INTERNATIONAL COMMERCIAL ARBITRATION

2020/2021

READING MATERIALS AND CASE STUDY

Class - 2 March

Syllabus
2. Applicable laws to international arbitration:
a. Law governing the arbitration agreement

Required Reading

- Redfern and Hunter on International Arbitration, 6th Edition, 2015, Chapter 3.B, Applicable
laws, p. 158-166

Students are expected to (i) read the materials; (ii) be prepared to answer the questions about the case
study (see below).

Supplementary Readings

Gary Born, International Arbitration, 3rd Edition, 2021, Chapter 4

Case study

Imoble, a company based in France, owns real estate in Oporto and has entered into a lease agreement
with Clothes & More (C&M), a company based in Sweden relating to that building. The parties provided
the following dispute resolution clause in the Lease Agreement:

“Any dispute that may arise from this agreement shall be submitted to arbitration under the Rules of the
ICC then in force. The arbitration will be held in Madrid, Spain in Portuguese.”

The Parties further agreed on the following provision on choice of law:

“Applicable to this Agreement is Portuguese law.”

A dispute arose between the parties regarding the termination date of the Lease Agreement and Imoble
initiated an arbitration proceedings.

a. Is this arbitration a case of international commercial arbitration?

Yes, because the parties who willingly submitted their dispute, which arose out of a commercial
transaction, to arbitration are two companies from different states.

At the end of the proceedings, the arbitral tribunal issued an arbitration award ordering Imoble to
pay C&M a certain amount of money. Imoble did not pay and hence C&M started a recognition and
enforcement proceeding of the arbitration award in France. Imoble opposed the recognition,
arguing the non-arbitrability of the dispute in accordance with Portuguese law.

b. Should the French court refuse to enforce the arbitration award? What are
the applicable rules?
We are going to access the validity of the arbitration agreement through Spanish law since it is the law of
the seat of the arbitration. According to Spanish law the arbitration agreement is valid. Since France is a
signatory of the New York Convention, this is going to be the law applicable to this case. Article V/2/a)
of this convention states that the Recognition and enforcement of the award may be refused, if the subject
of the dispute is not capable of being resolved through arbitration under the law of that country. The
wording of article V (2)(a) specifically directs the enforcing court to determine whether the subject matter
of the dispute is capable of settlement by arbitration “under the law of that country” where recognition
and enforcement is sought. In accordance, the arbitrability of this dispute should be looked at through
French law and not Portuguese law. French law considered this dispute to be arbitrable.

c. Would the answer be different if the award was to be enforced in Portugal?

If the enforcement of this award were to be seeked in Portugal, the arbitrability would be analysed in
accordance with Portuguese law. According to Portuguese law the criteria of arbitrability is economic
interests, that are present in this case, so the arbitrability of the dispute does not block the enforcement of
this award.