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7 CHOICE OF LAW

Arbitration Law

Chapter 7 CHOICE OF LAW ARBITRATION AND CHOICE OF LAW RULES 7.1 Choice of law involves a two-stage process. In the first instance, the system of law applicable to the dispute must be determined. Secondly, when it has been determined, the relevant substantive rules of law of the applicable system of law must be used to resolve the dispute. This chapter is concerned primarily with the general principles of English law which govern choice of law and the role of the arbitrators in the first of these exercises. As to the second, whether or not the arbitrators have properly applied the substantive rules of the chosen system of law to the relevant issue is a question of law which is capable of review by the English courts but only where the arbitration has its seat in England, Wales or Northern Ireland, in accordance with s 2 of the Arbitration Act 1996. Even if the arbitration has its seat in England, so that the English courts have jurisdiction to review errors, that jurisdiction may be limited by the arbitrators’ choice of law. If the arbitrators have decided, for example, that the dispute or the arbitration agreement is governed by French law, their application of the substantive or procedural rules of French law is not capable of review by the English courts, as the power to review errors of law under s 69 of the Arbitration Act 1996 is confined to points of English law. 1 If, by contrast, the arbitrators have decided that the procedure is governed by French law, the mandatory procedural provisions of the Arbitration Act 1996, listed in Sched 1, continue to apply to the arbitration despite the choice of law, 2 and there is a power of review in England in respect of those mandatory provisions only, although it should be said that the most important aspects of the arbitration—including the duty to act fairly—are mandatory. 3

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