The Arbitration Act 2025: can arbitration be revitalised in UK Construction disputes?

Since the introduction of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA), statutory adjudication has become the dominant dispute resolution mechanism in the UK construction sector. Designed to maintain project momentum and protect cash flow, its swift resolution model effectively sidelined arbitration in the industry for UK projects.

However, the recent Arbitration Act 2025 (the AA25) signals a potential shift. With reforms aimed at modernising arbitration, the AA25 raises a timely question: can arbitration make a comeback and rival adjudication’s dominance in domestic construction disputes?

From arbitration to adjudication: a shift in preference

Arbitration was historically favoured for its confidentiality, finality and ability to appoint industry-specific experts. However, it came under criticism for being costly, and less suitable for urgent issues In addition, the progressive procedures in the Technology and Construction Court made it have fewer advantages than in other business disputes. This created an opening for statutory adjudication, which offered faster, cheaper, and more accessible resolutions – particularly suited to payment disputes.

Adjudication soon expanded beyond its intended remit of “rough and ready” dispute resolution. Today, it is used from everything from interim payment disputes through to complex final account claims and complex delay related claims.

While its speed remains attractive, this growing scope often puts pressure on the process, with adjudication naturally also having its own shortcomings. A refined approach to arbitration is therefore a welcome development for the construction industry, but also more generally as it becomes an extra tool in the shed for the right disputes.

Key reforms in the Arbitration Act 2025

The AA25 amends the Arbitration Act 1996 with several targeted reforms:

• Legal certainty in governing law: in the absence of any express wording or agreement to the contrary, arbitration agreements will now default to the law of the seat (typically English law for domestic matters), removing ambiguity caused by the 2020 Enka v Chubb decision (which suggested that the law of the contract would govern the arbitration agreement)
• Summary awards: arbitral tribunals now have the power to dismiss claims with no real prospect of success, similar to summary judgment in civil proceedings. This can significantly reduce time and costs in construction disputes, which often include multiple, alternative or speculative claims.
• Streamlined jurisdiction challenges: new limitations on jurisdictional objections aim to curb tactical delays. Arbitrators’ decisions on jurisdiction will no longer be easily overturned with fresh evidence unless justice clearly requires it.
• Enforceable emergency relief: emergency arbitrators can now issue enforceable orders, including interim orders, providing urgent relief in situations like payment disruptions or site access disputes. These orders also benefit from the enforceability provisions of the New York Convention
• Enhanced arbitrator duties and immunity: arbitrators must disclose any circumstances raising doubts about impartiality and are granted broader immunity against cost sanctions
• Third-party orders: courts may now issue orders against third parties to support arbitration—an important development for multi-party construction disputes involving subcontractors or suppliers.

These reforms collectively make arbitration more appealing by addressing the key obstacles to its effective use in the construction industry, including delay, cost, and procedural complexity.

What does the future hold?

With these changes, the ability to summarily dispose of weak claims, obtain urgent binding relief, and rely on experts familiar with the technicalities of construction contracts represents a significant step forward.

Arbitration also offers advantages in high-value or complex disputes and a viable alternative to civil court claims where there is significant pressure on court capacity. Unlike adjudication, which is limited in scope and binding only on an interim basis, arbitration provides final, enforceable decisions. For intricate matters – such as large infrastructure projects involving multiple parties – arbitration allows for consolidated proceedings and greater procedural clarity than the adjudication scheme currently offers.

Despite these improvements, arbitration is unlikely to displace adjudication in the short term.

Adjudication remains quicker and cheaper for straightforward payment disputes. Moreover, the AA25 does not address the cost differences between the two systems: while adjudication generally requires each party to bear its own costs, arbitration follows the “loser pays” model unless otherwise agreed after a dispute arises – an unattractive prospect for smaller contractors.

There is also a cultural dimension to consider. The construction industry has grown comfortable with adjudication’s simplicity over the past three decades. Changing entrenched preferences will require time, education, and encouragement from industry bodies and legal practitioners.

Conclusion

Rather than replacing adjudication or civil proceedings in the Technology and Construction court, the reforms are likely to position arbitration as a complementary tool. These can combine adjudication’s speed with arbitration’s finality and depth. For example, parties might seek immediate adjudication to resolve cash flow concerns, followed by arbitration for a conclusive determination on complex matters.

In conclusion, the AA25 introduces much-needed updates that improve the attractiveness of arbitration for construction disputes. While adjudication will likely remain the first port of call for many issues, arbitration is now better equipped to handle the disputes where speed must be balanced with complexity, cost-efficiency, and finality.

Our expert Construction team has significant experience in dealing with all kinds of construction disputes.