NEWSLETTER-2017

155 ARBITRATION LAW Determination of Applicable Law to the Arbitration Agreement Separately from the Underlying Contract According to another point of view, one of the consequences of separability of arbitration agreement from the underlying contract is that the laws applicable to both agreements should be determined, separately. The principle of separability results in the arbitration agree- ment to be held subject to a law different from the law regulating the underlying contract. According to this view, the applicable law to these two agreements should be determined, separately, as the arbitration agreement and the underlying contract are separate from each other; if that the applicable law to the underlying contract is determined, the arbitration agreement, which is not a main or secondary obligation arising from the underlying contract, should not be subjected to the law applicable to the underlying contract. Under this section, attention is drawn to two approaches. The first approach is the application of the law of the seat of arbitration to the arbitration agreement; the other one is the application of a state law, or international principles, directly to the arbitration agreement, such as is accepted in Swiss, Turkish and French laws, with some variation. Application of the Law of the Seat of Arbitration to the Arbitration Agreement In arbitral awards and court decisions which accept that different laws should be applied to the arbitration agreement and to underlying contracts, it is often seen that the validity of the arbitration agreement is determined according to the law of the seat of arbitration. There are different reasons for this approach. Firstly, according to the New York Convention, Art. V/1(a) and the Model Law, Art. 36/1, it is stated that the arbitration agreement is subject to the the law that the parties have determined or, failing any indication thereto, to the law of the country where the award was made. In addition, the most related law for the arbitration agreement is the law of the seat of arbitration. In some decisions, it is accepted that the parties implicitly determine the law applicable to the arbitration agreement through determining the seat of arbitration.