## Facts

- Greek buyers (Tzortzis and Sykias) agreed to buy the steamship “Montrose” from Swedish sellers (Monark Line A/B) for £38,000 on a Scandinavian standard sale form.
- The contract required a deposit with a Stockholm bank and contemplated payment arrangements transferable into Swedish kroner.
- Delivery and takeover of the vessel were to occur at a Swedish west coast port.
- The contract did not contain an express governing-law clause.
- It contained an arbitration clause requiring disputes to be decided by arbitration in the City of London, with arbitrator appointment mechanisms linked to the High Court in London.
- A dispute arose and proceeded to arbitration in London.
- The buyers argued Swedish law was the proper law because the contract’s formation and performance were centered in Sweden and Swedish law was more favorable to them.
- The sellers argued that the London arbitration clause implied English law as the proper law.

## Issues

1. Where a contract contains no express choice-of-law clause, does an agreement to arbitrate in London imply that English law is the contract’s proper law, even if most connecting factors point to another country?

## Decision

- The Court of Appeal dismissed the buyers’ appeal.
- The court affirmed the arbitral ruling and the Commercial Court decision that English law was the proper law of the contract.
- The court treated the London arbitration clause as a decisive indicator of the parties’ implied choice of English law.

## Legal Principles

- In the absence of an express choice of governing law, the proper law is determined by identifying the system of law with the closest and most real connection to the transaction.
- Contractual terms relevant to dispute resolution (including the agreed seat of arbitration) are part of the connecting factors for determining proper law.
- A clause selecting arbitration in a particular country may constitute, or strongly evidence, an implied choice of that country’s law as the proper law of the underlying contract.
- An arbitration seat can outweigh stronger factual connections (such as place of contracting and performance) when the overall inference is that parties intended disputes to be resolved under the seat’s legal system.

## Conclusion

The Court of Appeal held that, despite overwhelmingly Swedish elements in the ship sale, the parties’ agreement to arbitrate in London implied an intention for English law to govern the contract, making English law the proper law in the absence of an express choice-of-law clause.


Tzortzis & Sykias v. Monark Line A/B, [1968] 1 W.L.R. 406 (C.A.)