Introduction
The Arbitration Act 2025, which took effect on 1 August 2025, introduces a series of refinements to the arbitration framework in England and Wales. These changes follow a comprehensive review by the Law Commission and aim to ensure that the UK remains the leading seat for international arbitration. The reforms are designed to enhance legal certainty, procedural efficiency, and the overall integrity of the arbitral process.
Governing law of arbitration agreements
One of the most notable changes is the introduction of a default rule for determining the law applicable to arbitration agreements. Where the parties have not expressly agreed on the governing law of the arbitration clause, the law of the seat of arbitration will now apply. This resolves the previous uncertainty, where courts had to infer the applicable law, often leading to inconsistent outcomes.
This clarification is particularly important in the context of bills of lading as well as Letters of Undertaking (LOUs), which often incorporate arbitration clauses by reference. In practice, LOUs are often issued in maritime and insurance disputes as a form of security. Where the LOU refers to an arbitration clause without specifying the governing law, the new rule will provide a clear default, reducing the risk of jurisdictional challenges.
Summary disposal powers
Duty of disclosure
This reform reinforces the integrity of the arbitral process and supports the perception of fairness, which is essential to maintaining confidence in the arbitration procedure as a dispute resolution mechanism.
Arbitrator immunity
Emergency arbitrators and interim measures
The Act confirms that emergency arbitrators may issue peremptory orders and that such orders are enforceable unless the parties agree otherwise. It also clarifies that emergency arbitrators can grant permission for applications to the court under section 44 of the 1996 Act. These provisions enhance the effectiveness of interim relief in urgent cases and provide greater flexibility for parties seeking immediate remedies.
Conclusion
The Arbitration Act 2025 reflects a thoughtful and measured update to the UK’s arbitration framework. By addressing areas of ambiguity and codifying best practices, it strengthens the appeal of English-seated arbitration. For practitioners and clients alike, the reforms offer greater clarity and efficiency, particularly in the drafting and enforcement of arbitration clauses in shipping contracts and LOUs.
If you would like to discuss how the Arbitration Act 2025 may affect your contracts or dispute resolution strategy, please get in touch.
