DALLAH CASE.

On 3 November 2010 the UK Supreme Court delivered its decision in Dallah -v- Pakistan1. The
Supreme Court refused to enforce a French ICC award against assets of the Government of Pakistan
in England, on the grounds that the Government was not a party to the relevant arbitration
agreement. The case has prompted a great deal of debate, in particular because the French Court
of Appeal subsequently ruled (in an application challenging the award in France) that the
Government was a party to the arbitration agreement.
Background:
Dallah Real Estate and Tourism Holding Co (Dallah) provides accommodation and other services to
Muslims performing the Hajj. On 24 July 1995 it signed a memorandum of understanding (MoU) with
the Government of Pakistan (Government), under which it agreed to provide accommodation for
pilgrims from Pakistan. It proceeded to acquire land in Mecca for this purpose. Subsequently on 10
September 1996 the MoU was formalised in an agreement signed by Dallah and the Awami Hajj
Trust (Agreement). The Awami Hajj Trust had been set up by the Government as a vehicle for the
deal, under a temporary Ordinance. In November 1996, however, there was a change of
government in Pakistan. The new administration (whether intentionally or by oversight) allowed the
Ordinance to lapse, with the result that the Awami Hajj Trust ceased to exist. The Government also
informed Dallah that the Agreement had been discharged. In May 1998 Dallah started an ICC
arbitration in Paris against the Government. The Government denied the tribunal had jurisdiction
over it because it was not a party to the Agreement, including the arbitration clause therein.
However, by a partial award in June 2001 the tribunal decided that it did have jurisdiction, and in
June 2006 it awarded Dallah damages of over US$20m.Dallah tried to enforce the award in the
English High Court but the Government successfully argued that it was not party to the Agreement.
After that decision was upheld by the Court of Appeal, Dallah appealed to the Supreme Court.
Decision of the Supreme Court: The Supreme Court dismissed Dallah's appeal against the
decision of the Court of Appeal.
Competence-competenceBy the principle of competence-competence a tribunal can determine
its own jurisdiction. The Supreme Court acknowledged that principle, but it observed that the courts
have the final say on the matter. It also held that while courts at the place of enforcement generally
only conduct a limited review of awards in line with the pro-enforcement policy of the New York
Convention, that does not override the fundamental right to resist enforcement on the basis of not
being party to the arbitration agreement. The Supreme Court needed to make an independent
determination of that issue and "the findings of fact made by the arbitrators and their view of the
law can in no sense bind the court."
Non-signatoriesThe Agreement did not specify a law governing the arbitration agreement. The
Supreme Court therefore decided that French law should apply to the question of whether the
Government was a party, since this was the law of the country where the award was made. Under
French law there needed to be a common intention that the Government would be bound by the
arbitration clause. The existence of a common intention would be determined by the parties'
actions during the negotiation, performance and termination of the Agreement. The Supreme Court
focused on the change in the transaction between the MoU (signed by the Government) and the
Agreement (signed by the Trust). Also, the Government was named in the Agreement, but only as a
guarantor of loans to the Trust. The Supreme Court decided that these factors meant there was no
common intention between the parties for the Government to be a party to the arbitration
agreement.
Comment
This case demonstrates the approach of the English courts to the issue of a Tribunal's jurisdiction.
The English courts will exercise broad powers of review on this issue, and this has prompted some
commentators to suggest that the England's "pro-arbitration" reputation has been eroded. It is
notable that in a recent attempt to set aside an international arbitration award in Singapore3, the
Respondent argued by reference to Dallah that deference should not be accorded to a Tribunal's
decision on a public policy objection. Although that application was unsuccessful, similar arguments
may be advanced by other parties when challenging or resisting enforcement of awards. In contrast
to the Supreme Court's judgment, in February 2011 the Paris Court of Appeal ruled that the
Government was a party to the arbitration agreement, and it therefore rejected an application to

challenge the award in France. These conflicting decisions might undermine the principle of uniform
treatment of arbitral awards under the New York Convention. However, the French and English
courts were addressing different applications, while the case underlines the fact that enforcement
involves the fundamental sovereignty of each court over assets in its jurisdiction. International
arbitration by definition embraces differing legal cultures and Dallah illustrates some of the myriad
issues which they can cause. It also highlights the risks involved with multi-party situations, and
emphasizes the need to ensure that all relevant parties to a transaction are parties to the
arbitration agreement.

