1997 - Hill-PrivateInterLawAspectAA1996

Some Private International Law Aspects of the Arbitration Act 1996
Author(s): Jonathan Hill

Source: The International and Comparative Law Quarterly , Apr., 1997, Vol. 46, No. 2
(Apr., 1997), pp. 274-308
Published by: Cambridge University Press on behalf of the British Institute of
International and Comparative Law
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SOME PRIVATE INTERNATIONAL LAW ASPECTS OF THE
ARBITRATION ACT 1996
JONATHAN HILL*
I. INTRODUCTION
A. The Background to the 1996 Act
As a method for resolving commercial disputes which ha

with two or more countries, arbitration has been given
boost this century by two developments at the internati
New York Convention of 1958-which was first implemen
and Wales by the Arbitration Act 1975-introduced a regim
a long way toward ensuring that arbitration agreements are
that arbitral awards are easily enforceable. The Conven
hugely successful in that it has been ratified by upward
including all the countries of Western Europe (with the exce
land) and nearly all countries which are significant comm
More indirect has been the influence of the Model Law on International
Commercial Arbitration, which was adopted by UNCITRAL in 1985.
Although the Model Law, which seeks to encourage States to modernise
their arbitration laws, has not been enacted by a very large number of
countries,' it has had a significant impact in that it has set an agenda for
reform-even for those countries which have decided not to enact it. The
Model Law has become "a yardstick by which to judge the quality of ...
existing arbitration legislation and to improve it".2
The Arbitration Act 1996 is the culmination of a long and arduous pro-
cess. As long ago as 1989 the Departmental Advisory Committee on Arbi-
tration (which was then under the chairmanship of Lord Mustill)
recommended that, although England should not adopt the UNCITRAL
Model Law,3 English law "should be set out in a logical order, and
expressed in language which is sufficiently clear and free from technical-
ities to be readily comprehensible to the layman" and "consideration
should be given to ensuring that any such new statute should, so far as
* Reader in Law, University of Bristol.
1. See Sanders, "Unity and Diversity in the Adoption of the Model Law" (1995) 11
Arb.Int. 1.
2. Steyn, "England's Response to the UNCITRAL Model Law of Arbitration" (1994) 10
Arb.Int. 1.
3. The Model Law has been enacted in Scotland: Law Reform (Miscellaneous Pro-
visions) (Scotland) Act 1990, s.66 and Sched.7.
274

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APRIL 1997] Arbitration Act 1996 275
possible, have the same structure and language as the Mod

enhance its accessibility to those who are familiar with th
Following the recommendations of the Committee, the t
ing a new Arbitration Act was commenced by a privat
tration practitioners, acting in consultation with the Depa
and Industry and the Chairman of the Departmental
mittee. The project was later adopted by the Departm
Industry and, after "a gestation period which has been ele
proportions",5 a Bill was introduced towards the end of 1
ment measure. The Arbitration Act 1996, which, inter
replaces Part I of the 1950 Act, the Acts of 1975 and 1
sumer Arbitration Agreements Act 1988, received the Roy
June 1996 and came into force on 31 January 1997.6
The 1996 Act is in four parts: the main body of the Act i
Part I (sections 1 to 84); Part II, which is entitled "Other p
ing to arbitration", sets out special rules which apply t
tration agreements, small claims arbitration in th
judge-arbitrators and statutory arbitrations (sections 8
deals with the recognition and enforcement of foreign aw
lar New York Convention awards (sections 99 to 104);
tains a few general provisions (sections 105 to 110).
The 1996 Act seeks to establish the general principles
tration law should be based and is intended to provide
statutory framework for each aspect of the arbitral proc
stressed, however, that many questions are left to be dec
and certain provisions have been drafted against the back
ing judicial decisions. It would be wrong, therefore, to see
lation as entirely self-sufficient. The structure of the
certain extent, based on the Model Law and, as far as p
Act adopts the style and, where appropriate, the text o
The 1996 Act is far removed from a codification of the p
the long title describes the new legislation as an Act
improve the law relating to arbitration".
The purpose of the discussion which follows is to foc
which the 1996 Act has affected private international law
requires consideration of three general areas. First, to
the 1996 Act affect the jurisdiction of the English cou
4. A Report on the UNCITRAL Model Law on International Com

(1989), p.34, para.108(7). For a discussion of the Committee's report
Report of the Mustill Committee: A Foreign View" (1990) 106 L.Q.R
5. Steyn, op. cit. supra n.2.
6. The date appointed by the Secretary of State under s.109 by SI 1
7. For reasons considered in infra Part I.B ss.85-87 (which deal with
agreements) have not been brought into force.

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276 International and Comparative Law Quarterly [VOL. 46
does the 1996 Act deal with choice of law questions? Third, what impact
does the 1996 Act have on the recognition and enforcement of arbitral
awards? Before turning to consider these issues (in infra Parts II to IV)
something ought to be said about domestic and international arbitration.
B. Domestic and International Arbitration
An arbitration may be "domestic"-where all the relevant factors are

connected with one country only-or it may be "international" in the
sense that it involves a foreign element or a number of foreign elements.8
It is, of course, perfectly possible for the same legal regime to be applied in
both domestic and international cases. However, some legal systems
choose to distinguish the two categories, normally with a view to giving the
courts greater control over domestic arbitrations. In an international case
the parties to the dispute and the cause of action may have only a very
tenuous connection with the country in which the arbitration is conduc-
ted.9 By contrast, in a domestic case the arbitral tribunal is, in effect, a
substitute for the local courts and this may be thought to justify closer
judicial supervision of the arbitral process.
Under English law prior to the enactment of the 1996 Act domestic and
international cases were distinguished in three contexts. First, whereas the
courts had discretion whether or not to stay proceedings brought in
breach of the terms of a domestic arbitration agreement,"' in an inter-
national case, if the relevant conditions were satisfied, the grant of a stay
was mandatory." Second, the right to appeal to the courts on points of law
under the 1979 Act was more easily excluded in international cases than in
domestic cases.'2 Third, the Consumer Arbitration Agreements Act 1988
8. To describe an arbitration which involves a foreign element as "international" is

potentially misleading. It has been pointed out that, except in the case of an arbitration
between two States or other international legal persons conducted in accordance with public
international law, all arbitrations are national, in the sense they are subjected to national
legal systems: Mann, "Lex Facit Arbitrum", in Sanders (Ed.), International Arbitration:
Liber Amicorum for Martin Domke (1967), p.157, at p.159. Notwithstanding such obser-
vations, the epithet "international" is convenient and is routinely employed to distinguish
domestic cases from cases with a foreign element.
9. Some legal systems limit the court's general powers in cases where the parties to an
arbitration have little or no connection with the seat of arbitration. For example, following
the reforms of 1985, Art.1717.4 of the Belgian Judicial Code provides as follows: "The Bel-
gian court can take cognisance of an application to set aside only if at least one of the parties
to the dispute decided in the arbitral award is either a physical person having Belgian
nationality or residing in Belgium; or a legal person formed in Belgium or having a branch or
some seat of operation there."
10. Arbitration Act 1950, s.4.
11. Arbitration Act 1975, s.1.
12. S.3(6).

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rendered certain consumer arbitration agreements

domestic cases"3 but not in international cases.14
The desirability of drawing a distinction between domestic and inter-
national cases is controversial. The Departmental Advisory Committee in
its Report on the Arbitration Bill, published in February 1996, suggested
that consideration should be given to the abolition of the distinction on the
ground that the rules which apply in international cases "fit much more
happily with the concept of party autonomy than our domestic rules,
which were framed at a time when attitudes to arbitration were very dif-
ferent and the courts were anxious to avoid what they described as usurp-
ation of their process".' The Departmental Advisory Committee also
drew attention to the fact that a distinction between domestic and other
arbitrations may produce odd results: "an arbitration agreement between
two English people is a domestic arbitration agreement, while an agree-
ment between an English person and someone of a different nationality is
not, even if that person has spent all his time in England".'6
Notwithstanding these arguments, the 1996 Act, as originally drafted,
sought to perpetuate the distinction between domestic and international
cases in relation to the staying of actions and to the right to appeal to the
court on points of law."7 However, before the Act came into force it
became clear that the distinction was, in practical terms, impossible to
maintain.
The problem was that the differential treatment of domestic and inter-
national agreements was seen to be inconsistent with EC law in that it
discriminated against nationals of other EC member States. This problem
had been noted by the Departmental Advisory Committee before the text
of the Bill was finalised'8 and was raised when the Bill was being debated in
the House of Lords."9 More significantly, after the enactment of the new
legislation-but before its commencement-the issue was considered by
the courts in the context of the Consumer Arbitration Agreements Act
1988.
In Phillip Alexander Securities and Futures Ltd v. Bamberger2() the plain-
tiff was an English company carrying on business as a futures and option
broker; the defendants, six of the plaintiff's former customers, were Ger-
13. S.1.
14. S.2(a).
15. P.66 (para.320).
16. Idem, p.67 (para.326).
17. Ss.85-87. The 1996 Act extends the application of the Unfair Terms in Consumer
Contracts Regulations 1994 to consumer arbitration agreements: ss.89-91. These provisions
apply equally to domestic and international agreements.
18. Report, supra, n.15 at p.67 (para.326).
19. See Lord Hacking's comments during the committee stage: H.L. Hansard, Vol.569,
CWH cols.23-24 (28 Feb. 1996).
20. The Times, 22 July 1996.

