The Changes to the English Arbitration Regime: What Parties to International Construction Disputes Need to Know

England, and in particular, London, is one of the leading international arbitration centers and is frequently selected as a seat of arbitration. Indeed, the 2025 International Arbitration Survey conducted by White & Case and Queen Mary London as the most preferred seat of arbitration globally. Given the popularity of London for the determination international construction related disputes, including those that are not subject to English law, it is important that parties, their counsel, and arbitrators are aware of the recent changes to the arbitration regime and their potential implications.

The Legislative Framework

The Arbitration Act 1996 (AA 1996) applies to arbitrations that have their seat in England, Wales or Northern Ireland. It broadly reflects, but does not expressly incorporate, the provisions of the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (1985) (UNCITRAL Model Law). 

For nearly 30 years, the AA 1996 has provided an effective and popular framework for arbitrations. But by 2021, calls for its modernisation were starting to grow louder, as many of London’s competitors, including Singapore, Switzerland and Germany, took steps to modernise their own arbitration laws.

The Arbitration Act 2025 (AA 2025)

The Law Commission of England and Wales (Law Commission) announced on 30 November 2021 that it would launch a review of the AA 1996. On 6 September 2023, the Law Commission released its final report on reform of the AA 1996, alongside a draft bill. While emphasising that “root and branch reform is not needed or warranted,” a number of notable reforms were proposed.

The draft bill was put before Parliament with a first reading in the House of Lords on 21 November 2023, and it received royal assent on 24 February 2025. The secretary of state determined that the act will come into force, in full on August 1, 2025.

What Do the Changes Mean for Parties and Arbitrators?

The AA 2025 applies to all kinds of international commercial and construction disputes, including claims by and against contractors, designers, joint venture partners, and suppliers. Parties, counsel and arbitrators involved in such disputes should be aware of the practical implications of the following key amendments to the AA 1996.

• Clarification of law applicable to an arbitration agreement: Arguably, the key change clarifies the law applicable to arbitration agreements. The AA 1996 was silent as to how the law governing the arbitration agreement should be determined. Parties therefore had to look to common law for the answer. The AA 2025 now provides welcome clarity and confirms that an arbitral agreement will be governed by the law of the “seat” chosen by the parties, except where an express choice has been made otherwise.

Accordingly, when drafting arbitration agreements, parties should consider expressly stating the law that will govern the arbitration. This is particularly important where the governing law of the contract is different to the seat of arbitration.

• New express powers of summary dismissal: The AA 2025 expressly grants arbitrators the power to summarily dispose of an issue, claim or defense on which they deem that a party has “no real prospect of succeeding” on such issue, claim or defense.

Consequently, in the right circumstances, a party may find that applications of this nature will provide a more efficient and cost-effective way to deal with unmeritorious issues. Although arbitral tribunals will have discretion to determine the procedure for assessing any application, the guidance provided in existing English case law with respect to summary judgment applications is likely to benefit parties in assessing the merits of any potential application.

• Simplification of challenges to arbitral awards: Previously, a party could apply to the English court to challenge an arbitral award on the basis that the arbitral tribunal lacked substantive jurisdiction to render such an award. Under existing case law, that involved a full rehearing of the application even where an arbitral tribunal had already considered the issue of its own jurisdiction. The AA 2025 simplifies this framework and provides that evidence put before an arbitral tribunal will not be re-heard by the court (and evidence not put before an arbitral tribunal must equally not be considered by the court). It further provides that grounds of objection that were not raised before an arbitral tribunal cannot be raised before the court unless applicants can show that they could not, with reasonable diligence, have discovered said ground at the time of the arbitration. Although the court is able to depart from these provisions “in the interests of justice,” taken together, they will effectively avoid jurisdictional issues being re-litigated after an arbitral award is rendered.

Accordingly, if a party plans to challenge the jurisdiction of the arbitral tribunal at an early stage of the arbitration, that party must ensure that it puts forward all possible arguments. Failure to do so could preclude that party from raising them at a later date to challenge an arbitral award.

• Enhanced arbitrator immunity: The AA 2025 strengthens the arbitrator immunity provisions of the AA 1996. The AA 2025 provides that: (i) an arbitrator’s resignation will not give rise to any liability for the arbitrator, unless it is shown that the resignation was, in all the circumstances, unreasonable; and (ii) a court may not order the arbitrator to pay the costs of an application for their removal, unless any act or omission by the arbitrator in connection with the proceedings is shown to have been in bad faith.

• Greater powers for emergency arbitrators: The AA 2025 empowers an emergency arbitrator to issue a peremptory order (i.e., a final order or direction that specifies a time to comply with the emergency arbitrator’s original order) and make a relevant application for a court order in support of the peremptory order. The AA 2025 removes any uncertainty as to whether an emergency arbitrator order can be enforced.

• Codification of arbitrators’ duty of disclosure: The AA 2025 codifies the existing common law duty on arbitrators to disclose any circumstances that might reasonably give rise to justifiable doubts as to their impartiality in relation to proceedings. The AA 2025 further clarifies that such disclosure(s) must be made “as soon as reasonably practical” once an individual is approached for a possible appointment as an arbitrator, and the duty to disclose continues to apply if an arbitrator later becomes aware or ought reasonably to be aware of relevant circumstances.

The AA 2025 amends rather than replaces the provisions of the AA 1996. It marks a gentle evolution of the existing arbitration framework, rather than a wholesale overhaul. Nevertheless, the amendments significantly update the prior legislative framework for arbitration in the UK and have potentially far-reaching implications that should promote the efficiency of the arbitral process and enhance the attractiveness of London as an arbitral seat.

Disclaimer: The content is intended for general informational purposes only and should not be construed as legal advice. If you require legal or professional advice, please contact an attorney.