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Stockholm Arbitration Report (SAR)

Preview Page SAR 2003 - 2

SUBJECT MATTERS:
(1) Whether an arbitration clause is not binding since the parties’ choice of law did not have any connection with the contract or the dispute.
(2) Whether an arbitration clause is null and void because it does not include an explicit will of the parties to comply with the award.

FINDINGS:
(1) Under the Geneva Convention on International Arbitration of 1961, Art. VI.2, the courts shall decide the validity of an arbitration agreement in accordance with the law chosen by the parties. Since the parties’ agreement was subject to the laws of the State of New York and clearly referred to arbitration under the rules of the American Arbitration Association, it did not matter that the chosen law lacked any connection with the contract or the dispute.
(2) The principle that the arbitration clause must express the parties’ undertaking to comply with the award, only applies to national arbitration and not to international arbitration – and even less so to international commercial arbitration. Moreover, the arbitration agreement is so clear that it excludes the need for interpretation on this issue.

PARTIES:
Claimant: Kern Electrónica SA (Spain)
Respondent: Goldstar Company Limited (Korea)

PLACE OF COURT PROCEEDINGS: Madrid, Spain

APPLICABLE LAW AND CONVENTION:
The Spanish Arbitration Act of 5 December 1998, Articles 5.1 and 61
The Geneva Convention on International Arbitration of 1961
Excerpts below are an unofficial translation of the proceedings.