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Arbitration and Contract Law pp 51–66Cite as

‘The Seat’ and the Laws Affecting the Arbitration

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Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 54))

Abstract

Arbitration must be centred upon a nominated legal jurisdiction, the ‘seat’ of the process. The law governing the substance of the dispute might be different from that applicable to the arbitration agreement and, in turn, another law might govern the conduct of the arbitration. There is a further question concerning the types of matter which can be validly assigned to arbitration (‘arbitrability’).

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Notes

  1. 1.

    Selection of the language for the reference is an important and practical modality of the arbitration, which must be relevant to choice of arbitrators and counsel; on this topic the rules of the LCIA (London Court of International Arbitration) provide a detailed code for determining which language shall be adopted by the tribunal: LCIA Arbitration Rules (2014), Article 17.

  2. 2.

    Naviera Amazonica Peruana v. Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116, 119, CA, per Kerr LJ.

  3. 3.

    Black Clawson International v. Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446, 455, per Mustill J.

  4. 4.

    ibid, at 455.

  5. 5.

    [2001] CLC 173, at [33] to [35].

  6. 6.

    [2009] EWHC 2853 (Comm); [2010] 2 All ER (Comm) 571; [2010] 1 Lloyd’s Rep 324, at [66] (illuminating but too long to cite here).

  7. 7.

    Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, 50, per Saville J, citing James Miller & Partners v. Whitworth Street Estates (Manchester) Ltd [1970] AC 583, HL.

  8. 8.

    Union of India, ibid, at 119.

  9. 9.

    Section 46(1)(a), Arbitration Act 1996; section 46(3), ibid; Mustill & Boyd, Commercial Arbitration: Companion Volume (London, 2001), 327.

  10. 10.

    Again in accordance with express choice or conflicts rules: section 46(1)(a), Arbitration Act 1996; section 46(3), ibid; Mustill & Boyd, Commercial Arbitration: Companion Volume (London, 2001), 327.

  11. 11.

    See the long passage at [2000] CLC 1243, at [41] to [44].

  12. 12.

    ibid, at [43].

  13. 13.

    ibid, at [44].

  14. 14.

    See the reference in section 46(1)(b), Arbitration Act 1996 to ‘such other considerations as are agreed by them or determined by the tribunal’; Mustill & Boyd, Commercial Arbitration: Companion Volume (London, 2001), 326–8 and 124–127.

  15. 15.

    (i) This renders arbitration practice under English rules more flexible that other contractual choices of law (see remainder of this note); this was acknowledged in Halpern v. Halpern (No 2) [2007] EWCA Civ 291; [2008] QB 195; (ii) the Rome I Regulation on the law applicable to contractual obligations, (EC) 593/2008, applicable to contracts formed after 17 December, 2009, does not permit the parties to choose a non-State law (Dicey, Morris and Collins on the Conflict of Laws (15th edn, London, 2012), vol 2, 32–049, 32–050; RG Fentiman, International Commercial Litigation (2nd edn, Oxford University Press, 2015), 5.28 to 5.30); see also Halpern</Emphasis> case, at [21] ff and [37]); (iii) the Rome I Regulation, see Article 1(2)(e), does not does not apply to ‘arbitration agreements’ (as distinct from the matrix or main transaction), Dicey (15th edn, London, 2012), vol 2, 32–021; (iv) however, the provisions of Jewish law (or other elements of non-State law) might be incorporated as terms of a contract otherwise governed by national law, and thus be taken into account when interpreting the relevant contract: Halpern case, at [30] ff.

  16. 16.

    For extensive literature, J Braithwaite, ‘Standard Form Contracts as Transnational Law: Evidence from the Derivatives Markets’ (2012) 75 MLR 779, nn 1–33, citing, notably, Lord Mustill, ‘The new Lex Mercatoria: the First Twenty-five Years’ (1988) 4 Arbitration International 86 (a sceptic); K Berger, The Creeping Codification of the New Lex Mercatoria (2nd edn, Kluwer, The Hague, 2010); see also B Goldman, ‘The Applicable Law: General Principles of Law-the Lex Mercatoria’, in JDM Lew (ed), Contemporary Problems in International Arbitration (London, 1986), 113.

