James Miller & Partners Ltd v Whitworth Street Estates

[HOUSE OF LORDS]

AND

[On appeal from WHITWORTH STREET ESTATES (MANCHESTER) LTD. v. JAMES MILLER & PARTNERS LTD.]

Arbitration - Arbitrator - Jurisdiction - R.I.B.A. contract - English standard form - Work to be done for English company in Scotland by Scottish company - English nominated architect Dispute - Scottish architect appointed arbitrator - Arbitration in Scotland following Scottish procedure - Whether law of arbitration English or Scottish - Lex fori - Whether law of arbitration may be different from proper law of contract - Conduct of parties after appointment of arbitrator - Whether showing acceptance by English company that Scottish law should govern arbitration proceedings.

Conflict of Laws - Contract - Proper law - R.I.B.A. contract entered into for work to be done for English company in Scotland by Scottish company with nominated English architect - Whether proper law of contract English or Scottish - Tests to be applied in determining proper law of contract - Whether parties to contract entitled to agree as to pro per law - Selection of R.I.B.A. contract - Place of performance - Relative weight to be attached to - Arbitration held in Scotland - Whether law of arbitration English or Scottish - Whether may be different from proper law of contract - Lex fori:

On May 10, 1965, an agreement was entered into between an English company and a Scottish company by which the Scottish company were to carry out certain conversion work at the English company's factory in Scotland. The agreement was in the then standard form of R.I.B.A. contract, there being at that time no R.I.B.A. form of contract specially adapted for use in Scotland although there was in common use a Scottish form of contract drawn up by a different professional body. The usual arbitration clause in the contract provided that any dispute should be referred to the arbitration of a person to be agreed, or, failing agreement, to be appointed by the president of the R.I.B.A. The nominated architect was English, the agreement finally concluded in Scotland. dispute arose, and the Scottish company applied to the president of the R.I.B.A. for the appointment of an arbitrator, stating that there was a submission to arbitration within the meaning of the Arbitration Act, 1950. The president appointed as arbitrator a Scottish architect practicing in Scotland, and the arbitration was held in Scotland following Scottish procedure. Points of law arose, and the English company asked the arbitrator to state his award in the form of a special case for eke decision of the English High Court, but the arbitrator refused to do so, holding that the arbitration was a Scottish

arbitration. He subsequently issued his final award in favour of the Scottish company. On application by the English company, the master ordered the arbitrator to state his award in the form of a special case, but an appeal by the Scottish company was allowed by the judge and the order rescinded. The Court of Appeal allowed an appeal by the English company on the ground that the proper law of the contract was English and the arbitration governed by English law, and restored the master's order.

On appeal by the Scottish company:-

Held, (1) (Lord Reid and Lord Wilberforce dissenting), that, notwithstanding the important factor that the place of performance of eke contract was in Scotland, the selection of the R.I.B.A. form of contract showed that the contract was to be governed by English law.

Observations on the tests to be applied in determining the proper law of a contract.

Tests in Rex v. International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] A.C. 500; [1937] 2 All E.R. 164, H.L.(E.); Bonython v. Commonwealth of Australia [1951] A.C. 201, P.C. and In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007; [1960] 2 W.L.R. 969; [1960] 2 All E.R. 332, H.L.(E.) applied.

Per Lord Reid, Lord Hodson, Viscount Dilhorne and Lord Wilberforce. A contract cannot be construed by reference to the subsequent conduct of the parties (post, pp. 603D-E, 606E,611D, 615A.

(2) That, however, the curial law of the arbitration could be different from the proper law of the contract; and that, on the facts, the conduct of the parties after the appointment of the arbitrator sufficiently showed an agreement or acceptance on the part of the English company that the arbitration proceedings should be governed by the law of Scotland, the reference to the Arbitration Act, 1950, in the Scottish company's application for the appointment of an arbitrator not availing the English company.

Don v. Lippmann (1837) 5 Cl. & F. 1, H.L.(Sc.); Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202, H.L.(Sc.); Norske Atlas Insurance Co. Ltd. v. London General Insurance Co. Ltd. (1927) 43 T.L.R. 541 and N. V. Kwik Hoo Tong Handel Maatschappij v. James Finlay & Co. Ltd. [1927] A.C. 604, H.L.(E.) applied.

Per Lord Hodson, Lord Guest, Viscount Dilhorne and Lord Wilberforce. Where the parties have failed to choose the law governing arbitration proceedings, those proceedings must be considered, at any rate prima facie, as being governed by the law of the country in which the arbitration is held, on the ground that that is the country most closely connected with the proceedings (post, pp. 607A, 609C, 612E-F, 616F-G.

Decision of the Court of Appeal [1969] 1 W.L.R. 377; [1969] 2 All E.R. 210, C.A. reversed.

The following cases are referred to in their Lordships' opinions:

Bonython v. Commonwealth of Australia [1951] A.C. 201, P.C.