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man nationals resident in Germany. Each of the contracts between the
parties contained an arbitration clause. When disputes arose the defend-
ants chose not to refer them to arbitration, but started litigation in Ger-
many instead. As regards the five defendants who had already obtained a
judgment in Germany, the plaintiff sought a declaration that the German
judgments were not enforceable in England. As regards the sixth, the
plaintiff sought an injunction to restrain the defendant from pursuing the
German proceedings.
It was clear that had the defendants been UK nationals and resident in
England the arbitration agreements would have been rendered
unenforceable by section 1 of the 1988 Act. However, the plaintiff con-
tended that, because the arbitration agreements were not domestic, the
effect of section 2 was that they were valid and enforceable.
The defendants argued that section 2 of the 1988 Act was incompatible
with EC law as constituting a restriction on the freedom to provide ser-
vices contrary to Article 59 of the EC Treaty and/or unlawful discrimi-
nation contrary to Article 6 thereof.2' The Court of Appeal, after
considering the jurisprudence of the Court of Justice,22 accepted the
defendants' argument. Leggatt LJ expressed the court's conclusion in the
following terms:23
A rule which disadvantages recipients of services in another Member State
inevitably restricts the freedom of the service provider to provide services
on equal terms to everyone in the Community and is inimical to the objec-
tive of the Treaty ... of achieving an internal market characterised by the
abolition of obstacles to the free movement of services. As the Court has
made clear, whether the restriction is placed on the provider of the services
or the recipient, the effect is the same, and it is inconsistent with the purpose
of the Treaty. Nationals in Germany, Spain or Finland may be less inclined
to avail themselves of the services of [the plaintiff] because English law does
not afford them the same treatment as that which is available to English
nationals, and in our judgment this is clearly discriminatory and impermiss-
ible pursuant to articles 6 and 59 of the Treaty.
The arguments relating to the discriminatory effect of the 1988 Act

could also be applied to the provisions of the 1996 Act relating to domestic
arbitration agreements. A dual regime-which distinguishes domestic
arbitration agreements from international ones-fails to comply with EC
law because it treats nationals of other EC member States less favourably
than UK nationals. The implications of the decision in Phillip Alexander
Securities for the 1996 Act, as originally drafted, were potentially far-
21. Formerly Art.7 EEC.

22. Cases 262/82 and 26/83 Luisi and Carbone v. Ministero del Tesoro [1984] E.C.R. 377;
Case 186/87 Cowan v. Tresor Public [1989] E.C.R. 195; Case C-45/93 Commission v. Spain
[1994] E.C.R. 1-911; Case C-384/93 Alpine Investments BV [1995] E.C.R. 1-1141.
23. Lexis transcript.

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reaching: in order to avoid unlawful discrimination

other EC member States, the domestic rules would
arbitration agreements involving nationals of other E
well as in cases involving UK nationals.
Obviously, the idea that the domestic rules should b
UK nationals and nationals of other EC member S
unattractive from the policy point of view. It was
intended that, in a case involving an English arbitr
cluded between an English seller and an Italian bu
excluding the right to appeal to the court on points o
tive only if entered into after the commencem
proceedings.24
As regards the staying of proceedings brought i
tration agreement, the implications of Phillip Alex
even more serious. The application of the domestic ru
cases involving nationals of other EC member Sta
breach of the international obligations which t
assumed on ratifying the New York Convention. This
considering the situation where, in breach of an Engl
a German national starts legal proceedings in Eng
national. The reasoning of the Court of Appeal wo
clusion that, in order to comply with EC law, the cas
the same way as a domestic case involving two UK
say, the court should have a discretion whether or no
However, under the New York Convention the grant
tory in this type of situation.26
Therefore, to comply with the requirements of bot
laws discrimination on grounds of nationality) an
(which requires the imposition of a stay in internatio
practical solution was to remove the special provision
trations and to apply the international regime to all a
ing the decision in Phillip Alexander Securitie
Advisory Committee issued a consultation documen
vassing opinion on, inter alia, the repeal of the dome
for by section 88 of the 1996 Act).27 In the light o
consultation exercise it was recommended that the domestic rules should
not be brought into force. The Secretary of State accepted this recommen-
dation.28 Accordingly, the rules set out in Part I of the 1996 Act apply
24. S.87(1).
25. S.86(2).
26. Art.II.
27. A Consultation Document on Commencement of the Arbitration Act 1996 (1996)
28. See SI 1996/3146.

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regardless of whether the arbitration agreement is domestic or

international.
II. JURISDICTION QUESTIONS AND THE STAYING OF ACTIONS
IT is important in the present context to distinguish two different

which are often treated as involving questions of jurisdiction. T
question is whether the court has the power to hear and determ
substance of a dispute, notwithstanding the fact that the part
agreed to arbitration. This is a question which until recently was ad
by the provisions of the 1950 and 1975 Acts and which is now dealt w
the 1996 Act. The second question in cases involving arbitration con
the extent of the court's powers of supervision and support in rela
arbitrations which are conducted in England and abroad. This
question is considered in Part III.
A. The Staying of Actions: Introduction

If a court accepts jurisdiction over the substance of a dispute wh
parties have agreed to refer to arbitration the arbitral process is se
undermined. Where legal proceedings are commenced in breach
terms of an arbitration agreement the defendant may reasonably e
to be able to rely on the agreement and ask the court to decline jur
tion. English law traditionally drew a distinction between domestic
(which fell within the scope of the 1950 Act) and international case
ing within the scope of the 1975 Act). It has been seen that, althou
1996 Act, as originally drafted, sought to maintain this distinction
already been abandoned.29
The staying of actions brought in breach of the terms of an arbi
agreement is regulated by section 9 of the 1996 Act.3" This section
regulates both international and domestic cases, applies even if the
29. See supra Part I.B.

30. S.9 reads as follows:
"(1) A party to an arbitration agreement against whom legal proceedings are brought
(whether by way of claim or counterclaim) in respect of a matter which under the agreement
is to be referred to arbitration may (upon notice to the other parties to the proceedings)
apply to the court in which the proceedings have been brought to stay the proceedings so far
as they concern that matter.
(2) An application may be made notwithstanding that the matter is to be referred to arbi-
tration only after the exhaustion of other dispute resolution procedures.
(3) An application may not be made by a person before taking the appropriate procedural
step (if any) to acknowledge the legal proceedings against him or after he has taken any step
in those proceedings to answer the substantive claim.
(4) On an application under this section the court shall grant a stay unless satisfied that the
arbitration agreement is null and void, inoperative, or incapable of being performed.
(5) If the court refuses to stay the legal proceedings, any provision that an award is a con-
dition precedent to the bringing of legal proceedings in respect of any matter is of no effect in
relation to those proceedings."

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outside England and Wales or if no seat has been de

mined.3" The 1996 Act effectively mirrors the pre-exis
obligation to grant a stay of proceedings under section
was not dependent on there being any connection be
the agreement, the situation or the parties.32
Although much of section 9 replicates section 1 of the
a more accessible form, there are various difference
noted.
B. A Confirmation
One of the issues which arose in Channel Tunnel Group Ltd v. Balfour
Beatty Construction Ltd33 was whether the court was required to grant a
stay under section 1 of the 1975 Act in a case where the parties were not in
a position to proceed immediately to arbitration. In the Channel Tunnel
case the plaintiffs started proceedings in England in the context of which
they sought an injunction to restrain the defendants from suspending
work on the tunnel's cooling system. The plaintiffs countered the defend-
ants' application for a stay on the ground that the contractual dispute-
resolution clause provided for a two-stage process-reference to a panel
of experts followed, if necessary, by arbitration-and that, when the pro-
ceedings were commenced, the first stage of that process had not yet been
commenced, let alone completed. Lord Mustill was troubled by the fact
that Article 11(3) of the New York Convention, on which section 1 was
based, provides that, assuming that the relevant conditions are satisfied,
the parties shall be "referred to arbitration". The perceived problem was
that, because the first stage of the process had not yet taken place, the
dispute could not be "referred to arbitration". Lord Mustill thought that if
the English legislation had followed the Convention "it would have been
hard to resist the conclusion that the duty to stay does not apply to a situ-
ation where the reference to the arbitrators is to take place, if at all, only
after the matter has been referred to someone else".34 This was one of the
reasons why Lord Mustill preferred to base the grant of a stay on the
court's inherent jurisdiction rather than on section 1.
The supposed problem which Lord Mustill identified in the Channel
Tunnel case is expressly addressed by section 9(2) of the 1996 Act, which
provides that an application for a stay "may be made notwithstanding that
the matter is to be referred to arbitration only after the exhaustion of
other dispute resolution procedures". This subsection can do no harm. It
is doubtful, however, whether it was strictly necessary. It has been con-
31. S.2(2)(a).
32. Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1992] Q.B. 656 (CA).
33. [1993] A.C. 334.
34. Idem, p.354.

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vincingly argued that the difficulty which worried Lord Mustill is illusory
since "the wording of article 11(3) of the New York Convention ... does
not mean that the court has to transfer the case to the arbitrator. It simply
means that, once the action is stayed by the court, the parties have no
other remedy than going to arbitration, should they wish to pursue their
dispute."35
C. A Significant Change
The significant reform which has been introduced by the 1996 Act is that a
stay can no longer be refused on the basis that the court is satisfied that
"there is not in fact any dispute between the parties".36 The 1975 Act's
requirement that there should be a dispute between the parties has no
counterpart in the New York Convention, having been derived from ear-
lier English legislation.37 The question as to whether there was a dispute
between the parties arose most frequently in the situation where the plain-
tiff, in an attempt to wriggle out of an arbitration agreement, applied for
summary judgment under RSC Order 14 and resisted the defendant's
application for a stay on the basis that, since the defendant had no defence
to the claim, there was not in fact a dispute between the parties for the
purposes of section 1 of the 1975 Act.
The traditional analysis was that, if the plaintiff could show that there
was no defence to the claim, there was no dispute between the parties and
a stay would be refused; if, however, the circumstances were such that the
defendant was entitled to be given leave to defend, the court was bound to
refer the matter to arbitration under section 1.38 There were a number of
problems with this approach. First, the tendency was for the court to be
drawn into a consideration of matters which the parties had agreed to
refer to arbitration. Second, the traditional approach depended on the
word "dispute" in section 1 being interpreted differently from the same
word when used in a standard arbitration clause (in which the parties
agree, for example, "Any dispute arising out of or in connection with this
contract shall be referred to and finally resolved by arbitration... "). If the
word "dispute" were given the same interpretation in both contexts the
result would be an absurdity: the arbitrator would be deprived of jurisdic-
tion in a situation where the respondent had no seriously arguable defence
35. Reymond (1993) 109 L.Q.R. 337,339 (referring to Van den Berg, The New York Con-
vention of 1958 (1981), p.129).
36. Arbitration Act 1975, s.1(1).
37. The relevant words were inserted into the Arbitration Clauses (Protocol) Act 1924 by
s.8 of the Arbitration (Foreign Awards) Act 1930. The phrase was repeated in s.4(2) of the
Arbitration Act 1950 when the legislation was consolidated and, although s.4(2) of the 1950
Act was repealed by the 1975 Act, the same phrase was included in the text of s.1.
38. See Kerr LJ in SL Sethia Liners Ltd v. State Trading Corporation of India Ltd [1985] 1
W.L.R. 1398, 1401.

