Abstract
The purpose of this paper is to consider, in the context of one specific legal system, the practical and theoretical implications of the governing law of an arbitration agreement and of the procedural law of an arbitration. Despite their fundamental character these questions have not been given the attention in England which they deserve.1 The answer to these questions may also go some way to determining whether English law will recognise transnational or delocalised arbitrations.
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References
Dicey & Morris, Conflict of Laws (10th ed 1980), 1122–28; Cheshire & North, Private International Law (10th ed 1979), 680–8; Mustill & Boyd, The Law and Practice of Commercial Arbitration in England (1982), chap 4; Russell on Arbitration (20th ed 1982), 58–63.
Heyman v Darwins Ltd [1942] AC 356; Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909. See also Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223, 287 (CA); Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446 at 452; Mustill & Boyd, op cit, 78–82.
Hamlyn &Cov Talisker Distillery [1894] AC 202; Norske Atlas Insurance Co Ltd v London General Insurance Co Ltd (1927) 28 L1LR 104; Kianta Osakeyhtio v Britain and Overseas Trading Co Ltd [1953] 2 Lloyd’s Rep 569; The Elizabeth H [1962] 1 Lloyd’s Rep 172; Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223 (CA); International Tank & Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224 (CA); Nova (Jersey) Knit Ltd v Kammgarn Spinnerei [1977] 1 WLR 713, at 718, 730 (HL); Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446; Qatar Petroleum v Shell International Petroleum [1983] 2 Lloyd’s Rep 35 at 43 (CA); The Marques de Bolarque [1984] 1 Lloyd’s Rep 652.
See Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446, at 455.
As Mustill and Boyd, op cit, at 89, points out, it would be an unusual case for the parties to choose only the law governing the arbitration clause.
Hamlyn v Talisker Distillery [1894] AC 202; Spurrier v La Cloche [1902] AC 446 (PC); NV Kwik Hoo Tong Handel Maatschappij v James Finlay & Co [1927] AC 604, at 608, 609; Norske Atlas Insurance Co Ltd v London General Insurance Co Ltd (1927) 28 L1LR 104; Maritime Insurance Co Ltd v Assekuranz Union von 1865 (1935) 53 L1LR 16; The Njegos [1936] P 90, at 100; NV Handels-en-Transport Maatschappij ‘Vulcan’ v ASJ Ludwig Mowinckels Rederi [1938] 2 All ER 152, at 156; Tzortzis v Monark Line A/B [1968] 1 WLR 406 (CA).
Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572 applied in Atlantic Underwriting Agencies Ltd v Compagnia di Assicurazione di Milano [1979] 2 Lloyd’s Rep 240, at 245; The SLS Everest [1981] 2 Lloyd’s Rep 389 (CA); The Parouth [1982] 2 Lloyd’s Rep 351 (CA); The Mariannina [1983] 1 Lloyd’s Rep 12 (CA); Steel Authority of India Ltd v Hind Metals Inc [1984] 1 Lloyd’s Rep 405.
[1894] AC 202. See on this case Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572, at 596.
[1894] AC 202, at 208.
Ibid, at 212. But the context suggests that by ‘it’ he may have been referring to the contract as a whole rather than the arbitration clause. See also Lord Shand, at 216.
(1927) 28 L1LR 104.
Nova (Jersey) Knit Ltd v Kammgarn Spinnerei [1977] 1 WLR 713, at 718, 730 (HL).
Qatar Petroleum v Shell International Petroleum [1983] 2 Lloyd’s Rep 35, at 43 (CA).
Kianta Osakeyhtio v Britain & Overseas Trading Co Ltd [1953] 2 Lloyd’s Rep 569.
The Elizabeth H [1962] 1 Lloyd’s Rep 172.
Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223 (Kerr J and CA).
[1981] 2 Lloyd’s Rep 446.
[1975] QB 224 (CA).
See CM van Stillevoldt BV v El Carriers Inc, The Times, July 8, 1982. It would seem to make no difference if the foreign law has a similar rule to s27, because the basis of these decisions appears to be that s27 only applies to arbitration agreements governed by English Law.
[1978] 2 Lloyd’s Rep 223.
