reference to the arbitration clause suffice, or must the agreement be written into the arbitration clause itself? We await authorities on this point, but it seems prudent to ensure that the choice of law governing any arbitration agreement is clearly set out in the arbitration clause to leave little room for doubt as to what the governing law of the arbitration should be.
Conclusion
Overall, the provisions of the AA 2025 on governing law make the prospect of a dispute over the governing law of arbitration agreements less likely.
We await future decisions of the English court on the application of the AA 2025’s provision on governing law, including with respect to the meaning of an “express” agreement.
It therefore remains important that parties clearly stipulate both (i) the governing law of the main contract and separately (ii) the governing law and the seat of the arbitration agreement to avoid disputes regarding governing law.
ABOUT THE AUTHOR
Adam Leese is an Associate in Clyde & Co’s London office. Adam specialises in (re)insurance litigation and international arbitration, including arising from the Bermuda Form. Adam has experience acting on behalf of global (re)insurers in the London and Lloyd’s markets, the United States, and Bermuda. Adam has a particular focus on complex, high-value disputes and coverage matters arising from mass torts, product liability, and excess liability claims.
Iffah Umairah Md Farid is an Associate in Clyde & Co’s London office. Iffah specialises in insurance and reinsurance disputes with a focus on international arbitration arising from the Bermuda Form. Iffah has experience acting on behalf of global (re)insurers in the London and Lloyd’s markets, the United States, and Bermuda, and has a particular focus on complex, high-value coverage disputes relating to product liability (including pharmaceutical products and medical devices), mass torts (including climate change-related claims), and excess liability claims.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
