Law of seat determines scope of permissible challenges to arbitral award

The Court of Appeal has upheld the decision of Cooke J (see Legal update, Interplay of substantive and curial law in international arbitration) and ordered the continuation of a final injunction preventing the defendant insurers from bringing proceedings in New York to challenge an award. In C v D [2007] EWCA Civ 1282, the underlying contract was a "Bermuda Form" insurance policy in the usual terms, referring disputes to arbitration in London, and applying New York law to issues arising under the policy.

On appeal, the defendant argued that as the arbitration agreement was silent as to its proper law, it should not follow the seat of the arbitration (namely London) but should follow the proper law of the contract (namely New York law) thus allowing challenges to the award in the New York courts. The Court of Appeal dismissed the appeal and continued the injunction. By chosing London as the seat of arbitration, the parties must be taken as having agreed that proceedings on the award should only be those permitted by English law. To allow the remedies available under New York law would be a recipe for litigation. Even where there is no express law of the arbitration agreement, it will rarely be the case that the law of the (separable) arbitration agreement will be different from the law of the seat of the arbitration. It is more likely that the law with which the arbitration agreement has its most close and real connection will be the law of the seat of arbitration, and not the law governing the underlying contract.

The case provides a clear reminder that an express choice of seat for arbitration proceedings must be regarded as also indicating the forum in which the parties may seek remedies to attack an award.