Arbitration and Conciliation Act, 1996 — Pt. I or Pt. II — Doctrine of severability

Cases Reported in 2014 SCC Vol. 7 August 28, 2014 Part 4

Law of substantive contract does not determine law of arbitration agreement/lex arbitri. Parties are entitled to agree that law of one country would govern substantive contract and laws of another country would apply to arbitration agreement. Parties can also agree that conduct of reference to arbitration would be governed by laws of yet a third country. As in this case, parties had by agreement provided that substantive contract (PSC) will be governed by laws of India, arbitration agreement by laws of England and appointment of arbitrators by Permanent Court of Arbitration at The Hague in case of failure of parties to appoint arbitrator(s), and the arbitration proceedings will be conducted in accordance with the UNCITRAL Rules, 1976. Further, agreement also specifically provided that right to arbitrate disputes and claims under said contract shall survive termination of contract, hence, applying doctrine of severability, there is no scope for confusion as to law governing the substantive contract (PSC) and law governing arbitration agreement. Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603

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