The UK’s new Arbitration Act – which has now received Royal Assent – is designed to ensure the jurisdiction remains a leading destination for commercial arbitration. London was the top choice of seat for International Chamber of Commerce arbitrations in 2024, while the city also led the rankings in the most recent International Arbitration Survey carried out by Queen Mary University in 2021, sharing a spot with Singapore.

The journey towards the new legislation took almost four years and saw the UK’s Law Commission carry out a thorough review of the Arbitration Act 1996. The Commission’s two consultations canvassed views from the arbitration community and those using its services, assessing what was needed to ensure the legislation remained fit for purpose.

The Arbitration Act 2025, which applies in England, Northern Ireland and Wales, updates the law in several key areas, reflecting the way arbitration has developed in the last 20 years and codifying best practice and case law. Among other things, the legislation introduces a default rule to confirm that the law of the seat of the arbitration will be applicable to the arbitration agreement, unless the parties agree otherwise. Chiann Bao, Co-Chair of the IBA Arbitration Committee, says this change brings clarity that was missing from the previous legislation.

Arbitrators will now be required to disclose circumstances that might raise doubts about their impartiality, following a key 2018 UK Supreme Court judgment. ‘The codification of the arbitrators’ duty on disclosure is quite important practically,’ says Angeline Welsh KC of Essex Court Chambers. Even though this duty already existed in the case law, the practical impact is that arbitrators will probably take ‘a more cautious approach to disclosure when they’re appointed,’ she explains.

It was timely to review the legislation, says Audley Sheppard KC, President-Elect of the International Council for Commercial Arbitration, with ‘the overwhelming view [being] that the existing act is fit for purpose.’ Sheppard praises the work of the Law Commission in consulting widely and says the key changes ‘provide greater certainty and efficiency’ to arbitrations seated in London.

‘With the complementary procedural mechanisms under the LCIA [London Court of International Arbitration] Rules, parties choosing LCIA arbitrations seated in London should see immediate and measurable gains in speed, efficiency and cost-effectiveness,’ adds Kevin Nash, the LCIA’s Director General.

Since the UK’s Arbitration Act 1996 was introduced, shifting geopolitics and the increased digitalisation of business have meant other seats have gained prominence and now challenge London. But nevertheless, the jurisdiction of England, Northern Ireland and Wales continues to set standards and precedent in arbitration, not least because of the strength of the commercial courts and the backing of the judiciary when it comes to arbitration disputes. ‘Arbitration can’t exist without the courts. It’s been said many times that the English courts are supportive of arbitration and they provide a necessary supervisory role as a backstop when things go procedurally wrong,’ explains Sheppard.

Common law jurisdictions such as Australia, Hong Kong, Malaysia and Singapore pay a significant amount of attention to the judgments of English courts in matters of arbitration, says Kim Rooney, Editor of the IBA journal Dispute Resolution International. 

Bao, who’s a partner at ArbBoutique and based in Singapore, adds that the popularity of English law cannot be underestimated. ‘Indeed, the English law system as a whole, from its jurisprudence to its judiciary, has far-reaching impact, shaping and influencing legal systems and the practice of law around the world,’ she says.

But that doesn’t mean that parties in, for example, Asia, will necessarily pick London as their arbitral seat – and arbitrators don’t believe the Act is going to substantially shift the dial either way when it comes to London’s place as a seat for arbitration. ‘It’s an incentive to consider [the jurisdiction] as one of the places for arbitration. It doesn’t mean it’s going to give it the automatic edge over another jurisdiction which offers similar predictability and where it may be cheaper in time and money to do it closer to home,’ says Rooney, who’s a barrister and arbitrator at Rede Chambers in Hong Kong. 

The Arbitration Act 2025 doesn’t apply to proceedings that have already started, so any major impact will be felt further down the line. In the meantime, practitioners appear happy with the outcome. ‘Because it was a reform that was widely discussed and consulted over a [number] of years, with long periods of open comment by the public and by the legal community, it was so heavily socialised before it was passed [and] that leads to a strong degree of acceptance,’ says Kate Brown de Vejar, who’s a Co-Chair of the IBA Arbitration Committee. 

‘The reality is if you step back, compared to 15 years ago, there’s far more competition for arbitration seats than there ever was before, all the other jurisdictions regularly update their legislation, so this update signals to the market that, at the very least, London is current and up to date with the other seats,’ says Welsh. 

Brown de Vejar, who’s also a partner at DLA Piper, says London continues to be a vibrant and active arbitration community. ‘In the view of some, the biggest benefit of the new Arbitration Act is simply that it has been revised, that one can refer to an instrument that has a more modern date,’ she says.
 

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