The argument that references to Indian law in the arbitration clause related to the procedural law of the arbitration as distinct from the proper law of the arbitration agreement were rejected.
[1970] AC 583.
Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572, at 604; Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223, at 270; International Tank & Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224, at 232 (CA); Bank Mellat v Helleniki Techniki SA [1984] QB 291, at 301 (CA); President of India v La Pintada Compania Navigacion [1985] AC 104 at 119.
Similarly with the enforcement provisions of the Arbitration Act 1975 and the New York Convention of 1958. The Geneva Protocol on Arbitration Clauses 1923 provided that the arbitration procedure was to be governed by the agreement of the parties and by the law of the place of arbitration and the Geneva Convention on the Recognition of Foreign Arbitral Awards 1927 requires the award to have been made in conformity with that law.
C/Thomas [1984] Lloyd’s Maritime and Comparative Law Quarterly 491; Mustill & Boyd, op cit, 68–70.
[1970] AC at 616.
[1984] QB 291, at 301.
President of India v La Pintada Compania Navigacion SA op cit at 119.
But where a Convention award falls to be enforced under the Arbitration Act 1975 it is sufficient that it is in accordance with the law agreed on by the parties even if that is different from the law of the place of arbitration.
C/Mann, ‘Lex Facit Arbitrum’, in International Arbitration: Liber Amicorum for Martin Domke (ed P Sanders, 1967) at p 165. In The Marques de Bolarque [1984] 1 Lloyd’s Rep 652, at 655, a charterparty between Spanish shipowners and Spanish charterers provided that it was to be governed by Spanish law and that disputes were to be settled by arbitration in London. When a dispute arose the Spanish owners sought to restrain an arbitration in London on the ground that the arbitration clause was invalid. On the evidence of Spanish law it was held that an agreement by a Spanish company to arbitrate in London was not contrary to Spanish law. In argument it was suggested that it might be possible for the arbitration in London to be subject to Spanish law, and Hobhouse J seems to have thought that although it might be ‘conceptually possible... it would, for practical purposes, be impossible’.
P 67.
For a tentative view to the contrary see Mustill and Boyd, op cit, 68.
Ibid, at 70. But it does seem from the Whitworth Street Estates case that the House of Lords did not exclude the possibility that an arbitration in Scotland could be subject to the supervisory role of the English court.
But cf The Mariannina [1983] 1 Lloyd’s Rep 12 (CA), where it seems to have been assumed that the power to appoint an arbitrator under the Arbitration Act 1950, s 10, depended on whether English law was the proper law of the arbitration agreement. But in that case English law was also the procedural law.
Bankers and Shippers Insurance Co of New York v Liverpool Marine and General Insurance Co Ltd (1926) 24 L1LR 85 (HL); Norske Atlas Insurance Co Ltd v London General Insurance Co Ltd (1927) 28 L1LR 104.
Cf Orion Compania Espanola de Seguros v Belfort [1962] 2 Lloyd’s Rep 257, at 264. See also Lorenzen, Selected Articles on the Conflict of Laws (1947), 465–6; Mezger, in Domke, International Trade Arbitration (1958), 229, at 239–43.
As in Norske Atlas Insurance Co Ltd v London General Insurance Co Ltd, supra; Union Nationale des Cooperatives Agricoles v Catterall [1959] 2 QB 44 (CA), Cf for English law Orion Compania Espanola de Seguros v Belfort [1962] 2 Lloyd’s Rep 257; Eagle Star Insurance v Yuval Insurance [1978] 1 Lloyd’s Rep, 357; Mann (1978) 94 LQR 486.
Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223, at 270.
Bank Mellat v Helleniki Techniki SA [1984] QB 291 (CA).
Whitzvorth Street Estates (Manchester) Ltd v James Miller & Partners Ltd [1970] AC 583 (English special case procedure not available in Scots arbitration).
Cf Marine Contractors Inc v Shell Petroleum Development Co of Nigeria Ltd [1984] 2 Lloyd’s Rep 77 (CA). (English remedies validly excluded in English arbitration under Nigerian law contract.)
[1981] AC 909.
Ibid, at 940–1.