DALLAH CASE
On 17 February 2011, in Gouvernement du Pakistan Ministre des Affaires Religieuses v.
Dallah Real Estate and Tourism Holding Company (Case No. 09/28533), the Paris Court of
Appeal rejected an application by the Government of Pakistan (the "Government") to set
aside three ICC awards delivered in Paris, holding that the arbitral tribunal was correct in
finding it had jurisdiction over the Government despite its not being a signatory to the
arbitration agreement. These very same awards, however, only last November, were
refused enforcement by the UK Supreme Court which applied French law to the matter
on the basis that the same tribunal had incorrectly decided it had jurisdiction.
Facts of case
Dallah is a Saudi Arabian company which provides services for pilgrims travelling to the
Holy Places in Saudi Arabia. In July 1995, Dallah signed a memorandum of understanding
(MoU) with the Government in relation to the construction of certain housing for
Pakistani pilgrims. In September 1996, Dallah entered into a contract (Contract) with the
Awami Hajj Trust (Trust), a body which had been established by an Ordinance
promulgated by the President of Pakistan. The Contract contained an arbitration
agreement, under which all disputes were to be referred to ICC arbitration in Paris.
The Government was not a signatory to the Contract, although the Contract made
reference to a guarantee to be provided by the Government and included a provision by
which the Trust could assign its rights and obligations to the Government without the
permission of Dallah.
The housing project never came to fruition and, following a change of government in
Pakistan, the Trust ceased to exist as a legal entity. In May 1998, Dallah commenced ICC
arbitration proceedings against the Government. In the arbitration, Dallah convinced the
arbitral tribunal composed of three well-known arbitrators that the tribunal had
jurisdiction over the Government. The arbitral tribunal issued three awards (successively
on jurisdiction, applicable law and the merits) and awarded Dallah approximately US$20
million in damages and legal costs. Dallah then endeavoured to enforce the final award in
the UK. The Government opposed enforcement before the UK Courts and commenced
annulment proceedings against all three awards before the Paris Court of Appeal.
The 3 November 2010 UK Supreme Court decision
The UK Supreme Court was faced with the question of whether the Government, which
was not a signatory to the Contract, should be considered a party to the arbitration
agreement (as an ICC tribunal sitting in Paris had found), or whether enforcement of the
tribunal's award could be refused under Article V(1)(a) of the New York Convention
because a proper application of French law led to the conclusion that the Government was
not a party to the arbitration agreement.

