By modernising arbitration, it’s hoped it will help to attract even more businesses to use it as a preferred method of resolving disputes – reinforcing the UK’s position as the ‘global destination of choice’ for the commercial legal sector, outstripping competitors such as Singapore, Stockholm and Paris as commercial arbitration centres.

According to the UK Government, the Arbitration Act 2025, which received Royal Assent earlier this year, will ‘turbocharge’ the UK’s position as a world-leader in arbitration, making it the best place to resolve commercial disputes outside of the court process.

The new Act is intended to make arbitration fairer and more efficient by simplifying procedures to reduce costs, while setting high standards in a market that continues to grow across the world.

Latest figures show that the sector grew by around 26% between 2016 and 2020. In the UK alone, the Government suggests that there are at least 5,000 domestic and international arbitrations in England and Wales on an annual basis, contributing at least £2.5 billion to the UK economy every year in fees alone.

When you consider that the UK is regarded as the largest legal market in Europe and second only to the US globally, it’s little surprise that modernising arbitration has been a key focus.

Minister for Courts and Legal Services, Sarah Sackman KC MP, said: “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.”

So what key changes will be introduced under the Arbitration Act?

• Applicable Law: the Act introduces a new rule whereby, unless the parties agree otherwise, the law governing the arbitration agreement will also be the law of the place chosen as the seat of arbitration. To avoid any uncertainty an arbitration clause should now expressly state the law which it is subject to.

• Awards on a summary basis: arbitrators will now be able to quickly resolve matters that have no real prospect of success. This provision should increase efficiency and, as the Act does not state specific procedures, ensures arbitrators will have maximum flexibility.

• Duty of disclosure: the Act introduces a statutory duty of disclosure for arbitrators ensuring that arbitrators are proactively disclosing potential conflicts of interest. An important point to note is that the Act specifies an arbitrator must disclose what they actually know and also what they ought reasonably to be aware.

• Arbitrator immunity: the Act provides that where arbitrators resign and can support the  resignation as not unreasonable, they will no longer be liable to the parties for costs. Where an arbitrator is removed by one or both of the parties, they will also no longer be liable for costs unless they are shown to have been acting in bad faith.
• Emergency arbitrators: the act makes amendments in order to give emergency arbitrators further powers and the support of the courts. These further powers mirror those of ordinary arbitrators.

The new law will come into force through regulations at a time yet to be confirmed by the Government. What is clear, however, is by clarifying existing uncertainties surrounding the Arbitration Act 1996, the new Act will not only ensure that the UK is a preferred destination for commercial arbitration, but it will also provide greater certainty and flexibility to arbitration procedures. Ultimately, modernising the arbitration process in the UK will make it a viable alternative to court proceedings for many types of dispute – both domestically and internationally.

Pannone Corporate has a top rated commercial disputes practice, including arbitration. If you’d like to find out more about the changes, or the process of arbitration in settling commercial disputes, contact senior partner, Paul Jonson, on Paul.Jonson@pannonecorporate.com