## Facts

- A Korean seller and a Jordanian buyer concluded three international sale-of-goods contracts executed in Korea.
- Each contract provided for final arbitration under the ICC in Paris, France, but did not specify a governing substantive law.
- The Jordanian buyer had a separate resale contract with an Iraqi buyer for the same goods.
- A dispute arose concerning performance under the sale contracts, and the Korean seller commenced ICC arbitration in Paris.
- The Jordanian buyer refused to appoint an arbitrator; the ICC Court constituted the tribunal under the ICC Rules.
- The Jordanian buyer objected to jurisdiction, arguing the arbitration clause was invalid under a Jordanian statute that made unenforceable agreements preventing Jordanian courts from exercising jurisdiction over certain disputes involving sale and carriage of goods.
- Because no governing-law clause existed, the tribunal also had to determine what substantive law or rules governed the merits.

## Issues

1. Whether a Jordanian statute restricting agreements that exclude Jordanian court jurisdiction rendered the ICC arbitration clause invalid or inapplicable in an arbitration seated in Paris arising from contracts executed in Korea.
2. How an ICC tribunal should identify the substantive law (or rules of law) governing the merits when the contracts contain no choice-of-law clause.

## Decision

- The tribunal rejected the jurisdictional objection and held the arbitration agreement valid and enforceable.
- The tribunal concluded the Jordanian statute did not apply in a manner that would defeat the parties’ ICC arbitration agreement for contracts executed in Korea and arbitrated in France.
- On the merits, the tribunal proceeded on the basis that it could determine the applicable substantive law through an appropriate conflicts approach and/or by selecting suitable rules of law for the international transaction, rather than treating the Jordanian restriction as controlling.
- The publicly reported materials do not identify the specific substantive law ultimately applied to resolve the contract claims.

## Legal Principles

- Domestic statutes restricting arbitration or preserving local court jurisdiction do not automatically invalidate an international arbitration clause where the contract formation and arbitral seat are outside the enacting state.
- An arbitration agreement may be assessed as a separable undertaking for purposes of jurisdiction, supporting enforcement despite unilateral domestic restrictions invoked by one party.
- In ICC arbitration, when the contract is silent on governing law, the tribunal may determine the applicable law by applying conflicts rules it considers appropriate or by directly selecting the law or rules of law it considers appropriate to the dispute.
- Party agreement to ICC arbitration in a neutral seat supports giving effect to the arbitration clause and limiting the reach of domestic anti-arbitration provisions lacking strong connecting factors to the arbitration.

## Conclusion

The tribunal upheld ICC jurisdiction notwithstanding the buyer’s reliance on a Jordanian anti-arbitration statute and treated the dispute as governed by an international choice-of-law approach appropriate to a Paris-seated arbitration over contracts executed in Korea, with the reported significance centered on enforcing the arbitration agreement and the tribunal’s flexible method for selecting applicable substantive rules absent a governing-law clause.


Seller (Korea) v. Buyer (Jordan), 20 Y.B. Com. Arb. 41 (Int’l Chamber Com. Arb. 1995)