#5206 - Egon Oldendorf V. Libera Corporation Governing Law - Conflict of Laws BCL

Egon Oldendorf v. Libera Corporation

It is sufficient to say that the party relying upon art. 3 must demonstrate with reasonable certainty that the parties have chosen a particular law as the governing or applicable law. I accept the submission that, as the Giuliano-Lagarde report says, it must be a real choice which the parties had a clear intention to make. In Redfern & Hunter on International Commercial Arbitration (2nd ed. at p. 123) the authors say that in the absence of an express choice the tribunal must look for a tacit choice of law, which they say may be known as an implied, inferred or implicit choice. They add that art. 3 makes it clear that a tacit choice must only be found where it is reasonably clear that it is a genuine choice by the parties.

Citing Lord Wilberforce:

How strong, then, is the inference to be drawn from a (London) arbitration clause? That the selection of a certain place for arbitration and, by inference, of nationals or residents of that place as arbitrators, is an indication that the parties intended the law of that place to govern is a sound general rule. But it should not be treated as giving rise to a conclusive or irresistible inference, as recent pronouncements appear to suggest. One of the reasons commonly given for attributing overwhelming force to the clause is that arbitrators in London are only to be supposed to be conversant with English law... but I venture to think that in commercial matters, at the present time, this may give insufficient recognition to the international character of the City of London as a commercial centre - the reason, rather than any preference for English rules, for which arbitration in London is selected. In this case the arbitrators had no difficulty in finding for French law and I do not suppose they would find ascertainment of the French law as to damages any more difficult than the English law of anticipatory breach. So, unless otherwise constrained, I would regard the clause as a weighty indication, but one which may yield to others.

While I of course accept Mr. Dunning's submission that the House of Lords was considering the position at common law and not the position under the Convention and that the test is not the same at common law as under the Convention, it is very similar and the considerations set out by both Lord Wilberforce and Lord Diplock in the above passages seem to me to be relevant to the correct application of the test under the Convention just as they were at common law. That conclusion is I think supported both by the Giuliano-Lagarde report and by Dr. Plender at par. 5.08. It is also supported by Dicey & Morris (12th ed.) at pp. 578 and 1226, although it is there suggested that the requirement that an implied choice must be demonstrated with reasonable certainty may have led to a change of emphasis.

Dicey & Morris say that whether a choice of law can be inferred from an arbitration clause will depend on the circumstances. Thus they say (at p. 1226):

... secondly, an arbitration clause which clearly demonstrates that the arbitration will take place in a particular country and that the arbitrators will be of that nationality or carrying on business in that country will permit an inference that the parties intended that the law of that country should be applied; thus an arbitration clause providing for arbitration in London by English maritime arbitrators, or by London brokers, or by a local association or exchange may be regarded as an implied...