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to the claimant's claim. These problems were exposed by

ter v. Nelson39 and, following this decision, the trad
repeatedly questioned, although the authorities were
There was no doubt, however, as to which way the wind
The amendment effected by the 1996 Act was long ov
the addition in section 1 of the 1975 Act of a further con
of a stay over and above those required by the New Yor
hardly consistent with the international obligations wh
when the United Kingdom ratified the Convention.42 W
to refer their disputes to arbitration it is essentially fo
rather than the court-to decide whether or not th
defence to a claim. Although RSC Order 14 has been use
claimants to avoid the delays which are inherent in the
which may be exploited by a recalcitrant responden
makes an order for summary judgment, even thoug
within the scope of an arbitration agreement between t
arily subverts the principle of party autonomy by takin
the hands of the agreed tribunal. As Lord Mustill ha
different context):44
The parties choose arbitration for better or for worse. The
features, of which there are many. When things take a t
there are limits beyond which they cannot be allowed,
their arbitration agreement, to run to the courts for hel
There is, of course, nothing in the 1996 Act to pre

arbitration agreement from making an application for
under RSC Order 14. However, if the proceedings are br
of a matter which under the agreement is to be referre
(that is to say, if there is a dispute which falls within th
diction) the defendant is entitled to a stay and the fact
does not have a plausible defence is not a relevant co
D. Formal Requirements
Section 5(1) of the 1996 Act states that the provisions o
where the arbitration agreement is "in writing". Thr
39. [1990] 2 Lloyd's Rep. 265.

40. The John C. Helmsing [1990] 2 Lloyd's Rep. 290.
41. See, in particular, the speech of Lord Mustill in Channel Tunn
42. Reymond, op. cit. supra n.35, at p.340.
43. For a discussion of the ways in which a respondent may slow d
Harris, "Abuse of the Arbitration Process-Delaying Tactics an
J.Int.Arb. (2) 87.
44. SA Coppie Lavalin NV v. Ken-Ren Chemicals & Fertilizers Lt
652.
45. S.9(1).

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noted about the way in which the legislation deals with the requirement of
"writing". First, the definition has been extended in order to take account
of modern technological advances. Whereas the 1975 Act referred to an
exchange of letters or telegrams,46 section 5(6) makes it clear that refer-
ences in the 1996 Act to "anything being written or in writing include its
being recorded by any means". This provision is obviously intended to
cover agreements which are recorded by telex, fax or electronic mail.
Read literally section 5(6) could be regarded as including a tape-recorded
oral agreement. During the Second Reading in the House of Lords, Lord
Noel-Buxton posed the following question: "Would a tape recording ...
recorded by one party with the acquiescence of, but without the formal
authority of the other or others, during which it was orally agreed to
include an arbitration clause in common form, be a sufficient agreement in
writing?"47 Since the new legislation is, to a significant extent, based on
Article 7(2) of the Model Law, which refers to "other means of telecom-
munication which provide a record of the agreement", it is preferable to
interpret section 5(6) as covering agreements which are recorded as text,
but not those which are recorded as speech.48
Second, subsection (5) follows Article 7(2) of the Model Law by
providing:
An exchange of written submissions in arbitral or legal proceedings in which
the existence of an agreement otherwise than in writing is alleged by one
party against the other and not denied by the other party in his response
constitutes as between the parties an agreement in writing to the effect
alleged.
Third, the 1996 Act endorses the decision of the Court of Appeal in
Zambia Steel & Building Supplies Ltd v. James Clark & Eaton Ltd.49 The
defendant, an English company, provided the plaintiff, a Zambian com-
pany, with a written price quotation for goods "made on our terms of busi-
ness". The defendant's standard terms-which were set out on the back of
the price quotation-included a clause which provided for arbitration in
England. The plaintiff ordered goods from the defendant and orally
assented to the defendant's terms. The plaintiff claimed that the goods
were damaged on delivery and started proceedings in England; the
defendant applied for a stay on the basis of the 1975 Act. The Court of
Appeal decided that an oral acceptance of a written proposal to arbitrate
qualified as an agreement in writing for the purposes of the 1975 Act. If the
same facts were to arise under the 1996 Act the same result would be
46. S.7(1).
47. H.L. Hansard, Vol.568, col.780 (18 Feb. 1996).
48. This view is supported by the DAC's Report on the Arbitration Bill (1996), p.14
(para.33).
49. [1986] 2 Lloyd's Rep. 225.

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reached. An agreement is in writing "if the agreemen

(whether or not it is signed by the parties)".5 Furthe
"Where parties agree otherwise than in writing b
which are in writing, they make an agreement in writ
also satisfies the 1996 Act's formal requirements if th
by exchange of communications in writing, or if
denced in writing.52
Whether the decision in Zambia Steel is consistent with the New York
Convention has been the subject of disagreement. One view is that the
purpose of Article II(2) of the Convention-which expressly refers only
to arbitration agreements which are concluded by an exchange of letters
or telegrams or which are signed by both parties-was to deny effect to an
arbitration agreement which is proposed in writing and accepted orally or
tacitly.53 According to this view, Article II(2) lays down both a minimum
and a maximum requirement with the consequence that "a court may not
require more, but also may not accept less" than is provided by the Con-
vention.54 The strict view of Article II(2) suggests that the courts should
not give effect to an arbitration clause which is contained in standard
terms and conditions communicated by one party to the other but not
signed by both. The broader view is that the New York Convention simply
stipulates certain forms of arbitration agreement which must be enforced
by the courts of the contracting States; it does not seek to prevent the
courts of a contracting State from giving effect to an arbitration agree-
ment which does not fall within one of the classes of agreement expressly
referred to in Article II(2). According to the Departmental Advisory
Committee the broader approach adopted by English law "is consonant"
with Article II(2) of the English text of the New York Convention: "The
non-exhaustive definition in the English text ('shall include') may differ in
this respect from the French and Spanish texts, but the English text is
equally authentic ... and also accords with the Russian authentic text."55
As regards the relationship between the 1996 Act and the Model Law, it is
clear that section 5 of the 1996 Act adopts a more indulgent attitude to
formal questions than the equivalent provisions of the Model Law.56
Because English law takes a more flexible approach to formalities than
the laws of some other countries, circumstances will arise in which,
50. S.5(2)(a).
51. S.5(3).
52. S.5(2)(b), (c) and (4).
53. Van den Berg, op. cit. supra n.35, at p.196.
54. Idem, p.179. See also Mann (1987) 3 Arb.lInt. 171.
55. Report on the Arbitration Bill (1996), p.14 (para.34).
56. Art.7(2) of the Model Law extends neither to an oral agreement evidenced in writing
nor to a written clause orally or tacitly accepted by the parties.

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although the English court will stay proceedings (on the basis of section 9
of the 1996 Act), the courts of other countries-which take a stricter view
of Article 11(2) of the New York Convention and/or follow the Model
Law-will not. This presents certain dangers and potential problems.
Consider, for example, the following situation. X (an English company)
and Y (an Italian company) orally conclude a contract for the sale of goods
on X's standard terms and conditions (which include a clause selecting
English law as the applicable law and a clause providing that any dispute
arising out of the contract should be referred to arbitration in England). X
subsequently sends a printed document setting out the terms to Y, who
does not reply. A dispute arises, each party alleging that the other is in
breach of contract.
If Y starts proceedings in England, the court will grant a stay on the
basis that the conditions set out in the 1996 Act are satisfied; according to
English law the arbitration clause forms part of the contract between the
parties and the clause is "in writing" for the purposes of section 5 of the
1996 Act. If, however, Y starts proceedings in Italy, the Italian courts will
almost certainly refuse to grant a stay; X will not be able to rely on the
arbitration clause because-according to the strict view-it does not satis-
fy the formal requirements of Article 11(2) of the New York Convention.
If the Italian court assumes jurisdiction over the substance of the dispute57
and gives judgment on the merits in Y's favour, X is placed in an unenvi-
able position. If X seeks to proceed with arbitration in England-in
accordance with the clause set out in X's terms and conditions-Y may
raise the Italian judgment as a defence to X's claim. The question then
arises as to whether the Italian judgment is entitled to recognition in
England. This question in turn depends on whether the Italian judgment
concerns "arbitration" for the purposes of Article 1(4) of the Brussels
Convention. If the Italian judgment declaring the arbitration clause to be
ineffective and deciding in Y's favour on the merits is regarded as falling
within the scope of the Brussels Convention58 it is entitled to automatic
recognition in England 59 and it is irrelevant that the judgment was given in
defiance of an arbitration agreement which is valid and binding according
to its proper law. If, however, the judgment concerns "arbitration" it falls
outside the Brussels Convention's scope and X is entitled to rely on sec-
tion 32 of the Civil Jurisdiction and Judgments Act 1982 to resist recog-
nition of the Italian judgment in England. Although the European Court
of Justice considered the meaning of "arbitration" in the Marc Rich case,60
57. If the place of performance of X's obligation was Italy, the Italian court would, subject
to the arbitration clause, be entitled to assume jurisdiction under Art.5(1) of the Brussels
Convention.
58. This was the approach adopted in The Heidberg [1994] 2 Lloyd's Rep. 287.
59. Art.26.
60. Case C-190/89 Marc Rich & Co. AG v. Societa Italiana Impianti, The Atlantic Emperor
[1991] E.C.R. 1-3855.

