This article has been authored by Khushi Jain, a 1st Year student at Dr. Ram Manohar Lohiya National Law University, Lucknow
Introduction
In recent decades, arbitration as a mechanism of dispute resolution has gained global acceptability. It is evolving as a principal method of settlement of commercial disputes. Commercial arbitration remains the preferred dispute resolution procedure for international transactions. Recognizing the need to maintain its status as a leading arbitration hub, United Kingdom (“UK”) has undertaken significant legislative reforms.
Highly anticipated English Arbitration Bill received Royal Assent, with the Bill enacted as the Arbitration Act 2025 (“2025 Act”). The new Act introduces a series of enhancements to the Arbitration Act 1996 (“1996 Act”) following a review by the Law Commission. It provides legal clarity on various legal issues and reinforces the pro-arbitration framework in England, Whales & Northern Ireland.
The blog aims to explore the current legal landscape of Arbitration in the UK through the recent yet much-debated 2025 Act. It examines the major amendments and novel provisions and evaluates their impact on the effectiveness and efficiency of arbitration. The blog further addresses the unexplored existing shortcomings and provides a prospective solution to curb them, ensuring a more equitable and robust dispute resolution system.
Overview of Key Amendments
The amendments clarify the key issues that impact arbitrations. A central change is the introduction of Section 6A, which establishes the law of the seat as the default governing law of the arbitration agreement, unless the parties have expressly agreed otherwise. It eliminates the uncertainties and complexities arising from the Supreme Court’s decision in Enka v. Chubb. Another important development is the codification of arbitrators’ duty of disclosure following the guidance laid down in Halliburton v Chubb. The 2025 Act mandates that arbitrators disclose any circumstances that might reasonably give rise to justifiable doubts as to their impartiality. Furthermore, Section 39A empowers arbitral tribunals to summarily dispose of claims or defenses that have no real prospect of success. Amendments to Section 67 represent a further effort to streamline post-award challenges. Parties are now restricted from raising new grounds or introducing fresh evidence that was not presented during the arbitration, thereby curbing the risk of rehearing disputes under the guise of jurisdictional challenges. The Act also empowers courts to either remit the award to the tribunal for reconsideration or declare it partially or wholly ineffective.
Another forward-looking amendment is the formal recognition of emergency arbitrators within the statutory framework. The Act acknowledges the growing importance of interim measures and emergency relief in international arbitration. Amendments to Section 44 further clarify that with appropriate permission from the emergency arbitrator, parties may approach courts for interim assistance. The Act also addresses the immunity of arbitrators by amending provisions related to their removal and resignation. It clarifies that arbitrators will not bear costs arising from a removal application unless there is evidence of bad faith. Similarly, an arbitrator who resigns will not be liable unless the resignation is unreasonable in the circumstances. In terms of procedural deadlines, the amendment to Section 70 ensures that where an award is corrected or supplemented under Section 57, the time limit for any challenge or appeal begins only after such corrections have been made or denied.
The 2025 Act represents a well-calibrated effort to enhance the efficiency, transparency and enforceability of arbitration in the UK. The 2025 Act modernizes the legislative landscape while maintaining flexibility for party autonomy and institutional practice through the codification of core principles and, clarification of jurisdictional and procedural issues. These reforms are poised to reinforce the appeal of English arbitration law in a competitive global market.
Limitations and Challenges
The current framework continues to have some limitations that hinder the balance between efficiency, fairness, and regulatory clarity in arbitration proceedings.
No Codification of Confidentiality Agreement:
2025 Act does not introduce any statutory provision on confidentiality in arbitration. While English case law like Dolling-Baker v Merrett recognizes arbitration as a private process, confidentiality obligations remain uncertain and are subject to judicial discretion.
A codified confidential agreement is the need of the hour. Confidentiality is largely implied under the Singapore International Arbitration Act. Section 63 mandates confidentiality for information obtained by an arbitrator acting as a mediator, unless the party consents or the mediation ends without settlement. A statutory provision should define confidentiality rules, exceptions and the extent of disclosure allowed in multi-party arbitrations. Tribunals should be granted express powers to issue confidential orders, reducing reliance on court intervention for such matters.
Corruption Concerns:
2025 Act lacks measures to enhance scrutiny in cases involving fraud, bribery or corruption. Nigeria v. P&ID case highlights concerns where an arbitral award of $11 billion was set aside due to corruption and fraud in the underlying contract.
