Arbitration Act 2025 Receives Royal Assent: How Will It Help Dispute Resolution?
The long-anticipated Arbitration Act 2025 has officially received Royal Assent and become law. The act introduces several reforms in the arbitration sector and aims to make the United Kingdom the best country for dispute settlement without having to go to court.
The arbitration sector is a major contributor to the United Kingdom economy, with a value of £2.5 billion. Thousands of domestic and international cases are handled annually in the country. The latest reforms seek to maintain the UK’s status as a preferred arbitration location, while also competing with other global centres such as Singapore, Hong Kong, and Paris.
Features of the Arbitration Act 2025
The 2025 Arbitration Act builds on the act of the same name from 1996. Notably, it introduces measures to enhance the transparency, accessibility, and effectiveness of the arbitration processes:
Legal Clarity
The act establishes clear rules regarding the laws that can be applied to settle an arbitration agreement. This is expected to reduce legal uncertainty and potential disputes due to individual interpretations.
Summary Disposal of Claims
The new act allows tribunals to dismiss or shut down weak cases quickly. In other words, this will reduce time-wasting tactics while expediting judgement earlier and saving time and money. Still, tribunals must give each party a reasonable opportunity to present their case to avoid injustices.
Jurisdictional Challenge Reforms
The act also introduces procedural changes for challenging an arbitrator’s jurisdiction under Section 67. Previously, a party could challenge jurisdiction in arbitration and then re-litigate the same issue in court from scratch.
However, now the court review will only consider relitigation if the arbitrator’s decision was incorrect based on the arguments made during arbitration.
More Protection for Arbitrators
With the act in force, arbitrators will have more immunity against lawsuits regarding their judgements or when they resign or are removed by the tribunal. This will allow them to provide unbiased judgements while also motivating qualified individuals to pursue careers as arbitrators.
Emergency Arbitration Support
The Arbitration Act 2025 also clarifies the court’s role in supporting emergency arbitrators. The goal is to make emergencies reliable for businesses needing quick resolutions. The rule will also now close a common loophole: some parties would refuse to adhere to emergency decisions.
The act is the result of a multi-year review process led by the Law Commission of England and Wales.
Implementation and Next Steps
While the Act has already been passed, the key provisions will come into effect through secondary legislation. The official date for this is yet to be announced.
Industry experts have welcomed the Act. Many note that it balances modernisation with continuity and positively enforces the UK’s claim to be an excellent business destination.
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