In Enka Insaat Ve Sanayi A.S. v. OOO “Insurance Company Chubb” and others [2020] EWCA Civ 574, the Court of Appeal has held (per Popplewell J.) that the choice of the seat of an arbitration in London has produced the implied result that English law is the curial law of such proceedings. An issue which has been and is largely debated even internationally.

The Three Alternatives

As it is well known – in the absence of an express choice of the proper law of the arbitration agreement – three alternative responses have been given to the query as to the law applicable to it.

Firstly, the choice of the main contract law would also amount to a choice of the procedural law applicable to the arbitration agreement, which forms part of the main contract, a doctrine which is referred to as the “lex contractus”.

Secondly, the choice of the seat of an arbitration would amount to an implied choice of the curial law of that seat (the “lex fori”).

Thirdly, in France the Court of Cassation has held, such as in Soerni (Société d’études et représentations navales et industrielles (Soerni) et al. v. Sté. Air Sea Broker Ltd. [2009] Chamber 1, 8 July), and commentators have taken the same view, that an arbitration agreement is not governed by any domestic law, but by applying a rule arising from the principle of the validity of an agreement based on the common intent of the parties and from compliance with the requirement of good faith (doctrine which is referred to as “la règle materielle”).

As it is well known, several authorities in various jurisdictions have decided this issue in a different way.

As to international conventions, the Geneva Protocol 1923 provides at art. 2

“The arbitral procedure, including the constitution of the arbitral tribunals, shall be governed by the will of the parties and by the law of the country in whose territory the arbitration takes place” (emphasis added).

The New York 1958 Convention provides at art. 5.1(a) for refusal of the recognition and enforcement of foreign awards if

“said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made” (emphasis added).

The Uncitral Model Law provides, as to the determination of rules of procedure, at art. 19 that failing a choice by the parties of the procedure to 

“the arbitral tribunal may, subject to the provisions of their law, conduct the arbitration in such manner as it considers appropriate”.

The Doctrine of Separability and its Effects

The largely accepted doctrine of separability and the consequent existence of two separate agreements - respectively the substantive parts of the main agreement and the arbitration agreement which forms part of it - produces the effect that the non existence, non validity or non effectiveness of the main contract do not produce effects on the arbitration agreement.

The Proper Law of the Arbitration Agreement

The arbitration agreement, which forms part of the main contact, being separate from it, its proper law has to be determined based only on it.

While the search for the main contract law, when governed by the Rome I Regulation (Regulation (EC) no. 593/2008 of 17 June 2008) is to be made based on the criterion of the closest connection, this criterion is not automatically applicable to all the other jurisdictions and in any event does not apply to arbitration agreements.

There is no unanimous solution as to criterion to be applied to determine it.

The conflict of law rules of the system of law of the place where the agreement has been entered into should apply.

It seems that the closest connection criterion will frequently be taken into account, what should lead to the law of the seat of the proceedings.

Effect of the Choice of the Seat on the Supervisory Jurisdiction

One of the few undisputed issues in arbitration is that the choice of the seat of an arbitration grants to the courts of that seat the supervisory jurisdiction on such arbitration, such courts of course applying their own procedural law, the “curial law”.

Internal and External Procedural Rules of Arbitration

A useful distinction is made (such as in Dicey, Morrus & Collins on The Conflict of Law, 14th ed. 16-009) between internal rules, which govern an arbitration, and procedural rules external to it, such as for its setting aside or enforcement (external rules).

The procedural law of the arbitration

A further effect of the choice of the seat of an arbitration concerns the internal procedure of the arbitration.

As it is well known, the parties do not always select the procedural law applicable to the arbitration. They frequently select just the arbitration rules of the arbitration centre, which is requested to administer the proceedings. Such rules have then to be fitted into the applicable procedural law. The view that the parties are free to select a procedural law different from that of the seat of arbitration is shared by various authorities and commentators.

However, whether there has been no choice by the parties of the procedural law which governs an arbitration or whether that choice has been made, the mandatory provisions of the law of the seat of that arbitration apply and prevail on any different provision of the arbitration agreement, of the arbitration rules incorporated by reference by the parties or of the applicable procedural law selected by the parties.

The space left to the parties as to the procedure of arbitral proceedings is then the area not covered by the mandatory provisions of the procedural law of the seat.

The lex fori as an implied choice or as the closest connection

The determination of the procedural law of the seat of an arbitration as an implied choice, which has been made by the Court of Appeal through a very detailed analysis, seems in effect a reasonable solution, as well as – in the alternative – could be the recourse to the criterion of the closest connection.