"The parties to the agreement referred to in article II [ie the arbitration agreement] were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;"
Also relevant is article V(1)(e), which applies where:
"The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made."
"(1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases.
(2) Recognition or enforcement of the award may be refused if the person against whom it is invoked proves -
(a) that a party to the arbitration agreement was (under the law applicable to him) under some incapacity;
(b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;
(f) that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made."
(i) Does the law governing the validity of the arbitration agreement govern the question of whether KFG became a party to the arbitration agreement?
(ii) What is that law?
(iii) At English law, has KFG become a party to (i) the FDA and (ii) if different, the arbitration agreement?
(The issues were formulated by reference to the FDA as it was agreed that this would be determinative of the like issues arising under the FOAs. A fourth issue, concerning the law governing the capacity of KFG to join the arbitration agreement, is not relevant on this appeal.)
(i) The law governing the validity of the arbitration agreement governs the question of whether KFG became a party to the arbitration agreement.
(ii) The law governing the validity of the arbitration agreement is English law.
(iii) At English law, (subject to a point left open in the court's judgment) KFG did not become a party to the FDA or the arbitration agreement of the FDA, the two questions raising the same issue.
(i) The terms of the FDA provided for the express choice of English law to govern the arbitration agreement in clause 14 of the FDA.
(ii) As a matter of English law, in the absence of written consent as required by the terms of the FDA or any matters capable of giving rise to an estoppel, KFG could not have become a party to the FDA and hence the arbitration agreement.
(iii) The judge should not have granted an adjournment and should have made a final determination that KFG was not a party to the FDA or the arbitration agreement, so that the award is not enforceable against KFG.
(i) What law governs the validity of the arbitration agreement?
(ii) If English law governs, is there any real prospect that a court might find at a further hearing that KFG became a party to the arbitration agreement in the FDA?
(iii) As a matter of procedure, was the Court of Appeal justified in giving summary judgment refusing recognition and enforcement of the award?
"(iv) Where the law applicable to the arbitration agreement is not specified, a choice of governing law for the contract will generally apply to an arbitration agreement which forms part of the contract.
(v) The choice of a different country as the seat of the arbitration is not, without more, sufficient to negate an inference that a choice of law to govern the contract was intended to apply to the arbitration agreement.
(vi) Additional factors which may, however, negate such an inference and may in some cases imply that the arbitration agreement was intended to be governed by the law of the seat are: (a) any provision of the law of the seat which indicates that, where an arbitration is subject to that law, the arbitration agreement will also be treated as governed by that country's law; or (b) the existence of a serious risk that, if governed by the same law as the main contract, the arbitration agreement would be ineffective. Either factor may be reinforced by circumstances indicating that the seat was deliberately chosen as a neutral forum for the arbitration.
(vii) Where there is no express choice of law to govern the contract, a clause providing for arbitration in a particular place will not by itself justify an inference that the contract (or the arbitration agreement) is intended to be governed by the law of that place."
"It has never been questioned that these conflict rules are to be interpreted as uniform rules which supersede the relevant conflict rules of the country in which the award is relied upon."
Similarly, Fouchard Gaillard Goldman (at p 985) states that the law governing the validity of the arbitration agreement "must be determined by applying a choice of law rule set forth in the Convention itself."
"The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;" (Emphasis added)
"There is no indication in this clause (a) as finally adopted that the decision of the parties as to the law which is to govern their agreement need be in the agreement itself or even in writing. Any form of agreement, express or tacit, would appear to be sufficient."
We read this statement as commentary by the author of the Summary Analysis, Mr D W Haight, who represented the ICC at the Conference, rather than (as Mr Diwan suggested) part of the preparatory history of the Convention to which recourse may be had as a supplementary means of interpretation in accordance with article 32 of the Vienna Convention on the Law of Treaties 1969. Nevertheless, we agree with this commentary as an explanation of what the words used in article V(1)(a) are reasonably understood to mean.