The UK Supreme Court held that, on a proper interpretation of the New York Convention,
whenever a party resists enforcement under Article V(1)(a) of the New York Convention
(i.e., by claiming that the arbitration agreement was invalid), the Court is bound to "revisit
the tribunal's decision on jurisdiction". The Supreme Court also endorsed the position of
the Government that the reviewing court "may have regard to the reasoning and findings
of the alleged arbitral tribunal, if they are helpful, but it is neither bound nor restricted by
them".
The UK Supreme Court, in applying French law, purported to follow the reasoning of the
French Court of Cassation in the well known Dalico case2(see further below) to the extent
that it analysed the common intention of the parties. It concluded that "there was no
material sufficient to justify the tribunal's conclusion" that the Government was a party to
the arbitration agreement and therefore refused to enforce the award in the UK.
The 17 February 2011 Paris Court of Appeal decision
The Paris Court of Appeal followed the Dalico doctrine whereby an international arbitration
agreement is not governed by any national law but by French "material rules" of
international arbitration, and the issue of whether a party is bound by an arbitration clause
has to be solved by a factual enquiry, i.e. the court must assess whether the parties
intended to go to arbitration.
Following Dalico, the Paris Court retraced in detail the successive steps of the project in
order to analyse the dealings between the parties.
The Paris Court noted that during the entire period prior to the conclusion of the Contract,
the Government was Dalla's sole counterpart/negotiating partner. In particular, the Court
noted that the Government directly negotiated the Contract, although the signatory, from
a legal standpoint, was the Trust.
The Paris Court then emphasized that the Government was also involved during the
performance of the Contract, as evidenced, in particular, by the direct involvement of two
employees of the Government in the organization of savings plans and advertising
campaigns related to the project.
Finally, the Court stressed that the Government directly handled the termination of the
Contract.
In light of the above, the Paris Court of Appeal concluded that: "[The
Government] behaved as if the Contract was its own; this involvement of [the
Government], in the absence of evidence that the Trust took any actions, as well as [the
Government's] behaviour during the pre-contractual negotiations, confirm that the
creation of the Trust was purely formal and that [the Government] was in fact the true
Pakistani party in the course of the economic transaction".
The Court thus rejected the Government's request, and even ordered the Government to
pay the full amount of legal fees claimed by Dallah, that is 100,000, under Article 700 of
the French Code of Civil Procedure.
Similar approaches regarding scope of judicial review of arbitrators' jurisdiction
It is striking to note that both the UK and French Courts concluded that they had authority

to conduct a full review of the arbitrators' decision on jurisdiction. As regards French law,
this decision is consistent with well-established case law. In a recent decision dated 6
October 2010, the French Court of Cassation thus confirmed that, in the context of the
control of arbitrators' jurisdiction in enforcement or annulment proceedings, French courts
are entitled to conduct a review of "all legal and factual elements that are relevant to
determine the reach of the arbitration agreement and draw the corresponding conclusions
regarding the arbitrators compliance with their mission".
Contrary findings when applying French law to the facts
The French and UK Courts applied French law to the same facts but reached different
conclusions.
The UK Supreme Court was in particular swayed by the following:
(a) the clear change in the proposed transaction from an agreement with the Government
(the MoU) to a contract with the Trust;
(b) the deliberate structuring of the Contract to be between Dallah and the Trust; the
Government's only role under the Contract was to guarantee the Trust's loan obligations
and to receive a counterguarantee from the Trust;
(c) Dallah had been advised throughout the transaction by lawyers who must have
understood the difference between an agreement with a state entity and an agreement
with the state itself;
(d) the Trust was established as a body corporate capable of holding property and of suing
and being sued; and
(e) it was the Trust that commenced proceedings against Dallah in Pakistan.
In contrast, as seen above, the Paris Court of Appeal found that the involvement of the
Government during the pre-contractual negotiations, the life of the contract and its
termination confirms that the Government acted like the real party and that the creation of
the Trust was purely formal. This conclusion was reinforced by the absence of any actions
by the Trust.
Next steps
It remains to be seen whether the Government will appeal the Paris Court of Appeal's
decision before the French Court of Cassation.
Comments
The UK Supreme Court applied French law in a manner which required a high standard of
proof that the Government had actually consented to arbitrate, whereas the Paris Court of
Appeal was prepared to take the surrounding context of the Contract (including the precontractual negotiations) into account. In so doing, it appears that although the Supreme
Court intended to apply French law, it did so using "English spectacles" and may have
been influenced by traditional English notions of privity and separate legal personality in
finding the Dalico test was not satisfied.
Some may also view this matter as an illustration of the competition between London and
Paris with respect to international arbitration. Indeed, it is striking that the UK Courts
decided to proceed with the matter and to apply French law, when annulment proceedings
had already been initiated before the Paris Court of Appeal as the court of the seat of

arbitration. One wonders whether the UK Courts would have decided differently had the
French Court ruled first.