The UNCITRAL Rules on Transparency in Investor-State Arbitration are a set of rules that aim to make investor-state arbitration more transparent. Article 5 allows for the submission of third-party briefs (“amicus curiae”), which may assist tribunals in uncovering facts relevant to public interest, including issues of corruption. Article 3 mandates the publication of key documents like pleadings and witness statements, which fosters accountability and deters fraudulent conduct. Similarly, Article 6 opens hearings to the public, subject to confidentiality safeguards under Article 7, enhancing scrutiny over the arbitral process. The 2025 Act could model a similar approach. Further, an express duty on arbitral tribunals to consider allegations of fraud and corruption when rendering awards could help. The UK could also take the lead in establishing a public arbitrator to conduct a registry, documenting appointments, disclosed relationships, past challenges, and tribunal performance metrics.
Third Party Funding (TPF):
Third party funders are defined as any person or entity that is contributing funds to the case and that has a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration. It has become a popular practice in several jurisdictions and has been witnessed at the global level. The absence of regulations on funder disclosure and conflicts of interest raises concerns about impartiality, transparency, and undue influence over arbitral proceedings.
A provision requiring parties to disclose the existence of third-party funding, the identity of the funder, and any financial interest the funder may have in the outcome of the case should be introduced. This would prevent undisclosed relationships that may lead to bias or conflicts of interest. For instance, Section 98U of the Hong Kong Arbitration Ordinance deals with the disclosure of TPF in arbitration. It requires the funded party to notify other parties and the arbitration body about the funding agreement and its identity.
Cost Efficiency:
The high costs of arbitration are the main criticism arbitration has received over the past two decades. It largely stems from the combined expenses of legal counsel, paying arbitrator fees, travel costs for hearings across different jurisdictions, complex document production, and administrative fees. The results of the 2015 Queen Mary University of London (QMUL) International Arbitration Survey show that stakeholders in international arbitration perceive ‘cost’ as ‘the worst characteristic of international arbitration’. The 2018 QMUL Arbitration Survey similarly concluded that cost continues to be seen as ‘arbitration’s worst feature’. The 2025 Act fails to include robust cost-management mechanisms.
The future of international arbitration depends on its ability to return to its roots offering a faster and more cost-effective alternative. Tribunals should be empowered to cap legal costs and arbitrator fees in proportion to the claim’s value, preventing excessive financial burdens on parties. Article 37 of ICC Arbitration Rules empowers tribunals to allocate costs based not only on the outcome but also on the parties’ conduct during proceedings, including procedural efficiency and cooperation. Further, the use of virtual hearings and AI-driven case management tools should be encouraged to reduce administrative costs and improve procedural efficiency.
Path Ahead
AI- Driven Arbitration: With the proliferation of artificial intelligence (AI) tools and their increasingly widespread use, there is a compelling case for specific frameworks and clear guidelines to regulate AI in international arbitration. It can benefit the system if used cautiously. AI can rapidly scan thousands of pages of contracts, case law, and correspondence to extract relevant clauses, key legal principles, and inconsistencies. It can recognize legal terms, even in complex or unstructured data, allowing arbitrators to quickly identify essential material facts and legal arguments. Moreover, it can also detect inconsistencies, altered documents, or fraudulent claims by analyzing document metadata and cross-referencing data points.
Harmonization with Global Best Practices: The harmonization of arbitration laws with international best practices becomes essential to ensure consistency, efficiency, and fairness in dispute resolution. Businesses seek arbitration regimes that offer predictability, enforceability, and procedural safeguards aligned with international norms as they engage in cross-border transactions. Leading arbitration hubs such as Singapore, Paris and New York have continuously adapted their frameworks to address emerging challenges. Singapore’s SIAC Rules enable proactive case management and streamlined joinder reducing delays, while France’s strict annulment standards and strong confidentiality protections ensure award finality. New York’s FAA enforces narrow vacatur grounds and supports interim relief promoting efficiency and predictability in arbitration. It can foster investor confidence, attract more international disputes and reinforce their positions as preferred arbitration seats.
Conclusion
The UK Arbitration Act 2025 marks a significant milestone in the evolution of arbitration law, addressing key areas such as summary disposal, the governing law of arbitration agreements, emergency arbitration, and challenges to jurisdiction. However, while these reforms aim to ‘turbocharge’ the UK’s arbitration framework, questions remain about whether they are substantial enough to bring the real reform.
This piece critically examines the impact of the 2025 Act, questioning whether it constitutes a groundbreaking transformation or merely a fine-tuning of an already effective system. Through a comparative analysis with Singapore, Malaysia and Hong Kong this piece highlights the critical gaps that remain unaddressed.
It also raises pertinent questions, such as how arbitration proceedings, particularly under the UK Arbitration Act 2025, can better suit the needs. As we delve deeper into these challenges, it becomes clear that continuous discussion, reform, and innovation are essential to achieving a more sustainable, efficient, and equitable arbitration framework that aligns with the evolving needs of commercial parties and international best practices.