Haynes Boone Counsel Fiona Cain authored an article for Mealey's International Arbitration Report examining the principal changes introduced by the Arbitration Act 2025, their implications for parties choosing London as an arbitral seat and the likely global impact of these reforms.
Read an excerpt below.
England and Wales has long been recognised as a leading jurisdiction for international arbitration, with London consistently ranked as one of the world’s foremost arbitral seats. The Arbitration Act 2025 (the 2025 Act), which came into force in August this year, introduces the first significant reforms to the country’s arbitration framework since the Arbitration Act 1996 (the 1996 Act).
London Seated Arbitration
The 1996 Act has governed arbitration in England and Wales for nearly three decades. It has underpinned the UK’s reputation as a jurisdiction with a modern and arbitration friendly legal framework. Many arbitrations take place in England and Wales every year with The Law Commission of England and Wales estimating in its 2022 consultation paper on the 1996 Act that there are “at least 5000 domestic and international arbitrations in England and Wales every year, potentially worth at least £2.5 billion to the economy”.
In terms of its international reach, London is usually considered the most preferred seat of arbitration globally. It topped the list of preferred seats for arbitration in the 2025 Queen Mary University of London International Arbitration Survey, and a similar picture is recorded by leading arbitral institutions. During 2024, the International Chamber of Commerce (the ICC) and the London Court of International Arbitration (the LCIA) both recorded that London was the most frequently selected city as a place of arbitration.
The 2025 Act
On 1 August 2025, the new 2025 Act entered into full force in England and Wales and Northern Ireland. The reforms introduced by the 2025 Act are designed to update but not overhaul the 1996 Act and to ensure that the UK continues to be one of the world’s premier seats of arbitration. The amended Act will apply to all arbitrations commenced after that date.
The key changes introduced by the 2025 Act which are discussed in this article relate to:
- The law applicable to arbitration agreements;
- Emergency arbitrators;
- Summary disposal of claims and defences;
- Arbitrator’s duty of disclosure; and
- Challenging the arbitrator’s jurisdiction.
In addition, the 2025 Act introduces changes concerning immunity of an arbitrator for costs on their removal and resignation; the jurisdiction of the tribunal; court orders and their application to third parties; the arbitrator’s power to award costs; and time limits for appeals or challenges to an award. The 1996 Act contained over 100 sections and 4 schedules, whereas the 2025 Act only runs to 18 sections – an indication of the limited but targeted nature of the reforms.
The Law Applicable To Arbitration Agreements
Under the 1996 Act, the law governing an arbitration agreement was not expressly addressed. Instead, the law in England and Wales had developed pursuant to case law and was most recently addressed by the Supreme Court in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38. In that case, the court set out a three-stage test which, in essence, provided that if there was no express or implied choice of law by the parties, the law governing the agreement would be that which is “most closely connected” with the arbitration agreement. The application of this test to individual cases was not straight for-ward and led to disputes over jurisdiction.
As a result, the 1996 Act has been amended by the 2025 Act with the introduction of section 6A. This states that, unless parties have expressly agreed to the contrary, the law governing an arbitration agreement will be the law of the seat of the arbitration. This will be the case regardless of the nationality of the parties to the arbitration agreement and the law that they have chosen to govern the contract unless it concerns an investment treaty arbitration.
Best practice is for parties to expressly agree the arbitral seat and the law governing the arbitration agreement in addition to agreeing the law which governs the contract itself. Where parties fail to do so, the popularity of London as an arbitral seat in international contracts is likely to cause an increase in the number of arbitration agreements governed by the laws of England and Wales as a result of this new provision.
To read the full article from Mealey's, click here.
