Lloyd's Maritime and Commercial Law Quarterly
THE LAW GOVERNING ARBITRATION AGREEMENTS IN ENGLAND
Ardavan Arzandeh*
Sulamerica v Enesa
It is well established that how the law governing an arbitration agreement in English law is determined varies from case to case. It is also clear that arbitration agreements do not fall within the scope of the Rome Convention1 and the Rome I Regulation.2 As such, the proper law of an arbitration agreement is determined by consulting the common law choice-of-law rules. Based on these rules, in the first place, the parties’ express choice (if there is one) would govern their agreement. In the absence of an express stipulation, however, the parties’ implied choice would apply to the agreement. If no express or implied choice of law can be identified, the common law choice-of-law rules state that the agreement would be subject to the laws of the place with which it has its most real and substantial connection.
In most instances, these choice-of-law rules provide fairly clear answers to the question of which law governs an arbitration clause.3 In relation to at least one category of cases, though, there are potential difficulties in ascertaining the law governing arbitration agreements under English private international law. In this class of cases, the law of state A is chosen to apply to the main contract, while state B has been stipulated as the seat of arbitration. In this kind of case, the arbitration agreement is potentially linked to two distinct systems of law: one is the law governing the matrix contract, the other is the law of the seat.
In the reported cases on this subject, judicial pronouncements on how the law governing an arbitration agreement is to be determined have all been in the form of obiter dicta. Traditionally, it was broadly understood that, notwithstanding the parties’ choice of the seat of arbitration, the law governing the arbitration agreement would be implied from the
1. The Rome Convention on the law applicable to contractual obligations (1980), incorporated into English law under the Contracts (Applicable Law) Act 1990, s.2 and Sch.l, Art.l(2)(d).
2. Reg (EC) No 593/08; [2008] OJ L177/6, Art.l(2)(e). This Regulation applies to contracts concluded on or after 17 December 2009.
3. For a more detailed account of the different scenarios in which the common law choice-of-law rules can be used in determining the law governing arbitration agreements, see A Arzandeh and J Hill, “Ascertaining the Proper Law of an Arbitration Clause under English Law” (2009) 5 JIPL 425, 427–429.
LLOYD’S MARITIME AND COMMERCIAL LAW QUARTERLY
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