New Arbitration Act enhances London’s dispute resolution reputation

The Arbitration Act 2025 (the Act) will enter into force on a date yet to be announced by the Secretary of State. Once in force, the Act will apply to arbitrations and related court proceedings commenced from that date onward. Regulations will need to be introduced by the government to give effect to the changes the Act makes to laws that have stood since 1996.

One of the most noteworthy changes brought about by the Act is a default rule regarding the governing law applicable to arbitration agreements. In the absence of express agreement by the parties as to the law applicable to the arbitration agreement, “the law of the seat of the arbitration in question” will be assumed to be the law of the arbitration agreement.

The default rule does not apply to investor-state arbitration agreements formed under treaties or foreign investment legislation.

Arbitrators also face new statutory duties of disclosure under the Act, requiring them to disclose – to persons that approach them over becoming an arbitrator and to the parties to the proceedings – “circumstances that might reasonably give rise to justifiable doubts as to [their] impartiality in relation to the proceedings, or potential proceedings, concerned”, as soon as reasonably practical to do so.

Further provisions that enhance arbitrators’ immunity against liability for resignations are also included in the Act.

Under the Act, arbitrators will obtain new powers to make awards on a summary basis on issues that have no real prospect of success.

Under the new Act, the tribunal has the authority to make an award on a summary basis to dispose of claims or issues that have no real prospect of succeeding. Parties wishing to opt out of the summary disposal powers granted to the tribunal can agree to disapply them, as the new power the Act introduces is not mandatory. However, if parties fail to disapply it, the summary powers will be available to the tribunal, which is similar to the court’s powers of summary or expedited judgment in England and Wales.

The circumstances in which losing parties in arbitrations can ostensibly obtain a re-hearing of the case before the courts will also be limited. In addition, courts will be empowered to make orders supporting those of emergency arbitrators – in line with powers that courts already have in relation to full arbitration proceedings.

Reforms to arbitration law in England and Wales were considered under the last Conservative government, after the Law Commission of England and Wales had undertaken a near year-long review of the existing Arbitration Act 1996 and identified areas that would benefit from targeted reform. Pinsent Masons contributed to the Law Commission’s consultation. The Conservative government’s Arbitration Bill fell when parliament was dissolved for the UK general election in May last year but was largely resurrected by the new Labour government after it came to power in July 2024.

The government said the reforms would support growth in the UK’s legal sector, which is second only in size to that of the US globally. It further highlighted the growth of international arbitration and said that there are at least 5,000 domestic and international arbitrations in England and Wales every year – and that this contributes at least £2.5 billion to the UK economy annually in fees alone.  

Sylvia Tonova of Pinsent Masons said: “The Arbitration Act 2025 affirms London’s preeminent position as preferred seat of arbitration and is expected to attract more international businesses resolving both their commercial and investment disputes in London.”

“The exclusion of investor-state arbitration agreements from the default law of the seat is a prescient addition to the law. Where such agreements are formed pursuant to investment treaties, they should rightfully be interpreted in light of applicable rules and principles of international law. The Act’s revisions to the process for challenging awards for lack of jurisdiction under section 67 of the 1996 Act is also a welcome development as the English courts would be prevented from re-hearing evidence that has already been heard by a tribunal and parties would not be able to raise new grounds or evidence unless they did not know and could not with reasonable diligence have discovered the new ground or evidence,” she said.

Scheherazade Dubash, also of Pinsent Masons, said: “The amendments to the three-decade-old law achieve their intended purpose without requiring a complete overhaul of the tried and tested legislation. These changes have been largely welcomed by the legal community in England and Wales, who have patiently followed the law's passage through parliament.”

“By codifying the law applicable to arbitration agreements, the amendments eliminate any ambiguity on the subject, balance party autonomy with legal certainty and encourage parties to explicitly specify the governing law if they prefer not to rely on the default rule,” she said.

Sarah Sackman KC, minister for courts and legal services, said: “The UK’s legal sector contributes billions to the economy and employs hundreds of thousands across the country. Companies from across the world look to the UK for our legal services and dispute resolution. This new Act ensures that arbitration law keeps this country ahead of the rest and supports economic growth.”