10Oct

Substantive Validity Agreement

The answer to this question can have important consequences for the real world. It may, for example, affect (i) whether a non-signatory may participate in arbitration proceedings; (ii) whether the tortious claims are covered by the arbitration agreement; and (iii) the validity of the arbitration agreement. In a recent case of the Commercial Court of England, Habas Sinai, an agent (contrary to the instructions of the principal), voted a contract without applicable legislation and an arbitration clause providing for icc arbitration in London. In the absence of an explicit provision of the applicable law in the substantive contract, the applicable law of the arbitration agreement would normally be that of the registered office, i.e. English law. It was argued that, in that case, the seat should be ignored because it had been agreed without real authority. .