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2021 developments on the issue of the governing law of the arbitration agreement in the UK

By Signature Litigation
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Signature Litigation

Continuing our review of key arbitration developments from 2021 (see Bernhard Maier’s briefing here on mining treaty disputes), Neil Newing looks at the UK Supreme Court (“UKSC”) decision of Kabab-Ji SAL v Kout Food Group here – the second case within the space of a year in which the Supreme Court looked at the issue of the governing law of the arbitration agreement. For busy readers, the key takeaways from the decision are the following:

  • The UKSC unanimously held that although there was no express choice of governing law for the arbitration agreement, the parties had included an express choice of English law to govern the underlying franchise development agreement and that this should extend to apply to the arbitration agreement.
  • The UKSC’s decision is another example after Enka of how choice-of-law rules under Article V(1)(a) of the New York Convention may conflict in practice. Approaches may not be reflected uniformly across jurisdictions, as the Paris Court of Appeal’s decision in the same matter indicates. Having observed the finale of Kabab-Ji’s English proceedings, we now await the French Court of Cassation’s decision to see how Kabab-Ji’s v KFG’s French “story” will conclude
  • This case, and particularly the difference in treatment between the different jurisdictions, highlights once again the importance of including an express governing law provision for an arbitration clause. This is especially true where the parties intend for this to be different to the governing law of the underlying contract.

With thanks to Leila Kazimi, ACIArb of WilmerHale and Assistant Editor at Kluwer Arbitration Blog whose case analysis provided background and sources for our presentation.

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