Arbitration Agreements-A clause for concern

Analysis

When drafting dispute resolution clauses, parties typically focus on the law governing the contract and, where such clauses provide for arbitration, the curial law (or procedural law of the seat). It is, however, common for parties to fail to specify the law that should be used to determine the validity of the arbitration clause itself.

If a party challenges the validity of the arbitration clause, the Tribunal is usually faced with the question of whether it should apply (i) the law governing the contract; or (ii) the procedural law of the seat, to determine whether the arbitration proceeds.

The DIFC-LCIA's likely amendment of its rules so that they are consistent with the position set out under Article 16.4 of the LCIA Rules 2014 (which provides that the law of the arbitration clause will be the law of the designated seat) is a positive step towards limiting the scope of any challenge to arbitration proceedings seated within the DIFC and subject to the DIFC-LCIA Rules.