Arbitration News – Which law governs your arbitration agreement?
(Article by Dr. A. Tsavdaridis, published in the Arbitration & ADR Newsletter of the ILO on February 25, 2016)
The place of arbitration and the law governing the main contract are important factors in
determining whether the parties made a tacit choice as to the law governing an arbitration
agreement. In the absence of a choice of law by the parties, Greek law governs the validity of
arbitration agreements relating to international commercial arbitrations held in Greece.
Facts
A dispute arose between a Romanian manufacturer of Dacia vehicles and a Greek distributor. The
distributor alleged that the manufacturer had breached the exclusive distribution agreement and
initiated court proceedings in Greece seeking approximately €20 million in damages, despite the
existence of an arbitration clause that provided for International Chamber of Commerce arbitration
in Paris. While the main contract also provided that it was governed by French law, there was no
explicit agreement with respect to the law governing the arbitration agreement.
The Athens First Instance Court accepted the respondent’s plea to stay the court proceedings(1) and
its decision was upheld by the Athens Court of Appeal.(2) The distributor subsequently appealed to
the Supreme Court.
The distributor’s main argument was that Paris was no longer a neutral place of arbitration (and thus
the arbitration agreement was null and void), as the manufacturer had since come under French
control. In addition, the distributor asserted that the place of arbitration could not – under the
circumstances – serve as an indication of the parties’ will with respect to the law governing the
arbitration agreement. However, the Court of Appeal held that the nationalities of the parties or their
shareholders were not criteria for selecting the place of arbitration, and that the place of arbitration
cannot in itself cast doubt – in advance – over the independence and impartiality of the arbitrators.
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