Although the seat and place of arbitration are often in the same country, this is not always the case and is not a mandatory requirement. This means that hearings take place at the place of arbitration, while the seat determines the procedural law of the arbitration and the courts that oversee the arbitration and the award (for the purposes of enforcement of the award). Following the opening of proceedings by Chubb in Russia against Enka, Enka initiated proceedings before the Commercial Court of London to obtain an injunction against the trial to prevent Chubb from pursuing the Russian case against Enka, as it was a violation of the arbitration agreement. The question was whether it could be said that Russian or English law governs the arbitration agreement. There are two types of arbitration from which the parties can choose to resolve disputes under their contract – institutional or ad hoc. The scope defines the types of disputes that may be submitted to arbitration. A poorly worded scope is a common source of litigation and may deprive the court of jurisdiction over all or part of the dispute. Article 3(1) of the National Arbitration Act provides that an arbitration agreement will survive the termination of the main agreement, but does not expressly provide for the severability of the main agreement. Arbitration agreements are often treated as “universal” precedents that are included in trade agreements without much thought. This approach can be counterproductive and lead to more time, cost and complexity in resolving disputes. A well-drafted arbitration agreement that takes into account the issues raised in this article can be used to mitigate these risks. However, arbitration agreements often do not specify the applicable law of the arbitration agreement. We strongly recommend that you do so.
Arbitration is not public, if sensitive issues are the subject of a dispute, then arbitration offers a preferred alternative to litigation. An arbitration agreement may take the form of an arbitration clause in a contract or in the form of a separate agreement. With regard to the second point, there is a general rule that the law of the place chosen as the seat of arbitration is the law most closely related to the arbitration agreement and which, in the absence of choice, must be applied by default. Indeed, the seat of arbitration is the place where (legally, but not physically) the arbitration agreement is to be conducted, and it is in accordance with international law as enshrined in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, and other international instruments, thus ensuring consistency with international law and legislative policy. It is also likely to maintain the reasonable expectations of parties who have chosen to resolve their disputes by arbitration in a particular location but have not made a choice of law for their arbitration agreement, and it provides legal certainty and predictability in the absence of choice by making it easy and with little room for argument by the parties to predict, what law the court will apply by default. Institutional arbitration is simply an arbitration administered by a recognized arbitration institution, an example of which is the Singapore International Arbitration Centre (SIAC). An institution such as SIAC has its own rules and is responsible for the appointment of the arbitral tribunal and the administration of the arbitration. In applying these principles, the majority concluded that the agreement giving rise to a dispute in this case did not contain a choice of law to govern the contract or arbitration agreement contained therein. In these circumstances, the validity and scope of the arbitration agreement (and the rest of the dispute settlement clause contained in this Agreement) shall be governed by the law of the arbitrator chosen, since the law to which the dispute settlement clause was most closely related was English law. The key to effectively handling multi-contract disputes is to ensure that the arbitration agreement is consistent in each interconnected contract and explicitly involves consolidation (i.e., merging separate arbitrations resulting from the same or interconnected contracts into a single set of procedures) and a link (i.e., adding a third party to an existing arbitration proceeding). Allows.
The arbitration clause should specify the language of the arbitration, in particular if the parties come from countries with different mother tongues. In practice, however, the parties are advised to expressly indicate both the choice of applicable law of the main agreement and the applicable law of the arbitration clause. Failure to specify both can lead to interlocutory and unnecessary litigation, as Demonstrated by Enka v. Chubb. A striking feature of the English trial is that the trial, the appeal to the Court of Appeal and the appeal to the Supreme Court were all heard in just over seven months, which can be described as a vivid demonstration of how quickly the English courts can act when the urgency of a case so requires. On the contrary, it is something that South African courts can adopt. Multi-level clauses provide gateways for attempts at a negotiated solution, so that disputes can be gradually escalated from negotiations to mediation or from conciliation to arbitration. In practice, parties rarely expressly provide that their arbitration agreement is subject to specific national legislation. So what is the national law applicable to an arbitration agreement without an explicit or implicit choice? The question of which national legal system governs the validity and scope of the arbitration agreement if the law applicable to the contract containing it differs from the law of the seat of the arbitral tribunal has long divided the arbitral tribunal community. Although this issue has not yet been addressed in a binding manner by the South African courts, the Supreme Court of the United Kingdom in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38 provides a useful reference. Parties bound by agreements with multiple contracts run the risk that in the event of a dispute, different courts may be appointed to deal with multiple arbitrations involving the same or similar facts.
This can lead to conflicting decisions and lead to costs and delays. By a three-to-two majority, the Supreme Court of the United Kingdom has ruled that an English court that must decide which legal system governs the validity, scope or interpretation of an arbitration agreement must regulate the law developed by the common law to determine the law on contractual obligations. These rules are that a contract (or a relevant part of it) is governed by: These legal systems may differ from each other. Each may also deviate from the law governing the validity and scope of the arbitration agreement. “In the event of any dispute, controversy or claim between the parties (hereinafter referred to as “the Dispute”) with respect to this Agreement, the parties will attempt to resolve the dispute through negotiation. This means that one party invites the other to a meeting in writing and attempts to resolve the dispute within 7 (seven) days of the date of the written invitation. Most arbitration institutions issue rules for the appointment of the arbitral tribunal and the arbitration procedure. In many cases, the rules of procedure will give the tribunal sufficient discretion to determine the manner and timing of the various procedural stages of arbitration, such as the filing of pleadings, the exchange of documents and testimony, and the scheduling of hearings. In the case of international contracts, performance may take place in one jurisdiction while the parties are in another jurisdiction; the law governing the contract may be that of one court, while the seat of the arbitration may be another jurisdiction.
The absence of a law expressly applicable to the arbitration agreement may result in lengthy litigation. Instead, the parties should focus on a thorough risk assessment of the arbitration agreement and a more comprehensive dispute resolution clause at an early stage. On the basis of this assessment, the parties may focus on developing an arbitration agreement that is best suited to these risks and that is most effective for any dispute that may arise […].
