The Current Position on the Proper Law of an Arbitration Agreement

English cases

The method of determining the proper law of an arbitration agreement has not yet been considered by the highest court in this jurisdiction. Two cases have touched on the issue.

In Channel Tunnel Group v Balfour Beatty Construction [1993] AC 334, Lord Mustill stated, obiter, that in international arbitration there may be "more than one national system of law" relevant to the determination of a dispute but it would be "exceptional" for the law governing the interpretation of an arbitration agreement to differ from the law of the main contract.[1]

Dallah Real Estate and Tourism Holding Company v Government of Pakistan [2010] UKSC 46; [2011] 1 AC 763 ("Dallah") concerned the enforcement of a USD 20m award rendered by a French tribunal against the Government of Pakistan. Lord Collins referred to the 1996 Act and specifically section 103(2)(b). That sub-section gives effect to the principle in Article V(1)(a) of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the NY Convention"). It provides that a Court may refuse recognition or enforcement of an award where a person proves that the arbitration agreement was not valid "under the law to which the parties subjected it, or failing any indication thereon, under the law of the country where the award was made."[2]  However, the Supreme Court was not required to consider the effect of the NY Convention in English law.

You can read the full post on our Commercial, Construction & International Arbitration Blog here.