Choice Of Law In Arbitration Agreements

This is a difficult issue and will depend on the circumstances of the case and the approach of the arbitral tribunal or the national court dealing with this issue. This lack of clarity can lead to costly satellite proceedings that would not be necessary if the law governing the arbitration agreement were defined in the arbitration agreement. The majority decision of the Supreme Court of the United Kingdom, which is discussed in more detail below, makes it clear that, for an arbitration proceeding based in London, the right of the arbitration agreement, without the election of the parties, will be the right of the seat. Under the „standard rule,“ it is the law of the place to which the arbitration agreement is most closely linked. „The central question of this appeal is what system of national law governs the validity and scope of the arbitration agreement when the law applicable to the contract containing it departs from the law of arbitration.“ In the end, the judgment may, in this case, encourage the courts to find an explicit choice of law more easily, but the parties are always well advised to seek legal advice in the development of arbitration agreements, particularly where the existing legislation of the main contract and the law of the seat are different. The second factor was the impact of Brazil`s choice of law as the law that governs the arbitration agreement; That is, it could not be implemented without the agreement of both parties. If Brazilian law applies to the arbitration agreement, it can only be applied with the agreement of both parties, and the judge stated that there was „at least a serious risk that a Brazilian choice of law would significantly undermine that agreement.“ There was no indication that the parties intended to enter into such a unilateral agreement. On this basis, Brazilian law could not be implied, and the question then turned to the law with the „closest and most real connection“. The Court was also influenced by the fact that the possibility that the compromise clause would be subject to a right other than that of the container contract was not inconsistent with the Rome I Convention.