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commentators are divided on the implications of this

ognition ofjudgments which are given in disregard of
ment.6' The position is unlikely to be clarified definiti
has been considered by the Court of Justice.62 The p
that legal harmony within Western Europe is not hel
with regard to the implementation of Article II of th
tion, not all Brussels and Lugano contracting Sta
approach.
III. CHOICE OF LAW
IN the field of choice of law, international commercial arbit

described as a "forensic minefield"." The legislation wh
repealed by the 1996 Act had very little to say about choice
tions, leaving such matters to be determined by the common
law that different aspects of an arbitration may be subjecte
laws. In particular, the law governing an arbitration clause (
of the agreement) must be distinguished not only from the
the arbitration procedure (the curial law or lex arbitri) but a
law applicable to the merits of the dispute between the p
sae). Where, for example, the parties agree to refer a disput
in Scotland, the parties cannot rely on English legislation to
English court on a point of law-even if English law is t
because whether a party can appeal on a point of law is a pro
tion to be determined by the curial law.65
A. The Curial Law and Its Scope

Most of the provisions in Part I regulate either the internal
the arbitration or the court's powers of supervision and sup
not be appropriate in the present context to list them all. M
made, however, of the following groups of statutory provis
with central elements of the arbitral process: sections 15 to
tribunal); sections 33 to 45 (the arbitral proceedings and the
court in relation to the arbitral proceedings) and sections 66
of the court in relation to the award).
How should the sphere of operation of these provisions be
The legislation which the 1996 Act has replaced was silent as
61. Compare e.g. Briggs (1991) 11 Y.B.E.L. 527, 529 and Cheshire and
International Law (12th edn, 1992), p.436.
62. For further discussion see Hill, The Law Relating to International
putes (1994) pp.63-66 (para.3.3.3.4.5) and 553-554 (para.20.6.1).
63. As defined by Civil Jurisdiction and Judgments Act 1982, s.1(3).
64. Redfern and Hunter, Law and Practice of International Commercial
edn, 1991), p.72.
65. James Miller & Partners Ltd v. Whitworth Street Estates (Mancheste
583.

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of application. Under the old law, when, in a case involving foreign

elements, the court was faced with the question whether particular rules
were applicable, the scope of each statutory provision was considered sep-
arately. The view was taken that "just because two rules of law are enacted
in the same statute, it does not follow that the same connecting factor
applies in each case"." For example, some sections of the 1950 Act were
thought to be applicable in cases where the arbitration agreement was
governed by English law67 and others where England was the seat of arbi-
tration.68 Fortunately, the uncertainties of the old law have been swept
away by a comprehensive set of rules in the 1996 Act which identify the
circumstances in which the various provisions of Part I are applicable.
Broadly speaking, there are two possible bases on which the law of a
particular country might be thought appropriate to govern the procedural
aspects of an arbitration: first, the parties might expressly choose the law
of country X as the curial law (the "autonomy criterion"); second, the
arbitration might have a close connection with country X by virtue of its
seat being located there (the "territorial connection").
At common law the parties were-in theory, at any rate-allowed to
select both the seat of arbitration and the curial law.69 It was even held that
the parties could effectively choose to split the curial law and to subject
different aspects of the procedure to different laws; the parties might, for
example, agree that internal procedural matters (such as the conduct of
the arbitration itself) were to be governed by the law of one country and
that external procedural questions (such as the powers of the court to
supervise the award) should be governed by the law of another.71 If the
parties chose country X as the seat of arbitration, but failed expressly to
choose the curial law, the law of country X governed; if the parties chose
the law of country X as the curial law, but failed to specify the seat, the seat
of arbitration was in country X.7' Through the application of these prin-
ciples, the curial law would normally be the law of the seat of arbitration.
What was the position, however, if the parties chose country X as the seat
of arbitration but the law of country Y as the curial law?72 The courts were
never required to answer this question and to decide whether primacy
66. Staughton U in Irish Shipping Ltd v. Commercial Union Insurance Co. Ltd [1991] 2
Q.B. 206, 220.
67. S.27 as interpreted in International Tank & Pipe SAK v. Kuwait Aviation Fuelling Co.
KSC [1975] Q.B. 224.
68. S.12 as interpreted in Channel Tunnel, supra n.33.
69. Naviera Amazonica Peruana SA v. Compania Internacional de Seguros del Peru
[1988] 1 Lloyd's Rep. 116.
70. Union of India v. McDonnell Douglas Inc. [1993] 2 Lloyd's Rep. 48.
71. Naviera Amazonica, supra n.69.
72. Why anyone should choose to do this is not clear; it would be much simpler to choose
country Y as the seat but to conduct the hearings in country X: Redfern and Hunter, op. cit.
supra n.64, at pp.93-94.

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should be given to the chosen law or the law of the s

only discussions in the cases are obiter.73
Rather than seeking to construct a series of rules f
party autonomy, the 1996 Act follows Article 1(2)
adopting as its starting point a "territorial criterion"
vides: "The provisions of this Part apply where the sea
in England and Wales... " The adoption of a territor
mean, of course, that the parties have no control ove
the parties are free to designate the seat of arbitra
seen, the parties may by agreement exclude those pro
Act which are not mandatory. But the adoption of a
does mean that if parties agree to arbitration in Engl
Part I are prima facie applicable by virtue of the simp
arbitration is in England.
The version originally favoured by the Departme
mittee left the scope of the various provisions of Part
reference to the rules of the conflict of laws. This w
considerable uncertainty since the draft legislation at
specify what were the relevant conflict of laws rules
various statutory provisions for the purposes of such
sion of section 2(1) has the advantage of simplicity
therefore, preferable to the previous version-
changed only at the eleventh hour.76
Of course, the general principle in section 2(1) p
point of departure, not the whole story. It would be v
the law to adopt a simplistic view that all the provisi
necessarily apply if the seat of arbitration is in Engla
them should apply if the seat is elsewhere. There a
consider. As arbitration is a consensual process the pa
eral, be able to decide for themselves how their dispu
There is nothing in principle objectionable in allo
exclude the law of the seat-whether by an ad hoc
adoption of institutional arbitration rules or by ch
other country. Nevertheless, the principle of party a
ordinate to the public interest of the country in
73. See, in particular, Kerr U in Naviera Amazonica, supra n.6

74. See Holzmann and Neuhaus, A Guide to the UNCITRA L M
Commercial Arbitration: Legislative History and Commentary (1
75. S.3(a).
76. Even after the Second Reading in the House of Lords the
Committee had not yet come round to the general principle that all
England should be subject to the provisions of Part I: Report on t
pp.11-12 (paras.23-25) and 74 (para.357).

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arbitration is located. Since the law of the seat has a legitimate interest in
ensuring that the arbitral process meets certain basic standards of justice
and fairness, the parties to an arbitration cannot be entitled to exclude
procedural rules which are mandatory according to the law of the seat.
Finally, as the courts of one country may make a positive contribution to
proceedings being conducted in other countries, it is legitimate for the
court to exercise certain types of power to support foreign arbitral
proceedings.
The general principle set out in section 2(1) is modified by a number of
other rules. First, subsections (2) to (5) provide that some sections con-
tained in Part I apply even if the seat of arbitration is outside England and
Wales. Second, the provisions of Part I are divided into two groups:
mandatory and non-mandatory provisions. As regards the mandatory
provisions, if the seat of arbitration is in England they cannot be excluded
by the parties' agreement.77 The non-mandatory provisions, however,
may be departed from by the parties. Most of the non-mandatory pro-
visions take one of two forms: either they state that "the parties are free to
agree" a particular issue (and that, failing such agreement, the statutory
rules apply) or they provide that a particular rule shall apply "unless
otherwise agreed by the parties".78
To illustrate how these rules operate four different situations will be
considered:
(1) the seat of arbitration is in England and the parties have not
chosen the law of another country as the curial law;
(2) the seat of arbitration is in England but the parties have chosen
the law of another country as the curial law;
(3) the seat of arbitration is not in England and the parties have not
chosen English law as the curial law;
(4) the seat of arbitration is not in England but the parties have cho-
sen English law as the curial law.
There is no doubt that situations (1) and (3) are much more common than
situations (2) and (4).
1. Seat in England; English curial law

In the standard case where the parties agree to arbitration in England
and the parties either choose English law as the curial law or make no
choice, the position under the 1996 Act is straightforward enough; section
77. S.4(1) and Sched.1. The following mandatory provisions are listed in Sched.1: ss.9-13,
24, 26(1), 28-29, 31-33, 37(2), 40, 43, 56, 60, 66-68 and 70-75.
78. The following provisions in Part I either apply "unless the parties otherwise agree" (or
"unless otherwise agreed by the parties" or "subject to the right of the parties to agree") or
state that "the parties are free to agree" a particular matter: ss.7-8, 14-18, 20-23, 25, 26(2),
27, 30, 34-36, 37(1), 38-39, 41-42, 44-45, 47-55, 57-58, 61-65, 69, 76-79.

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2(1) provides that the provisions of Part I are appl

case whether or not the situation involves a foreign e
sense, largely irrelevant in terms of the conduct of t
powers of the court.
However, it is relevant to note that many of the pow
court by the 1996 Act are discretionary. There is no p
Act which specifically seeks to direct how the court's
exercised. The only guidance given by the 1996 Ac
general principles set out in section 1, which stipu
that the provisions of Part I must be construed in
principle that "the parties should be free to agree how
resolved, subject only to such safeguards as are ne
interest".
In a case where parties, none of whom is connected with England,

choose England as the seat of arbitration, guidance as to how the court
should exercise its discretion may be found in the observations of Lord
Mustill in SA Coppee Lavalin NV v. Ken-Ren Chemicals & Fertilizers
Ltd.79 This case concerned an application for an order for security for costs
under section 12(1)(a) of the 1950 Act8" in the context of an ICC arbi-
tration between foreign companies. Lord Mustill placed particular
emphasis on two points.8" First, regard should be paid to the degree of
connection that the parties or the arbitration have with England and its
legal system. The court should generally be less willing to intervene in
cases where the parties have little connection with England. Second, the
court should "recognise and give effect to any agreement between the
parties, express or tacit, as to the way in which the arbitration should be
conducted".82 This second point is an important one. Under the 1996 Act
the non-mandatory provisions may be excluded by the parties' agree-
ment. So, for example, the parties, having decided to refer their dispute to
arbitration in England, can agree that the court's power to grant interim
injunctions (under section 44 of the 1996 Act) should be excluded. For the
purposes of Part I of the 1996 Act "agreement" means an agreement in
writing (or evidenced in writing) in accordance with the formal require-
ments laid down in section 5. Therefore, only an express, written agree-
ment can exclude the powers conferred by the 1996 Act. However, the
79. [1994] 2 W.L.R. 631. This case has been extensively discussed: Andrews [1994] C.L.J.
470; Beechey [1994] A.D.R.L.J. 242; Branson (1994) 10 Arb.Int. 313; Davenport (1994) 10
Arb.Int. 303; Hill [1995] L.M.C.L.Q. 19; Reymond (1994) 110 L.Q.R. 501.
80. Under the 1996 Act the court no longer has the power to make orders for security for
costs (s.44); the tribunal may, however, order a claimant to provide security for the costs of
the arbitration (s.38(3)).
81. Although Lord Mustill was in the minority in deciding that the court should not make
an order for security for costs, there was unanimous support for the approach which was
advocated.
82. Lord Mustill at [1994] 2 W.L.R. 631, 641.