Don v. Lippmann (1837) 5 Cl. & F. 1, H.L.(Sc.).

Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202, H.L.(Sc.).

Kwik Hoo Tong Handel Maatschappij (N.V.) v. James Finlay & Co. Ltd. [1927] A.C. 604, H.L.(E.).

Norske Atlas Insurance Co. Ltd. v. London General Insurance Co. Ltd. (1927) 43 T.L.R. 541.

Rex v. International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] A.C. 500; [1937] 2 All E.R. 164, H.L.(E.).

United Railways of Havana and Regla Warehouses Ltd., In re [1961] A.C. 1007; [1960] 2 W.L.R. 969; [1960] 2 All E.R. 332, H.L.(E.).

The following additional cases were cited in argument:

Amalgamated Building Contractors v. Waltham Holy Cross Urban District Council [1952] 2 All E.R. 452, C.A.

Assunzione, The [1954] P. 150; [1954] 2 W.L.R. 234; [1954] 1 All E.R. 278, C.A.

Howden & Co. Ltd. v. Powell Duffryn Steam Coal Co., 1912 S.C. 920.

Indyka v. Indyka [1969] 1 A.C. 33; [1967] 3 W.L.R. 510; [1967] 2 All E.R. 689, H.L.(E.).

Kahler v. Midland Bank Ltd. [1950] A.C. 24; [1949] 2 All E.R. 621, H.L.(E.).

Pick v. Stewart, Galbraith & Co. Ltd. (1907) 15 S.L.T. 447.

Racecourse Betting Control Board v. Secretary of State for Air [1944] Ch. 114; [1944] 1 All E.R. 60, C.A.

Rossano v. Manufacturers' Life Assurance Co. [1963] 2 Q.B. 352; [1962] 3 W.L.R. 157; [1962] 2 All E.R. 214.

Sirdar Gurdyal Singh v. Rajah of Faridkote [1894] A.C. 670, P.C.

Tzortzis v. Monark Line A/B [1968] 1 W.L.R. 406; [1968] 1 All E.R. 949, C.A.

APPEAL from the Court of Appeal (Civil Division) (Lord Denning M.R., Davies and Widgery L.JJ.).

On May 10, 1965, a contract was entered into between an English company, Whitworth Street Estates (Manchester) Ltd., and a Scottish company, James Miller & Partners Ltd., building contractors, of Glasgow, by which the Scottish company were to carry out certain conversion work at the English company's premises at Dumbarton, Scotland. The contract was finally concluded in Scotland. It was in the then standard form (1963 ed.) published by the Royal Institute of British Architects ("R.I.B.A."), the usual arbitration clause providing:

"... in case any dispute or difference shall arise between the employer or the architect on his behalf and the contractor ... then such dispute or difference shall be and is hereby referred to the arbitration and final decision of a person to be agreed between the parties, or, failing agreement within 14 days after their party has given to the other a written request to concur in the appointment of an arbitrator, a person to be appointed on the request of either party by the president or vice-president for the time being of the Royal Institute of British Architects."

There was no provision as to the place of arbitration or as to its procedure. The nominated architect was English and a member of a firm which had its offices in London. Disputes arose between the parties, and, on October 28, 1966, the Scottish company issued a writ in the Queen's Bench Division claiming certain moneys. They applied for judgment under R.S.C., Ord. 14, and concurrently the English company applied for a stay pursuant to section 4 of the Arbitration Act. 1950. On November 30, 1966, the master dismissed the Scottish company's application and made an order staying further proceedings. On December 5, 1966, the Scottish company applied

in terms of the arbitration clause in the contract to the president of the R.I.B.A. for the nomination of an arbitrator. Their application, on the institute's printed form, contained the phrase:

"Regarding the contract dated May 10, 1965, and made between [the parties] and where there is a submission to arbitration, within the meaning of the Arbitration Act, 1950. ..."

The president of the R.I.B.A., in response to that application, appointed as arbitrator a Scottish architect, a fellow of the institute, practicing in Scotland. The arbitration was held in Scotland in accordance with Scottish procedure. Points of law arose, and the English company asked the arbitrator to state his award in the form of a special case for the decision of the English High Court, but the arbitrator refused to do so, holding that the arbitration was a Scottish arbitration. He subsequently issued his final award, on December 10, 1968. On application by the English company, Master Elton, on July 22, 1968, ordered that the arbitrator state his award in the form of a special case. On October 31, 1968, Eveleigh J. allowed an appeal by the Scottish company against the master's order and rescinded it. On January 29, 1969, the Court of Appeal allowed an appeal by the English company, holding that the proper law of the contract had been English law and that the arbitration had been governed by English law, and restored the master's order.

The Scottish company appealed.

Further facts are stated in the opinion of Viscount Dilhorne.

