UK Arbitration Act 2025: why does it matter?

Last week the Arbitration Act 2025 received royal assent, introducing a host of changes that aim to simplify procedures, reduce costs, and attract international investment in the UK’s legal sector.

The reforms have been heralded by the UK Government as a boost for the UK economy – reinforcing Britain’s position as a preferred jurisdiction to resolve commercial disputes without having to go to court.

The UK’s legal sector is second in size only to that of the US globally, but with increasing competition in particular in the arbitration sector from seats including Singapore and Dubai, it is hoped with these reforms that the UK’s share of the market can further increase.

Modernising the Arbitration Landscape

The 2025 Act represents a refinement, not a revolution, of the Arbitration Act 1996, the foundational statute governing arbitration in England and Wales. The reforms are designed to bring greater efficiency, clarity, and fairness to arbitration proceedings. A key focus is on simplifying procedures to reduce costs, a priority in the face of rising global competition for arbitration business.

One of the most significant changes is the introduction of a new default rule for determining the law applicable to an arbitration agreement. Unless the law applicable to the arbitration agreement is expressly stated, the law governing the seat of the arbitration will be adopted. This is expected to reduce the complexity of disputes related to the law governing arbitration agreements, offering greater certainty for international parties.

Additionally, the Act codifies the arbitrators’ duty of disclosure following the Supreme Court’s decision in the Halliburton v Chubb case.  An arbitrator must now disclose any circumstances that reasonably give rise to doubts as to their impartiality. It will also extend the immunity of arbitrators, offering greater protection against challenges, provided they act in good faith. The reforms are intended to foster a fairer and more reliable arbitration process, encouraging more businesses to choose the UK for dispute resolution.

Empowering Emergency Arbitration

The new legislation also empowers emergency arbitrators (EAs) – an increasingly vital element of international arbitration. The Act ensures that the decisions of EAs can be enforced more effectively and reflects the growing need for quicker, more efficient resolutions in time-sensitive commercial disputes.

Another important reform is the clarification of the court’s role in supporting arbitration. The Act enhances powers under Section 44 of the Arbitration Act, allowing it to issue orders against third parties in support of arbitration proceedings. This change aims to streamline processes and prevent delays in arbitration, particularly in cross-border cases where third-party involvement is common.

Modernising the Arbitration Landscape

The 2025 Act represents a refinement, not a revolution, of the Arbitration Act 1996, the foundational statute governing arbitration in England and Wales. The reforms are designed to bring greater efficiency, clarity, and fairness to arbitration proceedings. A key focus is on simplifying procedures to reduce costs, a priority in the face of rising global competition for arbitration business.

One of the most significant changes is the introduction of a new default rule for determining the law applicable to an arbitration agreement. Unless the law applicable to the arbitration agreement is expressly stated, the law governing the seat of the arbitration will be adopted. This is expected to reduce the complexity of disputes related to the law governing arbitration agreements, offering greater certainty for international parties.

Additionally, the Act codifies the arbitrators’ duty of disclosure following the Supreme Court’s decision in the Halliburton v Chubb case.  An arbitrator must now disclose any circumstances that reasonably give rise to doubts as to their impartiality. It will also extend the immunity of arbitrators, offering greater protection against challenges, provided they act in good faith. The reforms are intended to foster a fairer and more reliable arbitration process, encouraging more businesses to choose the UK for dispute resolution.

Empowering Emergency Arbitration

The new legislation also empowers emergency arbitrators (EAs) – an increasingly vital element of international arbitration. The Act ensures that the decisions of EAs can be enforced more effectively and reflects the growing need for quicker, more efficient resolutions in time-sensitive commercial disputes.

Another important reform is the clarification of the court’s role in supporting arbitration. The Act enhances powers under Section 44 of the Arbitration Act, allowing it to issue orders against third parties in support of arbitration proceedings. This change aims to streamline processes and prevent delays in arbitration, particularly in cross-border cases where third-party involvement is common.

Global competition

With these reforms, the UK is positioning itself to compete with other major arbitration hubs. According to the latest full year statistics published by the key arbitral institutions, London’s Court of International Arbitration lagged behind centres in Singapore, Hong Kong, and Paris’ International Chamber of Commerce in terms of the number of cases handled.