20 Mar 2025
The Arbitration Act 2025 marks one of the most significant updates to arbitration law in nearly three decades. With this new legislation now in force, it is essential to understand the key changes, their rationale, and how they will impact legal practice and business dispute resolution.
Arbitration plays a crucial role in commercial disputes, offering a private, efficient, and flexible alternative to litigation. Particularly in cross-border transactions, arbitration provides predictability and neutrality. However, longstanding uncertainties and inefficiencies in English arbitration law have highlighted the need for reform, leading to the Arbitration Act 2025. This short insight will therefore examine the key updates introduced by the 2025 Act and their implications for businesses and legal practitioners, starting with a critical clarification on the governing law of arbitration agreements.
A major update is the introduction of Section 6A, which clarifies the law governing arbitration agreements. Unless the parties explicitly agree otherwise, the law of the arbitration seat (the jurisdiction where the arbitration is legally based) will apply. This resolves a longstanding debate, eliminating confusion caused by cases such as Enka v Chubb, where courts struggled to determine whether the arbitration agreement was governed by the law of the underlying contract or the seat of arbitration. This reform enhances predictability and reduces unnecessary litigation over governing law.
The Act codifies arbitrators’ duty to disclose any circumstances that might raise doubts about their impartiality. Previously developed through case law, particularly in Halliburton v Chubb, this duty now has statutory backing. Notably, the duty is continuous, applying both before and during the arbitration process. By enhancing transparency, this reform strengthens trust in arbitration proceedings.
Arbitrators now benefit from legal protection against liability unless they resign unreasonably or act in bad faith. This ensures that arbitrators can make decisions without fear of legal repercussions, allowing them to remain impartial and independent without external pressures.
The 2025 Act introduces a summary disposal mechanism, allowing arbitrators to dismiss claims or defenses that have no real prospect of success without a full hearing. This aligns arbitration with best practices under the London Court of International Arbitration (LCIA) Rules and aims to expedite proceedings, reducing costs and unnecessary delays. While the bar for granting such applications remains high, this reform could lead to a more efficient dispute resolution process.
The Act formally recognizes emergency arbitrators, granting them similar powers to regular arbitrators. This means parties can obtain urgent interim relief before the full tribunal is constituted, providing critical protection in fast-moving commercial disputes.
These reforms make arbitration in England & Wales and Northern Ireland more predictable, efficient, and attractive for businesses. The changes are expected to:
Strengthen London’s status as a leading global arbitration hub by reinforcing its pro-arbitration legal framework.
Reduce litigation over procedural uncertainties, saving businesses time and costs.
Encourage more companies to choose arbitration over traditional court proceedings.
For legal practitioners, the new Act brings several opportunities and considerations:
Increased demand for arbitration services, as businesses seek legal advice on incorporating arbitration clauses into contracts.
The need to review and revise existing arbitration agreements to ensure compliance with the new statutory framework.
Greater workload for dispute resolution teams, particularly in advising clients on the evolving arbitration landscape.
The Arbitration Act 2025 modernizes and refines English arbitration law, addressing ambiguities and reinforcing the UK’s reputation as an arbitration-friendly jurisdiction. While the full impact will unfold over time, the 2025 Act provides a more structured and efficient arbitration framework.
For businesses, now is the time to review arbitration clauses in contracts to align with the new legislation. For legal practitioners, these reforms present valuable opportunities to guide clients through the evolving arbitration landscape and ensure they are well-prepared for the future of dispute resolution.
