Modernisation Of Arbitration Law: Act Receives Royal Assent

The Arbitration Act received Royal Assent on 24 February 2025 and will be put into effect through regulations as soon as practicable. This development comes after some delay since an Arbitration Bill was first introduced in the King's speech in November 2023 and marks a welcome step forward in modernising arbitration law in England and Wales, reinforcing our position as a global leader in dispute resolution.

Key changes under the new Act

The Arbitration Act introduces several important changes:

1. Governing law: The Act will clarify which law underpins individual arbitration agreements, improving legal certainty and speeding up arbitrations. Subject to an exception for certain types of investment treaty arbitration cases, the law applicable will be that of the seat of the arbitration unless parties expressly agree otherwise.
2. Summary decisions: Arbitrators will be empowered to make decisions at an early stage on issues that have no real prospect of success through an expedited procedure, following an application by a party to the arbitration, making arbitration more efficient.
3. Impartiality and Transparency: Arbitrators must disclose any circumstances that might reasonably give rise to justifiable doubts as to the individual's impartiality in relation to the proceedings, or potential proceedings.
4. Court Support: The courts will be empowered to make orders supporting those of emergency arbitrators and make orders against third parties in support of arbitral proceedings.
5. Arbitrator Immunity: The Act will extend arbitrator immunity against liability for resignations, unless shown to be unreasonable, and the costs of an application to court for their removal, unless they have acted in bad faith.
6. Simplified Procedures: for challenging arbitral awards on substantive jurisdiction by providing that applications should contain no new evidence or new arguments.

Why is modernising arbitration law positive for the UK?

The modernisation of arbitration law is a positive development for several reasons. The changes will help bolster the UK's global standing in arbitration and maintains England and Wales as the primary destination for dispute resolution. The arbitration sector, which already generates £2.5 billion annually to the UK economy in fees, stands to benefit from continued growth through modernised legislation, leading to increased employment and investment. The choice updates to the Act also promise to save companies substantial legal costs by fostering efficiencies, offering a potentially quicker and cheaper alternative to court proceedings.

Minister for Courts and Legal Services, Sarah Sackman KC MP, stated: "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 as part of this government's Plan for Change."

Duran Ross, Partner in our Dispute Resolution team, comments: "The Arbitration Act will introduce welcome tweaks rather than a complete overhaul to the practice of arbitration in England & Wales, and cement London seated arbitration subject to the laws of England & Wales as a leading choice for contracting parties globally. The changes are on one view slight. However, the areas the changes effect are crucial to the smooth operation of arbitration which is so vital to resolving disputes as an alternative to the courts. For example, the extension of court support to assisting emergency arbitrations will provide parties with improved confidence in writing arbitration clauses into their agreements where they consider there is the risk of requiring urgent determination of disputes during the lifetime of a contract."