DALLAH V GOVERNMENT OF PAKISTAN

Dallah case some ten years after a distinguished arbitral tribunal seated in Paris applied
French principles of international arbitration law to conclude that the Government of
Pakistan was bound by a contract, the UK Supreme Court reached the opposite result
applying the same principles of French law to deny enforcement of an arbitral award
against Pakistan on jurisdictional grounds. Then, only months later, the Paris Court of
Appeal reached the opposite conclusion confirming the tribunals award and rejecting
Pakistans jurisdictional objection under French law. This series of developments, involving
two very eminent and experienced national courts, is very unhappy; those developments,
and particularly the UK Supreme Courts decision, contradict both the New York
Convention and the objectives of the international arbitral process.
On its facts, the Dallah case is straightforward. Dallah Real Estate and Tourism Holding
Company (Dallah), a Saudi Arabian company, entered into a Memorandum of
Understanding in 1995 with the Government of Pakistan to provide housing in Saudi Arabia
for Pakistani pilgrims to Mecca. Thereafter, various Pakistani Government ministers
negotiated the terms of an agreement with Dallah to implement the Memorandum of
Understanding. In connection with those negotiations, the President of Pakistan issued an
ordinance establishing the Awami Hajj Trust (Trust), a separate legal entity with
independent legal personality. In September 1996, the Trust entered into an agreement
with Dallah (Agreement), containing the terms previously negotiated by the Government
including an ICC arbitration clause, but no choice of law clause. Despite its previous
involvement in negotiations with Dallah, Pakistan was not a signatory to the Agreement.

The Agreement was ill-fated, lasting only four months or so. During that period, Pakistani
Government ministers wrote to Dallah (on Government letterhead), addressing issues that
had arisen under the Agreement and directing Dallah on how to perform the Agreement. In
December 1996, three months after the Agreement was concluded, the Trust ceased to
exist (because the Pakistani Government did not renew its existence). One month later, in
January 1997, a Pakistani Government official wrote to Dallah (again on Government
letterhead) purporting to terminate the Agreement. The Trust then sued Dallah for breach
of the Agreement in Pakistani courts. Those courts eventually dismissed the Trusts claims
(on the basis that the Trust no longer existed) after which Dallah commenced an ICC
arbitration against Pakistan (in May 1998), seeking to recover substantial costs it had
incurred in connection with the Agreement. Pakistan resisted, among other things, on
grounds of jurisdiction.
In a jurisdictional award (in June 2001), an arbitral tribunal composed of Lord Michael
Mustill, Nassim Hasan Shah and Ghaleb Mahmassani declared that Pakistan was bound by
the arbitration clause in the Agreement. Sitting in Paris, the tribunal looked to French
international arbitration law (which it characterized as incorporating the transnational
general principles and usages reflecting the fundamental requirements of justice in
international trade and the concept of good faith in international business). Applying
these principles of French law, the tribunal held that Pakistan was the alter ego of the Trust
and thus bound by both the Agreement and its arbitration clause. The tribunal
subsequently made a final award (in June 2006) awarding Dallah $20 million plus legal
costs.
Dallah sought enforcement of the award in England under the New York Convention and
the English Arbitration Act, 1996, and, subsequently, also sought exequatur of the award
in France. For its part, Pakistan resisted enforcement of the award in England, arguing
under Article V(1)(a) of the Convention that there was no valid arbitration agreement
between it and Dallah. In August 2009, exequatur of the award was granted in France,
while the English enforcement proceedings lasted until November 2010, when the UK
Supreme Court denied enforcement of the tribunals award ([2010] UKSC 46). (See also
my previous posts of 21 August 2009 and 12 April 2010.)
The UK Supreme Courts decision denying recognition deserves careful attention. The
Court is highly respected in the field of international arbitration, with its members enjoying
distinguished reputations in international matters, commercial and otherwise, while its
judgment in Dallah was clearly the product of careful thought.
The Supreme Court reached its decision to deny recognition of the arbitral award following
what it termed an independent investigation of whether the tribunal had jurisdiction: [the
Court must] revisit the tribunals decision on jurisdiction and is neither bound nor
restricted by the tribunals conclusions. Explaining that it was applying French law
reflected in Dalico and related French Cour de cassation decisions, the UK Supreme Court
held that there had been no common intention for the Government of Pakistan to be a
party to the arbitration agreement. Focussing narrowly on the formal signatories and literal
terms of the Agreement, the Court found that there was no material sufficient to justify
the tribunals conclusion that the Government was a party to the agreement to arbitrate.
Only months after the UK Supreme Courts decision (on 17 February 2011), the Paris Court
of Appeal rejected Pakistans application to annul the awards against it under Article
1502(1) of the French Code of Civil Procedure (Case No. 09/28533, 09/28535 and
09/28541). Like the UK Supreme Court, the Paris Court of Appeal applied French