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implication of Lord Mustill's speech in the Coppee Lavalin case is that,

even where the parties have not excluded the court's powers by written
agreement, the court should, as a matter of discretion, only exercise its
powers if to do so would not be inconsistent with the type of dispute-resol-
ution process to which the parties impliedly committed themselves.
2. Seat in England; choice of foreign curial law
The second situation which needs to be considered is where England is

the seat of arbitration but the parties have chosen the law of another coun-
try as the curial law. Some of the problems posed by this type of case were
considered under the common law in Union of India v. McDonnell Dou-
glas Inc."3 The contract between the parties included an arbitration clause
which provided: "The seat of the arbitration proceedings shall be London
... The arbitration shall be conducted in accordance with the procedure
provided in the Indian Arbitration Act 1940." Saville J interpreted the
parties' agreement as an implied choice of English law as regards external
procedural questions (notably the rules governing interim measures, the
rules empowering the exercise by the court of supportive measures and
the rules providing for the exercise by the court of its supervisory jurisdic-
tion) and a choice of Indian law only as regards the internal conduct of the
arbitration (and only to the extent that such law was not inconsistent with
the implied choice of English law as the curial law). As a result of this
interpretation Saville J avoided the more thorny difficulties which would
have been posed if the parties' agreement had been interpreted as provid-
ing for external procedural questions to be governed by the law of a for-
eign country.
Under the 1996 Act, where England is the seat of arbitration but the
parties have chosen a foreign curial law there are three aspects to be con-
sidered. First, section 2(1) provides that, as a general rule, the provisions
of Part I apply. Second, as already noted, the 1996 Act provides that vari-
ous mandatory provisions have effect notwithstanding any agreement to
the contrary.X4 A choice of a foreign curial law cannot have the effect of
excluding the mandatory provisions. Not surprisingly, the mandatory pro-
visions referred to in Schedule 1 include those aspects of Part I which con-
cern the court's supervisory jurisdiction. However, to the extent that the
court's powers of supervision are discretionary the parties' choice of a
foreign curial law is a factor which should be considered; the court may
choose not to exercise its powers, notwithstanding the fact that the seat of
arbitration is in England.85
83. [1993] 2 Lloyd's Rep. 46.

84. S.4(1) and Sched.1.
85. Saville J in Union of India, supra n.70, at p.51.

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Third, the parties are given a free hand with regard

tory provisions, in particular those which relate to t
the arbitration. The 1996 Act states that, as regards a
within the scope of the non-mandatory provisions, t
law is equivalent to an agreement making provision a
Where, for example, parties agree to arbitration in E
with German procedural law, all the non-mandato
1996 Act are displaced by the relevant provisions o
3. Seat abroad; foreign curial law

Where the seat of arbitration is in another country
not choose English law as the curial law, the provision
prima facie irrelevant; section 2(1) states that the pro
if the seat of arbitration is in England. Does this m
court can play no role in relation to a foreign arbitra
In Channel Tunnel Group Ltd v. Balfour Beatty Con
House of Lords held that the powers conferred by
1950 Act were exercisable only in relation to an Engli
Mustill thought that there was "no reason why Pa
had the least concern to regulate the conduct of an ar
abroad pursuant to a foreign arbitral law"." It was he
court had the power under section 37(1) of the Supre
grant the injunction sought by the plaintiffs, but tha
discretion, it should not do so.
The 1996 Act approaches the court's powers to in
arbitration differently. First, section 2(2) provides
apply even if the seat of arbitration is outside Eng
been designated or determined. Under this provision
to the staying of actions are of universal application;
the provisions relating to the court's power to order t
award in the same manner as a judgment."
Second, section 2(3) provides that the powers con
(securing the attendance of witnesses) and section 44
cisable in support of arbitral proceedings) apply even
tration is outside England or no seat has been desig
The power conferred by section 43 applies where the
are being conducted in England. The court could, f
order under section 43 in a situation where the partie
86. S.4(5).
87. [1993] A.C. 334.
88. Idem, p.359.
89. Ss.9-11.
90. S.66. Nothing in s.66 affects the recognition or enforcement of an award under oth
statutory provisions, in particular under Part III of the Act: s.66(4).

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as the seat, but it has been decided to hold the hearings in England. The
power is limited, however, to cases where the witness is in the United
Kingdom. Section 44 allows the court to exercise, with regard to an arbi-
tration, various powers which it enjoys in the context of litigation. The
matters in relation to which the powers can be exercised include the taking
of evidence of witnesses, the preservation of evidence and property, the
sale of goods and the grant of interim injunctions or the appointment of a
receiver."9
The idea which underlies section 2(3) is the distinction between powers
of supervision and powers of support. The process of arbitration is subject
to certain limitations, in particular the fact that the arbitrator is not
invested with many of the coercive powers which are enjoyed by the
courts. While it would be wholly inappropriate to confer on the English
court the power to supervise a foreign arbitration being conducted in
accordance with a foreign law, there is nothing, in principle, improper
about the courts of one country assisting an arbitration being conducted in
another. The practical value of assistance rendered by the courts of one
country to the resolution of a dispute in another country has already been
recognised in the context of international litigation; Article 24 of the Brus-
sels and Lugano Conventions92 enables the courts of one contracting State
to grant provisional measures in support of legal proceedings which are
being conducted in another contracting State.93 It was desirable that the
1996 Act should enable the English court to exercise similar powers in
support of foreign arbitral proceedings.
Of course, the possibility that the English court may make procedural
orders in relation to a foreign arbitration involves certain risks. There is a
danger that the English court and the courts of the country in which the
seat is located might come into conflict by issuing inconsistent orders in
relation to the same matters. It is, therefore, important that the English
court should exercise caution when invited to come to the assistance of a
foreign arbitration. Indeed, the 1996 Act encourages such caution by pro-
viding that the court may refuse to exercise any power if the fact that the
seat of arbitration is outside England and Wales makes it inappropriate to
exercise that power.94 The court should also be guided by Lord Mustill's
observation in the Channel Tunnel case that where the seat of arbitration
is located in a foreign country the court of that country is "the natural
91. S.44(2).
92. These provisions are implemented in England by Civil Jurisdiction and Judgments
Act 1982, s.25.
93. Where the substantive proceedings are being conducted in a non-contracting State the
powers of the court are more limited: Mercedes-Benz AG v. Leiduck [1996] 1 A.C. 284. The
current state of the law is a cause of increasing exasperation among commentators. See, in
particular, Collins (1996) 112 L.Q.R. 8.
94. S.2(3).

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court for the source of interim relief".95 If, in a cas

tration being conducted abroad, an application for int
in England it is for the plaintiff to show why the Eng
the relevant foreign forum, should grant relief. If, f
lar form of relief is not available under the law of th
which the English court has to weigh in the balanc
however, that the absence of a remedy in the fore
itself, justify the intervention of the English court.
In addition, section 2(4) states that the court may ex
ferred by any provision in Part I not mentioned in s
the purpose of supporting the arbitral process where
has been designated or determined and the conne
makes it appropriate to do so.
Finally, it should be noted that section 1(c) prov
governed by Part I "the court should not intervene e
[Part I]". It follows that the courts should not follow
by the House of Lords in the Channel Tunnel case-wh
although relief could not be given under the Arbitrat
did have the power to grant an injunction under th
ferred by section 37(1) of the Supreme Court Act 198
the 1996 Act should be all-embracing; if the cour
chooses not to exercise-the powers conferred by
should be the end of the matter.
4. Seat abroad; choice of English curial law

The last situation is where the parties choose English law as the curial
law but the seat is in another country. At common law the proper
approach to this type of case was not free from doubt. Although there are
dicta in some of the cases that the courts had no powers of supervision over
foreign arbitrations,96 in James Miller & Partners Ltd v. Whitworth Street
Estates (Manchester) Ltd97 the House of Lords seemed to proceed on the
assumption that, in a case where Scotland was the seat of arbitration, the
parties might have expressly agreed to the supervisory jurisdiction of the
English court.
Once again, the position under the 1996 Act could not be clearer. The
role of the English court in relation to foreign arbitrations is determined
by section 2, which does not allow for the application of the provisions of
Part I on the basis of an express choice of English law as the curial law.
Although, as has been seen, subsections (2) to (4) provide that some sec-
tions are applicable in cases where the seat is abroad or where the seat has
95. [1993] A.C. 334, 368.

