Sulamerica applied in Arsanovia – Expressly excluding parts of a national law may lead to that law being lex arbitri.

In Arsanovia, the High Court applied the Sulamerica test for identifying the lex arbitri (see here for the judgment in Sulamerica and for the notion ‘lex arbitri’). Hodges, Kaplan and Godwin excellently review the various other elements of the case here. For current blog the finding on lex arbitri is the most relevant. In particular, Smith J found of high relevance the fact that parties had excluded part of the Indian arbitration Act: at 20:

There is another consideration that to my mind is relevant in this case: that the arbitration agreement included a specific agreement not to seek interim relief under the Indian Arbitration and Conciliation Act, 1996 (“IACA”), including section 9 of that Act, and that the provisions of Part 1 of IACA were expressly excluded.(…) as I see it (…), where parties have expressly excluded specific statutory provisions of a law, the natural inference is that they understood and intended that otherwise that law would apply. Therefore to my mind the reference to IACA in the arbitration agreement supports the claimants’ contention that the parties evinced an intention that the arbitration agreement should be governed by Indian law (except in so far as they agreed otherwise).

It is not uncommon in identifying applicable law (in this case, for the arbitration agreement) to employ selective cancellation of a national aw as evidence of intention for that law to be applicable for the remainder. Whether that intention is properly present in the agreement, in the absence of a specific choice of law clause, inevitably is subject to the discretion of the bench. In the case at issue, the High Court was not swayed by the consideration that the partial exclusion of IACA was intended simply to obstruct Indian case-law on the wide jurisdictional reach of IACA in temporary relief, even for arbitration proceedings taking place outside of India.

The lesson is always the same: choose carefully, and explicitly.

Geert.

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