In Chalbury Mccouat International Ltd v. P.G. Foils Ltd [2010] EWHC 2050 (TCC) a dispute had arisen between Chalbury, an English company, and Foils, an Indian company, under a contract between Chalbury and Foils for the dismantling of a manufacturing plant in the Netherlands. The contract contained an arbitration clause which did not provide a procedure for the appointment of a tribunal. The parties failed to appoint a tribunal. Chalbury applied to the English court seeking the court’s assistance to exercise its powers under section 18 of the Arbitration Act 1996 (the Act), which gives the court powers concerning the appointment of arbitral tribunals where the parties have failed to agree a procedure to appoint and where the parties have failed to appoint.

The arbitration clause in the contract did not designate the seat of the arbitration. Therefore, the court had to determine, under section 2(4) of the Act, whether, by reason of a connection with England, it was satisfied that it was appropriate to exercise the court’s powers under section 18 of the Act. The court found that the likely proper law of the dispute between the parties was English law, the seat of the arbitration was more likely to be England than India, and that payment under the contract was to be made in England. The only connection with India which the court accepted was that Foils was an Indian company operating in India. Accordingly, the court found that there was a sufficient connection with England for the court to exercise its powers under section 18 of the Act, and in exercising those powers, the court gave directions for the appointment of the arbitral tribunal, namely by appointment of the London Court of International Arbitration.

This case demonstrates that, if parties agree to arbitrate disputes, they should at the bare minimum make provision for the proper law of the dispute, the seat of the arbitration and the procedure for the appointment of the arbitral tribunal.