  17. 17.

    e.g., Weissfisch v. Julius [2006] EWCA Civ 218; [2006] 2 All ER (Comm) 504; [2006] 1 Lloyd’s Rep 716; [2006] 1 CLC 424 (on which 4.15); in this case the arbitrator, Anthony Julius, an English solicitor, was appointed to conduct arbitration with its seat in Geneva; Lord Phillips CJ at [7] cited the relevant clause: ‘The Arbitrator will have the discretion to act ex aequo et bono whenever he may find it suitable or equitable, paying due regard in all circumstances to the parties’ equal treatment and their right to be heard in fair adversarial proceedings.’

  18. 18.

    [2009] EWHC 2853 (Comm); [2010] 2 All ER (Comm) 571; [2010] 1 Lloyd’s Rep 324, at [114] ff.

  19. 19.

    [2005] EWCA Civ 1116; [2006] QB 432, at [32] ff, per Mance LJ. (A later issue, also concerning jurisdiction, went to the Court of Appeal under section 67, Arbitration Act 1996: Ecuador v. Occidental Exploration & Production Co [2007] EWCA Civ 656; [2007] 2 Lloyd’s Rep 352; [2007] 2 CLC 16).

  20. 20.

    [2012] EWCA Civ 638; [2012] 1 Lloyd’s Rep 671; [2012] Lloyd’s Rep IR 405.

  21. 21.

    [1999] 2 Lloyd’s Rep 24, considering James Miller & Partners v. Whitworth Street Estates (Manchester) Ltd [1970] AC 583, HL; Black Clawson International v. Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446, Mustill J; Naviera Amazonica Peruana v. Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116, CA; and Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, Saville J.

  22. 22.

    [2001] CLC 173, also noting (besides the cases listed in the preceding note) Lord Mustill’s analysis in Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] AC 334, 357, HL.

  23. 23.

    Section 3, Arbitration Act 1996. For an example of judicial determination under (ii), see Aikens J’s decision in Dubai Islamic Bank PJSC v. Paymentech Merchant Services Inc [2001] CLC 173.

  24. 24.

    [1999] 2 Lloyd’s Rep 24, 33 col 1 to 34 col 2.

  25. 25.

    Section 2(2)(a), ibid, referring to sections 9 to 11.

  26. 26.

    Section 2(2)(b), ibid, referring to section 66.

  27. 27.

    Section 2(3)(a), ibid, referring to section 43.

  28. 28.

    Section 2(3)(b), ibid, referring to section 44.

  29. 29.

    Section 2(4), ibid.

  30. 30.

    Section 2(5), ibid, referring to section 7.

  31. 31.

    Section 2(5), ibid, referring to section 8.

  32. 32.

    [1999] 2 Lloyd’s Rep 24.

  33. 33.

    [2001] CLC 173.

  34. 34.

    ibid.

  35. 35.

    Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, 50, col 2, per Saville J, noting Naviera Amazonica Peruana v. Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116, 121.

  36. 36.

    Naviera Amazonica Peruana v. Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116, 120–1, CA, per Kerr LJ.

  37. 37.

    ibid.

  38. 38.

    P Lalive, ‘On the Transfer of Seat in International Arbitration…’, in JAR Nafziger and SC Symeonides (eds), Law and Justice in a Multistate World: Essays in Honor of Arthur von Mehren (Ardsley, New York, 2002), 515.

  39. 39.

    [1984] AC 50, 61, HL, per Lord Diplock; and [1983] 1 WLR 228, 233, CA, per Sir John Donaldson MR, and 246–7, Goff LJ; [1982] 1 WLR 961, 967, per Bingham J).

  40. 40.

