Law governing the agreement to have recourse to arbitration: civil law approach

It should be remembered that there are other approaches to determining which law governs the arbitration agreement. There is, for example, the “French third way”, which resulted from a series of decisions by the Paris Court of Appeal from the 1970s through to the 1990s. The principal authority in that regard is the case of Dalico [1994] Rev Arb116. The approach of the French courts is to determine the existence and scope of the arbitration agreement exclusively by reference to the discernible intentions of the parties. Thus, the arbitration agreement remains independent of whatever national laws might otherwise be deemed to apply to it.

Such an approach was examined by the United Kingdom Supreme Court in Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2010] UKSC4, which noted that: …arbitration agreements [under French law] derive their existence, validity and effect from supranational law, without it being necessary to refer to any national law. However, French law is still relevant, given that what is being said is that French law recognises transnational principles as providing the applicable test to determine the existence, validity and effectiveness of an arbitration agreement.

As the Paris Court of Appeal expressed it in the Dalico case: “…by virtue of a substantive rule of international arbitration, the arbitration agreement is legally independent of the main contract containing or referring to it, and the existence and effectiveness of the arbitration agreement are to be assessed, subject to the mandatory rules of French law and international public policy on the basis of the party’s common intention, there being no need to refer to any national law.”

In addition to the French approach, there is the possibility of combining different approaches. Such is the position in Swiss private international law, where an arbitration agreement will be valid if it conforms to the law chosen by the parties, to the law governing the subject matter of the dispute (in particular the law governing the main contract), or to Swiss law. The practical effectiveness is to allow the courts in Switzerland the greatest possible opportunity of upholding the validity of an arbitration agreement in any given case.