The future of arbitration for life sciences companies

Arbitration is an alternative to litigation before a national court as a means of resolving disputes. It involves a neutral third party (known as an arbitrator) making a final and binding decision on the dispute.

All parties have to agree to submit the dispute in question to arbitration. In the context of English law, that agreement must be made or evidenced in writing, and will typically appear as a separate clause within a wider commercial contract. However it can also take the form of a separate agreement, or drafted and agreed to after the dispute has arisen.

Why might life sciences companies opt for arbitration?

There are several key benefits to arbitration:

• Privacy and confidentiality: Disputes in the life sciences sector often involve the consideration of highly sensitive commercial information including pricing, intellectual property details and licensing terms. The confidential nature of arbitration therefore makes it an attractive alternative for life sciences companies trying to resolve contractual disputes. Arbitration also allows the parties to resolve disputes away from the glare of publicity given that hearings are held privately and the pleadings and witness statements referred to in an arbitration hearing do not ordinarily become publicly available documents. That being said, this does mean that the public “vindication” obtainable through court proceedings will not be possible.
• Speed and procedural flexibility: In theory, the arbitral process can be much more flexible than that of court proceedings and it can be quicker. For example, as long as the parties agree, they can choose to appoint an arbitrator with specific scientific knowledge and experience in the life sciences industry, which tends to lead to a more informed decision-making process.
• Neutrality: For international contracts, arbitration is often perceived as a neutral option, allowing parties to avoid opting for one or the other of their national courts as the dispute resolution forum.
• Potential cost savings: In terms of costs, the flexibility that comes with arbitration can help parties to achieve cost savings if it suits the case. A large additional cost is paying the arbitration tribunal - so clearly having a panel made up of 3 arbitrators will be more expensive than having a sole arbitrator, which is a point worth remembering at the contract drafting stage.
• Finality of the award: One of the key advantages of arbitration is the finality it offers — arbitral awards are rarely subject to challenge, which provides parties with a high degree of certainty. Under English law, there is a unique opportunity to appeal if the tribunal errs on a point of law, albeit many of the institutional rules (such as those of the London Court of International Arbitration) exclude this option. This characteristic sets London apart as a leading arbitration hub, offering a rare balance between finality and legal oversight.
• International enforcement: Arbitral awards are typically easier to enforce internationally than court judgments, which is a real advantage for life sciences companies with cross border operations.

The future of arbitration in the UK

In February this year, the Arbitration Act 2025 (the Act) received Royal Assent paving the way for reforms to the UK legislative framework for arbitration. The Act will enter into force on a date which is yet to be announced by the Secretary of State. You can read our initial thoughts on the new legislation here.

All in all, it is apparent that the aim of the new legislation is to increase the efficiency of the arbitration process. For example:

• A long-standing criticism of arbitration has been that the process does not allow for summary assessment of claims however the Act seeks to tackle this head on by giving arbitrators the express power to make summary judgment decisions on issues/claims that have no real prospect of success.
• Arbitrators also face new statutory duties under the Act requiring them to disclose, as soon as reasonably practical to do so, any “circumstances that might reasonably give rise to justifiable doubts as to impartiality in relation to the proceedings”.
• The Act confirms that, unless the parties have agreed otherwise, the law of the seat of the arbitration will govern the arbitration agreement. This promotes legal certainty and ensures that parties can rely on the laws of England and Wales for London-seated arbitrations.

Conclusion

There are clear benefits of arbitration in the right circumstances and these should be borne in mind when seeking to resolve disputes, whether they be IP or contractual, as well as when choosing the dispute resolution mechanism in new contractual arrangements.

London is already an attractive choice of arbitration seat for resolving life sciences disputes but we suspect it will become even more popular in light of the upcoming updates to the UK legislative framework for arbitration.