Commentary on provisions of Act Applicable law Section 1: Law applicable to arbitration agreement
Section 1 replaces the common law in Enka v Chubb (2020) 1 with a statutory rule. By inserting section 6A(1) into the 1996 Act, the law governing the arbitration agreement is the law expressly chosen by the parties, otherwise it is the law of the seat, except in the cases where the arbitration agreement arises from a treaty (see below). This is regardless of where the arbitration is seated. For example, where the arbitration is seated in England and Wales, then the agreement to arbitrate will usually be governed by the law of England and Wales. By inserted section 6A(2), any law chosen to govern the main contract does not count as an express choice of law to govern the agreement to arbitrate.
	The reason for section 1 is as follows. The 1996 Act applies when the parties have agreed in writing to arbitrate their dispute. Often the agreement to arbitrate is a section in a main contract. For example, there might be a main contract to build a factory, and one of the clauses provides that any dispute will be resolved through arbitration. Although the agreement to arbitrate is a clause in a main contract, the law sometimes treats the agreement to arbitrate as a free-standing or separable agreement.
	There may be an international dimension to a main contract and its agreement to arbitrate. For example, one party might be German, and the other party Chinese, with both agreeing to resolve their dispute by way of arbitration in London (as a neutral venue). In such circumstances, it is necessary to determine which country’s laws govern the agreement to arbitrate. In the present example, the agreement to arbitrate could be governed by the law of Germany, or China, or England and Wales, or another law entirely. Determining the governing law is important, as different governing laws may give different answers to important questions like who is party to the agreement (for example, whether the agreement extends to a subsidiary company), and whether this type of dispute is even capable of resolution by arbitration (as a matter of public policy, some types of dispute must be resolved by the courts rather than through arbitration).
	In its decision in Enka v Chubb, the Supreme Court said, broadly, as follows. The agreement to arbitrate is governed by the law chosen by the parties. This can mean that the agreement to arbitrate is governed by the law chosen to govern the main contract – unless, for example, that law would invalidate the agreement to arbitrate. Otherwise the agreement to arbitrate will be governed by the law with which it is most closely connected, which is usually the law of the seat. The seat is the place where the arbitration is deemed legally to occur (even if hearings take place elsewhere or online). In the above example, the seat of the arbitration is England and Wales (London).
	It is common for there to be an express choice of law to govern the main contract, and an express choice of seat for an arbitration, but no express choice of law to govern the agreement to arbitrate. It is therefore common for an arbitration to be seated in England and Wales but, as a result of the decision in Enka v Chubb, for the arbitration agreement to be governed by a foreign law (the law governing the main contract). Section 1 provides a new default rule that aligns the seat of the arbitration with the law governing the arbitration agreement. For example, where an arbitration is seated in England and Wales, then by default the agreement to arbitrate will now be governed by the law of England and Wales. This is unless the parties expressly agree a different law to govern the arbitration agreement. Where no seat has yet been agreed or designated, the courts could if necessary resolve the matter.
	However, inserted section 6A(3) and (4) provide that the section does not apply to arbitration agreements derived from standing offers to arbitrate contained in treaties or non-UK legislation. This means, for example, that non-ICSID investor-state arbitration agreements will tend not to be covered by the default rule in section 6A(1). However, investor-state agreements which arise under commercial contracts (rather than treaties or foreign legislation) will remain to be captured by the default rule in inserted section 6A(1).