Express Choice of Law to Govern Arbitration Clause

“This clause [number] shall be governed by [insert law governing main contract]”

As an arbitration clause is generally regarded as legally distinct (or separable) from the main agreement in which it is located, consider adding this wording to the end of your arbitration clause where your seat of arbitration is different from the governing law of the main contract (being a situation which might otherwise create debate as to which, the law of the seat, or the law of the main contract, applies to the arbitration clause). In this context, the applicable law of an arbitration clause generally determines its contractual validity and scope.

In particular, where you have selected England as a seat of arbitration but your contract is governed by the law of a different country we suggest that adding the wording would be helpful.

In English seated arbitration agreements, this drafting practice/trend originally emerged to help improve certainty in light of the fact that English common law conflict of law rules, in treating the matter as one of contractual interpretation, left room, in situations of “mis-match”, for some debate as to which (the law of the contract, or the law of the seat) should govern the arbitration agreement if the parties hadn’t specifically addressed the matter through drafting of the type set out above (see here for an early example and here and here for the UKSC’s general resolution of such issues).

In England, those common law rules are, as of 1 August 2025, replaced by a new statutory rule (s.6A Arbitration Act 1996). That section applies the law that the parties have expressly agreed to apply to the arbitration clause, or, where there is no such agreement, it is the law of the seat of the arbitration in question. Notably, however, s.6A goes on to say that agreement between the parties that a particular law applies to an agreement of which the arbitration agreement is part is not to constitute express agreement that that law also applies to the arbitration agreement. In other words, the idea is that unless the parties specifically address the law applicable to their arbitration agreement, then the “default” is that the law of the seat will apply.

Even in the light of this reform, however, where the seat is England and the contract is governed by the law of a different country, adding the specific wording set out above still remains prudent. This is for a number of reasons:

• First, if the parties wish their arbitration agreement to be governed by the same law as that chosen to govern their main contract (as opposed to English law as the law of the seat), then such action will be necessary given the terms of s.6A. As to whether that is desirable, parties may consider that such a choice presents a simpler starting point at the drafting stage. For example, it may better reflect a general commercial understanding/assumption that a chosen governing law applies across a contract as a whole. And, in technical terms, it better ensures alignment between the arbitration agreement and the main contract on key issues of formation (such as who is treated as party to both and how it is substantively concluded), as well as internal consistency in their operation and drafting more generally (for example of points of internal consistency see Enka at [53] and [235-239]). Put another way, lawyers advising on the contract may have drafted the arbitration clause in that context. So, unless there is some overriding reason not to, it makes sense to keep matters consistent. Accordingly, the clause above suggests the same.
• Second, if, despite such considerations, the parties wish their arbitration agreement to be governed by English law (as the law of the seat), a specific designation in favour of that may still be prudent as, although the legislative intent behind s.6A seems clear, it may be possible that the operation of its “default” rule remains debatable. In particular, in UniCredit, the UKSC emphasised that its conclusions (albeit under the common law) were rooted in an understanding of the meaning and scope of the express words that the parties used in their “general” governing law clause.
• Finally, whichever one of the law of the main contract, or English law as the law of the seat, parties wish to govern their arbitration agreement, specifying that choice can help promote certainty under Article V(1)(a) New York Convention if enforcement of the award is sought abroad.

In like circumstances where your seat is not in England (i.e. your contract specifies the law of state X and your seat is in state Y), consider with local lawyers advising on the consequences of the choice of seat as to whether, for similar reasons as to those listed above, the inclusion of a specific designation could be similarly beneficial.

As part of the drafting process, it will, of course, also be necessary to ensure that the arbitration clause is properly drafted and works as intended under the law to be applied.

In addition to the above, note that where the LCIA Rules have been chosen:

• Since 2014, the LCIA Rules have contained a provision (Article 16.4) which states that the law applicable to the arbitration agreement shall be the law applicable at the seat of arbitration. This appears to confirm that, uncontroversially, the parties consent to the applicable law of the arbitration clause being that which would be applied at the seat of arbitration once the seat’s rules as to the applicable law of an arbitration clause have been applied. A competing interpretation may, however, be that this article is an express choice in favour of the law of the seat of the arbitration. Although this may not be the better view (the article does not refer to the law of the seat, rather the law applicable at the seat) there remains a potential ambiguity as to whether such a choice has been expressed. Where the LCIA Rules have been selected, resolution of this ambiguity therefore provides another reason why, in cases where the governing law of the contract and the seat do not match (i.e. where there is room for debate as to the governing law of the arbitration clause), parties may see fit to make express provision as to the governing law of their arbitration clause in the clause itself.

• Separately, in the version of the LCIA Rules which apply to LCIA arbitrations commenced on or after 1 October 2020 a new Article 16.5 prescribes that the LCIA Rules are to be interpreted in accordance with English law. Whilst this is clearly intended to promote conformity and certainty in their application it would appear to effect a choice of English law as the law applicable to interpretation of part of the arbitration agreement (as the rules are incorporated therein) in every case. 
  
  Depending on the circumstances, such an approach might give rise to knotty issues of applicable law in particular whether, under the rules of the seat as to applicable law of an arbitration clause: (i) the application of English law and (ii) the application of a law to part of an arbitration agreement is permissible. And, in addition, whether point (ii) is acceptable under the law which would be applied to govern the arbitration clause generally (as, for example, a matter of formation).
  
  These issues should not arise in situations where English law is the governing law of the contract and the chosen seat of arbitration is also in England (or where the seat of arbitration is in England and the circumstances are such that, applying English rules on applicable law, English law would otherwise govern the arbitration clause, or, finally, in cases where the seat is elsewhere and the circumstances are such that, applying the seat’s rules on applicable law, English law would otherwise be applied to govern the arbitration clause ). In such situations the law applicable to the arbitration clause will, in any event, point to English law. Outside of those situations, however, the simplest solution for parties to avoid the difficult analytical issues arising from this provision may be, if the LCIA Rules are to be chosen, to insert a provision into their arbitration agreement disapplying the effect of Article 16.5 (for example "any provision of the arbitration rules of the LCIA which specifies that those rules shall be interpreted in accordance with the laws of England, shall, to that extent, not apply")

Aside from the provisions of the LCIA Rules discussed above, the main institutional rules discussed on this site - i.e. those of the ICC, UNCITRAL, HKIAC, SIAC, CIETAC, and SCC - do not contain any Articles covering this area. If using some other set of rules, do check whether any relevant provisions on this issue exist and, if so, consider what approach will be appropriate. (For example the 2022 Rules of PRIME Finance contain a provision, albeit in the form of a conflict of laws rule - as distinct from a positive choice - in Article 40.1 which states that the rules of law applicable to the arbitration agreement shall be that chosen by the parties, failing which the tribunal is to apply the rules of law it considers appropriate. Although this rule (in common with provisions of the 2022 PRIME Rules generally – see Article 1.2) is stated to give way to any mandatory provisions of law applicable to the arbitration. Another example of another set of institutional rules that did make such provision were the 2021 DIFC-LCIA Rules - which contained provisions identical to Articles 16.4 and 16.5 of the LCIA Rules; although the DIFC-LCIA rules are no longer a viable option for new contracts following the dissolution of the DIFC-LCIA Arbitration Centre's administering body in September 2021).