"Article 1: Content of the Agreement
This Agreement consists of the foregoing paragraphs, the terms of agreement set forth herein below, the documents stated in it, and any effective Exhibit(s), Schedule(s) or Amendment(s) to the Agreement or to its attachments which shall be signed later on by both Parties. It shall be construed as a whole and each of the documents mentioned is to be regarded as an integral part of this Agreement and shall be interpreted as complementing the others.
Article 14: Settlement of Disputes
14.2. Except for those matters which specifically involve the Mark, any dispute, controversy or claim between LICENSOR and LICENSEE with respect to any issue arising out of or relating to this Agreement or the breach thereof, … shall, failing amicable settlement, on request of LICENSOR or LICENSEE, be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.
14.3. The arbitrator(s) shall apply the provisions contained in the Agreement. The arbitrator(s) shall also apply principles of law generally recognised in international transactions. The arbitrator(s) may have to take into consideration some mandatory provisions of some countries ie provisions that appear later on to have an influence on the Agreement. Under no circumstances shall the arbitrator(s) apply any rule(s) that contradict(s) the strict wording of the Agreement.
14.5. The arbitration shall be conducted in the English language, in Paris, France.
Article 15: Governing Law
This Agreement shall be governed by and construed in accordance with the laws of England."
"The arbitrator(s) shall also apply principles of law generally recognised in international transactions."
The parties are agreed - and we are content to accept - that the reference to "principles of law generally recognised in international transactions" is to be understood as a reference to the UNIDROIT Principles of International Commercial Contracts. These are a set of principles formulated by a group of international scholars and published by the Governing Council of the International Institute for the Unification of Private Law ("UNIDROIT"), an intergovernmental organisation. The UNIDROIT Principles are now in their fourth edition, published in 2016. They cover most of the main areas of contract law.
"[instruments such as the UNIDROIT Principles] are not issued, endorsed or implemented by law-making bodies. They are essentially non-binding tools made available to the international community for adoption in contracts and use by judges and legislatures."
See Roy Goode, "International Restatements of Contract and English Contract Law" (1997) 2 Unif L Rev 231, 233.
"The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate."
The phrase "the rules of law" is broader than the rules of a national legal system and is capable of including non-state rules of law such as the UNIDROIT Principles.
"Article 3: Grant of Rights
3.1. License: … This grant is intended to be strictly personal in nature to the LICENSEE and no rights hereunder whatsoever may be assigned or transferred by LICENSEE in whole or in part without the prior written approval of LICENSOR.
Article 17: Waiver
17.1. Any waiver of any term or condition of the Agreement must be in writing and signed by the [a]ffected party ...
Article 19: Rights not Transferable
The parties hereto agree that all rights granted to LICENSEE under this Agreement are personal in nature and are granted in reliance upon various personal and financial qualifications and attributes of LICENSEE. LICENSEE'S interest under this agreement is not transferable or assignable, under any circumstances whatsoever, voluntarily, by operation of law or otherwise without the written consent of LICENSOR or purported transfer or assignment of all or any part of such interest shall immediately terminate this Agreement without further action of the parties and without liability to LICENSOR or its designee of any nature.
Article 24: Entire Agreement
... No interpretation, change, termination, or waiver of any provision hereof, and no consent or approval hereunder, shall be binding upon the other party or effective unless in writing signed by LICENSEE and by an authorized representative of LICENSOR or its designee.
Article 26: Amendment of Agreement
The Agreement may only be amended or modified by a written document executed by duly authorised representatives of both Parties."
"The first is that it prevents attempts to undermine written agreements by informal means, a possibility which is open to abuse, for example in raising defences to summary judgment. Secondly, in circumstances where oral discussions can easily give rise to misunderstandings and crossed purposes, it avoids disputes not just about whether a variation was intended but also about its exact terms. Thirdly, a measure of formality in recording variations makes it easier for corporations to police internal rules restricting the authority to agree them."
"the scope of estoppel cannot be so broad as to destroy the whole advantage of certainty for which the parties stipulated when they agreed upon terms including the No Oral Modification clause. At the very least, (i) there would have to be some words or conduct unequivocally representing that the variation was valid notwithstanding its informality; and (ii) something more would be required for this purpose than the informal promise itself: see Actionstrength Ltd v International Glass Engineering IN.G.LEN SpA  2 AC 541, paras 9, 51, per Lord Bingham of Cornhill and Lord Walker of Gestingthorpe."
