UK: How Do You Determine The Procedural Law Governing An International Arbitration?

The procedural or "curial law" which governs an international arbitration can have a tremendous impact on the proceedings as the arbitral tribunal will turn to it in order to decide any number of key matters, ranging from whether or not the dispute is actually capable of being referred to arbitration, to whether or not to order interim measures to the final judgment itself.

The purpose of this briefing note is both to review the existing theories concerning how arbitral tribunals should determine the procedural law and to look at the question as to how one determines the seat of an arbitration in the absence of agreement.

Influence of the seat of the arbitration

English law clearly favours the orthodox theory whereby the law of the seat is necessarily the procedural law governing the arbitration. Authority for this was confirmed in Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] AC 334 where the Court held that the presumption in favour of the law of the "seat" was "irresistible" in the absence of an explicit choice of some other law.

This position is also supported by the New York Convention (Article V.I(d)) which provides that an award may be set aside by the courts of the country where enforcement of an arbitral award is sought if "the arbitral procedure was not in accordance with the agreement of the law of the country where the arbitration took place."

In England, the 1996 Arbitration Act has further greatly diminished the prospect of an arbitration conducted in England being governed by the procedural law of another state. As noted by Mustill:

"Given that the act is the parliamentary expression of a national policy concerning the arbitral process it seems unlikely that even an express choice of foreign law in relation to an arbitration with a seat in England could have any impact on the mandatory provisions of the Act, and equally that anything other than such an express choice in writing could enable the rules of the foreign law of arbitration to take precedence over the non-mandatory provisions of the English Act."

Swiss law, like English law, is particularly clear on the link between the curial law and the seat of the arbitration. Article 176(1) of Loi Fedérale sur le Droit International Privé provides that:

"The provisions of this chapter [on International Arbitration] shall apply to any arbitration if the seat of the arbitral tribunal is in Switzerland and if, at the time when the arbitration agreement was concluded, at least one of the parties had neither its domicile nor its habitual residence in Switzerland."

The seat of the arbitration is therefore significant, as, under most legal systems, it will determine the procedural law, which will apply to an international arbitration. However, most does not mean all. The same approach is not evident in all jurisdictions.

Fouchard Gaillard and Goldman are advocates of the position that the seat of the arbitration will not necessarily determine the curial law. In their textbook on International Commercial Arbitration, they state:

"It is nowadays generally accepted that the law governing the arbitral procedure will not necessary be the same as that governing the merits of the dispute, or indeed that of the seat of the arbitration. The only rules that will prevail over those of the law which otherwise governs the procedure will be the mandatory procedural rules of law of the jurisdiction where any action to set aside or enforce the award is heard."

In support of this position, the author also refers to Article 19 of the UNCITRAL Model Law, which, they argue, opts for a considerably reduced role of the seat in determining the law applicable to the procedure. Article 19 (Determination of Laws of Procedure) states, at paragraph 1, that subject to the mandatory provisions of the Model Law:

"the parties are free to agree on the procedure to be followed by the arbitral tribunal … failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such a manner as it considers appropriate."

They submit that international arbitration practice has moved away from applying the law of the seat of the arbitration in the absence of a contrary intention of the parties. Instead, it now allows the arbitrators complete freedom in choosing the applicable procedure, or instead, resolving procedural issues as and when they arise. They refer in particular to the 1976 case of Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Government of the Libyan Arab Republic, 17 I.L.M. (1978) which applied rules of international law and not the law of the seat. According to the authors, this award reflects the dominant trend now found in international case law.

Therefore depending on the nationalities of the parties on the other side and their legal advisors, you may come up against the argument that the seat does not automatically determine the procedural law of the arbitration.

"Seat" is a juridical rather than geographical concept

The English Arbitration Act applies to arbitrations whose "seat" is in England. The Act does not explain the term "seat of arbitration" other than stating at section 3 that "seat of arbitration" means the juridical and not the geographical seat of the arbitration", and it may be "designated" in various ways by the parties, by an institution or person "vested" with powers to designate or by the Tribunal if authorised by the parties.

The concept of the seat of the arbitration means the place and country where the parties have expressly or impliedly chosen as the centre for arbitration. It is quite common for parts of the proceedings to be held in countries other than the seat for the convenience of the parties. This does not, however, mean that the seat has changed. If, therefore, an arbitration clause nominates Amman, Jordan as the seat of the arbitration, the parties might still agree to hold certain hearings in London or Paris. For enforcement purposes under the New York Convention (see Article VI(d), the seat will however remain Amman.

This has important practical implications as otherwise state courts may have jurisdiction to intervene in all arbitrations, which are only adventitiously taking place on their home soil.

When the parties do not agree on a seat

It is very often the case that the parties will choose a neutral seat for the arbitration, i.e. a place where neither of the parties conducts business. This has the practical implication that the curial law will often differ from the substantive law.

The question arises, however, as to what is the position if no seat is chosen by the parties? If the arbitral proceedings are governed by rules selected by the parties, then these rules will decide how the seat is chosen. For example, under ICC Rules, Article 14.1 provides that the place of the arbitration shall be fixed by the ICC Court unless agreed upon by the parties.

Similarly, under the LCIA Rules, Article 16.1 provides that if the parties do not agree the seat of the arbitration, it shall be London, United Kingdom, unless and until the LCIA Court determines in view of all the circumstances, and after having given the parties an opportunity to make a written comment, that another seat is more appropriate.

In an ad hoc arbitration, for example one using the UNCITRAL Rules, the decision will be made by the arbitrators if so authorised. Article 16(1) of the UNCITRAL Rules provides that unless the parties have agreed upon the place where the arbitration is held, such place shall be determined by the Tribunal, having regard to all the circumstances of the arbitration.

If there is no authorised third party (such as an institution) and the Tribunal does not have the authority to decide on the seat of the arbitration and the parties cannot agree, the matter may need to be decided by the courts. For example, if the parties need to establish whether Part I of the English Arbitration Act applies at all or if one of the parties wishes to make an application to the Courts in respect of a power given to them by Part I (for example, an application to the Courts for an order requiring a party to comply with a peremptory order made by the Tribunal), it is likely that a determination will have to be made by the Courts on the issue.

Conclusion

Whilst identifying the seat might not always be straightforward, it is of paramount importance that the seat must be identified by the time the award is made. Any award is required to state the seat (for example, section 52 of the English Arbitration Act) and without that, it may be impossible to enforce.

If you would like any further information on this topic please contact the author or visit www.fenwickelliott.co.uk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions