Arbitration Act 2025: In force from 1 August 2025

Governing Law: No More Guesswork

One of the biggest shake-ups is around the governing law of arbitration agreements. The new rule says that unless you’ve clearly agreed otherwise, the law of the seat of arbitration will apply. That’s a big shift from the previous uncertainty, and it means more predictability for businesses drafting cross-border contracts.

If you’re using arbitration clauses in your contracts, especially international ones, it’s time for a quick review. You don’t want to be caught out by assumptions about which law applies.

The new Arbitration Act 2025 serves as a good reminder that regardless of whether disputes are to be resolved in court, through arbitration, or by another dispute resolution mechanism, a well-drafted contract should always include a governing law clause. 

The provision specifies which jurisdiction’s laws will apply to interpret and enforce the terms of the agreement. In the absence of such a clause, there may be ambiguity or disagreement over which legal system governs the contract, especially in cross-border transactions. The choice of governing law can also significantly impact the outcome of a dispute, as different legal systems may interpret contractual obligations and remedies differently. 

Arbitrators: More Transparency, More Protection

The Act introduces a statutory duty of disclosure: arbitrators must now flag anything that might raise doubts about their impartiality. This codifies what’s already best practice, but now it is the law.

Plus, arbitrators get stronger immunity when they resign (unless it’s unreasonable) and protection from costs unless they’ve acted in bad faith.

This boosts confidence in the process and helps avoid messy challenges mid-arbitration. Good news for businesses relying on fair and efficient dispute resolution.

Summary Disposal: Cutting Through the Noise

Tribunals now have express powers to dismiss claims or defences with no real prospect of success, similar to summary judgment in court.

If someone’s throwing in a tactical weak claim just to stall or pressure you, there’s now a faster route to shut it down.

Court Support: Emergency Orders Get Teeth

Emergency arbitrators will now have clear authority to issue enforceable orders, and courts can step in to support arbitration more effectively, even against third parties.

This means better protection when urgent action is needed, and more confidence that arbitration isn’t a toothless tiger and removing some of the rising challenges relating to the enforcement of awards and judgments: Why are we seeing an increasing trend in work relating to the enforcement of awards?

Comment

The Arbitration Act 2025 is all about clarity, efficiency, and keeping London competitive as a global arbitration hub.  For businesses, it’s a chance to:

• review your arbitration clauses;
• update your dispute resolution strategy; and
• stay ahead of the curve.

If you need help reviewing your contracts or understanding how the changes affect your business, please get in touch.

Our Disputes team has considerable experience in international arbitration. This includes complex, multi-jurisdictional disputes involving concurrent proceedings in foreign jurisdictions; disputes with foreign states and state-owned entities; disputes exceeding US$100m; and the enforcement of judgments and arbitral awards, including asset tracing.

Our team has acted for parties in ad hoc arbitration and proceedings under the auspices of major arbitral institutions, including the ICC, LCIA, SIAC, SCC, and UNCITRAL, as well as specialist shipping and trade procedures such as LMAA, GAFTA, FOSFA and SCMA.