James Mackay Q.C. (of the Scottish bar), J. Raymond Phillips Q.C., A. J. Butcher and J. A. D. Hope (of the Scottish bar) for the appellants. The principal question in this appeal is, as Lord Denning M.R. said [1969] 1 W.L.R. 377, 380: by what law is the procedure in the arbitration governed? In the circumstances, it was governed by the law of Scotland, and, accordingly, it was not competent for the arbitrator either to state a case during the currency of the arbitration or to state his final award in the form of a special case as he has been ordered to do by the Court of Appeal: except for section 4 (2), Part I of the Arbitration Act, 1950, does not apply to Scotland. The proper law of the contract was also Scottish. It may be that there is a third argument on discretion, but the appellants do not propose to trouble the House much about that.

The arbitrator has not taken part in these proceedings beyond writing a letter of July 12, 1968, stating that he did not wish to increase the costs of the arbitration unless the master before whom the respondents' application was heard desired his presence.

"Sanction," on the title page of the R.I.B.A. contract form, means no more than that it is a drafted, approved form. There was no R.I.B.A. form with Scottish supplement at the time of the contract in this case.

With regard to clause 18 (1) of the R.I.B.A. contract, the suggestion is that "common law" means English law. The expression "common law," is, however, commonly used in relation to Scotland.

It would probably not be impossible to conduct an English arbitration in Scotland, though there might be difficulties if certain powers-in-aid had to be resorted to.

Under clause 27 (a) (ii) of the R.I.B.A. contract, the sub-contractor would have to agree to be governed by English law.

There is probably no difference between English and Scottish law as to the meaning of "submission to arbitration." [Reference was also made to clauses 18 (2), 19 (2) (a), 25 (2), 31 (1) (a) (i) and 35 of the R.I.B.A. form of contract and to the Arbitration Act, 1950, ss. 4, 21 and 35 and Sch. 1.]

Where an arbitration takes place within the territory of a country, the law governing the procedure in the arbitration is, at least as a general rule, the procedural (or "curial") rules of that country. It may be (though this may be the exception rather than the rule) that the substantive law to be applied may be different from the law of the country where the arbitration takes place, involving the application by the arbitrator of a law foreign to that territory. These two concepts are, however, different, and the right question here relates to the first: the law by which the procedure is to be governed. As to the distinction between the two concepts, see Don v. Lippmann (1837) 5 Cl. & F. 1, per Lord Brougham at pp. 13 et seq., where a guide is to be found to determining whether a particular matter is to be regarded as a matter of procedure to be governed by the curial law or as a matter of substantive law to be governed by the lex loci or proper law. It is plain that such a thing as an appeal from one court to another or from an arbitrator to a court is something which goes to procedure and is normally ruled by the curial law. The same general principle is applicable in determining whether a matter which arises in an arbitration is a matter of procedure. On the basis of this general principle, it is natural to apply, in matters of procedure at least, the law of the territory where the arbitration takes place. This is at the foundation of the significance which the courts have always attached to the choice of the seat of arbitration in determining the proper law of a contract.

In the present case, it was the agreement between the parties which determined where the arbitration should take place. The arbitrator did not make the determination; the position by the time when the application for his appointment was made was that the parties had agreed on Scots law. The respondents' remedy against the appointment of a Scottish arbitrator if the parties had decided that the arbitration should be held in England would have been a summons for the revocation of his authority unless he was prepared to abide by that agreement. The respondents here, however, consented to the arbitration being carried on in Scotland according to Scots law. It is alleged that there is an estoppel on the appellants in that they in some way represented that the law applicable was the law of England by applying to the English courts for a stay, thereby showing that they agreed that the Act of 1950 had no application. The stay, however, would have been equally applicable whether it was a Scottish or an English arbitration. An arbitration agreement, for the purposes of section 4 of the Act of 1950, can include arbitrations not subject to the law of England. "Submission to arbitration" occurs only in section 4 (2), where it must include foreign submissions. It is not contended that the respondents are estopped by their having agreed to arbitration in Scotland and Scottish procedure; what is alleged is that there was an agreement. There was no reservation of any kind regarding English control in the agreement to

accept Scottish procedure. One matter which is treated as being procedural is that of the competency of evidence: see section 18 (2) of the Civil Evidence Act, 1968, which shows that the statutory provisions with regard to the law of evidence apply to arbitration proceedings. If the parties have agreed that the procedure should be governed by the law of Scotland and a question arises regarding evidence, how is it to be determined? One gets into an inextricable tangle if one says that the English courts can control the evidence given in a Scottish arbitration.

The place where the arbitration is to take place has always been regarded as of fundamental importance in determining the law which is to apply: see Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202, per Lord Herschell L.C. at p. 210, which is in line with what Lord Brougham said in Don v. Lippmann, 5 Cl. & F. 1; see also perLord Watson at p. 212, where he recognises the rule that, where the tribunal has to investigate the merits, the rules applicable are those of the place where the court is; see also per Lord Ashbourne, at p. 215, and Lord Shand, at p. 216, to the same effect, and Norske Atlas insurance Co. Ltd. v. London General Insurance Co. Ltd. (1927) 43 T.L.R. 541. The same principle was applied in N. V. Kwik Hoo Tong Handel Maatschappij v. lames Finlay & Co. [1927] A.C. 204; see perViscount Dunedin, at p. 608.