96. Naviera Amazonica, supra n.69; Channel Tunnel, supra n.32.
97. [1970] A.C. 583.

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not been designated or determined, according to the general rule in sec-

tion 2(1) the powers conferred by Part I cannot be exercised unless the
seat of arbitration is in England. With regard to a foreign arbitration there
can, for example, be no question of the English court being able to exer-
cise its power to replace an arbitrator (under section 24) or to set aside an
award for serious irregularity (under section 68). Even if the parties have
expressly chosen English law as the curial law, these are matters which are
to be dealt with by the appropriate foreign courts.
By adopting, as its starting point, a territorial criterion rather than an
autonomy criterion, on the face of it the 1996 Act renders an express
choice of English law as the curial law irrelevant. It should be recalled,
however, that the powers which may be exercised under sections 43 and 44
are discretionary and that section 2(3) requires the court to consider the
appropriateness or inappropriateness of exercising its powers in cases
where England is not the seat of arbitration. One of the factors which the
court is entitled to take into account is the express wishes of the parties. It
is not unreasonable to suppose that the court may be more willing to exer-
cise the powers conferred by section 44 if the parties have chosen English
law as the curial law.
B. The Law Governing the Arbitration Agreement

The determination of the law governing an arbitration agreement is a mat-
ter which continues to be governed by the common law.98 The cases estab-
lish that the proper law of an arbitration agreement is the law chosen by
the parties or, in the absence of choice, the law of the country with which
the agreement is most closely connected (which will normally be the law of
the seat)." It has already been noted that, as a general rule, whether the
provisions of Part I of the 1996 Act are applicable turns on the seat of
arbitration; whether English law is the proper law of the arbitration agree-
ment is not relevant.
However, section 2(5) provides that certain provisions apply where the
law applicable to the arbitration agreement is the law of England and
Wales even if the seat of arbitration is elsewhere. The provisions referred
to by section 2(5) are sections 7 and 8. Section 7 endorses the decision of
the Court of Appeal in Harbour Assurance Co. (UK) Ltd v. Kansa Gen-
eral International Insurance Co. Ltd"" by providing for the separability of
the arbitration agreement; section 8 provides that the arbitration agree-
ment is not discharged by the death of either of the parties.
98. See Dicey and Morris, The Conflict of Laws (12th edn, 1993), pp.576-579; Hill, op. cit.
supra n.62, at pp.473-475 (para.17.1); Thomas, "Proper Law of Arbitration Agreements"
[1984] L.M.C.L.Q. 304.
99. Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202; Deutsche Schachtbau, infra n.121.
100. [1993] Q.B. 701.

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It should be noted that none of the provisions of th

with time limits"" apply on the basis that English law
the arbitration agreement. These provisions norma
seat of arbitration is in England. So, for example,
vides that the court may extend a contractual time lim
ment of arbitration-would not apply in a case
arbitration is in France even if English law is the pro
tration agreement. However, section 2(4) provides tha
tration has not been determined, the court may exer
conferred by Part I if satisfied that, by reason o
England, it is appropriate to do so. Accordingly,
national Tank & Pipe SAK v. Kuwait Aviation Fue
which, prior to the designation of the seat of arbitrat
an extension of time under section 27 of the 1950 Ac
section 12 of the 1996 Act, on the basis that the part
mit their disputes to ICC arbitration was governed
be decided in the same way under the 1996 Act.
As regards the limitation of actions, section 13 p
tation Acts apply to arbitral proceedings as they a
ings." Quite complex conflict of laws questions can
have connections with more than one country. Su
out of a contract which contains an English arbitratio
which stipulates that Ruritanian law is the law applic
of the contract. Are limitation questions governed by
itanian law? The identification of the applicable limit
the following steps: first, section 2(1) provides tha
arbitration is in England, section 13 applies-in
mandatory rule;"" second, section 13 requires the a
evant English legislation;'" third, according to the
Periods Act 1984 limitation questions are governed
to the merits of the dispute;"15 fourth, section 2(1) p
the seat of arbitration is in England, the law governi
dispute is to be determined by section 46 of the 1996
46(1) provides that, if the parties have chosen the app
tral tribunal shall decide the dispute according to
therefore, that the Ruritanian limitation period appl
101. Ss.12, 13, 50, 79 and 80.

102. [1975] Q.B. 224.
103. S.4(1) and Sched.1.
104. The relevant legislation includes the Foreign Limitation P
105. S.1. For further discussion see Dicey and Morris, op. cit.
Hill, op. cit. supra n.62, at pp.449-453 (para.5.1).
106. See infra Part III.C.

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Finally, a word should be said about the jurisdiction of the arbitrator. It

is established at common law that the proper law of the arbitration agree-
ment governs questions relating to the arbitrator's jurisdiction.~"" Section
30(1), which provides that "the arbitral tribunal may rule on its own sub-
stantive jurisdiction", is, however, an aspect of the curial law. The tribu-
nal's power to rule on its own jurisdiction is a procedural question, even
though the extent of its jurisdiction is a substantive matter. It is clear that
section 30(1) applies in a case where England is the seat of arbitration,
even if the law of another country is the proper law of the arbitration
agreement.
C. The Law Governing the Merits of the Dispute
As regards the determination of the law to govern the merits of the dispute
between the parties, the position under the common law prior to the
enactment of the 1996 Act was somewhat uncertain. It was generally
accepted that the curial law determined which choice of law rules should
guide the arbitral tribunal: if English law was the curial law, the relevant
English choice of law rules were applicable; if French law was the curial
law, the relevant French choice of law rules were applicable.'"1 What was
less clear, however, was the precise content of the choice of law principles
to be applied in English arbitrations. Whereas statutory provisions laying
down specific choice of law rules to be applied by arbitral tribunals are an
established feature of the laws of other countries,"' there was no such
provision in English law prior to the 1996 Act. The reform effected by
section 46-which sets out the principles which are to guide the arbitral
tribunal in determining the law applicable to the merits of the dispute-
brings English law into line, not only with the laws of those countries
which have implemented the Model Law but also with the laws of many
other countries in Europe and in other parts of the world.
At common law the orthodox position was that, if England was the seat
of arbitration, the tribunal was bound by the same choice of law rules as
the English court.'"' This position came under attack, however, from cases
in which the courts seemed to accept that, if authorised by the parties to do
107. Nova (Jersey) Knit Ltd v. Kammgarn Spinnerei [1977] 1 W.L.R. 713.
108. Norske Atlas Insurance Co. Ltd v. London General Insurance Co. Ltd (1927) 28 LI.L.
Rep. 104; Union Nationale des Cooperatives Agricoles de Cdreales v. Robert Catterall & Co.
Ltd [1959] 2 Q.B. 44. See also Mann, op. cit. supra n.8, at p.167; Thomas, "Commercial Arbi-
tration-Justice According to Law" (1983) 2 C.J.Q. 166; Jaffey, "Arbitration of Commercial
Contracts: the Law to be Applied by the Arbitrators", in Perrott and Pogany (Eds), Current
Problems in International Trade Law (1987), pp.129-151.
109. See e.g. Art.1496 of the French New Code of Civil Procedure and Art.1054(2) of the
Dutch Code of Civil Procedure.
110. Czarnikow v. Roth, Schmidt & Co. [1922] 2 K.B. 478 is normally cited as authority for
the orthodox position.

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so, an arbitral tribunal might decide a case by refere

than those which would be applied by the court-
which the tribunal might make an award which w
different from a judgment of the court on the same
also indications that, in certain circumstances, the
pared to uphold an English award in a case where
decided the dispute by reference to general principle
catoria) rather than by reference to the law of a part
In view of the unsatisfactory state of the common
that the 1996 Act should clarify the principles w
English arbitrations. Section 46, which is based on Ar
Law, sets out the choice of law rules which are app
England is the seat of arbitration. Section 46 is not, ho
may be excluded by the parties' agreement.
Section 46 envisages three situations: a choice of law
considerations" and an absence of choice. It is also
two other issues: the possibility of sanctions if the t
with section 46 and the potential impact of mandator
1. Choice of law
Section 46(1)(a) provides that the arbitral tribunal

pute in accordance with the law chosen by the partie
substance of the dispute. For the purposes of this
renvoi is excluded; if the parties choose the law of a
applicable law is the substantive law of that country,
stantive law which would be applied on the basis of t
of that country."3 If the parties choose Russian law t
must apply Russian law;''4 it would be irrelevant if, a
choice of law principles, the lex causae would be P
Russian law. It is reasonable to suppose that a cho
national law would also fall within section 46(1)(a)."
would be effective under paragraph (b).
111. See, in particular, Robert Goff LJ in Eagle Star Insurance

Co. Ltd [1978] 1 Lloyd's Rep. 357 and Lloyd LJ in Home and Ove
Mentor Insurance Co. (UK) Ltd [1990] 1 W.L.R. 153.
112. Some significance has been attached to the decision of
Deutsche Schachtbau, infra n.121, a case concerned with the enf
The relevance of this decision in any context other than the enf
has been doubted: Mustill, "The New Lex Mercatoria: The First
4 Arb. Int. 86, 107.
113. S.46(2).
114. This may be subject to mandatory rules. See infra Part III.
115. Orion Compania Espanola de Seguros v. Belfort Maatsch
zekgringeen [1962] 2 Lloyd's Rep. 257.

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Section 46(1)(a) does not indicate what is meant by "chosen". Does this
provision include only an express choice or also an implied choice? For
example, would it be legitimate for an English arbitrator to conclude that,
because the parties agreed to arbitration in England, a choice of English
law to govern the substance of the dispute could be implied?"6 The answer
to this question is unlikely to be of practical importance, since the 1996
Act provides that, in the absence of choice by the parties, the tribunal shall
determine the applicable law by reference to the choice of law rules which
it considers applicable."7 In a case where parties to an English arbitration
fail to designate expressly the applicable law and the tribunal decides that
English law is the lex causae it is a matter of purely theoretical interest
whether the tribunal's decision as to the applicable law is based on a find-
ing that the parties made a choice (within the scope of section 46(1)(a)) or
on the application of the maxim qui indicem forum elegit jus (under sec-
tion 46(3)).
2. Choice of "other considerations"

The parties may expressly decide that, instead of subjecting the dispute
to a particular law, the substance of the dispute should be decided by ref-
erence to principles common to the laws of two countries" or to principles
common to the law of a country and public international law or to general
principles of commercial law or to principles of fairness."9 All these possi-
bilities are countenanced by section 46(1)(b), which provides that, if the
parties so agree, the tribunal shall decide the dispute "in accordance with
such other considerations as are agreed by [the parties] or determined by
the tribunal".
It is important to remember that, where the parties have agreed to insti-
tutional arbitration or to arbitration in accordance with a set of arbitration
rules such as the UNCITRAL Arbitration Rules, the provisions of such
rules must be considered. Since the arbitration rules are effectively incor-
porated into the parties' agreement, the relevant provisions for determin-
ing the choice of law are those to be found in the arbitration rules (rather
than section 46(3) of the 1996 Act, which applies only in the absence of
choice). In many cases, it will not make any difference whether the choice
of law process is determined by section 46 or by the relevant provisions of
116. See the discussion of the House of Lords in Compagnie d'Armement Maritime SA v.
Compagnie Tunisienne de Navigation SA [1971] A.C. 572.
117. S.46(3).
118. As in the contracts relating to the Channel Tunnel project. See Redfern and Hunter,
op. cit. supra n.64, at p.117; Rubino-Sammartano, "The Channel Tunnel and the Tronc Com-
mun Doctrine" (1993) 10 J. Int. Arb. (3) 59.
119. In many continental countries arbitration by reference to principles of equity or fair-
ness is often referred to as amiable composition or arbitration ex aequo et bono. See Rubino-
Sammartano, "Amiable Compositeur (Joint Mandate to Settle) and Ex Bono et Aequo
(Discretional Authority to Mitigate Strict Law)" (1992) 9 J. Int. Arb. (1) 5.

