Sulamerica CIA Nacional de Seguros SA
and others v Enesa Engenharia SA and others [2012] EWCA Civ 638
The
English Court of Appeal has clarified what has been an uncertain area of
jurisprudence as to which law should apply to the arbitration agreement where
none is expressly stated. It upheld the High Court's decision that the law of
the seat (England) should apply in this case, despite the fact that all other
factors pointed to the law of Brazil. In so doing, they continued the anti-suit
injunction that had been ordered in relation to Brazilian court proceedings. The
Court included the three stage test for determining the proper law of the
arbitration agreement: (i) whether the parties expressly chose the law of the
arbitration agreement; (ii) whether the parties made an implied choice of the
arbitration agreement; and (iii) in the absence of express or implied choice,
the system of law with which the arbitration agreement has the “closest and
most real connection”. In this case, the arbitration agreement had its closest
and most real connection with English law and was therefore governed by English
law.
Arsanovia Ltd & Ors v Cruz City 1
Mauritius Holdings
Another
related decision of the Commercial Court ia Arsanovia Ltd & Ors v Cruz
City 1 Mauritius Holdings which concerned the application of the Sulamérica
test in circumstances where the parties had expressly chosen Indian law to
govern the substantive contract and London as the seat of arbitration.
Interestingly, both parties sought to rely upon the decision in Sulamérica
in support of their conflicting positions as to the law of the arbitration
agreement. The court in Arsanovia was satisfied on the facts of the case
that the parties had evinced an intention that Indian law was to apply to the
arbitration agreement, the effect of which was that the arbitral tribunal was
found not to have had jurisdiction to issue one of the two challenged awards.
Although not decisive, the court was satisfied that the choice of law governing
the substantive contract was a "strong pointer" toward
the law of the arbitration agreement which could not be displaced alone by the
choice of a seat in a foreign jurisdiction.
Habas Sinai Ve Tibbi Gazlar Istihsal
Andustrisi AS and VSC Steel Company Ltd [2013] EWHC 4071 (Comm)
In
subsequent decision of Habas Sinai Ve Tibbi Gazlar Istihsal Andustrisi AS
and VSC Steel Company, the English Commercial Court further added that the
terms of the arbitration agreement may themselves indicate an implied choice of
law of that arbitration agreement. The contract which was ultimately concluded
by two companies acting as agents for Habas, provided for no applicable law to
the substantive contract or to the arbitration agreement, but provided for
arbitration in London. The Court rejected the argument that it should disregard
the chosen seat included in the arbitration agreement when considering the law with
which the agreement had its closest connection, on the basis that the
Claimant’s agents exceeded their actual authority when agreeing to the
arbitration agreement. For a number of reasons, the Court found that, even if
it was the case that there was no actual authority to agree the London
arbitration clause, the applicable law of the arbitration agreement would be
English law.
Enercon India Ltd v. Enercon GmbH
(Indian Supreme Court)
The
Indian Supreme Court had to determine whether the seat of the arbitration was
London or India in light of an arbitration clause which provided that the
"venue of the arbitration proceedings shall be London" and that
"the provisions of Indian Arbitration and Conciliation Act 1996 shall
apply". The Supreme Court, having regard to the applicable law of the
contract (Indian law) and the fact that the parties did not purport to exclude
the application of Part 1 of the Indian Arbitration and Conciliation Act, held
that India is the seat of the arbitration. The Court also went on to state that
the choice of India as the seat was analogous to an exclusive jurisdiction
clause in favour of the Indian courts which had the effect of excluding the
respondent's right from seeking interim relief in the English courts. The
latter part of the Supreme Court's decision is in stark contrast with that of
Blair J. in U&M v. Zambia (Zambian courts were the natural courts for
granting effective interim relief in respect of those assets which were present
in Zambia, notwithstanding that London was the seat).
Sources: http://uk.practicallaw.com/5-519-6971
https://www.dlapiper.com/en/uk/insights/publications/2013/03/determining-the-law-of-an-arbitration-agreement-__/
http://hsfnotes.com/arbitration/2014/01/20/commercial-court-reaffirms-the-importance-of-sulamerica-in-determining-the-law-of-the-arbitration-agreement-in-circumstances-where-choice-of-seat-was-agreed-without-actual-authority/
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