Arbitration Act 2025: Key Changes and Impact on UK Arbitration

Categories: Arbitration, Legislation

Michael Coyle
March 6, 2025

Introduction

The Arbitration Act 2025 received Royal Assent on 24 February 2025, with its primary provisions set to take effect at a later date. The Act follows a comprehensive review of the Arbitration Act 1996 by the Law Commission, which began in 2023. Rather than an overhaul, the new legislation fine-tunes arbitration laws to reinforce the UK’s position as a global leader in arbitration.

With the UK’s arbitration sector valued at £2.5 billion annually, the modernisation of dispute resolution mechanisms aims to attract further international business. England and Wales already handle over 5,000 domestic and international arbitration cases annually, offering businesses a faster and more cost-effective alternative to litigation.

Key Amendments to the Arbitration Act 1996

The Arbitration Act 2025 introduces several critical updates that clarify legal principles, enhance efficiency, and strengthen the credibility of UK arbitration. Below are the key changes:

1. Clarification of Governing Law in Arbitration Agreements

New provision: Section 6A establishes that the applicable law in an arbitration agreement is:

The law expressly agreed upon by the parties.
Where no such agreement exists, the law of the seat of arbitration applies.

However, a general agreement on a governing law for a contract does not automatically apply to the arbitration agreement unless expressly stated. This amendment enhances legal certainty and ensures arbitration agreements are interpreted consistently.

Practical Consideration: Businesses must now carefully draft arbitration clauses, explicitly stating the governing law to avoid jurisdictional disputes.

2. Duty of Disclosure for Arbitrators

New provision: Section 23A expands the duty of disclosure, requiring arbitrators to disclose any circumstances that could raise reasonable doubts about their impartiality.

This amendment enhances trust in the arbitration process by ensuring transparency and upholding the integrity of dispute resolution.

3. Protection Against Arbitrator Liability

New provision: A new subsection (4) to section 29 provides that an arbitrator is not liable for resigning unless the resignation is shown to be in bad faith.

This protection ensures arbitrators can make impartial decisions without fear of personal liability, thereby fostering a fairer arbitration environment.

4. Power to Issue Summary Awards

New provision: Section 39A grants tribunals the power to make a summary award if:

A party has no real prospect of succeeding on a claim.
A defence lacks a real prospect of success.

This provision accelerates dispute resolution by eliminating meritless claims early in proceedings, reducing costs and delays.

5. Emergency Arbitrators and Enforcement of Orders

New provision: Section 41A confirms that unless parties agree otherwise, emergency arbitrators may issue peremptory orders when a party fails to comply with directions.

Strengthening the enforcement of emergency orders enhances the effectiveness of arbitration as a rapid dispute resolution mechanism.

Impact of the Arbitration Act 2025

While the Act does not introduce drastic procedural changes, it has several implications for arbitration in the UK:

Increased Certainty: Clear rules on governing law improve predictability for businesses.
Greater Efficiency: The introduction of summary awards speeds up dispute resolution.
Stronger Enforcement: Emergency arbitrators have clearer authority, strengthening the arbitration framework.
Enhanced Credibility: Arbitrators’ duty of disclosure increases trust in UK arbitration.

Best Practices for Businesses

To navigate the evolving arbitration landscape, businesses should:

Carefully draft arbitration clauses, explicitly stating the governing law.
Ensure all arbitration agreements reflect the latest legal provisions.
Monitor developments as the Act is implemented to stay compliant.

Conclusion

The Arbitration Act 2025 reaffirms the UK’s status as a leading destination for international arbitration. By refining arbitration laws, enhancing procedural efficiency, and ensuring legal clarity, the Act strengthens the UK’s appeal as a premier hub for commercial dispute resolution.

While immediate changes may be subtle, businesses engaged in arbitration should update their contracts to reflect the new legal landscape. With greater transparency, efficiency, and certainty, the UK continues to set the global standard for arbitration.

References

Arbitration Act 2025 (Legislation.gov.uk)
Arbitration Act 1996 (Legislation.gov.uk)
Law Society: Arbitration in the UK

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Written By:

Michael Coyle

Michael is Lawdit’s Principal and heads our Commercial and Intellectual Property Department. As a Solicitor Advocate, he is one of a select group of legal experts qualified to represent clients as an advocate in the Higher Courts in England and Wales. He holds a Master of Laws degree (LL.M) from Nottingham Trent University and is a guest lecturer at Southampton Solent University. He has also completed a teaching stint at the Academy of Music in Guildford where Michael taught copyright law. Michael is highly regarded for his work in all areas of intellectual property law (which includes the eCommerce and IT fields), litigation and company/commercial matters. He regularly advises on non-contentious issues including regulatory and statutory obligations and has been involved in many successful disputes, with a strong reputation for finding common sense and practical solutions for clients. In 2017, Michael was awarded the honorary degree of Doctor of Law from Southampton Solent University for his contribution to the University and his continued support to its students.