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the arbitration rules chosen by the parties; this is becau

section 46 is largely the same as the choice of law provi
tration rules. However, not all arbitration rules adopt t
law principles-in particular, in cases where the par
choice. Whereas Article 13(3) of the ICC Rules of Con
tration and Article 33(1) of the UNCITRAL Arbitrat
tion 46(3) of the 1996 Act-provide that in the absen
parties the tribunal shall determine the applicable law b
choice of law rules which it considers applicable, Ar
Arbitration Rules states that, failing a choice by the pa
"shall make its award in accordance with the rules of law which it con-
siders appropriate". It is at least arguable that under the ICC Rules or the
UNCITRAL Arbitration Rules, in the absence of choice by the parties,
the tribunal has to apply traditional conflict of laws methodology with a
view to identifying the law of a particular country as the applicable law,
whereas under the NAI Arbitration Rules the tribunal is given more free-
dom and might legitimately conclude that the lex mercatoria furnishes the
applicable rules of law.
3. Absence of choice
Section 46(1) allows the parties to identify the considerations by refer-
ence to which the dispute is to be determined either directly (for example,
by agreeing to the law of a particular country or to general principles of
international trade law) or indirectly (for example, by agreeing to a set of
arbitration rules which allows the tribunal to select the applicable law-or
rules of law-if the parties fail to do so). If the parties do not make a
choice, either directly or indirectly, section 46(3) provides that, to the
extent that the parties have not made a choice, "the tribunal shall apply
the law determined by the conflict of laws rules which it considers appli-
cable". In a case falling within section 46(3) the tribunal is not obliged to
apply the principles which the English court would apply (namely, the
rules set out in the Rome Convention on the Law Applicable to Contrac-
tual Obligations, as implemented by the Contracts (Applicable Law) Act
1990), though it is, of course, free to do so if it thinks that English choice of
law rules are applicable.'2
A question arises as to the scope of the arbitrator's discretion under
section 46(3). For example, is the arbitrator entitled to decide by refer-
ence to internationally recognised principles of commercial law or by ref-
erence to standards of equity or fairness-rather than by reference to the
law of a particular country? The position in relation to amiable compo-
120. For a discussion of how arbitrators are likely to exercise the sort of discretion
conferred by s.46(3) see Craig, Park and Paulsson, International Chamber of Commerce
Arbitration (2nd edn, 1990), pp.287-292.

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sition or arbitration ex aequo et bono is quite clear. It is generally recog-

nised that an arbitral tribunal may act as amiable compositeur only if the
parties expressly authorise it to do so. So, if the case falls within section
46(3) the tribunal would be exceeding its powers if it decided the dispute
by reference to principles of fairness rather than by reference to principles
of law.
It is less clear, however, whether in the absence of choice by the parties

the tribunal may decide the dispute by reference to the lex mercatoria.
DSTv. Rakoill21 concerned an arbitral award made in Switzerland follow-
ing an arbitration conducted in accordance with the ICC Rules. Article
13(3) of the ICC Rules provides, inter alia: "In the absence of any indi-
cation by the parties as to the applicable law, the arbitrator shall apply the
law designated as the proper law by the rules of conflict which he deems
appropriate."
The arbitrators, in reliance on this provision, decided that the rights and
obligations of the parties were governed by "internationally accepted
principles of law governing contractual relations". When the claimants
applied to enforce the award the respondents argued that the award
should be refused recognition and enforcement on the ground of public
policy. 22 In the course of his judgment Sir John Donaldson MR con-
sidered the effect of Article 13(3) of the ICC Rules and decided that, since
the parties had left the proper law to be decided by the arbitrators and had
not "in terms confined the choice to national systems of law", there was no
basis for concluding that "the arbitrators' choice of proper law-a com-
mon denominator of principles underlying the laws of the various nations
governing contractual relations-[was] outwith the scope of the choice
which the parties left to the arbitrators".'23 So, although the ICC Rules,
like section 46(3) of the 1996 Act, provide that in the absence of choice by
the parties the tribunal shall apply the law determined by the conflict of
laws rules which it considers appropriate, it would seem from the
approach taken by the Court of Appeal in DSTv. Rakoil that the lex mer-
catoria may be regarded as "law" for these purposes.
For a number of reasons it would be wrong to read too much into DSTv.
Rakoil. First, it must be remembered that the decision of the Court of
Appeal was focused on whether the Swiss award was enforceable in
England under the 1975 Act; the choice of law aspects of the case were not
of central importance. It might be questioned whether the approach taken
by Sir John Donaldson MR is even of persuasive authority when consider-
ing the meaning to be given to the word "law" in section 46(3).
121. Deutsche Schachtbau- und Tiefbohrgesellschaft mbH v. R'As al-Khaimah National Oil
Co. [1990] 1 A.C. 295.
122. Arbitration Act 1975, s.5(3).
123. [1990] 1 A.C. 295, 316.

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Second, the choice of law aspects of the decision of

in DSTv. Rakoil have been the subject of criticism.
tators on ICC arbitration note that "the matter rema
In the absence of an express choice by the parties, ar
ommended to decide that the lex mercatoria is applic
Whatever the arbitrator's private opinion about the n
siveness of lex mercatoria as a legal system, and irrespec
ness if the sole criterion is the appearance of neutrali
view, as matters stand today in most countries, that IC
risk of doing mischief if they declare lex mercatoria to
The proper conduct would seem to be that of the trib
which declined to accept lex mercatoria as the applica
of any proof that the parties had so intended.
Third, it was envisaged by the drafters of the U

that, in a case falling within the scope of Article 2
which section 46(3) is based, the tribunal would be bo
of a specified legal system, as opposed to "rules of
textured term which would cover, for example, "the
convention or similar text elaborated on the inter
not yet in force").'26 Since the intention of the drafte
to follow Article 28 of the Model Law, the better
absence of choice by the parties, the tribunal is boun
of law rules which it considers appropriate with a vie
law of a particular country as the applicable law.'27
4. Sanctions for failure to comply with section 46

Under the terms of the Model Law there is no real sa
tral tribunal fails to apply the choice of law principle
28.'2" The relevant provisions of the 1996 Act dealing
the award are significantly different from the equival
Model Law. Not only does the 1996 Act make prov
appeal to the court on a point of law,'29 but an award m
aside for serious irregularity, which includes "the
powers".'" Although the right to appeal on a point of
excluded by the parties' agreement,'3' the court's sett
124. Craig, Park and Paulsson, op. cit. supra n.120, at p.300.
125. Ibid.
126. Holzmann and Neuhaus, op. cit. supra n.74, at p.768.
127. See the DAC's Report on the Arbitration Bill (1996), p.50 (para.225).
128. Art.34 (recourse against the award) limits the grounds on which an award may be set
aside to the grounds on which enforcement of an award may be refused under Art.V of the
New York Convention.
129. S.69.
130. S.68(2)(b).
131. S.69(1).

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under section 68 cannot.'32 There is a strong argument for saying that if a

party suffers substantial injustice as a result of the arbitral tribunal's fail-
ure to respect the parties' choice of law or because the tribunal-without
having been authorised by the parties to do so-decides the dispute as
amiable compositeur or by reference to the lex mercatoria, the award may
be set aside by the court on the basis that the tribunal exceeded its powers.
5. Mandatory rules
Regard should be had to the possible application of mandatory rules."33

There are three situations to consider. First, if the parties agree that the
tribunal should decide the dispute in accordance with principles of fair-
ness or by reference to the lex mercatoria, the tribunal is given, in effect, a
broad discretion to apply the rules and principles which it considers
appropriate. In such a case the tribunal might decide that a party who has
failed to keep his side of the bargain should be excused performance if
performance is illegal under the law of the country where performance
was to be effected or that an agreement which violates "good morals"
(where, for example, one party agrees-in return for payment-to bribe
public officials on behalf of the other) should be unenforceable. Second, in
a case where the parties fail to make a choice, the tribunal may con-
clude-by reference to the choice of law rules which it considers appropri-
ate-that, notwithstanding the fact that the law of country X is prima facie
the applicable law, certain mandatory rules of the law of country Y or of
the law of the country in which the seat of arbitration is located should
prevail over the law of country X. In reaching such a conclusion the tri-
bunal could, for example, rely on Article 7 of the Rome Convention as a
"conflict of laws rule[ ... ] which it considers applicable".
The third situation-where the parties choose the law of a particular
country as the applicable law-is perhaps the most problematic. It is clear
that, in this type of case, the arbitrator should apply the mandatory rules
which form part of the chosen law. The difficult question is whether the
tribunal is entitled to apply the mandatory rules of the law of some other
country with which the situation is connected. Although section 46 is silent
on the question of mandatory rules, this does not necessarily mean that
the arbitral tribunal is free to have regard only to the law chosen by the
parties. Account must also be taken of other statutory provisions concern-
132. S.4(1) and Sched.1.

133. See Mayer, "Mandatory Rules of Law in International Arbitration" (1986) 2 Arb. Int.
274; Hochstrasser, "Choice of Law and 'Foreign' Mandatory Rules" (1994) 11 J. Int. Arb. (1)
57.

