Arbitration law reform in the UK 

History 

Arbitration in the UK has deep roots, with its statutory foundation beginning in the Arbitration Act 1698, which allowed courts to enforce arbitration agreements. Over the centuries, arbitration evolved from informal commercial dispute resolution to a formalized process. The Arbitration Act 1889 was the first comprehensive codification, consolidating various procedures and establishing the legal framework for arbitration in England and Wales. 

This was followed by the Arbitration Act 1950, which integrated provisions from earlier laws and emphasized court supervision. However, as arbitration gained international prominence, a need for a more modern and streamlined approach emerged. 

The landmark Arbitration Act 1996 transformed the landscape by promoting party autonomy, limiting judicial intervention, and providing a clearer procedural framework. It positioned London as a leading global seat for arbitration and was praised for its accessibility and clarity. 

Reason for reform 

The Arbitration Act 1996 was widely respected and formed a strong foundation for arbitration in the UK, but by 2025, it was showing its age. The Law Commission didn’t find the 1996 Act fundamentally flawed, but it did identify specific gaps, ambiguities, and areas lacking clarity or modern utility: 

1. Ambiguity in governing law of Arbitration agreements: The 1996 Act didn’t clearly state what law governs the arbitration agreement when the parties haven’t expressly chosen one. This led to uncertainty and inconsistent court decisions, particularly in cross-border disputes. For example, in Enka v Chubb [2020], the UK Supreme Court had to resolve this, but the debate continued.
2. No statutory duty of disclosure for arbitrators: The Act lacked an explicit requirement for arbitrators to disclose any conflicts of interest or circumstances that might raise doubts about their impartiality. While common law filled the gap, it wasn’t codified, which left uncertainty about the scope and timing of disclosure.
3. Lack of power for summary disposal: Arbitrators had no explicit power to dismiss weak claims early. Parties could drag out proceedings by making hopeless claims, increasing time and costs.
4. Unclear legal standing of emergency arbitrators: The 1996 Act did not recognize emergency arbitrators or give courts a framework to enforce their orders. In urgent cases, parties had to rely on courts or arbitral rules with limited enforceability.
5. Limited court supervision in some areas: The Act allowed for minimal court interference, but some areas needed clearer court powers—like correcting tribunal decisions or supporting enforcement.
6. General modernization and international competitiveness: Arbitration practices have evolved globally, and the UK risked falling behind jurisdictions like Singapore or Paris, where laws had already been updated.

Key changes 

Reflecting on the arisen challenges, the Arbitration Act 2025 – which received Royal Assent on 24 February this year – amends the 1996 Act, bringing clarity and solutions to the arisen applicability challenges: 

1. Applicable law: Section 6A defines that the law of the seat governs the arbitration agreement, unless expressly stated otherwise, and that the governing law chosen for the underlying contract of which the arbitration agreement forms a part does not constitute express agreement that the same law also applies to the arbitration agreement.
2. Arbitrators’ duty of disclosure: The new Act codifies the arbitrator’s duty to disclose circumstances that might reasonably give rise to justifiable doubts as to the arbitrator’s impartiality, aligning UK law with international best practices and increasing transparency (Section 23A).
3. Summary disposal: Section 39A allows the tribunal to make an award on a summary basis in relation to a claim (or particular issue) if the tribunal considers that a party has “no real prospect of succeeding” on “the claim or issue” or in “the defence of the claim or issue” (Early Determination). 
4. Emergency arbitrators: The 2025 Act formally recognizes emergency arbitrators under Section 41A and the emergency arbitrator is expressly empowered to make a peremptory order, which is enforceable by the court, where a party fails to comply with the emergency arbitrator’s order or directions.
5. Immunity of arbitrators: Section 24 of the 2025 Act fine-tuned court support functions while keeping the non-interventionist philosophy intact, arbitrators shall not pay the costs of an application to court for their removal or in case of resignation of an arbitrator, nor take any liability, unless removal was due to arbitrator acted in bad faith or the resignation was unreasonable.
6. Third parties: The court’s authority to issue orders supporting arbitration proceedings pursuant to Section 44 of 1996 Act (including freezing orders or orders in respect of the preservation of evidence) has been extended to include orders against third parties, as opposed to only against parties to the arbitration – which is especially useful in case of fraud or disappearing assets.

The 2025 Act clarifies a number of issues and reinforces the pro-arbitration in England – please read the enacted text HERE.  

Please note that the legislation will enter into force on a date to be set by the Secretary of State – for any cases brought to arbitration prior to that, the old rules still apply.  

Should you have any questions about the impact of the 2025 Act on your arbitration agreement or in relation to disputes intended to be submitted to any England-based arbitration, please contact us at [email protected].