international arbitration law (looking to the parties common intentions under Dalico and
similar decisions). But, unlike the UK Supreme Court, the Paris Court of Appeal had no
difficulty in concluding that Pakistan had been intended to be a party to the Agreement.
The French court took a broad, pragmatic view of the parties conduct, focussing in
particular on the Governments (sole) involvement in negotiating the Agreement, in
implementing its terms and in terminating the Agreement: the Government behaved as if
the Contract was its own; this involvement [of the Government], in the absence of
evidence that the Trust took any actions, as well as [the Governments] behaviour during
the pre-contractual negotiations, confirm that the creation of the Trust was purely formal
and that [the Government] was in fact the true Pakistani party in the course of the
economic transaction.
It remains to be seen how the French Cour de cassation will ultimately decide any appeal
from the Paris Court of Appeal. Considering matters as they currently stand, however, the
regrettable course of the Dallah case and conflict between the French and English
decisions are pathological: they are contrary to both the purposes and specific terms of
the New York Convention and they produce a potentially serious injustice. The most
fundamental objectives of the Convention include ensuring uniform treatment of arbitral
awards, and facilitating the effective enforcement of such awards, in the Conventions
Contracting States. Those goals are undermined when, a decade after an arbitral tribunal
decides that parties concluded a binding agreement, courts in different Contracting States
reach conflicting conclusions as to the correctness of the tribunals award with a foreign
court disagreeing with the courts of the arbitral seat over the application of its own law.
For at least three reasons, outlined below, this is not what the drafters of the New York
Convention intended, nor what parties concluding international commercial contracts and
arbitration agreements intend.
First, the terms of the Convention provide a mechanism specifically designed to avoid
conflicts between annulment and enforcement decisions. In particular, Article VI of the
Convention (and section 103(5) of the English Arbitration Act) provides enforcement courts
with authority to stay (or adjourn) decisions on enforcement pending the outcome of
annulment proceedings in the arbitral seat. Dallah was a text-book example of a case
where Article VI should have been applied: the Paris Court of Appeal was about to decide
almost precisely the issue before the UK Supreme Court an issue, moreover, that was
governed by French law, that had already been decided by a French-seated arbitral
tribunal and that involved an arbitral award that had already been granted exequatur by a
first instance French court. In these circumstances, the arguments for staying English
enforcement proceedings pending the French courts decision were overwhelmingly
powerful.
Article VI grants authority to recognition courts to stay enforcement actions in appropriate
cases (where they consider [it] proper). This provides a mechanism, designed to further
the Conventions objectives of uniformity by avoiding conflicting decisions in different
Contracting States, which is especially appropriate and useful in cases where the courts of
the arbitral seat have particular competence on an issue. In Dallah, the decisive issue was
one of French arbitration law (the law of the putative arbitral seat, indisputably applicable
under Article V(1)(a)s choice-of-law rules), which had already been decided by a Frenchseated tribunal; moreover, French courts had unique expertise on the relevant issues (of
their own law), were seised of the issue and about to render a decision and they were
undoubtedly neutral and objective. Basic principles of common sense and judicial