With reference to Tzortzis v. Monark Line A/B [1968] 1 W.L.R. 406 it would admittedly be strange if, if there had been Swedish sub-contractors in this case, the arbitration would still have been governed by Scottish law. The possibility is not excluded that there may be two proper laws, one for some things and one for others. The sub-contractor can, however, refuse nomination unless he is prepared to comply with all the provisions of the contract, and this includes the arbitration clause. The only subcontractor nominated in this case was English.

There are two stages of logic behind the cases: (1) the law of the place of arbitration is the law governing the proceedings and perhaps even the law to be applied; (2) because the parties have selected the place of arbitration in their contract, that is the law which governs the contract. These cases show (1). There is no authority which says that, when an arbitration takes place in one country, the law to be applied must be the law of that country, but the authorities do show that there is a strong inference that this is so. If the arbitration takes place in Scotland with the acquiescence of the parties and the procedure applied is Scottish procedure, this is sufficient to make the arbitration governed by Scottish law. The respondents' acquiescence in the selection of the arbitrator and his decision to hold the arbitration in Scotland amounted to an addition to the original contract. It is a reasonable inference that, when the parties entered into their contract, they must have known that there was a high probability that the president of the R.I.B.A. would act as he did and that any arbitration would be held in Scotland. There was nothing to stop the arbitration being held miles away from the site, but there were clearly circumstances of convenience which the parties might well have anticipated when they entered into the contract. The situation here is that, the arbitration clause not having specified the place of arbitration, it was perfectly within the scope of that clause to have it in Scotland, and, once it took place in Scotland, prima facie Scottish rules of procedure should

apply. It is clear that, once the arbitration was being held in Scotland, the parties acted throughout on that footing. [Reference was made to Dicey and Morris, Conflict of Laws, 8th ed. (1967), p. 1047.]

The second paragraph of the protocol set out in the First Schedule to the Arbitration Act, 1950, is an application of the principle for which the appellants contend in this case; though it is not directly applicable although it does have statutory force. See the reference to protocol in section 4 (2) of the Act of 1950. Protocol is also referred to in section 35, which, by subsection (1) (a), defines "foreign award" by reference to the protocol. See also section 37; subsection (1) (c) would bring one to the second paragraph of the protocol. The protocol is part of the Act of 1950 for the purposes of sections 4 (2), 35 (1) (a) and 37 (1) (c). "Agreement to which the protocol ... applies" does not apply to an agreement within the United Kingdom. This is not a statutory enactment bearing directly on the present question, but it helps as an application of the principle in the statute. If this is not an agreement to which the protocol applies, then there is no power in the Scottish court to assist within section 4 (2). In England, under section 4 (1) it is plain that the court has a duty to assist by staying the proceedings. This is an illustration of the recognition of principle in the protocol that the place of arbitration is to be the place whose law will govern the arbitration procedure. If there was an arbitration clause providing for arbitration in Scotland and litigation took place in England, the court would have power to stay the action under section 4 (1). Any arbitration agreement would be a good basis for a stay - Scottish or any other, since "arbitration agreement" includes foreign arbitration agreements.

Another illustration of the recognition of the principle contended for is to be found in the Rules and Conditions of Arbitration of the International Chamber of Commerce: see article 16.

[Counsel was stopped on the ground that that was not authority.]

Again R.S.C., Ord. 73, r. 7, in particular, is not direct authority but shows that, in matters of control (of the appointment of an arbitrator or umpire) the important step of service out of the jurisdiction is permitted with the leave of the court if the arbitration is held within the jurisdiction: see also Ord. 11, r. 9 (1).

If misconduct had been committed under English or Scottish law, an order would have to be obtained for the removal of the arbitrator, and, under R.S.C., Ord. 73, r. 7, there could be service of this order out of the jurisdiction only if the arbitration was held within the jurisdiction. So, it would not run aganst me arbitrator in the present case, since he would need to be served out of the jurisdiction.

With regard to committee, see Indyka v. Indyka [1969] 1 A.C. 33. Committee is not the basis on which a foreign decree is recognised; the question is whether the foreign court had jurisdiction according to internationally recognised principles. [Reference was made to Sirdar Gurdyal Singh v. Rajah of Faridkote [1894] A.C. 670, 684, and Pick v. Stewart, Galbraith & Co. Ltd. (1907) 15 S.L.T. 447.]

[LORD REID. You assume that there was jurisdiction to make the order; the question is, is it the kind of order which you would enforce?]

