The Arbitration Act 2025 has now received Royal Assent, introducing targeted but significant reforms to the framework first laid down by the Arbitration Act 1996.
While designed to reinforce the United Kingdom’s status as a global arbitration hub, the changes will be felt most acutely in insurance, where London-seated arbitration clauses are a staple of policy wordings across classes of business.
Insurance contracts, from marine and energy risks to professional liability programmes, often mandate that disputes be arbitrated in London, even when the insured risk lies overseas. These clauses, frequently embedded in standard forms or layered towers, can sit untouched until a dispute arises. At that point, any ambiguity in the drafting of arbitration provisions can magnify the cost, complexity and duration of proceedings.
The new Act sharpens several aspects of procedure and arbitrator conduct that directly affect how coverage disputes will be handled. For insurers and policyholders alike, the reforms present an opportunity and a warning to revisit existing wordings.
Read more: The new UK arbitration act
One of the most consequential reforms is found in section 6A, which stipulates that unless expressly agreed otherwise, the law governing the arbitration agreement will be that of the seat of arbitration.
This overturns the approach of the Supreme Court in Enka v Chubb (2020), which tended to align the clause with the substantive law of the contract. For insurance programmes written on hybrid forms (for example, London-seated arbitration but governed by New York law) clarity on this point is critical. Explicit drafting will be essential to avoid unintended results.
The Act also codifies the arbitrator’s continuing duty of disclosure.
Arbitrators must now reveal any circumstances that might reasonably give rise to doubts about impartiality, and are deemed to be aware of circumstances they ought reasonably to have known. This responds directly to concerns in the insurance sector, where a small circle of repeat appointments has long raised questions of independence. For policyholders facing insurers with deep benches of “frequent flyer” arbitrators, the reform offers a firmer ground on which to challenge or question appointments.
Perhaps the most striking innovation for practitioners is the new power to grant awards on a summary basis.
Where a tribunal concludes a claim or defence has no real prospect of success, it may deliver a decision without a full hearing, provided parties are given the chance to make representations. In coverage disputes, this could streamline determinations of policy construction, exclusions or other threshold issues — areas where spurious arguments have historically prolonged proceedings.
The Act also strengthens arbitrator immunity in cases of resignation or removal and introduces recognition of “emergency arbitrators” with powers to issue binding interim orders, and adjusts the framework for challenging awards and appealing High Court decisions. Each measure, though technical, further aligns the UK’s system with international best practice and signals a pro-arbitration stance.
For the insurance market, the message is twofold. First, arbitration is here to stay, and London remains firmly positioned as a preferred seat. Second, policyholders and insurers alike should take this legislative moment as a cue to review arbitration clauses across their books. Are governing law provisions explicit? Are institutional rules clearly identified? Do policies account for summary awards and disclosure duties?
Arbitration has always offered confidentiality and specialist expertise, factors that appeal in sensitive coverage disputes. Yet these benefits can only be realised if arbitration clauses are coherent and consistent across the layers of an insurance programme. The 2025 Act gives the market the tools to refine those clauses. The question is whether insurers and brokers will seize the opportunity, or whether costly uncertainty will linger until the next dispute brings it to light.
