Born in Liverpool in England, he was son of George Clerk Arbuthnot and Caroline Ramsay Hay, and grandson of Sir William Arbuthnot, 1st Baronet. His first post was aboard HMS Britannia. Later he served aboard the Arctic yacht Pandora, earning the Arctic Medal. He was promoted to Lieutenant on the Royal Yacht in 1871, Commander on 31 December 1883; Captain, 31 July 1891; Rear-Admiral, 1 January 1904; Vice-Admiral on the retired list, 23 March 1908; and Admiral on the retired list, 19 September 1911. Earlier in his career, Arbuthnot served as Captain of the protected cruiser HMS Hermione. He also commanded HMS Orlando from 1892 to 1895 during her operations around Australia. He was a Naval Aide-de-Camp to King Edward VII from September 1901 until promoted to flag rank in 1904.