London Maritime Arbitration

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The conflict of laws

A. Introduction

5.1 The principles of the “conflict of laws” (sometimes described as private international law) determine which system of law governs a particular legal problem, and which forum should decide a dispute. These principles are sometimes of particular relevance in maritime arbitration which, by reason of its international nature, may give rise to disputes as to which law governs a particular issue and which tribunal should decide it. These disputes are of practical importance since different systems of law (or tribunals) will often give rise to different outcomes. This chapter aims to set out the basic principles determining the law applicable to disputes relating to arbitration. Reference to specialist works such as Dicey, Morris & Collins on the Conflict of Laws is recommended for greater detail. 5.2 The task of determining the law governing a particular issue is generally performed by the arbitral tribunal but it may sometimes be decided by the court (for example on an appeal under section 69 or when a jurisdictional dispute goes to court). Where an issue as to the applicable law is raised in England (whether in court or before the arbitrator) in relation to a London maritime arbitration, English rules of conflict of laws will usually apply to determine which system of law applies. Foreign conflict of law rules would only apply in the highly unusual case where the parties have made an express and enforceable choice in favour of those rules. If it becomes necessary to apply foreign law in a maritime arbitration its content and effect will be regarded as a question of fact, to be proved by evidence, usually a report from a foreign lawyer although submissions may also be used. In the absence of such evidence, it will be assumed that foreign law is the same as English law although there would be no appeal for error of law.1 5.3 The general principle is that it is for the parties to choose the law which is to govern the different aspects of their arbitration, subject only to mandatory procedural provisions in

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the public interest.2 However, the rules derived from that principle are complex due to the different aspects of arbitration which may be governed by different laws; for this reason the 1996 Act does not attempt to codify them.3 In understanding disputes as to the applicable law it is important to distinguish the different aspects of the arbitration, each of which might, in theory, be governed by different laws:4
  • (1) the agreement to arbitrate;
  • (2) the act of referring the dispute to arbitration (i.e. the reference to arbitration);
  • (3) the substance of the dispute which is referred to arbitration;
  • (4) the arbitral procedure;
  • (5) the arbitration award.
5.4 It would be misleading to suggest that it is common for these aspects to be governed by different laws. Usually the arbitration agreement (and the procedure of the arbitration conducted pursuant to it) is governed by the same law as the main contract in which it is contained. Occasionally, however, the laws of different countries may govern different aspects of a single arbitration.5 For instance, the laws governing the substance of the dispute and the procedure of the arbitration will be different where London arbitration is used to resolve a dispute arising out of a contract governed by foreign law. In practical terms the most common issues that arise are as to the law governing the substance of the dispute, the law governing the procedure of the arbitration and the law governing the arbitration agreement itself (including issues as to its validity). The law of the procedure will invariably govern any challenge to the award and will also govern most aspects of the reference to arbitration. 5.5 Where there is a jurisdictional dispute as to whether a matter should be arbitrated in London or decided in a foreign forum, an English court will only assume jurisdiction if satisfied as a threshold requirement that it is appropriate for that dispute to be decided by it, typically on grounds that there is a good arguable case that the seat of the arbitration would be London6 (see on injunctions). Similar jurisdictional disputes may arise in the arbitral process and are discussed more broadly in . In resolving jurisdictional disputes the court (or arbitral tribunal) will generally apply English law to the dispute if satisfied that the arbitration agreement is governed by English law but the court will also take account of foreign law.

In Starlight Shipping Co v Tai Ping Insurance Co Ltd 7 a cargo claim arose under a bill of lading expressly incorporating an arbitration clause in a voyage charter providing for London arbitration according to English law. Cooke J granted the shipowners an anti-suit injunction restraining cargo insurers from pursuing the cargo claim in the Chinese courts on grounds that English law applied and would allow such relief. He regarded it as irrelevant that under Chinese law cargo interests would not be bound by the arbitration clause.

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