The Arbitration Act 2025 represents one of the most significant reforms to dispute resolution law in nearly three decades, modernising how arbitration is conducted across England, Wales, and Northern Ireland.
For businesses in the construction sector where adjudication has long been the preferred route, the new Act brings greater flexibility, efficiency, and alignment with how modern business operates. It introduces enhanced powers for arbitrators, supports the use of technology in proceedings, and reaffirms the UK’s position as a global centre for fair, commercially minded dispute resolution.
What is the Arbitration Act 2025 and why was it introduced?
The Arbitration Act 2025 amends and updates the law that governs how parties conduct arbitration in England, Wales and Northern Ireland.
It was introduced into law on 24th February 2025 to modernise the earlier law set out in the Arbitration Act 1996.
What is the difference between the Arbitration Act 2025 and the Arbitration Act 1996?
The Arbitration Act 1996 served its purpose well, but it hasn’t kept pace with innovation and how business is conducted in the UK.
For construction users, arbitration had become slower and more expensive than adjudication, which offered quick, interim decisions.
At the same time, it lacked some of the tools of litigation such as the ability to dismiss hopeless claims early.
One aim of the Act is to level that playing field. It gives arbitrators clearer powers to manage proceedings proactively and efficiently in much the same way a judge might, whilst encouraging the use of technology.
In 1996 when the Arbitration Act was introduced, most of us hadn’t used email or the internet, and video calls such as Microsoft Teams and Zoom were still decades away.
Fast forward to today and it’s difficult to imagine doing business without those modern-day conveniences. The Act aims to bring arbitration in line with modern business practices and use the everyday technology we take for granted.
However, there is also a bigger strategic aim here. England has long been a global hub for arbitration, and the new Act helps protect that position by ensuring that our framework remains modern, business-friendly, and aligned with international expectations.
Will the Arbitration Act 2025 affect the use of adjudication in construction disputes?
The Act doesn’t replace adjudication but that is not its aim. Adjudication will remain the first step in most construction disputes, particularly when cash flow and a quick resolution is key.
But what the Act does do is make arbitration a far more attractive form of final dispute resolution and a serious contender to traditional court proceedings, especially in more complex or high-value matters.
In our experience, many clients prefer arbitration to court proceedings. It’s less formal, more flexible, and gives parties a single point of contact in the form of an arbitrator.
Whilst the Courts still offer a good user experience in the specialist courts such as the Technology & Construction Court, many claims will fall outside the ambit of the specialist courts. With regards to local county courts, the experience has, in my view, deteriorated considerably since Covid.
Public resources have been stretched, particularly in relation to the timescales involved in getting a matter heard before a judge and in relation to general response times to routine queries. In July 2025, the Justice Committee went as far as to label the County Court system as dysfunctional and failing to deliver justice.
You can learn more about the difference between arbitration and adjudication by clicking here.
What are the practical implications of the 2025 reforms for construction contractors and subcontractors?
The reforms give Arbitrator’s a wider set of tools to proactively manage cases much like a Court would.
Arbitrators now have the express power to summarily dismiss claims that have no real prospect of success, which prevents parties dragging out proceedings with hopeless claims.
Emergency arbitrators can now issue enforceable interim orders and injunctions much like a Court can. This is a major step forward, especially where fast relief is needed to prevent delays.
The Act also encourages modernisation of procedure. While it doesn’t mandate virtual hearings, it supports their continued use. This flexibility is especially useful in construction disputes where the parties, their experts and/or representatives may be based in different countries.
The changes are designed to reduce delay, uncertainty and cost and to make arbitration feel less like a credible, commercially viable option to litigation.
How could the Arbitration Act 2025 influence the way construction disputes are resolved?
For clients caught up in construction disputes, we are currently advising them to expect to wait perhaps 12 to 18 months before their matter will be heard in front of a Judge, if the matter proceeds to Court.
For those referring disputes to arbitration, parties can expect their disputes to be heard much quicker and thanks to the new Act, those parties can have the confidence that the Arbitrator now has broader powers of case management that a Court would have.
Should construction businesses review their contracts in light of the new Act?
For those considering arbitration (and we would suggest you seriously consider it), it’s important to recognise that you can only bring proceedings if you have an arbitration agreement.
Therefore, if you would like to consider the use of arbitration as a form of dispute resolution, it’s important to check your contracts to ensure that any contracts contain the right contractual clauses, otherwise you might find that an arbitrator does not have the jurisdiction to hear the dispute.
What steps can organisations take now to prepare for the Arbitration Act 2025?
The act is already here and has been in place since February 2025. Organisations would be well advised to:
- Review contractual clauses around dispute resolution
- Understand the new tribunal powers conferred on arbitrators
- Where disputes arise, discuss appropriate forms of dispute resolution with legal representatives
Contact our construction solicitors
Our specialist construction lawyers are already advising clients on how to adapt contracts and strategies under the new Act. If you would like to review your existing clauses or understand how these reforms could affect your business, our expert team can provide comprehensive support and advice, ensuring your contracts and commercial relationships are managed effectively.
Key Contact
Phil Caton
Construction Law Partner
Phil is a Partner at the firm who specialises in both transactional and contentious construction matters.
