Applicable law: contract, arbitration agreement, procedure and enforcement

Why one choice of law may not answer everything

A statement that “the law of State X applies” does not resolve every issue in an international dispute. The law of the underlying contract, the law of the arbitration agreement, the law of the arbitral seat and the rules of an enforcement country must be identified separately. They may coincide, but that conclusion follows from the agreement and applicable rules, rather than from the label arbitration.

Parties might choose one law for a supply contract, a different arbitral seat and an institution based in a third country. The debtor’s assets might be in a fourth. This is not a recommended universal clause: it illustrates the connecting factors requiring attention. The institution’s location does not, by itself, establish either the contract’s governing law or the seat.

Contract law: the parties’ substantive obligations

Substantive law governs contractual rights and obligations, including performance, breach and remedies within the relevant legal system. Under Model Law Article 28, a tribunal applies the rules of law chosen by the parties. Without a choice, it applies the law identified through the conflict-of-laws rules it considers applicable. Domestic legislation and agreed arbitration rules may refine the mechanism.

For disputes within the European Convention 1961, Article VII separately addresses the law governing the merits. Contractual terms and trade usages also matter. Choosing foreign substantive law does not remove mandatory procedural requirements at the seat or guarantee enforcement in every country.

Agreement law: consent, parties and scope

The formation, validity and scope of the arbitration agreement require their own analysis. A dispute may concern whether a particular company agreed to arbitrate, whether the clause covers the claim, or the consequences of a change of parties. Separability distinguishes the clause’s legal existence from that of the main contract; it does not supply consent that was never given.

At foreign-award enforcement, New York Convention Article V(1)(a) refers to the law to which the parties subjected the agreement and, failing an indication, the law of the country where the award was made. Identifying that choice and classifying validity issues depend on the applicable review framework. Express, consistent drafting of the agreement’s governing law can therefore be valuable: a general contractual formula may not be interpreted identically in different courts.

The law of the seat and the agreed rules

The lex arbitri is the domestic legal framework for the arbitration. It addresses mandatory safeguards, judicial assistance and supervision, and grounds for setting aside. Agreed arbitration rules organise proceedings within that framework. The UNCITRAL Arbitration Rules and Model Law have different functions: parties may select the former as procedural rules, while the latter is a legislative model for States.

Model Law Articles 19–20 treat procedural autonomy and the seat separately. A video hearing or a meeting in another city does not necessarily change the juridical seat. Examine the clause, any determination of the seat and the applicable legislation. See the separate guide to the arbitral seat.

The English reform and its transitional boundaries

The Arbitration Act 2025 inserted section 6A into Part I of the 1996 Act. It selects the law expressly agreed for the arbitration agreement or, without such agreement, the law of the seat. A general choice of the main contract’s law does not itself amount to an express choice for the arbitration agreement. An exception concerns agreements derived from standing offers in treaties or foreign legislation.

The provisions commenced on 1 August 2025. Section 17(4) preserves the previous framework for arbitrations commenced earlier, court proceedings connected with them, and other court proceedings begun before commencement. Otherwise, an agreement’s earlier date does not itself exclude the amendments. Procedural commencement dates therefore matter. The scope of Part I must also be distinguished from Convention-award enforcement under Part III; the reform should not be presented as automatically displacing every earlier English holding.

Section 6A also applies where the seat is outside England, Wales and Northern Ireland: section 2(2)(za), inserted by the 2025 Act section 1(3), expressly provides for this. Compare UniCredit/RusChemAlliance for the earlier approach in an agreement-protection case.

One award, two legal approaches

In Kabab-Ji, UKSC 48 (2021), the English enforcement court applied English law and upheld refusal. In French decision no 20-20.260, the court reviewing the refusal to annul applied French substantive rules of international arbitration and left the award intact. The legal approach and the object of the court proceedings differed, although both concerned the same award.

When drafting or assessing a dispute, prepare four separate answers: the law governing contractual claims; the law and evidence of consent to arbitrate; the juridical seat and procedural framework; and likely enforcement countries. Then check dates, mandatory provisions and applicable treaties. This analysis identifies risks that even a carefully selected institutional rulebook cannot eliminate.