Kabab-Ji SAL: A convergence in legal thinking?

By Joshua Ng


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In the absence of a specifying clause, how do we determine the legal system that an international arbitration agreement is governed by (“governing law”)? The UK Supreme Court in Kabab-Ji SAL v Kout Food Group [2021] UKSC 48 answered this question. In Kabab-Ji, the Court had to determine the governing law in order to determine the validity of an arbitration agreement. The Court ruled that, in the absence of a specifying clause, the governing law was presumed to be the same as that of the main contract. [1] This is in spite of the fact that under said presumption, the agreement was invalid. Prima facie, this ruling stands in contrast to Enka v Chubb [2020] UKSC 38: in Enka, the Court held that invalidation of the arbitration agreement was valid grounds for rejecting the main contract presumption. [2] In fact, the ruling in Kabab-Ji seems to mirror Singaporean legal thinking in BNA v BNB and another [2019] SGCA 84 instead.


The law in Singapore


Legal thinking in Kabab-Ji appears, prima facie, to have converged with Singaporean legal thinking. In BNA, the Singapore High Court reached a similar conclusion to that in Kabab-Ji: there is a strong presumption for the governing law of the main contract to apply to the arbitration agreement, even if the governing law would invalidate the arbitration agreement. [3]


Same same, but different?


However, commentators might distinguish Kabab-Ji from BNA based on the facts. In Kabab-Ji, the parties had not evidenced a clear intention to arbitrate. [4] As such, it was open to the Court to apply the governing law of the main contract, invalidate the arbitration agreement, and depart from Enka. In this sense, Enka and Kabab-Ji are not inconsistent. Meanwhile, in BNA, the parties had evidenced an intention to arbitrate, yet the courts invalidated the agreement anyway, rejecting an “arbitration at all costs” approach. [5]


Evaluation and Conclusion


Nevertheless, the legal thinking behind Kabab-Ji and BNA is still highly similar. Both cases are underpinned by the fundamental desire to give effect to the parties’ intentions or lack thereof. Rather than viewing BNA as a case where there was a blatant disregard for the parties’ intentions, it might be argued that the Court actually respected their intention to arbitrate in a particular jurisdiction. In fact, Enka might be the anomaly in that it strained the natural meaning of the contract in order to validate the arbitration agreement. [6] Thus, Kabab-Ji has in fact signalled a convergence with Singaporean legal thinking.





References:

[1] Kabib-Ji SAL, Lord Hamblen SCJ and Lord Leggatt SCJ at [35]

[2] Enka, Lord Hamblen SCJ and Lord Leggatt SCJ at [97]

[3] BNA, Steven Chong JA at [90]-[95]

[4] Kabib-Ji SAL, Lord Hamblen SCJ and Lord Leggatt SCJ at [51]

[5] Herbert Smith Freehills, “SINGAPORE COURT OF APPEAL CONFIRMS THAT THE PARTIES’ INTENTION TO ARBITRATE SHOULD NOT BE GIVEN EFFECT “AT ALL COSTS”, https://hsfnotes.com/arbitration/2020/01/17/singapore-court-of-appeal-confirms-that-the-parties-intention-to-arbitrate-should-not-be-given-effect-at-all-costs/, accessed Dec 11 2021

[6] Enka, Lord Burrows SCJ and Lord Sales SCJ (Dissenting) at [228]