The Law of the Arbitration Agreement: The English Courts Decide? - ARIA Vol. 24, No. 3, 2013

Author(s):

Peter Ashford

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18 pages

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Published:

December, 2013

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The last few years have seen the seemingly modest point of the governing law

of agreements to arbitrate, exercise the English courts. In agreements to arbitrate

it is rarely stated what the governing law of that, separate, agreement, is. There

are, in essence, two rival theories: the “seat” theory that states that the governing

law follows the geographical location of the seat of the arbitration provided for,

and, secondly, the “host” theory that states that the governing law of the

agreement to arbitrate is the same as the governing (or substantive) law of the

contract in which, typically, the agreement to arbitrate is a clause. The modern

cases, that are seemingly irreconcilable, are C v. D and Sulamérica Cia Nacional

de Seguros S.A. v. Enesa Engenharia S.A. (“Sulamérica”). Two of the modernday

commercial colossi in the Court of Appeal, Longmore LJ in C v. D and

Moore-Bick LJ in Sulamérica, are plainly at odds.

In Arsanovia Ltd & Ors v. Cruz City 1 Mauritius Holdings (“Arsanovia”),

Andrew Smith J grappled with the tensions between, and questions left

unanswered in, the two Court of Appeal cases. As Andrew Smith J, rather politely

observed in Arsanovia, it is “impossible not to detect in the judgment of Moore-

Bick LJ … that he was uncomfortable with the reasoning of Longmore LJ….”

This article aims to make the analysis a little more comfortable.

The importance of the governing law of the arbitration agreement is that it

will determine questions as to formation (including special considerations

concerning questions of disputed incorporation), validity (and conversely

illegality or invalidity), effect or construction and discharge of that agreement to

arbitrate.4 These will often be significant battlegrounds.

Before embarking on further consideration it is, firstly, worth noting several

uncontroversial propositions (at least in English law):