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ing "public policy" which have some bearing on th

what obliquely.
The 1996 Act provides that leave to enforce an aw
not be given to the extent that its enforcement would
policy'-4 and that an award may be set aside on the b
the way in which it was procured) is contrary to
addition, one of the grounds on which an award may
ment under the New York Convention is that it offe
of the country in which enforcement is being sought
tator has noted:'37
The award is the raison d '?tre of every arbitration; if the award is unenforce-
able the whole arbitration proceeding will have been a waste of time and
money. If the arbitrator's award is not enforceable because it violates the
public policy of the place of performance, the arbitrator will have failed in
the responsibility vested in him.
The tribunal should, therefore, have regard to the public policy of both the
seat of arbitration and the country (or countries) where recognition and
enforcement are likely to be sought. Failure to do so will normally have
the result that the award will be rendered unenforceable.
IV. THE ENFORCEMENT OF ARBITRAL AWARDS
THE attractiveness of international commercial arbitration as a means of

resolving cross-border disputes is to a significant extent dependent on the
effectiveness of mechanisms for the international recognition and
enforcement of arbitral awards. The most significant development in this
area is the New York Convention, although the international community
had taken the first steps towards providing for the recognition and
enforcement of foreign awards in the Geneva Convention of 1927.
Part II of the 1950 Act made provision for the recognition of Geneva
Convention awards. Part II of the 1950 Act was, however, largely super-
seded when the 1975 Act implemented the New York Convention. If an
award fell within the scope of the 1975 Act then Part II of the 1950 Act
ceased to be applicable. Because the New York Convention has been so
extensively ratified throughout the world Part II of the 1950 Act has
become of very little practical significance.'3" Nevertheless, the 1996 Act
134. S.66(3)(b). This provision is concerned only with cases where England is the seat of
arbitration; it does not apply to the enforcement of foreign awards, which fall within Part III
of the 1996 Act.
135. S.68(2)(g).
136. Art.V(2).
137. Lew, Applicable Law in International Commercial Arbitration (1978), p.537.
138. Malta is one State which, although it ratified the Geneva Convention, has not become
a party to the New York Convention: see the DAC's Report on the Arbitration Bill (1996),
p.71 (para.346).

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preserves Part II of the 1950 Act, which still applies to "foreign awards"'39
which are not also New York Convention awards.'14
Although the entirety of the 1975 Act is repealed by the 1996 Act, Part
III of the new Act reproduces, with minor textual amendments, the recog-
nition and enforcement provisions of the earlier legislation.'4' The 1996
Act applies to "New York Convention awards"-that is, awards made in
pursuance of an arbitration agreement, in the territory of a State (other
than the United Kingdom) which is a party to the New York Conven-
tion.'42 Since most of the provisions are identical to the equivalent pro-
visions of the 1975 Act extensive commentary in the present context is
unnecessary.'143
The basic scheme of the English legislation follows closely the New
York Convention. Enforcement under Part III depends on the party wish-
ing to rely on an award producing the relevant documents (namely, the
original award and the original arbitration agreement-or duly authenti-
cated copies).'44 The court may refuse enforcement only if one of a care-
fully circumscribed list of grounds is established: the party against whom
the award is invoked lacked capacity; the arbitration agreement on which
the award was based was invalid; the arbitral proceedings did not comply
with principles of natural justice; the arbitrator lacked jurisdiction; there
was a failure to comply with the applicable procedural rules; the award is
not binding or has been set aside in the country of origin; the award is
contrary to public policy or the subject matter of the dispute was not
arbitrable.'45
The 1996 Act has, however, made a significant change to the way in
which the enforcement regime operates. One of the most widely-and
understandably-criticised decisions under the 1975 Act was the decision
of the House of Lords in Hiscox v. Outhwaite.'46 In this case an arbitration
139. As defined by Arbitration Act 1950, s.35(1).

140. S.99.
141. The relationship between the 1996 Act and the equivalent provisions of the 1975 Act is
as follows: s.101(1) = s.3(2); s.101(2) and (3) = s.3(1); s.102 = s.4; s.103 = s.5; s.104 = s.6.
142. S.101(1).
143. See Dicey and Morris, op. cit. supra n.98, at pp.622-630; Hill, op. cit. supra n.62, at
pp.529-544 (para.20.2); Thomas, "International Commercial Arbitration Agreements and
the Enforcement of Foreign Arbitral Awards-A Commentary on the Arbitration Act
1975" [1981] L.M.C.L.Q. 17, 30-39.
144. S.102. Where a document is in a foreign language an official translation must also be
provided: s.102(2). For the purposes of Part III of the 1996 Act, "arbitration agreement" is
defined as "an arbitration agreement in writing (including an agreement contained in an
exchange of letters or telegrams)": s.103(2). The definition in s.5 is relevant only to Part I of
the 1996 Act.
145. S.103.
146. [1992] 1 A.C. 562. For criticism of the decision see Davidson (1992) 41 I.C.L.Q. 637:
Mann (1992) 108 L.Q.R. 6: Reymond (1992) 108 L.Q.R. 1: Thomas (1992) 11 C.J.Q. 352.

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was conducted in England-the hearings having ta

but the arbitrator signed and dated the award in
applied for leave to appeal against the award under
Act and for remission under section 22 of the 1950 Act. The defendant
argued that the plaintiff's applications should be dismissed on the ground
that since the award had been "made" in France it was a Convention
award which, by virtue of section 3(2) of the 1975 Act, had to be "treated
as binding for all purposes". In the course of its decision the House of
Lords accepted the argument that the award was "made" in France.'47
Lord Oliver, with whom the other members of the House of Lords agreed,
thought that, although an award is the culmination of a process, it is simply
a written instrument which is "made" when and where it is signed.'4~
The implications of this decision are potentially far-reaching and dis
turbing. The New York Convention is premised on the idea that an award
is-as a matter of law-made at the seat of arbitration. Any other view
makes a nonsense of the rules that enforcement of an award may be
refused if the award "has been set aside by a competent authority of the
country in which ... the award was made"' 4 or if "the arbitration agree-
ment was not valid under the law to which the parties subjected it or, fail
ing any indication thereon, under the law of the country where the award
was made".' The 1996 Act rectifies the potential anomalies generated by
the decision in Hiscox v. Outhwaite by two provisions.
First, section 53 provides that unless otherwise agreed by the partie
"where the seat of arbitration is in England and Wales ... any award in the
proceedings shall be treated as made there, regardless of where it was
signed, despatched or delivered to any of the parties". So, if the facts of
Hiscox v. Outhwaite were to arise after the entry into force of the 1996 Act
the award would not be a New York Convention award within the scope of
Part III.
Second, section 100(2)(b) provides that, to determine whether or not an
award is a New York Convention award for the purposes of Part III of the
1996 Act, "an award shall be treated as made at the seat of the arbitration,
regardless of where it was signed, despatched or delivered to any of the
parties". So, if the seat of arbitration is in France (a New York Convention
State) but the arbitrator signs the award in Ruritania (a non-New York
Convention State) the award is to be regarded as "made" in France and is,
therefore, entitled to recognition and enforcement according to the rules
set out in Part III of the 1996 Act.
147. The House of Lords decided, however, that because England had been the seat of
arbitration the English court retained its supervisory jurisdiction.
148. [1992] 1 A.C. 562, 594.
149. S.103(2)(f).
150. S.103(2)(b).

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V. CONCLUSION
SINCE the foregoing discussion has centred exclusively on sp

of the new legislation it would be inappropriate to offer a g
ation of the 1996 Act or to express a view on whether it is li
its broader objectives. In the limited area of private inte
however, the 1996 Act is to be warmly welcomed. The ol
gime was both partial and defective. The new legislatio
form-is, therefore, to be seen as a very significant imp
aspects of the 1996 Act are of particular importance: the ab
distinction between domestic and international arbitratio
the amendment of the law relating to the staying of action
delimitation of the scope of the statutory provisions;'52 the e
cation of mandatory and non-mandatory rules;53 the int
statutory rule-based on Article 28 of the Model Law-for
the law applicable to the merits of the dispute;'54 and the rev
v. Outhwaite.'55
151. S.9.
152. S.2.
153. S.4.
154. S.46.
155. Ss.53 and 100(2)(b).

189.62.45.195 on Tue, 12 Sep 2023 15:40:11 +00:00

1997 - Hill-PrivateInterLawAspectAA1996

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Some Private International Law Aspects of the Arbitration Act 1996

Author(s): Jonathan Hill

Stable URL: https://www.jstor.org/stable/760718

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A. The Background to the 1996 Act

As a method for resolving commercial disputes which ha

* Reader in Law, University of Bristol.

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possible, have the same structure and language as the Mod

4. A Report on the UNCITRAL Model Law on International Com

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B. Domestic and International Arbitration

An arbitration may be "domestic"-where all the relevant factors are

8. To describe an arbitration which involves a foreign element as "international" is

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rendered certain consumer arbitration agreements

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The arguments relating to the discriminatory effect of the 1988 Act

21. Formerly Art.7 EEC.

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reaching: in order to avoid unlawful discrimination

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regardless of whether the arbitration agreement is domestic or

II. JURISDICTION QUESTIONS AND THE STAYING OF ACTIONS

IT is important in the present context to distinguish two different

A. The Staying of Actions: Introduction

29. See supra Part I.B.

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outside England and Wales or if no seat has been de

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to the claimant's claim. These problems were exposed by

There is, of course, nothing in the 1996 Act to pre

39. [1990] 2 Lloyd's Rep. 265.

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reached. An agreement is in writing "if the agreemen

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commentators are divided on the implications of this

IN the field of choice of law, international commercial arbit

A. The Curial Law and Its Scope

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of application. Under the old law, when, in a case involving foreign

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should be given to the chosen law or the law of the s

73. See, in particular, Kerr U in Naviera Amazonica, supra n.6

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1. Seat in England; English curial law

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2(1) provides that the provisions of Part I are appl

In a case where parties, none of whom is connected with England,

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implication of Lord Mustill's speech in the Coppee Lavalin case is that,

2. Seat in England; choice of foreign curial law

The second situation which needs to be considered is where England is

83. [1993] 2 Lloyd's Rep. 46.

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Third, the parties are given a free hand with regard

3. Seat abroad; foreign curial law

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court for the source of interim relief".95 If, in a cas

4. Seat abroad; choice of English curial law