Lloyd's Maritime and Commercial Law Quarterly
BRITISH ISLES ARBITRATION LAW
Karen Maxwell
CASES
20. Arsanovia Ltd v Cruz City 1 Mauritius Holdings 1
Governing law—arbitration agreement
Disputes arose in connection with a shareholders’ agreement, concluded as part of a joint venture for development of land in India. The shareholders’ agreement contained an arbitration clause referring disputes to LCIA arbitration in London, and a governing law clause specifying Indian law. The agreement also included a clause excluding interim relief under certain provisions of the Indian Arbitration and Conciliation Act 1996. The disputes were subjected to three arbitral references. The claimants now sought to challenge awards rendered in the first two references pursuant to the Arbitration Act 1996, s.67 on the basis of lack of substantive jurisdiction. They argued that, as a matter of Indian law, the disputes did not fall within any binding arbitration agreement. One of the principal issues before the court was, therefore, whether the arbitration agreement was governed by English or Indian law.
Decision: Application granted in respect of first award but dismissed in relation to second.
Held: The shareholder agreement arbitration agreement was governed by English law. The court should consider whether the parties had expressly or implied chosen the governing law of the arbitration agreement, failing which the issue was which system of law had the closest and most real connection with the arbitration agreement (Sulamérica Cia Nacional de Seguros SA v Enesa Engenharia SA
2 applied). The choice of England as the arbitral seat was a factor pointing towards a choice of English law. However, the fact that the parties had expressly excluded certain aspects of Indian arbitration legislation suggested that they contemplated that such legislation would otherwise apply. This was a much stronger factor weighing in favour of a choice of Indian law as the governing law of the arbitration agreement. Ultimately, the evidence pointed towards an intention that Indian law should govern.
Comment: The judge’s reliance on the exclusion of the Indian legislation as evincing an intention that Indian law should apply is somewhat surprising. The evidence suggested that the exclusion was intended to avoid the consequences of the notorious decision of the
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