prudence counselled that the UK Court should have awaited the imminent outcome of
proceedings in the arbitral seat.
Despite this, the UK Supreme Court refused to grant a stay of recognition proceedings
under Article VI, commenting in passing that since Dallah has chosen to seek to enforce
in England, it does not lie well in its mouth to complain that the Government ought to have
taken steps in France. Although the explanation is not entirely clear, it appears that the
UK Supreme Court faulted Dallah for not having itself first sought exequatur in French
courts before seeking recognition in England hence, the UK Courts refusal to stay
English recognition proceedings pending Dallahs exequatur action. That rationale ignores
both the specific language and underlying objectives of Article VI which aim to avoid
exactly the conflicting decisions that Dallah produced. More fundamentally, the UK
Supreme Courts apparent rationale is impossible to reconcile with the New York
Conventions deliberate elimination of any requirement that award creditors obtain double
exequatur (previously required under the Geneva Convention). Given that, an award
creditor like Dallah is entirely free to seek to enforce its award abroad without first seeking
exequatur in the arbitral seat. Contrary to the UK Courts suggestion, Article VI of the
Convention, and the policies of efficiency and uniformity it furthers, remain fully applicable
in such circumstances.
Second, the New York Convention also provides that, in an enforcement proceeding, the
party resisting enforcement bears the burden of proof, both under Article V(1)(a) and
otherwise. This is made express in the introductory provisions of Article V(1) and is a
fundamental element of the Conventions basic purpose again, specifically altering the
position under the Geneva Convention. Although these principles are non-controversial,
the UK Supreme Courts decision in Dallah is very difficult to reconcile with them with the
Court instead imposing on the award creditor (Dallah) the burden of producing material
sufficient to justify the tribunals conclusion. That holding misunderstands the Convention
and its burden of proof: critically, it was not properly for Dallah to prove the existence of a
valid agreement to arbitrate under Article V, but for Pakistan to disprove the existence of
such an agreement.
Despite this, the UK Supreme Court declared that: [t]he scheme of the New York
Convention may give limited prima facie credit to apparently valid arbitration awards
based on apparently valid and applicable arbitration agreements, by throwing on the
person resisting enforcement the onus of proving one of the matters set out in Article V(1)
. But that is as far as it goes in law. Dallah starts with advantage of service, it does not
also start fifteen or thirty love up. This reasoning misapprehends the meaning and
purpose of Article V of the Convention.
Article V establishes the basic rule that it is for the party resisting recognition of an award
to prove the applicability of an exception to the Conventions general obligation (under
Articles III and IV) to recognize foreign awards. Importantly, Article V prescribes a
substantive burden of persuasion not merely a procedural allocation of pleading roles
which can have significant consequences in many categories of cases. It is beyond debate
that the Conventions allocation of the burden of proof applies fully to all of Article Vs
exceptions, including cases involving claims that there was no valid arbitration agreement
under Article V(1)(a). Again importantly, this reverses the allocation of the burden of proof
which exists at the stage of enforcing agreements to arbitrate, where the burden of
proving the existence of such an agreement is on the party seeking to require arbitration.

