## Facts

- A Mozambique seller and a Dutch buyer entered an international contract for the sale of seed potatoes.
- The contract provided for ICC arbitration seated in Switzerland.
- The contract included a choice-of-law clause stating that “the law applicable is that known in England.”
- A dispute arose under the sales contract, and arbitration was commenced.
- The tribunal bifurcated proceedings and issued a preliminary award addressing only the law governing the merits.
- The buyer argued (i) the clause did not clearly select English substantive law and (ii) English law could not be chosen because the transaction lacked a sufficient connection to England.
- The seller argued the clause was an effective and permissible selection of English law.

## Issues

1. Whether the clause “the law applicable is that known in England” constitutes a sufficiently clear and effective choice of English law to govern the contract.
2. Whether party autonomy permits selection of a governing law that lacks an objective territorial connection to the parties or transaction.
3. If the clause were ineffective, what conflict-of-laws method should determine the governing law in an ICC arbitration seated in Switzerland.

## Decision

- The tribunal found the clause to be an effective choice of English law as the governing substantive law.
- The tribunal rejected the argument that a valid choice of law requires an objective connection between the chosen law and the transaction.
- The tribunal directed that English law would govern the merits going forward, leaving substantive liability and quantum issues for a later phase.

## Legal Principles

- A choice-of-law clause need not use technical formulae if it objectively indicates an intent to select a particular national legal system as the law governing the contract.
- In international commercial arbitration, party autonomy generally allows selection of a governing law even if the chosen law has no territorial link to the parties or transaction.
- Limits on party autonomy include mandatory rules of law that may apply notwithstanding the parties’ choice and public policy constraints at the seat or enforcement fora.
- Where a valid choice is established, arbitral tribunals should give effect to it rather than defaulting to conflict-of-laws rules.

## Conclusion

The tribunal treated the contract’s reference to law “known in England” as an effective selection of English law and held that, in international commerce, parties may choose a neutral governing law without demonstrating a connecting factor, subject to mandatory-law and public-policy limits.


Preliminary Award in ICC Case No. 5505, 13 Y.B. Com. Arb. 110 (Int’l Chamber Com. Arb. Trib. 1988)