Governing Law And Arbitration Agreements

A decision of the Supreme Court, the final court of appeal for civil cases in the United Kingdom, has clarified how the governing law of an arbitration agreement is to be determined when the law applicable to the contract containing it differs from the law of the "seat" of the arbitration.

Background

The case arose out a fire at a power plant in Russia. Chubb had insured the owner of the power plant against such damage.

The owner had engaged a contractor to carry out construction works at the power plant. In turn, the contractor engaged Enka, a Turkish engineering company, as a subcontractor.

The contract made between the contractor and Enka (the Subcontract) included an agreement that disputes would be determined through arbitration proceedings in London. In May 2014, the contractor transferred its rights and obligations under the Subcontract to the owner. After the fire in February 2016, Chubb paid an insurance claim by the owner and, by doing so, assumed