The form of order is recognised: see Dicey and Morris, op. cit., P. 1017, r. 169.

The second question in this appeal is: what was the proper law of this contract, including, in particular, the arbitration clause? It is clear that the parties made no express choice of law, and, in these circumstances, the test is to ask: with what system of law has the contract the closest and most real connection? See The Assunzione [1954] P. 150, Bonython v. Commonwealth of Australia [1951] A.C. 201 and In re United Railways of Havana and Regla Warehouses [1961] A.C. 1007, which shows that the whole of the circumstances have to be looked at. If one applies these tests in the circumstances of the present case, the answer to the question posed above should be: the law of Scotland.

If the R.I.B.A. form had wished to make it clear that its acceptance constituted a choice of the law of England, it would be very natural to expect that it would have contained an express choice of law, but it has never done so. So, the form is one which could apply and operate in Scotland or in England. The R.I.B.A. is a British, not an English, body. The R.I.B.A. form was not chosen here because it was an English contract; it was chosen because it fitted the needs of the parties; it was a fixed-price contract. The fact that the place of performance of the contract was clearly Scottish and that it was a building contract to be carried out over a considerable period of time are factors to which weight should be given. The only system of law mentioned in the contract must be the law of Scotland: see the reference to statutory or common law claims for personal injury in clause 18. The law to be applied to that is that of wherever the claim is made - here, of Scotland because that was the place of performance of the contract. See per Lord Denning M.R. [1969] 1 W.L.R. 377, 380: "common law" can be of Scotland; liens are well-known in Scottish law also, and a provision for a receivership would be quite natural under a Scottish contract: see also per Widgery L.J., at p. 384.

If both parties to this contract had been Scottish and had wanted an English architect because he was good, and he had selected the R.I.B.A. form, it would follow from the reasoning of the Court of Appeal decision that it would then have been an English contract.

So far as the subsequent conduct of the parties is concerned, their actions cannot be looked at to determine what is the proper law of the contract: (1) The raising of the action in England was very natural where the person who would be liable to pay on the certificates was in England. (2) Again, the stay which was ordered does not advance the position. The situation is that section 4 (1) of the Arbitration Act, 1950, is part of the curial law of the courts of England, and, if they are faced with an arbitration agreement, their powers to stay an action under section 4 (1) arise. (3) The form of the appellants' application for the appointment of an arbitrator does not take the argument any further; the only place where the phrase "submission to arbitration" occurs is in section 4 (2), where it clearly includes foreign agreements.

These actions cannot, therefore, be relevant in answering the causation what is the proper law; alternatively, they do not assist.

Accordingly, the proper law of this contract was Scots law, and the Court of Appeal was wrong in holding the contrary.

On discretion, the court has undoubted discretion, and, if the appellants are wrong on their other submissions and section 21 of the Act of 1950 does apply, the court is still not bound to order the arbitrator to state a special case. If it is not clear that an order would be enforceable, this will enter into the question whether an order should be made. Also, where questions of law were not formulated to the arbitrator, the court is really deprived of hearing from him. The principal point which the appellants make on discretion is, however, that concerned with the enforceability of any order.

J. Raymond Phillips Q.C. following. The appropriate course for the respondents to have taken if they objected to the arbitrator sitting in Scotland would have been a motion by them for his removal under section 23 of the Act of 1950 on the ground that he had misconducted himself in the proceedings. This is on the basis that English law was the proper law of the contract and that the effect of the arbitration proceedings being held in Scotland was to submit them to the law of Scotland. Section 23 is wide enough to cover not only personal misconduct but also an error of law. The arbitrator is really a quasi-judge exercising quasi-judicial functions. It is true that this point has never quite arisen to make it necessary to put it in this way, but, for example, in deciding whether he must comply with the rules of evidence his position has been equated with that of a quasi-judge.

With regard to an arbitration taking place in two countries simultaneously, one would look to the main part of the arbitration.

On a second point of detail, namely, the rules of court with regard to the service of proceedings out of the jurisdiction, the relevant order seems to be R.S.C., Ord. 11, r. 9. If proceedings have been begun by writ, they cannot be served out of the jurisdiction. The only relevance of Ord. 73, r. 7, is that such a situation could arise; if the application were decided in favour of the respondents, it is not clear what machinery they could adopt to have the arbitrator removed. It seems that there would be no power to serve the order out of the jurisdiction in a case of this kind. This may be relevant to the question of discretion.

On the question of the proper law of the contract, see per Widgery L.J. [1969] 1 W.L.R. 377, 383-384. He is saying that there are three stages: (1) you ask whether there is an express agreement; (2) you ask whether it can be inferred what the parties intended; (3) only if you cannot do that, you look at all the circumstances, including the traditional tests with regard to where the contract was made and was to be performed, etc. Those three stages are plainly inappropriate in the circumstances of this case because it cannot be inferred what the parties intended without looking at the circumstances. This case was never argued on the basis that there had been a new contract - that there was the initial proper law with some variation. Widgery L.J. is really referring to the parties' pre-contract conduct.

