The Arbitration Act 2025: Key reforms and their impact on international arbitration in the UK
The Arbitration Act 2025 significantly refines the UK’s international arbitration framework. Building upon the Arbitration Act 1996, the new legislation modernises arbitration law, enhances efficiency, and clarifies key legal principles. In this article, we examine the most important changes, why the reforms were needed, when they will take effect, and how they will shape international arbitration going forward.
Key changes introduced by the Arbitration Act 2025
The Arbitration Act 2025 introduces a range of targeted updates designed to strengthen the UK’s position as a global arbitration hub. The most notable changes include:
Clearer rules on the governing law of arbitration agreements
One of the most significant amendments is introducing a default rule for determining the governing law of an arbitration agreement. Under the new Act:
- If the parties specify a governing law for the arbitration agreement, that law will apply.
- If no governing law is explicitly stated, the law of the arbitration seat will govern the agreement.
- The governing law of the main contract will not automatically apply to the arbitration agreement unless expressly stated.
This reform resolves past uncertainties and ensures that arbitration agreements seated in the UK benefit from an arbitration-friendly legal framework.
Stronger powers for arbitrators
The Act grants arbitrators the power to summarily dismiss claims or defences with no real prospect of success. While some UK arbitrators previously exercised this power under general procedural discretion, there is now a clear statutory basis, aligning arbitration with court-based summary judgment procedures. This change is expected to improve efficiency by preventing frivolous claims from prolonging proceedings.
Increased arbitrator immunity
The immunity of arbitrators has also been strengthened under the Act. While arbitrators were already protected from liability for decisions made in good faith, they previously faced potential exposure when resigning or in cases where a party sought their removal.
The new legislation clarifies that arbitrators cannot be sued for reasonable resignation or costs incurred in removal proceedings. This measure reassures arbitrators and reinforces the integrity of arbitration as a neutral and independent dispute resolution process.
The role of UK courts in arbitration
The new Act enhances the role of courts in arbitration while limiting interference. Key reforms include:
- Recognition of emergency arbitrators: UK courts can now enforce interim orders made by emergency arbitrators, strengthening pre-award relief measures.
- Third-party orders: Courts will have greater flexibility in compelling third parties to provide evidence or comply with arbitration-related orders.
- More streamlined jurisdictional challenges: The process for challenging the jurisdiction of an arbitral tribunal has been refined to reduce unnecessary delays.
These measures ensure that arbitration proceedings remain efficient while benefiting from court assistance when necessary.
What prompted the changes in UK arbitration law?
The Arbitration Act 1996 served the UK well for nearly three decades, but updates were needed due to several key factors:
Keeping up with global developments
Other leading arbitration hubs, such as Singapore, Switzerland, and France, have modernised their arbitration laws in recent years. The UK needed to adapt its legal framework to maintain its competitive edge in international arbitration.
Clarifying legal uncertainties
Some provisions of the 1996 Act were open to interpretation, allowing for inconsistent rulings. The new Act provides greater clarity, especially in determining the governing law of arbitration agreements, arbitrators’ powers, and procedural rules.
Enhancing efficiency and reducing costs
Arbitration is valued for being faster and more cost-effective than litigation, but delays and procedural inefficiencies were a concern. The new Act addresses this by introducing summary disposal powers, ensuring faster resolution of frivolous claims, and improving court support mechanisms.
Reinforcing London’s role as a leading arbitration hub
London remains a leading seat for international arbitration. By modernising its arbitration laws, the UK reinforces its reputation as a pro-arbitration jurisdiction, encouraging more companies and investors to resolve disputes in the UK.
When does the Arbitration Act 2025 take effect?
The new Act received Royal Assent on 24 February 2025. However, the specific date it will take effect is subject to government approval. The UK government has indicated that the Act will be implemented as soon as practicable, with a transition period to ensure smooth implementation.
In the meantime, arbitrators and businesses should review the new provisions and their impact on arbitration agreements.
How will the Act strengthen international arbitration?
The Arbitration Act 2025 is set to enhance international arbitration in the UK, strengthening its reputation as a reliable and efficient hub by improving key areas such as:
Greater legal certainty for international parties
By clearly defining which law applies to arbitration agreements, the Act removes uncertainty, making the UK an even more attractive jurisdiction for businesses engaged in international disputes.
More efficient and cost-effective arbitration
With summary dismissal powers now clearly established, arbitrators can quickly resolve unfounded claims, preventing delays and reducing the financial burden on parties.
Ensuring arbitrator independence
The strengthened immunity provisions give arbitrators greater confidence to act independently, ensuring that international arbitration in the UK remains fair and impartial.
Keeping the UK at the forefront of arbitration
With these reforms, London remains one of the world’s most arbitration-friendly jurisdictions, alongside hubs such as Singapore, Paris, and Geneva. The Act strengthens the UK’s appeal for international arbitration, with the potential to attract more cases.
The future of international arbitration in the UK
The Arbitration Act 2025 represents a measured but important evolution in UK arbitration law. It maintains the UK’s position as a global leader in international dispute resolution by clarifying legal uncertainties, enhancing arbitrator impartiality, and improving procedural efficiency.
For businesses and practitioners involved in arbitration, now is the time to review existing arbitration agreements, understand the new legal framework, and prepare for the Act’s implementation. As the UK continues to modernise its arbitration laws, the Arbitration Act 2025 is a key step in securing its position as a leading global arbitration hub for years to come.
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The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor.
