Domestic & International Commercial Arbitration Practice

Welcome to Domestic & International Commercial Arbitration Practice. Follow Programme Reader 02 — Core Concepts & Vocabulary, then practise in the learning system. Sign in and use the study header to open your authorised course. Select this published lesson. Start Course Tutor with Auto audio on: it teaches continuously, answers a typed question, then resumes. The law governing the arbitration agreement is different, and it is the one most often omitted. It determines whether the arbitration agreement itself is valid, what it covers and who is bound by it. A contract between an Indian company and an English company provides: this agreement shall be governed by the laws of England and Wales; any dispute shall be referred to arbitration seated in New Delhi under institutional rules. A dispute arises and the Indian party contends that the arbitration agreement is invalid. Which law decides that question? Work the layers. The substance. English law governs whether the contract was breached and what damages follow. That is expressly chosen and uncontroversial. The seat. New Delhi is the seat, so Indian law is the lex arbitri. The Indian courts supervise, the first Part of the Act applies, and any challenge to the award will be brought in India. The arbitration agreement. Here is the gap. The clause does not say which law governs the arbitration agreement itself. Two candidates compete: English law, as the law chosen for the contract in which the clause sits, and Indian law, as the law of the seat. Different legal systems have resolved this differently, and the answer can determine whether the arbitration agreement is valid, what it covers and who is bound. The consequence. The parties will now litigate a preliminary question that has nothing to do with their commercial dispute, and the answer may differ depending on whether the question is asked in India or in England. That is months and a great deal of money, caused by one missing sentence. The cure, at drafting stage. "This Agreement is governed by the law of England and Wales. The arbitration agreement in clause 19 is governed by the law of India. The seat of arbitration is New Delhi." Three sentences, and every question answered. The cure, now. If the clause is already signed and a dispute has arisen, the Indian court, as the court of the seat, will decide any application before it, and its approach will be informed by the provision in the second Part treating the arbitration agreement as governed by the law to which the parties subjected it or, failing indication, the law of the country where the award was made. An adviser should present the argument from both candidate laws and be candid that the point is genuinely contestable. Ask Course Tutor to explain this step: The clause does not say which law governs the arbitration agreement itself. Say what you tried. Pause and try this source task. Why is naming the law of the arbitration agreement worth a sentence in every international clause? The source answer is: Because without it the parties may litigate for months over whether the law of the contract or the law of the seat governs the agreement's validity, scope and reach to non-signatories. One sentence removes a dispute that is entirely collateral to the commercial issue. Compare your method and result, correct an error, then continue. Use Stop to end Course Tutor.