Arbitration Act 2025 and Energy Charter Treaty reforms: arbitration insights
Insight
Trends and insights 2026
Key reforms under the Arbitration Act 2025
The Arbitration Act 2025 fully commenced on 1 August 2025, introducing significant reforms aimed at modernising arbitration in England and Wales.
Key features include:
- Governing law of arbitration agreements: if the governing law of an arbitration agreement is not specified, the Act defaults to law of the seat, with investment treaty carve out. This change reduces the risk of 'Enka satellite litigation'. Under Enka, English seated arbitrations defaulted to law of the contract.
- Arbitrator's duty of disclosure codified: the Act formalises disclosure obligations following Halliburton v Chubb
Latest institutional and ad hoc caseload data
- ICC 2024: 841 new arbitrations (831 under ICC Rules). London was the top seat (96 cases) and English law was the most selected governing law (125 cases). The total value of pending cases reached US$354bn at year-end.
- LMAA 2024: London is the global centre of maritime disputes with 1733 references in 2024 (LMAA). We see maritime disputes which extend to issues over the sale, purchase and financing of commodities and to luxury yachts and superyachts.
ICSID awards and state immunity
English courts continued to register International Centre for Settlement of Investment Disputes (ICSID) awards and rejected state immunity defences at registration following the trajectory of Infrastructure Services v Spain (Antin) and its confirmation in EWCA Civ 1257.
Predictions
Arbitration Act 2025 in force
The Act is expected to deliver:
- Fewer interlocutory skirmishes over governing law;
- Faster resolution of weak claims; and
- Improved emergency relief pathways in London-seated arbitrations.
From August 2025, summary disposal and empowered emergency arbitrators will be invoked more frequently in London, potentially truncating some references that otherwise would have been forced to run on.
Expect more clauses expressly stating the governing law of the arbitration agreement to piggyback on the Act’s default rule, reducing 'Enka risk' (that the law of the contract may govern the law of the arbitration agreement).
What to do
- Refresh templates to state the governing law of the arbitration agreement, otherwise the seat will decide (even where substantive law differs).
- Consider your options at the summary disposal stage (think about an early merits memo or applying for summary disposal).
- Include emergency arbitrator-friendly provisions (notice mechanics, undertakings for enforcement, etc).
ECT reforms and enforcement risks for investors
On 3 December 2024, the Energy Charter Conference made very large reforms to the Energy Charter Treaty (ECT). It will no longer include protection for fossil fuel investments in the EU (including UK and Switzerland), and it will now prohibit claims between EU investors and EU Member States.
Enforcement uncertainty is likely to continue. Awards may be enforceable in non-EU courts such as the US, Australia and some others, but are likely to be blocked within the EU.
What to do
- Map enforcement venues at the front end (identify non-EU jurisdictions receptive to ECT awards).
- Consider a London seat with an English law-governed arbitration agreement plus anti-suit strategy, given the UK Supreme Court’s generally supportive stance.
Funding market settles but on new terms
Without an immediate legislative reversal of PACCAR, expect more 'costs multiple' or fixed-return litigation funding agreements (LFAs). Tribunals are also expected to apply closer scrutiny of funding in collective and multi-party arbitrations.
What to do
Stress test your existing funding arrangements to ensure compliance with PACCAR. Avoid pure 'percentage of proceeds' LFAs for London-seated arbitrations, as these may fall foul of current restrictions.
Significant legal developments are anticipated in 2026, amid economic turbulence, the growing influence of AI and heightened public scrutiny. To help you prepare, our experts have produced key litigation-related insights across areas including arbitration, commercial litigation, contentious trusts & estates, family disputes, and more.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, January 2026
