Cracking the Code: A Structured Solution to the Law Governing Arbitration Agreement Issue for Indian Arbitration

¹ Vanshika Agarwal is a final year student at West Bengal National University of Juridical Sciences pursuing a degree in B.A. LLB (Hons). 

² Taniya Kedia is a fourth-year student at West Bengal National University of Juridical Sciences pursuing a degree in B.A. LLB (Hons). 

Résumé

The ambiguity surrounding the law governing the arbitration agreement has plagued tribunals across the world in arbitration. Jurisdictions like India, the United Kingdom (UK), Hong Kong, and Singapore, have developed various tools to interpret an arbitration agreement. Yet, Indian courts struggle with finding a uniform approach to determining the law governing the arbitration agreement without an express choice of law clause. The validation principle has recently emerged as a solution that seeks to apply the law that upholds the validity of the arbitration agreement. This principle takes a balanced approach between the law of the main contract and the law of the seat. While there is some agreement in the UK, Hong Kong, and Singapore regarding the application of the validation principle for questions of governing law, India finds itself in a bind with no consolidated framework for this concept. The Supreme Court of India has advocated for applying the law of the main contract to the arbitration agreement through judgments like NTPC v Singer. However, recent judgments have nevertheless questioned the validity and applicability of such jurisprudence. This article proposes a refined adoption of the validation principle with certain caveats, namely that the validity of an existing agreement conforms with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. It contends that such an approach will provide a plausible solution to the dilemma that Indian courts are currently facing when deciding on the law governing arbitration agreements.