Ibid, at 949.
[1978] 2 Lloyd’s Rep 332, at 270, per Kerr J.
[1984] 2 Lloyd’s Rep 77 (CA). See also Arab African Energy Corp v Olieprodukten Nederland BV [1983] 2 Lloyd’s Rep 419.
[1984] 2 Lloyd’s Rep, at 82. But the court would still have power to remove an arbitrator for misconduct, even if the arbitration were under ICC Rules: see Bank M e Hat v Helleniki Techniki SA [1984] QB 291, at 305.
[1984] QB 291.
Ibid, at 315. See also Pagnan and Fratelli v Corbisa Industrial Agropacuaria Ltda [1971] 1 All ER 165, at 166, per Salmon LJ.
The literature is very considerable. See especially for material in favour of delocalised arbitration Goldman, ‘Les conflits de lois dans l’arbitrage international de droit privé’, Recueil des Cours de l’Academie de Droit International, 347 (1963); Fragistas, ‘Arbitrage étranger et arbitrage international en droit privé’, Révue critique de droit international privé 1 (1960); Lalive, ‘Problèmes rélatifs à l’arbitrage international commercial’, Recueil des Cours de l’Académie de Droit International, 571 (1967); Schmitthoff (ed) Sources of the Law of International Trade, (London 1964); Lew, Applicable Law in International Commercial Arbitration, New York 1978; Fouchard, L’Arbitrage Commercial International (1965) Vol II, 401 et seq; Paulsson (1981) 30 ICLQ 358, (1983) 32 ICLQ 53. For criticism see Mann, op cit supra n30; Wetter, International Arbitral Process New York 1979, Vol 2, pp 403–4, 526–31; Park (1983) 32 ICLQ 21. See also Hirsch 34 Arbitration Journal 43 (1979); Collins, in Basle Symposium on the Law Governing Contractural Obligations (eds Klein and Vischer 1983), 70–9.
Arbitrations between states and private parties raise special problems: in several such cases arbitrators have applied the procedural law of the place of arbitration, but not its conflict of law rules: see, eg, Sapphire International Petroleum Ltd v National Iranian Oil Co 34 International Law Reports 136 (1967); BP v Libya 53 International Law Reports 297 (1979). But cf Saudi Arabia v Armaco, 27 International Law Reports 117 (1963); Texaco Overseas Petroleum Co Ltd v Libya 53 International Law Reports 389 (1979); LIAMCO v Libya 62 International Law Reports 140 (1982); Kuwait v Aminoil 66 International Law Reports 518 (1984).
The phrase in a number of institutional procedural rules (UNCITRAL, UN Economic Commission for Europe, International Chamber of Commerce) influenced by the European Convention on International Commercial Arbitration 1961 (not ratified by the United Kingdom).
Subject to the possibility of a choice of a different procedural law, discussed supra.
Whitworth Street Estates (Manchester) Ltd v James Miller & Partners Ltd [1970] AC 583.
On enforcement of ‘de-localised’ awards, see Van den Berg, The New York Arbitration Convention of 1958 Kluwer (Deventer 1981), 34–43.
Orion Compania Espanola de Seguros v Belfort [1962] 2 Lloyd’s Rep 257 (including, perhaps, public international law).
Eg Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572. Cf The Hollandia [1983] 1 AC 565, 576.
‘There must be no Alsatia in England where the King’s writ does not run’, Czarnikow v Roth Schmidt&Co [1922] 2 KB 478, at 488 (CA), per Sorutton LJ. But the effect of an exclusion agreement under the Arbitration Act 1979 may be to make this duty unenforceable, at least where the parties have agreed that the arbitrator need not apply the law.
[1984] AC 50 at 65; see also Mann, ‘England Rejects “Delocalised” Contracts and Arbitration’, 33 ICLQ 193 (1984).
Bank Mellat v Hellniki Techniki SA [1984] QB 291, at 301, referring to the views of Dr F A Man, op cit supra n30.
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Collins, L. (1987). The law governing the agreement and procedure in international arbitration in England. In: Lew, J.D.M. (eds) Contemporary Problems in International Arbitration. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-1156-2_12
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