October, 2020 - English Supreme Court rules in “Enka v Chubb”

The Supreme Court has handed down an eagerly-awaited judgment setting out the approach to be taken in ascertaining the law governing arbitration agreements, providing clarity to the question of which system of law should govern the validity and scope of an arbitration agreement in circumstances where the governing law of the contract is different from the law of the nominated seat of arbitration (Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38).

Where parties have not specified the law of the arbitration, but have agreed the law governing the charterparty then the latter will apply to the arbitration, even where the seat of arbitration is in a country which is governed by different laws.  However, where there is no choice of law specified in the contract, as was the case in Enka v Chubb, the Supreme Court has confirmed that the arbitration will be governed by the law with which it is most closely connected, which will typically be the law of the seat of arbitration.

In the Enka v Chubb case, the relevant contract, which was for the construction of a power plant in Russia, contained no governing choice of law, but did contain an arbitration agreement which provided for ICC arbitration with its seat in London.  The ruling meant that the English court had supervisory power over the arbitration and was therefore entitled to grant an anti-suit injunction restraining Chubb from pursuing proceedings against Enka in Russian.

If nothing else, the takeaway from this case is that including clearly drafted law and jurisdiction clauses in contracts is of the utmost importance.  Failing to do so can result in a lack of certainty and potential for costly litigation to determine the correct position. 

The full judgment can be read here.  Further commentary on this case will be published in due course and meanwhile, Members are invited to contact the Association in the usual way with any queries relating to the issues discussed above.