The <span class="news-text_italic-underline">Arbitration Act 2025</span> officially received Royal Assent on 24 February 2025, marking the completion of its passage through Parliament. This new Act closely follows the recommendations made by the Law Commission in response to a government request to review the <span class="news-text_italic-underline">Arbitration Act 1996</span> and ensure its continued relevance in promoting the UK as a leading hub for international commercial arbitration.
The Law Commission's review, following a consultation period, culminated in the publication of its recommendations in September 2023. These proposed amendments aim to enhance the arbitration framework, ensuring it remains effective and competitive on the global stage.
Sir Peter Fraser, Chair of the Law Commission, commented on the significance of the Bill’s passage:
<p class="news-text_emphasize">"The Arbitration Act 2025 marks a pivotal step in advancing the UK’s arbitration landscape. By enacting the Law Commission’s recommendations, we are not only strengthening the arbitration framework but also reaffirming the UK’s status as the premier jurisdiction for commercial arbitration. This will ensure the UK remains a top destination for international arbitration."</p>
The Bar Council has also expressed its support for the passing of the Arbitration Bill 2025. The updated Act aligns with the Law Commission’s recommendations and brings welcome clarity to the existing framework, further cementing the UK’s position as a global leader in arbitration.
According to the Law Commission, there are over 5,000 domestic and international arbitrations annually in England and Wales, generating £2.5 billion in fees. This underlines the significant economic contribution of arbitration to the British legal system.
Barbara Mills KC, Chair of the Bar Council, highlighted the importance of the new legislation:
<p class="news-text_emphasize">"We welcome the Arbitration Act 2025, which will further enhance the UK’s standing as a leading centre for arbitration. This industry is worth billions to the British economy. In particular, we value the clarity the new Act provides regarding the law applicable to arbitration agreements, which we anticipate will increase the number of disputes arbitrated in England and Wales. Additionally, the Act strengthens the role of courts in supporting arbitration and allows for the summary dismissal of meritless claims, increasing efficiency in arbitral proceedings … The modernisation of the UK’s arbitration framework ensures the country remains competitive in the international arbitration market.”</p>
Further information about the Law Commission’s arbitration law reform project, including their recommendations, can be found on <a href="https://lawcom.gov.uk/project/review-of-the-arbitration-act-1996/" target="_blank" class="news-text_link">the project page</a>.
The <span class="news-text_italic-underline">Arbitration Act 1996</span> governs arbitration in England and Wales, as well as Northern Ireland, with London recognised as a prominent arbitration center. A significant number of international commercial agreements are governed by English and Welsh law.
In March 2021, the Conservative government asked the Law Commission to review the Arbitration Act to ensure it remains effective and relevant. After consultations in September 2022 and March 2023, the Law Commission issued its final recommendations in September 2023. These included proposals for arbitration agreements, challenging arbitrator decisions and enhancing the court’s role in supporting arbitration proceedings.
The Law Commission emphasised that, while improvements were necessary, the core structure of the Act was generally working well and did not require radical reform. The government accepted these recommendations and introduced the Bill in the House of Lords on 21 November 2023. The Bill progressed through a public bill committee but was halted when Parliament was prorogued in May 2024.
The Labour government, in the King’s Speech on 17 July 2024, pledged to reintroduce the Bill. It was presented in the House of Lords the next day, reflecting amendments from the previous version and incorporating changes related to the law governing arbitration agreements in investor-state disputes.
On 11 September 2024, the Bill underwent further amendments in the House of Lords, specifically regarding appeals on decisions to stay legal proceedings. A consequential change was also made to the Bill’s title.
As the Bill continues to move forward through the legislative process, we will keep you updated with further developments and any changes that may arise in the coming stages of its consideration.
