## Facts

- A Mozambican party and a Dutch party entered an international sales contract for seed potatoes.
- The contract contained an ICC arbitration clause providing for arbitration in Switzerland.
- The clause included a governing-law phrase stating that “the law applicable is that known in England” (or materially similar wording).
- A dispute arose from performance of the sales contract (e.g., delivery/quality/payment).
- In the arbitration, the parties disputed whether the clause validly selected English substantive law and whether English law could be chosen absent any connection to England.
- The tribunal issued a preliminary (partial) award limited to the applicable-law question, leaving merits issues for later phases.

## Issues

1. Whether the phrase “the law applicable is that known in England” constitutes a valid and effective choice of English substantive law governing the contract.
2. Whether, in an ICC arbitration seated in Switzerland, the parties may select a governing law with no objective connection to the transaction.
3. Whether the reference to “law … known in England” concerns procedural arbitration law, substantive contract law, or both.

## Decision

- The tribunal interpreted the governing-law phrase as an effective selection of English substantive law for the contract.
- The tribunal upheld party autonomy to choose English law even without an objective connection between the transaction and England.
- The tribunal treated Swiss law (as the law of the seat) as governing arbitral procedure, while English law governed the parties’ substantive contractual rights and obligations.

## Legal Principles

- In international arbitration, tribunals generally give effect to the parties’ expressed choice of substantive governing law.
- A choice of law is not necessarily invalid merely because the chosen law lacks territorial or transactional connections to the parties or performance.
- A foreign-law reference in an arbitration clause is commonly construed as selecting substantive law, while the lex arbitri remains the law of the seat, absent clear contrary language.
- Party-chosen substantive law remains subject to the application of mandatory rules and public policy constraints associated with the seat and potentially affected jurisdictions.

## Conclusion

The preliminary award treated an informal governing-law reference to “law … known in England” as a valid choice of English substantive law and recognized that, in a Switzerland-seated ICC arbitration, parties may choose a nonconnected national law to govern the merits while arbitral procedure remains controlled by the law of the seat.


Buyer (Mozambique) v. Seller (Neth.), 13 Y.B. Com. Arb. 110 (ICC Arb. 1988)