Securing London’s status as a world leading arbitral seat: The Arbitration Act 2025
June 2025Arbitration is an alternative to litigation and provides the parties within a binding means of resolving domestic or international dispute through an effective, confidential and impartial process. It is a creature of contract and requires all parties to enter into an arbitration agreement or incorporate a contractual arbitration clause.
Arbitration is estimated to be worth £2.5 billion to the UK economy, based on just the fees generated from arbitration proceedings, and this is expected to grow.[1]
London is already widely regarded as one of the world’s leading arbitral seats, amongst the likes of Singapore, Hong Kong, Paris, Geneva and New York. The Law Commission has reviewed the UK’s legislative framework for arbitrations with the aim of introducing reforms that provide greater procedural certainty, enhance efficiency where appropriate, improve cost-effectiveness, and codify the duties of arbitrators to maintain impartiality throughout the process.
The Arbitration Act 2025 received royal assent on 24 February 2025 and amends the Arbitration Act 1996 (the “1996 Act”). We think that the limited but significant changes to the legislative framework under this new legislation will, as is consistent with the objectives of the legislation[2], convince parties to select London over some of the other world-leading arbitral seats for resolving disputes on major infrastructure projects.
We explore below six of the key changes to the legislative framework introduced by the 2025 Act.
- New mechanism for determining the governing law of an arbitration agreement
The 2025 Act provides that the law applicable to an arbitration agreement will be either: (i) the law that the parties have agreed will apply to the arbitration agreement; or (ii) if there is no agreement between the parties, the law of the seat for the arbitration.
Whilst the legislation is intended to reduce the uncertainty around which governing law applies to an arbitration agreement, it clarifies that the law of the arbitration agreement is not to be determined by reference to the law of the matrix contract.
The ‘default rule’ is therefore a departure from the approach in Enka[3], in which the Supreme Court found that, in the absence of an express party choice, the law of the matrix contract governed the arbitration agreement (where such law was expressly selected by the parties), unless there was an exemption or good reason to suggest otherwise.
- Arbitrator impartiality: codifying an arbitrator’s duty of disclosure
There is now a duty on individuals and arbitrators to disclose any ‘relevant circumstances’ which “might reasonably give rise to justifiable doubts as to the individual’s impartiality”.
We anticipate that there will be some caselaw on this in the future which will give practical examples of what arbitrators are expected to disclose.
- Extending the scope of arbitrators’ immunity
Where an application is made to remove an arbitrator, the Court no longer has the power to order that arbitrator to pay the costs of the application, unless it can be shown that the arbitrator has acted in “bad faith”.
- Clarifying the process for challenging an award on jurisdictional grounds
Under Section 67 of the 1996 Act challenges (challenging an award on jurisdictional grounds) involve a full rehearing before the Courts.
The amendments introduced by the 2025 Act provide that, where an objection has been made to the tribunal that it lacks jurisdiction, and the tribunal has ruled on its jurisdiction, then any subsequent Section 67 challenge by any parties will be limited. The court will not entertain any new grounds of objection, or any new evidence, and evidence will not be reheard (save in the interests of natural justice). The approach will therefore be more akin to an appeal, rather than a full hearing.
- Power of summary disposal
An arbitral tribunal can now, unless agreed otherwise, issue an award on a summary basis on either: (i) an issue; or (ii) the claim as a whole, if it believes that a party has no prospect of succeeding/defending on the wider claim.
This amendment to the 1996 Act is consistent with the Law Commission’s objective to speed up the arbitration process and ensure that parties mitigate costs, where possible.
- Emergency arbitrator powers and orders
Emergency arbitration enables parties to obtain urgent protective measures, before the constitution of a tribunal.
The 2025 Act assists with the enforcement of those protective measures as emergency arbitrators will now have the same powers as other arbitrators to enforce peremptory orders.
Emergency arbitrators will also now have the same power as other arbitrators to give arbitral parties permission to apply to court for a Section 44 order (i.e. increasing the Court’s supporting powers, including around evidence or interim injunctions).
Practical issues
Despite improvements to the arbitration framework, practical hurdles remain in England due to court backlogs—particularly for matters requiring court intervention, such as arbitrator appointments, jurisdictional challenges, appeals, and award enforcement.
There can be delays with the Commercial Court listing half-day hearings to address these points, which could in-turn delay the start of an arbitration. Although these types of delay have reduced in frequency, a backlog nevertheless remains.
Our arbitration practice at a glance
Beale & Co has significant experience dealing with complex and high value domestic and international arbitrations relating to a wide range of issues. We have considerable knowledge of all major arbitration rules including UNCITRAL, ICC, DIAC, ADCCAC, and DIFC-LCIA. We also have extensive experience acting in relation to ad hoc arbitration agreements.
Our clients instruct us to advise on all aspects of the dispute resolution process from crystallisation of a dispute prior to any formal proceedings until resolution. Based on a strong understanding of clients’ business needs and the challenges of operating in a global market, our lawyers tailor their approach to address clients’ specific legal requirements.
We have a proud history of acting for clients around the world and we have built an international practice that provides clients with a first-class service, wherever they are. Our lawyers have advised or acted in relation to disputes in various international jurisdictions including the Middle East, Africa, Europe, Australasia, Asia Pacific and the Americas.
[1] Government Press Release, ‘Modernised laws to secure UK as world leader in dispute resolution’, published 22 November 2023 – Modernised laws to secure UK as world leader in dispute resolution – GOV.UK (www.gov.uk)
[2] See Government ‘Arbitration Bill: Fact Sheet’, arbitration-bill-factsheet.pdf (publishing.service.gov.uk).
[3] Enka Insaat Ve Sanayi AS (Respondent) v OOO Insurance Company Chubb (Appellant) [2020] UKSC (Enka) 38
Download PDF
