The law governing arbitration agreements: a comparative law analysis

Determining the law applicable to an arbitration clause is a controversial issue in international commercial arbitration doctrine and practice. An arbitration agreement is of an autonomous nature and, therefore, the parties to the transaction are free to choose the law applicable to it. In practice, however, counterparties very rarely specify the law governing the arbitration clause. By applying a comparative method, the authors examine three main approaches which have emerged in the international arena, noting a wide variety of views and numerous instances of competition between the decisions of courts in different jurisdictions. Like some other jurisdictions, by reference to the provisions of the 1958 New York Convention, the Russian Federation has expressly opted for the law of the place of arbitration unless the parties have expressly agreed otherwise. On the other hand, a large number of jurisdictions have taken the approach that the law of the underlying contract is the law applicable to the arbitration agreement. The article also deals with the possibility of applying “cross-border” rules to the arbitration agreement. The authors examine in detail the practice of English courts. Thus, the authors study the criteria elaborated in the 2012 judgment of the appellate court in Sulamerica v. Enesa Engenharia. In the course of review of a complaint filed in another case, Enka v. Chubb, in October 2021, the UK Supreme Court added complexity to the English approach by making it less clear. Also in 2021 in its ruling in Kabab-Ji SAL v. Kout Food Group on enforcement of an arbitral award, the UK Supreme Court confirmed this approach, but its conclusions on the law applicable to an arbitration agreement were at odds with the conclusions of a French appellate court which was guided by a different test while considering an application to set aside the same arbitral award. Particular attention is paid to the validation rule, which is directed to the construction of an arbitration agreement in favor of its validity. Many European jurisdictions have enacted this approach as a law, and more and more researchers support it as a baseline in determining the governing law. The authors conclude that the absence of uniform and comprehensible criteria for establishing the law governing an arbitration agreement causes considerable difficulties and remain sceptical about the idea of an international consensus on this problematic issue.