    [2012] EWCA Civ 638; [2013] 1 WLR 102, at [9], per Moore-Bick LJ; supported by Lord Neuberger MR at [62]; at [48], Hallett LJ agreeing.

  41. 41.

    Arsanovia Ltd v. Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm); [2013] 2 All ER (Comm) 1; [2013] 1 Lloyd’s Rep 235 at [8].

  42. 42.

    ibid, at [13].

  43. 43.

    Sulamerica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638; [2013] 1 WLR 102.

  44. 44.

    C v. D [2007] EWCA Civ 1282; [2008] 1 Lloyd’s Rep 239, at [21] to [29]. On the status of Longmore LJ’s comments as dicta, see Andrew Smith J at Arsanovia case [2012] EWHC 3702 (Comm); [2013] 2 All ER (Comm) 1; [2013] 1 Lloyd’s Rep 235 at [11].

  45. 45.

    Andrew Smith J in the Arsanovia case [2012] EWHC 3702 (Comm); [2013] 2 All ER (Comm) 1; [2013] 1 Lloyd’s Rep 235, at [12].

  46. 46.

    ibid, at [22].

  47. 47.

    ibid, at [16] and [19] and [21].

  48. 48.

    ibid, at [13], [20], and [24].

  49. 49.

    Arsanovia case [2012] EWHC 3702 (Comm); [2013] 2 All ER (Comm) 1; [2013] 1 Lloyd’s Rep 235 at [13] and [24].

  50. 50.

    [2012] EWCA Civ 638; [2013] 1 WLR 102, at [31].

  51. 51.

    ibid, at [32].

  52. 52.

    ibid,, at [30].

  53. 53.

    ibid, at [11] ff, noting comments by Lord Mustill in Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] AC 334, 357–8, HL; by Mustill J in Black Clawson International Ltd v. Papierwerke Waldhof-Aschaffenburg AG [1982] 2 Lloyd’s Rep 446, 456, col. 1; by Colman J in Sonatrach Petroleum Corp v. Ferrell International Ltd [2002] 1 All ER (Comm) 627, at [32]; by Potter J in Sumitomo Heavy Industries Ltd v. Oil & Natural Gas Commission [1994] 1 Lloyd’s Rep 45, 57, col. 1; and by Cooke J in Leibinger v. Stryker Trauma GmbH [2005] EWHC 690 (Comm).

  54. 54.

    [2012] EWCA Civ 638; [2013] 1 WLR 102, at [17].

  55. 55.

    (2nd edn, London, 1989), 63.

  56. 56.

    Sulamerica case [2012] EWCA Civ 638; [2013] 1 WLR 102, at [20] and [21], commenting on Longmore LJ’s discussion in C v. D [2007] EWCA Civ 1282, [2008] 1 All ER (Comm) 1001.

  57. 57.

    Sulamerica case, ibid, at [19], commenting on XL Insurance Ltd [2001] 1 All ER (Comm) 530; [2000] 2 Lloyd’s Rep 500.

  58. 58.

    Sulamerica case, ibid, at [61].

  59. 59.

    C v. D [2007] EWCA Civ 1282; [2008] 1 Lloyd’s Rep 239, at [21] to [29].

  60. 60.

    Sulamerica case, ibid, at [49] ff, notably at [56] to [59].

  61. 61.

    ibid, at [58], noting D Joseph, Jurisdiction and Arbitration Agreements and Their Enforcement (2nd edn, London, 2010), paras 6.33–6.41; see now on this topic Joseph (3rd edn, 2015), 6.29 ff; for a sixpoint distillation of the case law, Hamblen J in the Habas Sinai case [2013] EWHC 4071 (Comm); [2014] 1 Lloyd’s Rep 479, at [101]; see also A Briggs, Private International Law in English Courts (Oxford Uiviersity Press, 2014), 14.38 ff.

  62. 62.

    Sulamerica case, ibid, at [24].

  63. 63.

