A new law to help the UK's legal services sector maintain pole
position and which will deliver millions more to grow the economy
and help implement our Plan for Change.
The Arbitration Act, which received Royal Assent today (Monday 24
February), will help attract even more businesses from around the
world to invest in the UK. It will re-enforce Britain's position
as the best place to resolve disputes without having to go to
court.
This arbitration process saves companies significant costs in
legal fees by providing a quicker alternative to court and
reducing acrimony between the parties. Every year there are
at least 5,000 domestic and international arbitrations in England
and Wales - contributing at least £2.5 billion to the UK economy
annually in fees alone.
Modernising arbitration law will ensure the UK remains the global
destination of choice for the legal sector, outstripping
competitors such as Singapore, Hong Kong and Paris. This will
help generate greater employment in the sector to bring even more
investment into the UK.
Minister for Courts and Legal Services, KC MP,
said:
“The UK's legal sector contributes billions to the economy and
employs hundreds of thousands across the country.
“Companies from across the world look to the UK for our legal
services and dispute resolution. This new Act ensures that
arbitration law keeps this country ahead of the rest and supports
economic growth as part of this government's Plan for
Change.”
Today's new law makes arbitration fairer and more efficient by
simplifying procedures to reduce costs and protecting arbitrators
from unreasonable lawsuits. It also strengthens the courts'
powers to support emergency arbitration so time-sensitive
decisions can be made more easily.
International arbitration is a major and growing area of
activity. Industry estimates suggest the sector grew by around
26% between 2016 and 2020, and in the past 10 years, UK exports
of legal services have risen by more than 80%.
Cristen Bauer, Head of Policy, Chartered Institute of
Arbitrators, said:
"As the leading professional body globally for dispute resolvers,
we are delighted to see the Arbitration Act reach Royal
Assent. We worked closely with the UK Law Commission and other
officials during the review of the Arbitration Act 1996, and
were pleased that the majority of our recommendations were
included in the final report, and that all of the review's
recommendations were adopted.
“The Arbitration Act will strengthen London's position as an
arbitration seat, and continue to set a high standard
internationally. We look forward to seeing the positive
impact of the Arbitration Act 2025 for many years ahead."
This Act supports economic growth in a multi-billion-pound sector
– the UK is the largest legal market in Europe and is second only
to the US globally.
The new laws are the latest step in the government's work to
support the sector to grow.This includes the GREAT Legal Services
campaign which was launched in 2017 to promote the strength of
English and Welsh Law, the UK's world-renowned independent
judiciary, and our legal expertise to the global
market.
The latest figures from 2022 show that the UK's legal sector
generated £34 billion. This will be enhanced by key agreements in
recent months including with Japan, Greece and Malaysia to allow
UK lawyers to practise abroad.
The government asked the Law Commission to review the law to
ensure the UK remains ahead of the curve when it comes to dispute
resolution. They consulted extensively before making
recommendations which have been accepted in full. Once in force,
the Arbitration Act will:
- Clarify which law underpins
individual arbitration agreements thereby improving legal
certainty and speeding up arbitrations.
- Empower arbitrators to speed-up
decisions on issues that have no real prospect of success to make
arbitration more efficient.
- Introduce a duty on arbitrators to
tell parties any circumstances which could cast reasonable doubt
on their impartiality in deciding an outcome of a dispute.
- Empower the court to better support
arbitration through orders supporting the actions of emergency
arbitrators to enhance their effectiveness, and orders against
third parties (those not involved in the proceedings) to for
example preserve evidence or take witness evidence.
- Extend arbitrator immunity against
liability for resignations and the costs of the application to
court for their removal, to support arbitrators to make impartial
decisions.
- Simplify court procedures related
to arbitration to increase clarity as well as reduce delays and
costs for parties.
The new law will be commenced through regulations as soon as
practicable.
