What’s the Law? How Indian Courts Should Determine the Law Governing the Arbitration Agreement

Abstract

Determination of the law governing the arbitration agreement is a long-standing subject of controversy. The highest courts in the United Kingdom and Singapore have now provided definitive guidance in their respective jurisdictions using a largely identical test, which we call a common choice of law framework. No such common framework for determining the law of the arbitration agreement exists in India. Despite the Indian Supreme Court’s early observations on this issue in NTPC v. Singer (1992), subsequent Supreme Court and High Court decisions have adopted varying approaches, which has resulted in jurisprudential uncertainty. We argue that consistent with India’s increasing friendliness to arbitration and the Indian Supreme Court’s prior decisions, Indian courts should adopt the common choice of law framework as articulated in the United Kingdom and Singapore. We further argue that the Indian courts should recognize the validation principle as articulated by the UK Supreme Court. Law governing the arbitration agreement, choice of law, validation principle, closest and most real connection, reasonable commercial parties, business efficacy, pro-arbitration approach