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Governing Law of Arbitral Agreements in the UK.
Introduction
The United Kingdom is famous for having an in-depth and well-structured set of laws that govern arbitral procedures, known as the Arbitration Act of 1996, which applies to national and international cases. However, the unique operation of the UK vis-à-vis the governing laws of the arbitration procedures is that, in certain situations-particularly revolving around the obligations of parties and/or arbitrators, the standard English may also be applicable, despite the presence of a statute that deals with arbitration procedures in isolation.
This conclusion was arrived at by the Supreme Court in a very recent judgement, which settled a long-standing debate.
Enka v. Chubb (UKSC 38, 2020)
The main question, in this case, was which governing law applies when a) the parties have chosen different countries for curial law of the seat in their agreement and b) when they have chosen different substantive laws that govern their contractual relationship.
The Supreme Court was able to conclude, considering various aspects, and the decision that English law would prevail in acting as the governing law was reached after a while. This decision entailed some of the following key points:
- The test for determining the governing law of an arbitration agreement is considered when there is an implied or expressed existence of a chosen law by the parties, in the absence of which, the court looks at the governing law which is most consonant with the clauses of the agreement.
- If the court is left to determine which governing laws are more consonant with the clauses of the agreement, the judge held that the possibility of the law of the seat of the agreement being the governing law for the same is exceptionally high.
- Among the other principles that backed the ratio decidendi, the Supreme Court also commented on the English law being the primary governing law for conflict resolution by arbitration, especially if the seat of arbitration (even in international disputes) is in the UK.
Conclusion
The Supreme Court has made it clear that the contract-like nature of an arbitration agreement does not rule out the possibility of difference of choice between the parties, per which the governing law and the substantive governing laws will differ and be applicable for the said arbitral agreement. The case of Enka v. Chubb has been a clarifying factor for this debate and has further laid down the elements that impact which particular law is the governing law for arbitration agreements of both international and national nature.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise.
- Introduction
- Enka v. Chubb (UKSC 38, 2020)
- Conclusion