    Thus the Sulamerica case vindicates Colman J in Sonatrach Petroleum Corp (BVI) v. Ferrell International Ltd [2002] 1 All ER (Comm) 627, at [32], cited by Moore-Bick LJ in the Sulamerica case, at [13] (and Moore-Bick LJ cited at [14] similar comments by Potter J in Sumitomo Heavy Industries Ltd v. Oil and Natural Gas Commission [1994] 1 Lloyd’s Rep 45, and by Cooke J in Leibinger v. Stryker Trauma GmbH [2006] EWHC 690 (Comm)); similarly, Saville J’s decision in Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, as noted by D Joseph, Jurisdiction and Arbitration Agreements and Their Enforcement (2nd edn, London, 2010), 6.37 (discussion not presented in 3rd edn, 2015).

  64. 64.

    D Joseph, ibid, at 6.41 (not presented in 3rd edn, 2015).

  65. 65.

    ibid, at 6.41 (not presented in 3rd edn, 2015).

  66. 66.

    ibid.

  67. 67.

    [2012] EWCA Civ 638; [2013] 1 WLR 102 at [60]: ‘The fact that the mediation agreement…[is] governed by Brazilian law does not necessarily mean that any subsequent arbitration must be similarly so governed.’

  68. 68.

    See Moore-Bick LJ noted in Sulamerica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638; [2013] 1 WLR 102, at [9].

  69. 69.

    e.g., the authorities cited by Andrew Smith J in Arsanovia Ltd v. Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm); [2013] 2 All ER (Comm) 1; [2013] 1 Lloyd’s Rep 235, at [24].

  70. 70.

    These provisions were noted in the Sulamerica case, [2012] EWCA Civ 638; [2013] 1 WLR 102, per Moore-Bick LJ at [29] and Lord Neuberger MR at [55].

  71. 71.

    Considered by Toulson J in XL Insurance Ltd v. Owens Corning [2001] 1 All ER (Comm) 530; [2000] 2 Lloyd’s Rep 500; [2001] CP Rep 22; [2001] CLC 914; Toulson J’s analysis was approved in the Sulamerica case by both Moore-Bick [2012] EWCA Civ 638; [2013] 1 WLR 102, at [29] and by Lord Neuberger MR, at [55].

  72. 72.

    [2012] EWCA Civ 638; [2013] 1 WLR 102, at [55].

  73. 73.

    ibid, at [55].

  74. 74.

    Commercial Arbitration (2nd edn, London, 1989), 63.

  75. 75.

    Section 6, Arbitration (Scotland) Act 2010: Law governing arbitration agreement: Where—(a) the parties to an arbitration agreement agree that an arbitration under that agreement is to be seated in Scotland, but (b) the arbitration agreement does not specify the law which is to govern it, then, unless the parties otherwise agree, the arbitration agreement is to be governed by Scots law.

  76. 76.

    [2010] UKSC 46; [2011] 1 AC 763.

  77. 77.

    Black Clawson International v. Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446, Mustill J; Naviera Amazonica Peruana v. Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116, CA; Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, Saville J; ABB Lummus Global Ltd v. Keppel Fels Ltd [1999] 2 Lloyd’s Rep 24, Clarke J.

  78. 78.

    Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, 50, per Saville J; Naviera Amazonica Peruana v. Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116,120, CA; noting also Black Clawson International v. Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446, 453, per Mustill J.

  79. 79.

    Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48, 51, per Saville J.

  80. 80.

    [1988] 1 Lloyd’s Rep 116.

  81. 81.

    ibid, at 121.

  82. 82.

    ibid, at 120, and 121.

  83. 83.

    [1981] 2 Lloyd’s Rep 446.

  84. 84.

    [1986] QB 441, 458.

  85. 85.

    Similarly, section 103(3), Arbitration Act 1996, in the context of recognition or enforcement of a New York Convention (1958) award.

  86. 86.

    Opinion of Advocate General Wathelet (delivered 4 December 2014), at [130] to [152].

