By: King Fung Tsang & Weijie Lin
The governing law of arbitration agreements determines the validity of an arbitration agreement and equally the entire arbitration. However, there is huge disagreement around the world as to the appropriate choice-of-law rules for deciding this governing law, particularly between rules favoring the governing law of the underlying contract (represented by the English approach) and the curial law (represented by the Chinese approach).
By comparing the choice-of-law rules of these two jurisdictions, the authors argue that this disagreement is futile and unnecessary because both jurisdictions’ choice-of-law rules are pro-validity in substance and likely lead to the arbitration agreement being upheld. There is, therefore, no urgency to change the status quo by asking one jurisdiction to follow another’s choice-of-law approach. The authors conducted empirical research on relevant Chinese judicial decisions to add further depth to the comparison.