If the proper law cannot be determined by reference to the contract itself, then it must be determined by all the circumstances, and it is a criticism of the members of the Court of Appeal that they did not consider all the circumstances, only some of them. They paid no attention to the place where the contract was made, to the fact that it was to be

performed in Scotland, to the fact that its subject-matter was land in Scotland and to the fact that the respondents were acting in their capacity of property-owners rather than as contracting parties. They were all plainly influenced by what Mr. Hayworth did when he went to London, but the R.I.B.A. form was accepted by Mr. Hayworth because he understood that, naturally, the architects, being London-based, would want that particular form of contract. We are dealing with London architects, and what was affecting them was the technical rather than the legal aspect. [Reference was made to Dicey and Morris, op. cit., p. 1067.]

Morris Finer Q.C. and Patrick Milmo for the respondents. The proper order of approach to the questions in this appeal is not a mere matter of convenience. The proper order is: (i) what is the proper law of the contract? (ii) if it be possible to have a law of the arbitration different from the proper law of the contract, do the circumstances entitle the law applicable to be split in this way? A good many of the difficulties which have arisen so far in the discussion of these questions resolve themselves if the matter is approached in this way.

There is in fact no case so far cited, the respondents have found none and the passage in Dicey and Morris, Conflict of Laws, 8th ed., pp. 1047-1048, suggests that there is none in which the law has ever been split in the way in which it is suggested by the appellants that it should be (assuming that the proper law of the contract is English). There is, however, a useful passage in Kahler v. Midland Bank Ltd. [1950] A.C. 24 in the dissenting speech of Lord MacDermott at p. 42, referring to the reluctance of the courts to split the proper law, assuming that it is possible in theory to do so at all. It will only be done in very exceptional circumstances. See also per Lord Reid, at p. 50.

The importance of the proper law of the contract as regards not only its substantive provisions but also as regards the arbitration clause is quite manifest. If the parties' intention in entering into the R.I.B.A. form of contract was that the proper law of the contract should be English, then it is in the highest degree unlikely that it was their intention that the law of the arbitration should be any other than English law. If this is right, the appellants here are in the position of having to suggest that there was some sort of variation of the parties' original intention. Whether the proper law is determined by the country with which the contract is most closely connected or (as is the more accurate formulation) the system of law with which the contract is most closely connected, the question is always: what was the intention of the parties? It is only when the court finds itself at a loss to determine that intention that it has to impose rather artificial rules in order to seek a reasonable solution, though this solution could be quite different from what the intention of the parties in fact was. Here, there was a real intention.

It is suggested that people like the parties in this case and architects are concerned merely with the technical aspects of the contract. This is wholly unrealistic. Anyone who is operative in a big way of business is perfectly well alive to the situation that, under Scots law, arbitration is uncontrolled but that, under English law, it is subject to the control of the courts. This House will not assume without evidence that these people

did not know their business; it will assume the contrary. If the respondents insisted on a contract in the R.I.B.A. form, there being in existence a Scottish form almost universally, if not universally, adopted, and deliberately chose to use the R.I.B.A. form which the appellants anticipated that they would want, then to say that all that can be deduced from that is that the respondents wanted the R.I.B.A. technical clauses but not that the court should have control over any dispute is wholly unrealistic. If an officious bystander had been told that the proper law of the contract was English and had been asked whether or not the Arbitration Act applied, he would have said: "yes, of course." If he had been asked by which law the contract was intended to be governed, he would have said: "the law of England."

The approach to the question of the proper law of a contract is accurately set out in Dicey and Morris, op. cit., p. 1047. If one is looking at intention, it is perfectly permissible to look at the conduct of the parties before, at the time of and after the making of the contract. This was a contract in English form. It was proffered in English form by an English surveyor in London, not by way of accident or inadvertence but specifically because the respondents wanted an English form of contract. The fact that the architect and the surveyor were English has to be accorded more weight than merely to say that it would have been their preference to have a form of contract with which they would be familiar. The architect plays a vital part in working out the contract. Two standard forms of contract existed all this time. One refers to institutions (see title page) which are predominantly English. So specifically English is it that, whatever the convenience of applying it in Scotland, it is necessary to have a supplement in order to make it more useful there. It cannot be said that it was regarded generally as a very useful document for use in Scotland and under Scottish law, otherwise the supplement would have been unnecessary. It is plain, on the evidence, that, however possible it might have been to stretch the English document to cover a Scottish situation, that was never done (pre-1963). Regard should be had to common and practical reality; this is the best guide in the absence of express words.

The parties' intention might be common, yet founded on different motives and experience. Once one gets outside questions of pure construction, one has to look at all the surrounding circumstances. One is not seeking to imply a term but to establish as a matter of law what the proper law of the contract is. This is rather different from the question of the terms, express or implied, on which the contract was made.