"… there are four main differences. First, a novation requires the consent of all three parties involved … But (in the absence of restrictions) an assignor can assign without the consent of either assignee or the debtor. Secondly, a novation involves the termination of one contract and the creation of a new one in its place. In the case of an assignment the assignor's existing contractual rights are transferred to the assignee, but the contract remains the same and the assignor remains a party to it so far as obligations are concerned. Thirdly, a novation involves the transfer of both rights and obligations to the new party, whereas an assignment concerns only the transfer of rights, although the transferred rights are always 'subject to equities'. Lastly, a novation, involving the termination of a contract and the creation of a new one, requires consideration in relation to both those acts; but a legal assignment (at least), can be completed without the need for consideration."
"… there are in any event very real unanswered questions arising from the Majority's acceptance of this case without further ado:
(i) When did the licence change from there being an exclusive licensee to two licensees?
(ii) How and when did [Al Homaizi] consent to this?
(iii) Above all, what were the terms of such transfer or 'novation'? Were the two licensees to be jointly and severally liable? Was the new additional licensee to be liable in respect of all previous liabilities?"
"… the existing authorities establish that an attempted assignment of contractual rights in breach of a contractual prohibition is ineffective to transfer such contractual rights. … If the law were otherwise, it would defeat the legitimate commercial reason for inserting the contractual prohibition, viz, to ensure that the original parties to the contract are not brought into direct contractual relations with third parties."
"Plainly if KFG acted as if it was the licensee that would not be enough, not least because, by virtue of the terms of the FDA, KFG would not believe itself to be at risk of becoming the licensee, with all its obligations, by doing so …"
"A contract in writing which contains a clause requiring any modification or termination by agreement to be in a particular form may not be otherwise modified or terminated. However, a party may be precluded by its conduct from asserting such a clause to the extent that the other party has reasonably acted in reliance on that conduct."
"In carrying out their obligations under the Agreement, the Parties shall act in accordance with good faith and fair dealing. The provisions of the Agreement, as well as any statements made by the Parties in connection therewith, shall be interpreted in good faith."
This provision cannot, however, be relied upon as against KFG unless and until it is established that KFG is party to the FDA or is precluded from contending otherwise. It cannot assist in determining whether or not either one or the other has occurred.
"Neither article V(1)(a) nor section 103(2)(b) hints at any restriction on the nature of the exercise open, either to the person resisting enforcement or to the court asked to enforce an award, when the validity (sc existence) of the supposed arbitration agreement is in issue. The onus may be on the person resisting recognition or enforcement, but the language enables such person to do so by proving (or furnishing proof) of the non-existence of any arbitration agreement. This language points strongly to ordinary judicial determination of that issue."
"Where an application for the setting aside or suspension of the award has been made to [a competent authority of the country in which, or under the law of which, that award was made], the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award."
Article VI of the Convention and section 103(5) thus gives the court a discretion ("may") to adjourn enforcement proceedings if it considers it "proper" to do so pending a decision by the court of the seat whether to set aside the award.
"en vertu d'une règle matérielle du droit international de l'arbitrage, la clause compromissoire est indépendante juridiquement du contrat principal qui la contient directement ou par référence et … son existence et son efficacité s'apprécient, sous réserve des règles impératives du droit français et de l'ordre public international, d'après la commune volonté des parties, sans qu'il soit nécessaire de se référer à une loi étatique …"
"by virtue of a substantive rule of international arbitration, the arbitration agreement is legally independent of the main contract containing or referring to it, and the existence and validity of the arbitration agreement are to be assessed, subject to the mandatory rules of French law and international public policy, on the basis of the parties' common intention, there being no need to refer to any national law."
The only exception is where a choice of national law to govern the arbitration agreement is contained within the arbitration agreement itself.
"he overlooked that the decision of the French Court was not relevant to the questions of English law and its application to the facts which were before the judge. This was a fortiori the position given that the French Court would not apply the article V(1)(a) of the New York Convention test in determining the law of the arbitration agreement, but internal French law."
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