The Proper Law of Arbitration and Jurisdiction Agreements

Dr. Carlo de Stefano
Roma Tre University

Saturday, 14 September – 9:00 am
Room V 005, Faculty of Law – Professor-Huber-Platz 2, 80539 Munich

This paper analyses the issue of the proper law of arbitration and jurisdiction agreements, namely the law that is applicable to their substantive validity. In relation to arbitration agreements, Article V(1)(a) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (the “New York Convention”) sets forth a two-pronged rule providing for the application of the law elected by the parties (loi d’autonomie) or, in the absence thereof, the law of the country of the seat of the arbitral proceedings or lex (loci) arbitri. While the law of the seat of arbitration is usually applied in civil law jurisdictions to determine the substantive validity of arbitration clauses, the common law of England has traditionally enforced its preference for the application of the law governing the main or matrix contract (lex contractus), especially where the latter was chosen by the parties. This interpretation fosters the primacy of the choice-of-law methodology on the principle of severability of the arbitration agreement, notwithstanding that such a principle is a fundamental tenet of the law of international arbitration, including under English law. In relation to choice-of-court agreements, both Article 6(a) of the Hague Convention of 30 June 2005 on Choice of Court Agreements (the “Hague Convention”) and Article 25(1) of the Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (the “Brussels I-bis Regulation”) establish that their substantive validity is to be determined upon the application of the law of the designated court (lex fori prorogati). However, both the Hague Convention and the Brussels I-bis Regulation preserve the mechanism of renvoi, which allows the inclusion of the rules of private international law (or conflict-of-laws rules) of the selected forum within the proper law of jurisdiction agreements. Proceeding from the analogy between arbitration and jurisdiction agreements (both constitute dispute resolution agreements, indeed), the Author supports the view that the proper law of arbitration and jurisdiction clauses should generally be the law of the country that has been elected by the parties as locus of the proceedings, that is the jurisdiction of the seat or place of arbitration or the designated forum, respectively. In addition, the application of the lex (loci) arbitrior the lex fori prorogati should not include their rules of conflict, thus displacing the method of renvoi (and its inefficiencies) in favour of the method of the voie directe. This proposal is advocated on the basis of the principle of severability of dispute resolution agreements and their mixed character that prompts not only substantive, but also procedural effects. Such a solution would enhance legal certainty and predictability for the benefit of the parties, especially with regard to the determinations of domestic judges as to dispute resolution clauses relating to international business transactions.

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