On 24 February 2025, the Arbitration Act received royal assent, paving the way for updates to the UK legislative framework for arbitration.
This will be welcomed by arbitration practitioners who have been following the review of the legislation over the past few years. The changes will update the arbitral framework with the aim of attracting international business and positioning the UK as a global centre for dispute resolution. The updating legislation is the result of detailed consultation and reporting carried out by the Law Commission to identify how far the arbitration community considered change was needed and the areas for reform.
Ultimately the Law Commission concluded that, despite being enacted nearly 30 years ago, wholesale reform of the Arbitration Act 1996 was not wanted or needed as the existing framework was fundamentally working well. Given that assessment, it is interesting to consider which reforms were included in the final legislation (and which were not), and the impact of the changes.
What does this mean in practice?
Notable changes in the updating legislation include clarifying the law applicable to arbitration agreements, permitting the power of summary disposal where a party has no real prospect of succeeding and codifying arbitrators’ duty of disclosure where circumstances exist which might reasonably give rise to justifiable doubts as to their impartiality. The new legislation also amends court powers in support of arbitral proceedings and emergency arbitrators.
Given the background of the review, the reforms have been debated in detail so there are no real surprises for arbitration practitioners. However, there are noteworthy points that arise from the changes that provide insight into the motivations for the update and its impact.
At the forefront of the review is modernising the framework in an increasingly competitive global market for dispute resolution. Undoubtedly a key objective of the update was increasing the efficiency of the arbitration process. The power for arbitrators to make summary judgment decisions in claims with no legal merit not only achieves desired efficiency but also aligns the framework with the remedies available in litigation in this jurisdiction. As the rules of many arbitral institutions already contain such powers, this move not only seems attractive but necessary.
Adapting to recent case law
Another clear point is the legislation proactively adapting to issues that have arisen in recent cases, particularly two matters that proved complex for the English Supreme Court in 2020. The decision in Enka v Chubb clarified the court’s approach for ascertaining the law of an arbitration agreement but also added complexity to the situation. The new legislation significantly changes this and provides that unless parties have agreed otherwise, the arbitration agreement will be governed by the law of the seat.
The update brings welcome clarity to the position as the effect of the Enka decision did not just lead to the potential for satellite litigation but also uncertainty in the arbitral process. Importantly the provision also maintains party autonomy as parties can still make an express choice of law for the arbitration agreement.
This article was first published in Global Legal Post and can be accessed here.
Catherine Penny
Lorna Sleave