UK Arbitration Act Changes 2025: New Rules Explained
From 1 August 2025, businesses resolving disputes through arbitration face new rules that could catch them out if contracts aren’t updated. The changes affect how arbitration agreements are governed, how disputes are handled, and what protections arbitrators have.
The Arbitration Act 2025 represents the most substantial reform to arbitration law in England, Wales and Northern Ireland since the Arbitration Act 1996. The reforms apply to all arbitration proceedings that start on or after 1 August, including those arising from existing arbitration agreements.
For construction and commercial businesses using arbitration to resolve disputes, understanding these changes is critical. Get in touch with our construction law specialists today for clear, fixed-fee support on arbitration and dispute resolution matters.
What Are The Main Arbitration Law Changes?
Under the new rules, the arbitration agreement will automatically be governed by the law of where the arbitration takes place, known as the seat. Your business contract and arbitration clause can now be governed by different laws unless you expressly state otherwise in your agreement.
For example, a construction contract between a UK contractor and an international developer might be governed by the law of the developer’s country, but if the arbitration is seated in London, the arbitration process itself follows English law.
This separation provides clarity about which rules apply to the dispute resolution process. Businesses can now plan with certainty, knowing exactly which legal framework governs their arbitration.
Enhanced Arbitrator Duties
The 2025 Act gives arbitrators greater powers and clearer responsibilities.
One significant change allows arbitrators to dismiss weak claims or defences early in the process. If a claim has no realistic chance of success, the arbitrator can issue a summary award without a full hearing, using the same standard applied in English courts. This helps businesses avoid wasting time and money on disputes that were never going to succeed. Parties can opt out of this provision if they prefer.
Arbitrators must now disclose anything that could raise doubts about their impartiality, from the moment they’re considered for appointment throughout the arbitration. If an arbitrator has any connection to one of the parties or previous involvement in related matters, they must declare it. This transparency requirement gives businesses confidence in the fairness of the process.
The Act also strengthens protections for arbitrators themselves. They cannot be held liable for costs of removal applications unless they acted in bad faith, and resignations are protected provided they were reasonable. These safeguards ensure arbitrators can make difficult decisions independently, which benefits businesses through robust decision-making.
How Do The New London Seat Rules Work?
With the governing law now defaulting to the seat location, choosing where your arbitration takes place has become more significant. Businesses need to think carefully about seat selection when drafting or reviewing arbitration clauses.
Key considerations for businesses
- Evaluate whether your chosen seat provides an arbitration-friendly legal environment with established procedures
- Consider the availability of supportive court measures like interim injunctions and evidence preservation orders
- Review existing contracts containing arbitration clauses, as the new rules apply to proceedings starting from 1 August 2025 onwards, even for older agreements
- If you want a law different from the seat to govern your arbitration agreement, you must expressly state this in your contract
- Check whether your chosen seat offers practical advantages like experienced arbitrators and enforcement mechanisms
The UK handles at least 5,000 domestic and international arbitrations annually, contributing £2.5 billion in fees. The changes aim to maintain London’s position as a competitive arbitration destination alongside Singapore, Hong Kong and Paris by providing greater certainty and efficiency for businesses resolving disputes.
What Are The Key Dispute Resolution Changes?
The 2025 Act introduces several practical improvements to how arbitration disputes are handled, focusing on speed and efficiency.
Emergency arbitrators now have formal recognition
Sometimes, businesses need urgent action before a full arbitration tribunal can be appointed. Emergency arbitrators can now issue binding orders that courts will enforce. This is particularly valuable in construction disputes where you might need to preserve evidence, prevent work from continuing, or secure assets before the main dispute is heard. Previously, the legal status of emergency arbitrators was unclear.
Courts can now act against third parties
The Act confirms that courts can issue orders against parties not directly involved in the arbitration. This means if you need a witness to provide documents, a bank to preserve evidence, or any third party to comply with an interim injunction, courts have clear power to compel cooperation. Third parties subject to such orders have a right to appeal.
Jurisdictional challenges are more streamlined
One common delaying tactic in arbitration is to challenge whether the tribunal has jurisdiction to hear the dispute. The new rules prevent this from becoming a lengthy process:
- Once the tribunal has ruled on its own jurisdiction, parties cannot ask a court for a separate preliminary ruling on the same issue
- If you challenge an award based on jurisdiction, courts will review the tribunal’s decision rather than rehearing all the evidence again
- You cannot introduce new arguments or evidence at the court stage that you could have raised during the arbitration
- Even if a tribunal decides it has no jurisdiction, it can still rule on who pays the costs incurred up to that point
These changes benefit construction and commercial businesses by reducing opportunities for tactical delays. Disputes move forward more quickly, keeping costs down and allowing businesses to focus on their operations rather than prolonged legal battles.
What Businesses Should Do Now
Businesses should act now to align their contracts with the new framework.
- Review your arbitration clauses. Explicitly state which law governs your arbitration agreement rather than assuming it follows your main contract. This is essential if you previously relied on the approach where the arbitration agreement automatically followed the main contract’s governing law.
- Reconsider your seat selection. Evaluate whether your chosen seat provides the legal framework and practical support your business needs for efficient dispute resolution.
- Decide on summary disposal. Since this provision is non-mandatory, consider whether to expressly include it in your agreements to enable early dismissal of weak claims, or opt out if you prefer a different approach.
Businesses that fail to update their contracts and understand the new rules risk unexpected outcomes, increased costs and jurisdictional complications from 1 August 2025 onwards.
My Commercial Lawyers provides comprehensive support for construction and commercial businesses navigating arbitration and dispute resolution. Our team can review your existing contracts, advise on arbitration clause drafting, and represent your business in arbitration proceedings under the new framework. Contact us today to safeguard your contracts and keep your projects on track.