Which Law Governs the Arbitration Agreement?
📂 Case Details
Case Title: Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb
Citation: [2020] UKSC 38; [2021] AC 408
Court: Supreme Court of the United Kingdom
Judges: Lord Kerr, Lord Sales, Lord Hamblen, Lord Leggatt, Lord Burrows
Date: 9 October 2020
Legal Area: International Arbitration – Governing Law of the Arbitration Agreement
Parties:
Appellant: Enka Insaat Ve Sanayi AS (Turkey)
Respondent: OOO Insurance Company Chubb (Russia)
⚖️ Background of the Dispute
Enka, a Turkish construction company, was contracted to carry out works at a power plant in Russia. A fire broke out at the site, causing substantial damage. The insurer, Chubb, compensated its insured and sought to recover that amount from Enka, alleging liability for the damage.
Although the contract included an ICC arbitration clause with London as the seat, it did not specify the governing law of either the main contract or the arbitration agreement. Chubb filed proceedings in a Russian court, while Enka argued that the dispute must be referred to arbitration in London.
The key issue became: Which law governs the arbitration agreement—the law of the seat (English law) or the law of the underlying contract (Russian law)?
🔍 The Legal Question
The Supreme Court was asked to resolve a long-standing uncertainty in arbitration law:
When parties have not expressly chosen the governing law of the arbitration agreement, should the law of the main contract or the law of the seat of arbitration apply?
The Court’s Ruling
By a 3–2 majority, the Supreme Court held that:
If the contract specifies a governing law, that law will also govern the arbitration agreement—unless there are strong reasons to displace it.
If no law is specified, the arbitration agreement is governed by the law of the seat of arbitration.
In this case, because London was the seat, English law governed the arbitration clause.
The Court further held that anti-suit injunctions could be issued by English courts to restrain proceedings brought abroad in breach of an arbitration agreement seated in London.
Significance of the Decision
The Enka v Chubb ruling is now a leading authority on determining the proper law of arbitration agreements. It provides a clear hierarchy:
Express choice of law (if any) by the parties;
Implied choice, usually inferred from the governing law of the main contract;
Default rule: the law of the seat of arbitration if neither is specified.
This decision enhances predictability in international arbitration and underscores England’s position as a pro-arbitration jurisdiction, offering certainty to global businesses drafting cross-border contracts.
What Businesses Should Know
For companies entering international contracts with arbitration clauses:
Always specify both the governing law of the contract and the law of the arbitration agreement to avoid uncertainty.
Remember that the seat of arbitration plays a decisive role—it determines not only the procedural law but also, in most cases, the substantive law of the arbitration clause.
The English courts continue to demonstrate a supportive approach to arbitration, especially in protecting parties from foreign court interference.