The arbitration agreement stated:
“14.3 The arbitrator(s) shall apply the provisions contained in the Agreement. The arbitrator(s) shall also apply principles of law generally recognized in international transactions. The arbitrator(s) may have to take into consideration some mandatory provisions of some countries i.e., provisions that appear later on to have an influence on the Agreement. Under no circumstances shall the arbitrator(s) apply any rule(s) that contradict(s) the strict wording of the Agreement.
14.5 The arbitration shall be conducted in the English language, in Paris, France.
15. This Agreement shall be governed by and construed in accordance with the laws of England.”
The ICC tribunal determined that the issue of whether or not K was bound by the arbitration agreement was a matter of French law (Paris, France being the seat of the arbitration), but that the issue as to whether there had been a transfer of rights or obligations under the FDA to Z was a matter of English law (as the substantive law of the FDA), supplemented by the express terms of the contract i.e. as to good faith and principles generally recognised in international transactions. By majority decision, as a matter of English law, there had been a novation inferred by conduct so as to add K as a party to the FDA, such that it was bound by the arbitration agreement and an award of substantial damages was then made against it in favour of J.
K challenged the award, which challenge is expected to be heard by the Paris Court of Appeal in early 2020. Z commenced enforcement proceedings in England and on 7 February 2019, Popplewell J ordered ex parte that the arbitral award be enforced as a judgment. J applied for an adjournment of its own enforcement action under section 103(5) of the Arbitration Act 1996 (the “Act”) pending the resolution of K’s challenge to the arbitral award in Paris. K cross-applied to set aside Popplewell J’s order. The English court was asked to determine these two applications in the context of the proceedings concerning whether the award was enforceable in England by virtue of the New York Convention, as reflected in section 103 of the Act.