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Commercial Court confirms principles relating to law governing arbitration agreements

25 February 2014. Published by Chris Ross, Partner

The case of Habas Sinai v VSC Steel Company[1] reinforces the importance of providing for a governing law in contracts, particularly if the parties want an arbitration agreement to be governed by a different law from the law of the seat of the arbitration.

The Claimant, Habas, a Turkish company, entered into a contract (through its agents, Charter Alpha Limited and Steel Park Limited) with the defendant, VSC, a Hong Kong company, for the sale by Habas of 15,000 MT of steel. No delivery was made and VSC commenced arbitration proceedings.  The contract specified ICC arbitration in London but did not provide for a governing law.

In the absence of a separate specified law applying to the arbitration agreement an agreement will be governed by the principles laid down in Sul America, which meant in this case it was the law of the seat i.e. English law.   For the full facts of the case and commentary please click here.

[1] Habas Sinai Ve Tibbi Gazlar Istihsal Andustrisi AS v VSC Steel Company Ltd [2013] EWHC 4071 (Comm)

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