UK Trends and Developments Contributed by: Tom Sprange KC, Shouvik Bhattacharya and Sadyant Sasiprabhu, King & Spalding International LLP
The Arbitration Act 2025 Is In Force: Key Reforms and Implications Introduction The 2024 chapter of this guide told the story of the amendments to the Arbitration Act 1996 (the “1996 Act”). It traced the journey from the Law Commis - sion’s multi-step review process – including its first consultation paper in September 2022, followed by a second in March 2023, both of which attracted spirited and detailed responses from a wide range of stakeholders within the arbitration community – to the ultimate introduction of the Arbitration Bill (the “Bill”) in Parliament on 21 November 2023, and the premature shelving pending the 2024 general election. The new Labour government promptly reintroduced the Bill in substantially identical terms soon after taking office in 2024, confirming cross-party consensus on the need to modernise the 1996 Act, and to safeguard England and Wales’ pride of place among the premier jurisdic - tions for arbitration. The Arbitration Act 2025 (the “2025 Act”) received Royal Assent and came into force on 1 August 2025, pursuant to the Commencement Regulations. It intro - duces a suite of targeted and pragmatic amendments to the 1996 Act, aimed at enhancing legal certainty, procedural efficiency and the global standing of Eng - lish arbitration, while preserving the foundational prin - ciples that have long underpinned London’s appeal as a seat of choice. The 2025 Act applies to arbitrations commenced after its effective date of 1 August 2025 and does not affect proceedings already under way. This chapter sum - marises the key amendments introduced by the 2025 Act and their potential implications. Governing Law of Arbitration Agreements One of the headline reforms introduced by the 2025 Act is the clarification of the law governing arbitration agreements. The question of what law governs an arbitration agreement when the arbitration agreement does not expressly set out an explicit (or implicit) choice of substantive law has long bedeviled arbitration practi - tioners. Two popular answers have developed in the literature:
• the first is that the law of the main or “matrix” contract should govern the arbitration agreement as well; and • the second is that the law of the seat should gov - ern the substantive law of the arbitration agree - ment. Section 6A establishes a default rule that endorses the second camp: in the absence of express party agree - ment to the contrary, the law of the seat will govern the arbitration agreement. In practical terms, this means that English law will apply to arbitration agreements seated in England and Wales unless the parties have made a different choice. Importantly, party autonomy remains paramount. Section 6A operates only as a fallback and does not override any express choice of law made by the parties. The provision aligns with the default position under the London Court of Interna - tional Arbitration (LCIA) Rules 2020 (Rule 16.4) and is expected to reduce satellite litigation over governing law disputes. This reform marks a deliberate departure from the position articulated in Enka v Chubb , where the Supreme Court famously inferred the governing law of the arbitration agreement from the law of the under - lying contract in the absence of express choice. While the Supreme Court in Enka invoked common business sense as one of the rationales for its ultimate deci - sion, commentators have since noted that the deci - sion itself could lead to perhaps unintended results. For example, where the matrix contract is governed by a foreign law, where the arbitration agreement is silent on choice of substantive law, and where the seat is in England and Wales, under Enka the applicable foreign law would govern any disputes relating to the scope and effect of the arbitration agreement. Regular business users – and not arbitration lawyers – may not anticipate that outcome when they agree to a contract that says all arbitrations will take place in (for example) London. Section 6A of the 2025 Act seeks to remedy that uncertainty and reinforce the supportive stance of English law towards arbitration. Parties, arbitration practitioners and those tasked with drafting arbitration agreements (frequently at short notice) should take note: if the parties intend for the arbitration agreement to be governed by a law other than that of the seat,
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