Abstract

Article

International commercial contract to resolve disputes by arbitration

Different national systems give support in different ways and an important aspect of the autonomy of the parties is the right to choose the governing law and seat of the arbitration according to what they consider will best serve their interests.

Where an international commercial contract contains an agreement to resolve disputes by arbitration, at least three systems of national law are engaged: that governing the substance of the dispute; that governing the agreement to arbitrate; and that governing its process. The first is generally the law applicable to the contract from which the dispute has arisen. The law governing the arbitration process is generally the law of the seat of the arbitration, usually the place chosen for it in the agreement. It will usually have a closer and more real connection with that place, which is where the parties have chosen to arbitrate, than with the place of the law of the underlying contract. Treating an arbitration agreement as governed by the law of the seat of arbitration in the absence of choice also accords with international law as embodied in the 1958 New York Convention and other international instruments.

The principles governing the determination of the law applicable to the arbitration agreement in certain cases are summarised in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38  as follows:

i)                            If a contract contains an arbitration agreement to resolve disputes arising from it, the law applicable to the arbitration agreement may not be the same as that applicable to the other parts of the contract and is to be determined by applying common law rules for resolving conflicts of laws rather than the provisions of the Rome I Regulation.

ii)                       T he law applicable to the arbitration agreement is the law chosen by the parties to govern it or otherwise, the system of law with which it is most closely connected.

iii)                       Whether they have agreed on a choice of law is determined by construing the arbitration agreement and the contract containing it as a whole, applying the rules of contractual interpretation of domestic law as to the law of the forum.

iv)                       If it is not specified, a choice of governing law for the contract will generally apply to an arbitration agreement which forms part of it.

v)                    Without more, the choice of a different country as the seat of the arbitration is not sufficient to negate an inference that a choice of law to govern the contract was intended to apply to the arbitration agreement.

vi)                       Additional factors which may do so and may imply that the arbitration agreement was intended to be governed by the law of the seat are: (a) any provision of the law of the seat which indicates that, where an arbitration is subject to that law, the arbitration will also be treated as governed by that country’s law; or (b) the existence of a serious risk that, if governed by the same law as the main contract, the arbitration agreement would be ineffective. Either may be reinforced by circumstances indicating that the seat was deliberately chosen as a neutral forum.

vii)                     If there is no express choice of law, a provision for arbitration in a particular place will not alone justify an inference that the contract, or the arbitration agreement, is intended to be governed by the law of that place.

viii)                  Absent any choice of law to govern the arbitration agreement, its governed by the law with which it is most closely connected. Where the parties have chosen a seat of arbitration, this will generally be the law of the seat, even if it differs from the law applicable to the parties’ substantive contractual obligations.

ix)                       That the contract requires the parties to attempt to resolve a dispute through good faith negotiation, mediation or any other procedure before referring it to arbitration will not generally displace the law of the seat of arbitration as the law applicable to the arbitration agreement by default in the absence of a choice of law to govern it.

Anti-suit injunction

By choosing a seat of arbitration the parties also choose to submit themselves to the supervisory and supporting jurisdiction of its courts over the arbitration. A well established and well recognised feature of the supervisory and supporting jurisdiction is injunctive relief to restrain a party from breaching its obligations under the arbitration agreement by bringing claims which fall within that agreement in court proceedings rather than in arbitration. A promise to arbitrate is also a promise not to litigate. West Tankers Inc v RAS Riunione Adriatica di Sicurtà SpA (The Front Comor) [2007] UKHL 4; [2007] 1 Lloyd's Rep 391, at paras 20-22:

The Courts exercise the jurisdiction to restrain foreign court proceedings. Pena Copper Mines Ltd v Rio Tinto Co Ltd (1911) 105 LT 846. Whether the parties should submit themselves to such a jurisdiction by choosing a country as the seat of their arbitration is entirely a matter for them. In granting an anti-suit injunction the courts are upholding and enforcing their contractual bargain. The enquiry is whether there has been a breach of the arbitration agreement and whether it is just and convenient to restrain that breach by the grant of an anti-suit injunction. The detail of the enquiry may differ, but its nature is the same.

Comity has little if any role to play. Aggeliki Charis Cia Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd's Rep 87, 96. The court’s approach is the fact of the promise made, not the law by which it was governed. That accords with principle. The grant of an anti-suit injunction is always a matter of discretion. There may be circumstances in which it would be appropriate to await a decision of a foreign court, but if the issue arises in proceedings brought in alleged breach of the arbitration agreement, comity should generally cede to the importance of upholding the parties’ bargain and restraining a party to an arbitration agreement from doing something it has promised not to do. Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38

 

 

Inferred acceptance of offer - Silence

A party seeking to rely on the existence of a contract must prove its elements: offer, acceptance, consideration and an intention to create legal relations. As a reflection of the requirement for mutual assent, to protect an offeree by preventing an offeror from claiming that a contract will be created by his own silence, it cannot usually constitute acceptance. But acceptance may be inferred from his conduct if an objective bystander in his position and in the surrounding circumstances would conclude from his conduct, including his silence, that he has accepted the offer and communicated it to the offeror. Circumstances in which a contract will be inferred are rare. This is a result of the absence of a clearly identified offer and acceptance whereby it will be difficult to identify mutual assent to a binding legal relationship and its terms. In certain cases, the conduct between the parties, including post formation conduct, may manifest sufficient evidence of mutual assent though no acceptance of an offer can otherwise be established or inferred, but the conduct relied upon must, on an objective assessment, evince a tacit agreement with sufficiently clear terms. It must be more than merely consistent with it: it must positively and unambiguously, though noy necessarily in absolute and unqualified terms, show that the parties considered themselves contractually bound by it. Danbol Pty Ltd v Swiss Re International SE [2020] VSCA 274.

 

Unilateral contract

A unilateral contract imposes obligations only on the offeror. It is a promise to do something if the other party does something which is stipulated, and his doing it amounts to acceptance and consideration so that the offeror becomes bound to fulfil its promise. There is no requirement for a separate or distinct acceptance of the offer by the offeree. As every contract requires an agreement between two parties, the term, unilateral contract, is unscientific and misleading. The contract is accepted and fully executed by the offeree by the doing of the act. The matter will often turn on the terms of the alleged promise. Danbol Pty Ltd v Swiss Re International SE [2020] VSCA 274.

Amount of Premium

A contract of insurance may be concluded though the premium has not been settled. Though not stated as a fixed amount, it may be treated as agreed to at an objctively reasonable amount, having regard to, for example, past dealings between the parties. A cover note for interim cover may give rise to a contract on the assumption that in the event that the original policy is eventually renewed, the premium for interim cover may be included in the new annual premium. Danbol Pty Ltd v Swiss Re International SE [2020] VSCA 274.