All the members of the Court of Appeal based themselves on the leading idea that the R.I.B.A. code was incomplete unless it was governed by English law. The drafting of the R.I.B.A. contract is based on about 60 years of English case law, though the respondents do not suggest that anything in it is not perfectly intelligible to a Scots lawyer. All the cases on the R.I.B.A. contract are based on English case law. There is not a single Scottish decision on it (before 1963, when it was never in use in Scotland, at any rate), but scores of English cases. Many difficulties in it have been eked out by English case-law: see, e.g., Amalgamated Building Contractors v. Waltham Holy Cross Urban District Council [1952] 2 All E.R. 452. It is inconceivable that parties contracting on the standard

R.I.B.A. form were not adopting the decisions in the English cases on it, and it is inconceivable that a Scottish court would decide the points decided in those cases de novo. From 1909 to 1963, the form was revised at least seven times. Those revisions were largely based on English decisions which had shown up gaps in the code. The supplement was published under the sanction of Scottish bodies. The contract itself is an English contract. The respondents' primary submission is that this is a factor which is, in a sense, involved in the construction of the R.I.B.A. form of contract in that one is entitled to go outside the document itself to see that it is based on a body of English law. The selection of this form of contract indicated the parties' intention. Perhaps, on consideration, it is best described not as a matter of construction but as something integral in the contract, so that the parties, in adopting the contract, are integrally adopting English law.

The position where one cannot get the intention of the parties from the contract itself and has to look at the reality of the surrounding circumstances to construct an intention should be contrasted with the artificialities of rules of thumb such as the lex loci solutionis or contractus; the factor that the R.I.B.A. form of contract is based on a body of English case law is overwhelming, and should be preferred. Regarding the theory that there may be an intermediate stage between pure construction and looking at the circumstances, see Dicey and Morris, op. cit., p. 691. One does not really reach the third stage mentioned there in this case.

The appellants persuaded the arbitrator that there was no contract at all - that the matter ought to be dealt with on the basis of quantum meruit. Would the respondent have entered into a contract which exposed them to findings of that kind? They got no law at all. It is not necessarily to be inferred that the respondents would have preferred to risk the waste of time ailed money which can occur when costs go to and fro between arbitrators and the courts, but the policy which English law favours is that, in important commercial matters, though parties may prefer arbitration, they do not intend to give arbitrators completely unfettered discretion without recourse to the courts. The policy of the courts ought to be, in matters of this description, to submit matters to the control of lawyers rather than laymen.

Conduct is one of the circumstances from which an inference can be drawn. A subsequent circumstance may be used in order to determine the intention of the parties. Here, the conduct relied on is that there was a reference to arbitration under the Arbitration Act, 1950.

There is plenty of evidence that the parties did apply their minds to the question whether this was a Scottish or an English contract.

The arbitrator was appointed in London. But this is not a case where the clause says "arbitration Glasgow" or "arbitration London." If the place were specified, that would be a very powerful factor, but that is not this case. Nor can it be right that, if the proper law were otherwise manifestly Scottish, if the parties had chosen the English architect originally suggested by the respondents as arbitrator that accident would have made the proper law of the arbitration English. It is worth mentioning that it was an arbitrator which was applied for, not an arbiter. Contrast clause 11 (4) (c) of the contract concerning rates with clause 1 of the Regulations and

General Conditions of Contract for Building Works in Scotland: in Scots contracts you have the Scots method of measurement. The revision of the Scottish form of contract as from 1968 makes it absolutely clear that Scots law applies to that form.

It is wrong to say that no factor other than the form of contract was considered by the Court of Appeal: see per Lord Denning M.R. [1969] 1 W.L.R. 377, 381. [Reference was made to Rossano v. Manufacturers' Life Assurance Co. [1963] 2 Q.B. 352, per McNair J.] There is no real conflict between The Assunzione [1954] P. 150 and other cases, because the members of the court there were directing their minds to different stages of the inquiry. In The Assunzione, they imputed an intention, so had to go into the circumstances.

Regarding the distinction between connection with the "country," and with "the system of law," there are many cases where this dichotomy has not been explained because it was not relevant to the inquiry. The "system of law" test is much more accurate than the "country" test, though it is not suggested that the country test must be excluded. Admittedly, the place and manner in which the contract is to be carried out can be connected with a system of law.

The respondents' submissions on the proper law of the arbitration, assuming that there can be a split, are as follows: under his remit, this arbitrator was bound by the Arbitration Act, 1950. So, right from the beginning he never had vires to deal with the matters other than by reference to the Act. If this is right, it is conclusive of this case - if there are no countervailing considerations - even if the proper law of the contract was Scottish law. The arbitrator was acting under the Arbitration Act. There is no evidence that he did anything not under the Act until he refused to state a special case. The procedure was under the Octet does not matter whether the expression "points of claim" is used or the equivalent Scottish expression (see the form of appointment). Of course the arbitrator derives his authority from the arbitration clause, but one cannot ignore the terms on which he was appointed. "Within the meaning of ...," in the application for his appointment, can only really mean "under." The fact that the application was made six days after the appellants' action had been stayed under the Act may have some relevance, but there was no point in referring to the Act unless he was being directed to the fact that his authority was to act within the meaning of the Act.

