17 Jun 2019

The law of the agreement to arbitrate has divided the English Court of Appeal with C v D and SulAmerica apparently incapable of reconciliation. The latter is, however, being treated by the lower courts (and jurisdictions such as Singapore) as the definitive statement of the law and, in consequence, the substantive law of the contract will generally be the law of the agreement to arbitrate, rather than the law of the seat. Whilst the result in both C v D and SulAmerica is unobjectionable (on the facts both concluding that the law of the seat prevailed), this article seeks to analyse the process of reasoning to reach the results and consider the wider context especially challenges to awards under the 1958 New York Convention. Viewed with that, and other, international contexts the arguments in favour of the law of the seat are, it is suggested, far more persuasive.

1. Introduction

The Arbitration Act 1996 s 46(1) provides that:

“The arbitral tribunal shall decide the dispute—
(a) in accordance with the law chosen by the parties as applicable to the substance of the dispute, or
(b) if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal.”

It is immediately apparent that this is concerned only with the law applicable to the substance of the dispute. It is not concerned with the law applicable to the arbitration agreement, nor is it concerned with the law applicable to the arbitral procedure. The Act makes no provision for these matters (and nor does the Model Law). The only jurisdictions
that make express provision are Sweden and Scotland.

The Swedish Arbitration Act 1999 provides:

“Section 48
Where an arbitration agreement has an international connection, the agreement shall be governed by the law agreed upon by the parties. Where the parties have not reached such an agreement, the arbitration agreement shall be governed by the law of the country in which, by virtue of the agreement, the proceedings have taken place or shall take place.

The first paragraph shall not apply to the issue of whether a party was authorised to enter into an arbitration agreement or was duly represented.”

Please click here to read the full article in PDF format.

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