  87. 87.

    ibid, at [165].

  88. 88.

    For this restriction, section 34(1)(a), Matrimonial Causes Act 1973; on which Radmacher v. Granatino [2010] UKSC 42; [2011] 1 AC 534, at [2], [154].

  89. 89.

    Commercial Arbitration: Companion Volume (2001), 75.

  90. 90.

    [2011] EWCA Civ 855; [2012] Ch 333; Longmore, Patten, and Rix LJJ (latter at [97]) held that section 1(b) of the Arbitration Act 1996 requires courts to lean in favour of a wide consensual power to refer matters to arbitration, subject only to points of public interest.

  91. 91.

    ibid, at [79], noting ACD Tridon Inc v. Tridon Australia Pty Ltd [2002] NSWSC 896.

  92. 92.

    [2011] EWCA Civ 855; [2012] Ch 333, at [59], noting Lord Hoffmann’s exegesis on this provision in O’Neill v. Phillips [1999] 1 WLR 1092, 1098G–1099B, HL.

  93. 93.

    Section 994, Companies Act 2006; and on the court’s wide remedial powers, section 996, Companies Act 2006: cited [2011] EWCA Civ 855; [2012] Ch 333, at [45].

  94. 94.

    Section 9(4), Arbitration Act 1996.

  95. 95.

    Longmore LJ was satisfied it was sufficiently wide: [2011] EWCA Civ 855; [2012] Ch 333, at [95].

  96. 96.

    ibid, at [78] per Patten LJ; and at [97] to [104] per Longmore LJ; overruling Exeter City AFC Ltd v. Football Conference Ltd [2004] EWHC 831 (Ch), [2004] 1 WLR 2910, Judge Weeks QC (which had conflicted with Re Vocam Europe Ltd [1998] BCC 396, Rimer J, the latter case was here affirmed).

  97. 97.

    [2011] EWCA Civ 855; [2012] Ch 333, at [96], per Longmore LJ; and Patten LJ at [42], contrasting sections 34–36, Matrimonial Causes Act 1973; section 203, Employment Rights Act 1996 and section 144(1), Equality Act 2010 (discussed in Clyde & Co LLP v. Van Winkelhof [2011] EWHC 668 (QB)).

  98. 98.

    [2011] EWCA Civ 855; [2012] Ch 333, at [85] to [88], per Patten LJ; at [96] per Longmore LJ.

  99. 99.

    <Footnote ID="Fn98"><Para ID="Par171">ibid, at [52] and [53], noting section 122(1)(g), Insolvency Act 1986 (and citing Re Crigglestone Coal Co Ltd [1906] 2 Ch 327; and noting Lord Hoffmann’s comments on insolvency proceedings in Cambridge Gas Transport Co v. Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26; [2007] 1 AC 508, at [14]).

  100. 100.

    [2011] EWCA Civ 855; [2012] Ch 333, at [77].

  101. 101.

    Section 994, Companies Act 2006; on the court’s wide remedial powers, section 996, Companies Act 2006: cited [2011] EWCA Civ 855; [2012] 1 All ER 414; [2011] BCC 910, at [45].

  102. 102.

    [2011] EWCA Civ 855; [2012] Ch 333, at [38] and [39].

  103. 103.

    Commercial Arbitration (2nd edn, London, 1989), 149; much more detailed, but not cited by the court is Mustill and Boyd’s further discussion in Commercial Arbitration: Companion Volume (2001), 70–82, containing references to literature.

  104. 104.

    G Born, International Commercial Arbitration (Kluwer, Deventer, 2009), 768.

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    Neil Andrews

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Andrews, N. (2016). ‘The Seat’ and the Laws Affecting the Arbitration. In: Arbitration and Contract Law. Ius Gentium: Comparative Perspectives on Law and Justice, vol 54. Springer, Cham. https://doi.org/10.1007/978-3-319-27144-6_3

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