The BVI’s Arbitration Act 2013 (the Act) is based on, and enacts multiple provisions of, the UNCITRAL Model Law. It contains provisions concerned with arbitration agreements. For instance, Article 32 of the Act provides that the arbitral tribunal may rule on its own jurisdiction including any objections with respect to the validity of the arbitration agreement. Article 32 further provides that for that purpose an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. It follows from provisions such as this that the governing law of an arbitration agreement is a distinct issue from the law which governs the wider contract within which arbitration agreements are commonly contained.

A question arises as to how to determine the law which governs an arbitration agreement. In English law this question was resolved in Enka v Chubb. That decision held that the law applicable to the arbitration agreement will be the law chosen by the parties to govern it or in the absence of such a choice, the system of law with which the arbitration agreement is most closely connected. Where the law applicable to the arbitration agreement is not specified, a choice of governing law for the contract as a whole will generally apply as an implied choice to the arbitration clause. However, other factors may imply that the law of the seat of the arbitration is intended to be that which governs the law of the arbitration agreement. In the absence of choice, the law of the seat will generally be the law governing the arbitration agreement.

In England, the Law Commission has, however, proposed overturning Enka v Chubb  as being overly complex. Furthermore, parties may be surprised to find that having selected an arbitration-friendly jurisdiction such as England as the seat of the arbitration, questions such as the validity, scope and interpretation of arbitration agreements may be governed by the law of a less arbitration-friendly jurisdiction. Consequently a bill currently passing through Parliament proposes a new rule which provides, in summary, that the law that parties expressly agree applies to the arbitration agreement will govern – although a choice of law as to the main contract does not constitute an express agreement as to the law of the arbitration agreement. In the absence of express agreement the law of the seat will govern.

The BVI Court will, therefore, likely have a choice if and when the arbitration bill becomes law. It will need to choose whether to follow Enka v Chubb  or whether to follow the terms of the new English arbitration bill. Given the differences between the English and BVI arbitration acts, there seems to be latitude for both approaches although this issue could usefully be resolved in the BVI by legislative intervention once the English arbitration bill is enacted.