In 1998, a company acting out of offices in Cyprus (Respondent) agreed to sell a given quantity of cereals to a company from the British Virgin Islands (Claimant) pursuant to a contract governed by English law. Deliveries were to be on the basis of the Incoterms rule CPT. The parties' contract stipulated that liquidated damages were payable for delays in delivery. As no deliveries were made, the purchaser invoiced the seller for damages pursuant to this stipulation, which the seller refused to pay.

'36. [Claimant's solicitor] suggested that the contract should be governed by English law. Basically the reason for this suggestion was the arbitration clause which provides:

In case of any dispute between sellers and buyers, the dispute shall be settled amicably. If no amicable solution can be found, any dispute arising out of or under this contract shall be referred to arbitration in accordance with the arbitration clause and rules in the hereafter mentioned contract form with arbitration in London as per International Chamber of Commerce. Governing contracts shall be INCOTERMS-90.

37. Whilst a perusal of INCOTERMS show that it is neither a standard form contract nor a code of law or arbitration rules in any usual sense they certainly would have helped if there had been a dispute over the meaning of shipping terms. As most people know INCOTERMS are mainly terms of definition used in the shipping world so this would be a rather strange governing law clause. I hold that this final sentence means that INCOTERMS 90 will provide the governing definitions for any shipping terms used, which is of course a useful function in case any disputes arose about the impact of those terms.

38. The clause cited above leaves me with a reasonably open field in terms of the governing law because I hold that the reference to governing contract cannot be seen to be a reference to governing law. There has therefore been no clear choice of the governing law.

39. In Article 17 the ICC Rules give me the following guidance:

1. The parties shall be free to agree upon the rules of law to be applied by the Arbitral Tribunal to the merits of the dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate.

2. In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages.

40. Applying this guidance it does not appear to me that there has been any express agreement between the parties on the rules of law to be applied to the merits beyond what was agreed in the contract but there may still be an implied agreement. If no agreement can be implied it is my task in accordance with Article 17.1 to apply the rules of law I determine to be appropriate.

41. First I must determine if there can be found an implied agreement on the governing law. Because the place of this arbitration is London, I will do this in accordance with the relevant English principles. Here I was helpfully assisted by [Claimant's solicitor] who referred me to the 13th Edition of Dicey & Morris on the Conflict of Laws, which is the leading textbook on the subject and one of the most authoritative sources in the world.

. . . it was pleasant to revisit cases such as Amin Rasheed Shipping Corp v. Kuwait Insurance Co. [1984] A.C. 50 and the Compagnie Tunisienne de Navigation S.A. v. Compagnie d'Armement Maritime S.A. [1971] A.C. 572 which both indicated the fact that the arbitration clause mentioned London as the place of arbitration was to be taken as a "strong inference" that the parties intended the law of that place to govern. This approach has been adopted and approved in a more recent case called Egon Oldenroff v. Libera Corporation (No.2) [1996] 1 Lloyd's Rep. I also have the guidance of the Giuliano-Lagarde Report referred to in Dicey & Morris and the wise words of Lord Wilberforce to the effect that "the selection of a certain place for arbitration . . . is an indication that the parties intended the law of that place to govern . . .".

42. There has been an indication given in the choice of London as the place, especially as this was a choice clearly and specifically agreed upon.

43. In considering the matter, I think it is perfectly possible that a Cypriot party, whose law closely has followed the law of England and a party from a British Colony would quite naturally wish to apply English law, especially as the other possibilities - French, Swiss and Ukrainian - would probably be quite unknown, but known to be different from the law they were used to. They may even have assumed, as London was the place, that English law would naturally be applied. This could be why they only referred to the application of INCOTERMS. For all of these reasons I decide that English law is the governing (substantive) law as the implied choice of the parties. For the avoidance of doubt it is also the law I determine to be appropriate under Article 17.1 of the ICC Rules.

44. It should also be noted that there is a relevant English procedural rule, and English procedural law clearly applies here as London is the seat of the arbitration as it was both contractually designated and confirmed by the ICC. English procedural law provides that where no evidence of foreign law is tendered a judge or arbitrator is entitled to assume that the foreign laws which might govern the contract are the same as English law.

45. Thus even if I were wrong in my choice of governing law, which I do not believe to be the case, I am entitled to assume that whatever foreign law applies it is similar to English law since no evidence of foreign law was tendered to me.'