## Facts

- An English merchant, Hamlyn & Co., and a Scottish distilling firm, Roderick Kemp & Co. (Talisker Distillery), executed a memorandum of agreement in London (Jan. 27, 1892).
- The seller agreed to sell Hamlyn all grains produced at the distillery for a set price; Hamlyn agreed to supply and erect a patent grain-drying machine at the distillery.
- The seller agreed to maintain the machine, provide steam and labor for drying, and bag and deliver the grains free on board at Carbost, Isle of Skye; the arrangement was to continue for ten years.
- The contract contained an arbitration clause requiring disputes to be settled by arbitration “by two members of the London Corn Exchange, or their umpire, in the usual way.”
- After performance disputes arose, the seller brought an action for breach in the Scottish Court of Session and used Scottish arrestment procedure to found jurisdiction over Hamlyn.
- Hamlyn defended on the grounds that (1) the Scottish court lacked jurisdiction and (2) the action was excluded by the arbitration clause.
- The Scottish courts rejected Hamlyn’s arbitration defense, treating Scottish law as governing and viewing the clause as invalid under Scots law because the arbiters were not individually named.

## Issues

1. What law governs the interpretation and validity of the arbitration clause in a cross-border contract: the place of contracting, the place of performance, or the parties’ expressed or implied intention?
2. If English law governs the arbitration clause, is a reference to arbitration by “two members of the London Corn Exchange” valid even though the arbitrators are unnamed?
3. Must a Scottish court give effect to an arbitration clause valid under its proper law, despite a contrary domestic rule that would invalidate a similarly framed clause under Scots law?

## Decision

- The House of Lords reversed the Court of Session’s judgment.
- The arbitration clause was governed by English law because its terms and context showed the parties intended English arbitral arrangements (London Corn Exchange; arbitration “in the usual way”).
- Under English law, the arbitration agreement was valid and binding despite not naming individual arbitrators.
- No overriding Scottish public policy justified refusing effect to the parties’ English-law arbitration agreement; the Scottish action was required to yield to arbitration.

## Legal Principles

- For contracts involving parties connected to different legal systems, the governing law for interpretation and validity depends primarily on the parties’ expressed or implied intention, rather than an automatic rule tied only to the place of contracting or performance.
- An arbitration clause may be treated as a separable contractual obligation for choice-of-law purposes, and may be governed by a different proper law than other contractual obligations.
- A forum court should enforce an arbitration clause that is valid under its proper law, absent a compelling local public-policy reason, even if the clause would be invalid under the forum’s domestic law when viewed in isolation.
- Under English law, arbitrators may be sufficiently identified by reference to a class or institution (e.g., members of a named exchange) without individual naming.

## Conclusion

The House of Lords held that the parties’ implied choice of English law governed the arbitration clause, rendering it enforceable and requiring the Scottish court proceedings to be displaced in favor of arbitration despite Scots-law rules that would otherwise treat the clause as invalid.


Hamlyn & Co. v. Talisker Distillery, [1894] A.C. 202 (H.L. 1894)