Kabab-Ji appealed on the grounds that the judge had mistakenly applied English law rather than French law to the question of whether Kout was a party to the arbitration agreement and held that Kout was also a party to the arbitration agreement under English law. While clarifying the law, the judgment also stresses the importance of a legal choice clause, both in the contract, which contains the material rights and obligations of the parties, and, in case of doubt, in the arbitration agreement itself. This is not a common practice, although legal advisors who take a conservative approach have tended, at least for the past decade, to include a legal choice clause in the arbitration clause. According to the judges, this means that the parties have made an explicit choice of English law to settle the arbitration agreement, although the choice of law is not explicitly stipulated in the arbitration agreement itself. 1 The validity of the arbitration agreement depends mainly on the law chosen by the parties. As a general rule, international commercial contracts do not contain specific choice of law clauses for the arbitration agreement contained in such contracts. The general choice of law clause in the contract, which establishes the legitimate law of the contract, does not necessarily extend to the arbitration agreement, which is a separate contract. It follows that a cancellation clause in the main contract does not necessarily cover the arbitration clause. Indeed, arbitration clauses often contain their own legal provisions in force. The FDA`s arbitration clause (Section 14) did not specify the applicable legislation. “If the principle of severability is recognized by the presumed applicable law of the arbitration agreement, there is no inconsistency in the treatment of issues such as whether the contract is fulfilled out of frustration or whether the innocent party may terminate or withhold the performance because of the breach by the other party or whether the contract has been cancelled for misrepresentation.
governed by a law other than that of the arbitration agreement, since the resolution of these matters does not affect the validity or enforceth of the arbitration agreement. These are very new issues that should be further considered by the singapore courts. A solution would have important consequences for the analysis of the contract and the compatibility of the Sulamerica test. Simple wording such as “the applicable law of this arbitration agreement is the law of [England]” are effective. In a recent case of the Commercial Court of England, Habas Sinai, an agent (contrary to the instructions of the principal), voted a contract without applicable legislation and an arbitration clause providing for icc arbitration in London. In the absence of an explicit provision of the applicable law in the substantive contract, the applicable law of the arbitration agreement would normally be that of the registered office, i.e. English law. It was argued that, in that case, the seat should be ignored because it had been agreed without real authority. The applicable law would then be the law most closely linked to the substantive contract, which would be Turkish law (which was the intention of the contracting authority). In accordance with practice, the Court held that different obligations in the same treaty could be subject to different laws, but found that “the application of different legal systems to different parts of a treaty has the potential to create inconsistency and uncertainty”.
The Court then turned its attention to the unique role of the arbitration clause (which does not deal with material rights, but with an agreement on how to settle disputes arising from material rights) and the “cardinal” principle of severability. . . .