The UK Supreme Court recently delivered its second judgment in as many years on the law to be applied to determine the validity of an arbitration agreement. Last year, in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb¹, the question of which law governed the validity and scope of an arbitration agreement arose before any arbitration had taken place. Now, in Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait)², a similar question arose in circumstances where an arbitration had already taken place and proceedings were brought in England to enforce the award. With the Supreme Court’s latest judgment parties to arbitration agreements should now hopefully be in no doubt as to how the English courts will approach the issue, no matter when it arises. This decision is also an example of “exceptional circumstances” where the English court has refused enforcement of an arbitral award.
Kabab-Ji SAL (“Kabab-Ji”), a Lebanese company, entered into a series of franchise agreements with Al Homaizi Foodstuff Company (“Al Homaizi”) under which Kabab-Ji granted Al Homaizi licenses to operate franchises using Kabab-Ji’s Lebanese and Middle Eastern restaurant concept. Each of the franchise agreements were governed by English law.
Following a restructuring of the Al Homaizi group, Al Homaizi became a subsidiary of Kout Food Group (“KFG”) and, when a dispute arose under the franchise agreements, Kabab-Ji commenced ICC arbitration proceedings against KFG in Paris. Notably, the proceedings were not brought against Al Homaizi.