Debated Modernization: Is the Arbitration Act 2025 a Much-Needed Update or a Squandered Chance?
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The Arbitration Act 2025, which received Royal Assent on 24th February 2025 and came into force on 1st August 2025, marks a significant update to the UK's arbitration legislation. The Act primarily focuses on procedural efficiency and clarity, aiming to enhance London's status as a leading international forum for dispute resolution.
The 2025 Act retains the essence of what made the 1996 Act so effective, rightly being described as evolution, not revolution. Some of the key changes include default governing law rules for arbitration agreements, summary disposal powers for tribunals, enhanced disclosure duties, and emergency arbitrator powers.
However, the Act deliberately did not incorporate reforms concerning duty of confidentiality, third-party funding, regulation of technology, arbitrator independence, and anti-discrimination measures. These were addressed in the Law Commission’s review but were not part of the final enacted 2025 Act.
The Act makes express provision for the appointment of emergency arbitrators where the parties have agreed to arbitration rules that provide for such appointments. It also introduces a new framework for when a party challenges an award for lack of substantive jurisdiction.
The 2025 Act goes further in requiring an arbitrator to disclose any relevant circumstances of which they "ought reasonably to be aware," imposing an obligation on arbitrators to conduct diligent enquires into the existence of relevant circumstances before and after accepting appointments.
Section 4 of the 2025 Act provides that an arbitrator will only be liable for costs associated with their resignation in circumstances where their resignation was, in all the circumstances, unreasonable. Similarly, Section 3 of the Act clarifies that an arbitrator will only be liable for costs associated with their removal where it can be shown that they acted in bad faith.
The Act does not introduce a statutory duty of confidentiality in arbitrations seated in England and Wales. The Law Commission chose not to introduce an express statutory duty of independence for arbitrators either. Instead, it endorsed the current, arguably more flexible position.
The Supreme Court's 2023 decision in R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28 cast uncertainty over arbitration funding. However, the 2025 Act did not address this issue directly.
The Act clarifies Court powers in support of emergency arbitrators and confirms the power of a tribunal to issue awards on a summary basis upon an application made by a party. Section 7 of the Act further confirms this power.
The Law Commission did not recommend any reform to the 1996 Act to explicitly address discrimination. The 2025 Act does not introduce any explicit prohibition on discrimination in arbitration either.
In summary, these key areas were considered during the comprehensive Law Commission review but were deliberately not included in the Arbitration Act 2025 reforms enacted as of August 2025. The Act primarily focuses on procedural efficiency and clarity, leaving more complex regulatory or policy issues such as confidentiality, third-party funding, technology regulation, arbitrator independence, and discrimination for further consideration or alternative regulatory approaches.
