The highest courts of Singapore and the United Kingdom have recently issued decisions regarding the choice of law to govern arbitration agreements.
Singapore Courts’ Approach
In BNA v BNB and another [2020] 1 SLR 456; [2019] SGCA 84 (“BNA”), the Singapore Court of Appeal adopted at [44]-[48] the following three-step approach from BCY v BCZ [2017] 3 SLR 357 (HC) (“BCY”):
- The parties’ express choice of proper law governing the arbitration agreement is first identified (the “Express Choice of Law”).
- If there is no express choice, the court ascertains the parties’ implied choice of law based on their intentions at time of contracting (the “Implied Choice of Law”).
- If an express or implied choice is absent, the law governing the arbitration agreement is the system of law with the closest and most real connection to it.
This is based on the framework in Sulamerica Cia Nacional de Seguros S.A. v. Enesa Engenharia S.A. [2012] EWCA Civ 638 (“Sulamerica”).
An express choice of the proper law of the main contract does not, in and of itself, also constitute the proper law of the arbitration agreement: BNA at [61].
There is a presumption that the parties’ choice of law for the entire/main/underlying contract (containing the arbitration clause) also reflects the parties’ implied choice of law governing the arbitration agreement (BNA at [61]).
However, this presumption can be rebutted. The choice of a seat that is different from the place of the law of the main contract is not by itself sufficient to displace the starting point: BNA at [62]; BCY at [65].
The inquiry of whether the presumption is displaced only becomes relevant if the law of the seat is materially different from the (I suppose, putative) law governing the arbitration agreement (lex arbitri): BNA at [63]. E.g. if the seat of arbitration is Singapore but the assumed lex arbitri by that point in the analysis is the law of the People’s Republic of China (PRC).
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