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Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services Ltd [2008] EWHC 426 (TCC) dealt with an inconsistency between the designated “seat” of the hearing and the legal ‘seat’ of the arbitration.

Akendhead J of the English Technology and Construction Court confirmed that the place where the arbitration would be heard would not dictate what the governing or controlling law of the arbitration would be. Rather, “one needs to consider what, in substance, the parties agreed was the law of the country which would juridically control the arbitration”.

Background

In Braes v Alfred McAlpine, a dispute arose relating to an Engineering, Procurement and Construction (EPC) contract to carry out works in relation to the construction of 36 wind turbines in Scotland. The claimant, Braes, applied to the English Court for leave to appeal against the award of an arbitrator in favour of the defendant, Alfred McAlpine. The defendant relied on the arbitration clause of the EPC which provided that “Glasgow, Scotland” was to be the seat of any arbitration, and sought a declaration that the English Court had no jurisdiction to entertain the appeal.

Seat determined by choice of law

Although the arbitration clause of the EPC provided that “Glasgow, Scotland” was to be the seat of any arbitration, it otherwise provided for the exclusive jurisdiction of the courts of England and Wales and the application of the Arbitration Act 1996. As the Arbitration Act 1996, pursuant to s2(1), only applies where the seat of arbitration is in England and Wales or Northern Ireland, Akendhead J ruled that on a proper construction of the EPC, the legal seat of the arbitration was England. In forming this view, Akendhead J applied Naviera Amazonica Peruana SA v Cia Internacional de Seguros del Peru [1988] 1 Lloyd's Rep 116.

Akendhead J proceeded to dismiss the claimant’s appeal and upheld the arbitrator’s award in favour of the defendant.

What this means to you

In the February 2008 client alert, we reported on the English Court of Appeal’s decision in C v D [2007] EWHC 1541 (Comm) (5 December 2007) which considered the question of which Court exercised supervisory jurisdiction where the parties did not stipulate a law in relation to the arbitration agreement. Akendhead J referred to C v D and noted that “the seat or an arbitration and the choice of procedural law will almost invariably coincide…”

Braes v Alfred McAlpine demonstrates that merely stipulating in your agreement that a particular place will be the “seat” of the arbitration may be insufficient to give the courts of that place supervisory jurisdiction. This is because designation of a supervisory jurisdiction by reference to a particular law (in this case the English Arbitration Act) may be construed as the true choice of seat by the parties, notwithstanding the fact that the contract identifies a different seat. The practical upshot of this decision is that parties should stipulate a place as the seat without any reference to “other countries” or laws.