I have previously written extensively on the question of the proper law of an arbitration agreement where I concluded that absent express choice, any implied choice or closest and most real connection ought to be with the system of law at the seat rather than the governing law of the host or matrix contract. There were several principled reasons for this essentially drawing on the need for international consistency. Those national laws that address the issue provide that in the absence of express choice the law of the agreement to arbitrate is to be that of the seat. Those institutional rules that address the same issue arrive at the same result.
I argue that there ought to be a common international solution to an international problem. The NYC (and to a lesser degree, the Model Law) point towards the conclusion that the courts where the challenge to an award is made, at the seat, ought logically to apply, absent express choice to the contrary, the laws of that nation. If any implication is to be drawn, then in light of the Model Law, NYC and orthodox private international law, the implication should favour the “seat” theory rather than the “host contract” theory. It will also be recalled that those cases that have reached the Supreme Court have proceeded on the basis of the law of the seat being the law of the agreement to arbitrate, seemingly without objection, and perhaps even endorsement by Lord Collins in Dallah.
to read the full article in PDF format.