The Arbitration Act 2025 (‘the 2025 Act’) represents the most substantial overhaul of the UK’s arbitration framework in nearly three decades. For the construction industry—where arbitration remains an alternative and more final method of dispute resolution, as opposed to construction adjudication—the implications are particularly acute. Parties to construction contracts must now take stock of how these reforms impact their risk exposure; procedural options; and overall dispute resolution strategy.
An Evolution, Not a Revolution for Construction Arbitration
While the Arbitration Act 1996 provided a robust framework that has served commercial parties well, the 2025 reforms are designed to modernise and streamline the process. The changes reflect recommendations made by the Law Commission and are intended to reinforce England and Wales as a global seat for arbitration. In the context of construction, where complex, high-value disputes are common, these refinements are more than cosmetic—they are operationally significant.
Key updates include:
- Clarification of Governing Law for Arbitration Agreements
Section 1(2) of the 2025 Act introduces a presumption that the law governing the arbitration agreement is the same as that of the main contract, unless otherwise stated. Failing this, it will be the law of the seat of the arbitration; and an express choice of law to govern the main contract will not constitute an express choice of law to govern the arbitration agreement.
- Statutory Duty of Disclosure
Arbitrators now have a continuous statutory duty to disclose any circumstances that might give rise to justifiable doubts as to their impartiality. Section 2(2) of the 2025 Act codifies the duty previously established in Halliburton Co v Chubb Bermuda Insurance Ltd [2020] UKSC 48 and makes clear that such disclosures must be made as soon as reasonably practical, and that the duty is a continuing one. While this codifies existing best practice, it raises the bar for transparency and could lead to more frequent challenges over neutrality in the early stages of proceedings. For example, in Aiteo Eastern E & P Company Limited v Shell Western Supply and Trading Limited and others [2024] EWHC 1993 (Comm), Mr. Justice Jacobs held that arbitral awards could be set aside arising out of the appearance of bias.
- Summary Disposal of Claims
In section 7 of the 2025 Act, tribunals are expressly empowered to dispose summarily of claims or defences that are manifestly without merit.
- Confidentiality Provisions
However, while confidentiality has long been a feature of arbitration, the 2025 Act does not introduce any statutory confidentiality provision. It may be that rules governing specific arbitral centres such as the London Court of International Arbitration (LCIA), or the International Chamber of Commerce (ICC) contain confidentiality obligations that extend to all stakeholders in an arbitration
What This Means for Construction Arbitration
Construction arbitration has distinct procedural and evidential demands, owing to the technical nature of disputes, the multiplicity of parties, and the volume of documentation involved. The Arbitration Act 2025 directly addresses several pain points in this context.
1. Greater Procedural Efficiency
The summary disposal mechanism can serve to eliminate weak claims early, preserving time and cost. This is particularly relevant in construction disputes, where protracted arguments can exhaust both budgets and patience.
2. Strengthened Tribunal Integrity
By codifying the duty of disclosure, the Act aims to protect the integrity of the process. For developers and contractors engaged in high-stakes disputes, confidence in an impartial tribunal is non-negotiable.
3. Less Scope for Jurisdictional Ambiguity
The clarification on governing law removes one layer of uncertainty that has, until now, occasionally led to preliminary, yet costly, skirmishes. For international construction joint ventures operating under English law, this adds a welcome degree of certainty.
4. Reinforced Confidentiality
Clients in construction disputes often seek to avoid public litigation for commercial or reputational reasons. The strengthened confidentiality provisions give greater assurance that sensitive information will not enter the public domain.
Action Points for Executives and In-House Counsel
Given the significance of these changes, construction-sector stakeholders are advised to undertake a careful review of their standard contract terms and construction arbitration clauses. Key considerations include:
- Reviewing arbitration agreements to ensure they reflect updated legal assumptions
- Considering whether to opt-in or opt-out of the summary disposal provision
- Assessing potential arbitrator conflicts in light of the expanded duty of disclosure
- Updating internal dispute resolution protocols to align with new statutory duties
Time for Strategic Reassessment
The Arbitration Act 2025 introduces several measured but meaningful changes that will alter the way construction arbitration is conducted in England and Wales. The new provisions demand a strategic reassessment from all parties involved in construction procurement, project delivery, and dispute management.
Failing to account for these changes could result in procedural missteps or missed opportunities for early resolution. Conversely, those who act now to align their contracts, strategies, and expectations with the new framework will be better positioned to resolve disputes efficiently and effectively.
Specialist Legal Guidance
Mercantile Barristers is a modern set of commercial barristers’ chambers specialising in complex construction disputes. If your organisation is reviewing its construction arbitration protocols in light of the 2025 Act, our specialist counsel are available to provide strategic advice tailored to your commercial objectives.
