Model arbitration agreements rarely provide for the applicable law of the arbitration agreement. However, problems can arise if this is not addressed in the agreement – this is good practice. The boundary between each of the three stages of the investigation is good, and the relative importance that should be attached to the choice of the law of the underlying contract, on the one hand, and the choice of jurisdiction, on the other, is something that has been blurred in English case law. Once the parties to an international transaction have agreed to arbitrate, the legal framework for dispute settlement can lead to the application of a number of different laws. These laws include: (1) the law governing the substantive rights and obligations of the parties – generally expressly chosen and set forth in a clause on applicable law; and (2) the law governing the conduct of the arbitration (also known as curial law) – determined by the choice of a seat or venue for the arbitration. You will probably be surprised to learn that this is an issue that has irritated courts and commentators in England and around the world for many years. On the one hand, there are authorities who say that the law chosen for the main contract should also regulate the arbitration clause. On the other hand, there are authorities who say that it should be the law of the chosen arbitrator. The surest way to maintain control over the law applicable to the arbitration agreement is to state this explicitly in the arbitration clause. Despite all this, the courts of Singapore still have to deal with the specific situation in which there was no choice of the applicable law of the main contract. The Supreme Court`s decision in Enka v. Chubb will be convincing in Singapore`s courts if the problem arises. The ICC and LCIA recommend that the following four points be included in an arbitration clause: the seat of arbitration; the number of arbitrators; the language of the arbitration; and the law incumbent on the contract.
In the event that there is no choice of law for the underlying contract or for the arbitration agreement, the law applicable to the arbitration agreement shall be the law of the seat of arbitration, and the law of the underlying contract shall be the law most closely related to the performance of the underlying contract. This report states: “The parties make an express declaration of intent when mutually choosing the law applicable to the recognition of the effect of an arbitration agreement, and the law applicable exclusively to the agreed agreement may not be invoked as the law applicable to the recognition of the effect of the arbitration clause of the contract (Article 13).” However, the fact that Article 16(4) gives precedence to the law of the registered office over the law governing the underlying contract could be an unpleasant surprise for parties who have not actively considered this issue at the draft stage. One way to reduce the cost of arbitration is to write carefully. Disputes over the interpretation of an arbitration agreement arise surprisingly frequently, and their resolution – through negotiations or intermediate hearings – is an expensive matter. In the latest edition, Deborah Ruff and Charles Golsong provided advice on how to negotiate an ICC arbitration agreement involving a state or state institution. Our questions and answers deal with the applicable law of the arbitration agreement. Simple wording such as “the applicable law of this Arbitration Agreement is the law of [England]” shall prevail. It is midnight and you are in the final stages of negotiations in a complex international transaction. It`s a safe bet that the only thing that doesn`t keep you up at night is worrying about the law that governs the arbitration clauses of these contracts. After all, why is the applicable law of an arbitration clause important? Will it not be the same law as the law that governs the underlying contract? Far from choosing a privileged body of law, whether it is the law of the registered office or the law applicable to the dispute, Article 9.6 of the Law applies an approach of the “most favourable criteria”, according to which the agreement is valid in Spanish law as long as it corresponds to the law chosen by the parties to regulate the arbitration agreement; the law applicable to the substance of the dispute, or; Spanish law..
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