The Dallah Courts tennis analogy cannot be reconciled with the New York Conventions
allocation of the burden of proof in enforcement proceedings. Under Article V, Dallah does
not merely enjoy the advantage of service, or even the advantage of a couple of points
in one game of tennis. Rather, if the metaphor is to be pursued, Dallah had already won an
entire match, which concluded with a presumptively valid arbitral award and the
question was whether the outcome of that match should be ignored in recognition
proceedings. Under Article V, only where the award debtor (here, Pakistan) itself
affirmatively proves that there is no valid arbitration agreement should this exceptional
result be permitted. The UK Courts conclusion that that Dallah had nothing more than the
advantage of service and was required to provide material demonstrating the existence
of a valid agreement to arbitrate is fundamentally contrary to both the plain language and
obvious purpose of Article V.
Third, the Convention also requires Contracting States, like the United Kingdom, to apply
the law specified in Article V(1)(a) to the validity of agreements to arbitrate and not to
apply their own local law to this issue. In Dallah, that law was indisputably French law
(because, in the absence of a contrary choice by the parties, it was the law of the putative
arbitral seat). Critically, however, the UK Supreme Court recited the words of the French
international arbitration principles articulated in Dalico and other French decisions, but
appears not to have applied the real substance of the French standards when evaluating
the parties actual conduct and agreements.
That conclusion is confirmed by a comparison of the substantive analyses of the UK
Supreme Court and of the French courts. Thus, the UK Supreme Court largely ignored
factual elements that were central to the Paris Court of Appeals (and arbitral tribunals)
decisions. In particular, the UK Supreme Court largely discounted the fact that, until the
day before the execution of the Agreement, all negotiations and formal correspondence
(on Government letterhead) took place exclusively between Dallah and the Pakistani
Government. Similarly, the Supreme Court ignored the fact that the Prime Minister of
Pakistan presided over meetings of the Trust (despite holding no position in it) and that it
was the Pakistani Government which both created and later terminated the Trust the
latter act dissolving Dallahs nominal contractual counter-party. And the UK Supreme Court
devoted only passing attention to the fact that the Pakistani Government was actively
involved in directing performance of the Agreement and formally terminating the
Agreement (again, in correspondence from Government officials on Government
letterhead), while the Trust had not been involved at all in either performance or
termination of the Agreement. In contrast, the Paris Court of Appeal placed substantial
weight on all these circumstances, holding that the Governments actions both before and
after conclusion of the Agreement could only be explained by its status as a real party to
the Agreement.
One might debate the evidentiary weight of these various factors though they point fairly
decisively against the UK Supreme Courts conclusions. The more fundamental point,
however, concerns Article V(1)(a)s choice of law rule for the law governing the
arbitration agreement often described as one of the Conventions crowning
achievements. That rule requires Contracting States not merely to formally recognize
foreign standards for the validity of arbitration agreements, but also to apply the
substance of those standards in practice, just as the relevant foreign courts would do so.
In Dallah, it is difficult to avoid the conclusion that the UK Supreme Court ultimately failed
to appreciate the substance of French law and to an extent, understandably applied
what amounted to a classically English approach to contract law. Lord Mance hinted at

this, referring with evident discomfort to the French standard: It is difficult to conceive
that any more relaxed test would be consistent with justice and reasonable commercial
expectations
This discomfort is not surprising. The reluctance of English courts to consider
precontractual negotiations as contrasted to the approach in many other civil and
common law jurisdictions is familiar. Equally familiar is the English courts emphasis on
express terms of contractual agreements and hesitations to embrace notions of good faith.
Those rules are fair enough in English settings indeed, that is why parties frequently
agree to English law, applied by English courts or English-seated arbitral tribunals, to
govern their commercial contracts. Critically, however, these are not rules of French law
and, as the competing decisions in Dallah illustrate, the application of these English
approaches to contract law can, expressly or otherwise, produce very different results from
those which obtain under French law. Under Article V(1)(a), it is essential that courts not
merely apply just the words, but also the substance and spirit of the legal rules specified
by the Conventions choice-of-law standards. More fundamentally, the challenges of
applying foreign law confirm the wisdom of Article VIs provisions for stays of enforcement
proceedings when annulment proceedings are underway in the courts of the country
where the award was made.
In sum, the Convention did not contemplate a process that permits a jurisdictional
objection to be relitigated effectively from scratch in a foreign court ten years after the
arbitrators jurisdictional decision and fifteen years after the events in question. Instead,
like commercial parties, the drafters of the New York Convention intended that
international arbitration be speedy, efficient and effectively enforced; the drafters of the
UNCITRAL Model Law had similar objectives, including by requiring prompt challenges to
jurisdictional awards (in Article 16(3)). Regrettably, Dallah does not achieve any of these
objectives: it misapplies the Conventions provisions on burden of proof, stays of
enforcement and choice of law, producing a result that frustrates the most basic objectives
of the arbitral process.