Even if the proper law of the contract was originally Scottish, the parties turned it into an English arbitration by their submission to arbitration. They certainly did not turn it into a Scottish arbitration.

If one is talking about a submission to arbitration, only section 4 (2) of the Act contains this phrase, and section 4 (2) has nothing to do with the present matter. There is not even a reference here to "a submission within section 4 (1)." What can be the meaning of "submission within the meaning ..." where the Act does not make a reference to it? Nor does the Act define "arbitration," only "arbitration agreement." [Reference was made to section 32.] "Within the meaning of the Act" cannot just be a convenient paraphrase of "whereas there is an arbitration agreement."

Even if the reference to the Arbitration Act, 1950, in the application for

appointment does not have the definitive effect contended for, it is a material circumstance to be taken into account in determining the proper law of the contract.

The time factor does not operate adversely if it is recognised that these forms are standard forms of application for appointment standing collaterally with the standard forms of contract. One is going to get a form from the Institute which refers to the Arbitration Act whether there has been an antecedent stay or not. It is all part of the general English context. This is reinforced by the opening words of section 4 (1). It is conceded that these words are apt to cover a case where the submission to arbitration or arbitration agreement is a foreign one but the proceedings have been begun in the English courts. It looks as though one can stay such a proceeding.

Racecourse Betting Control Board v. Secretory of State for Air [1944] Ch. 114, per MacKinnon L.J., at p. 126, shows that, when one is dealing with a foreign submission, the power of the court to restrain proceedings is inherent and existed before section 4 of the Arbitration Act, 1950. The stay under section 4 was applied for on this basis and was obtained without dissent by the appellants. This is one other factor in the general context of the case indicating what the parties' intention was.

The appellants' argument is that the procedure adopted in the arbitration was wholly Scottish and was adopted without dissent by the respondents, and that the arbitration was held in Scotland. This is, however, not a case where the contract specified arbitration in Scotland; it is thus a different class of case. The question is how the arbitration came to be held in Scotland and whether that should be treated as conclusive as to the intention of the parties. It was, however, a pure question of convenience. So far as the Scots form of pleadings is concerned, a reading of the correspondence makes it plain that one had the situation where the arbitrator had been appointed and he and his clerk quite naturally began to use the kind of terminology with which they were familiar. From quite early on, the respondents and the appellants' English solicitors went on using their terminology. Ultimately, as a matter of convenience and courtesy, both sides fell in with the arbitrator's terminology. It is impossible to say that the law of the arbitration was intended to be different from the proper law of the contract. The fact that the parties adopted terminology which was convenient to the tribunal can have no effect on what is the proper law of the arbitration. The parties did not, except in trivial matters, consent to Scottish procedure. They did not agree to Scots law of procedure being adopted by the arbiter. The respondents were advised by English leading counsel then retained by them that the right time to raise the point regarding the stating of a special case was at the end of the evidence. They never concluded from the clerk to the arbiter's letter of May 24, 1967, stating that the procedure outlined was not in accordance with Scottish arbitration procedure, that a case stated would not be possible. The correspondence never went beyond matters of terminology. The letter of May 24 refers to an interlocutory step of no importance. There is nothing in the respondents' acknowledgment of it to indicate that they intended to give up the right to have the arbitration supervised by the courts. Nor was it even necessarily the appellants' view that the arbitration would be without such supervision.

It was not a case where one party wanted Scottish procedure in the full sense to apply and the other did not. It is likely that both sides thought that, in the full sense, it would not apply. Or, at least, they did not bend their minds to the subject at all. On the contrary, the respondents throughout particularly wanted the R.I.B.A. form of protection, and the appellants knew it.

The fact that the arbitrator had no difficulty in applying English law is irrelevant: this was simply because he was Scottish as opposed to French or German.

Howden & Co. Ltd. v. Powell Duffryn Steam Coal Co. [1912] S.C. 920 shows that, in all these matters of pleading and terminology, the fact that the arbitrator was dealing with the matter in Scottish form is irrelevant, because it is well recognised in Scotland that these variations are of no importance even in the case of matters of pure construction, let alone pleadings. If an important point of procedure had arisen, arbitrator had a clerk to assist him. The position is different from that of an arbitration going on in Spain, for instance, in a different language. It is, in any event, not uncommon for a point of foreign law to arise in an arbitration. One ought not, therefore, to allow formal and unimportant matters to affect the conclusion.

To say that the arbitrator, having made his final award, was functus officio is demonstrably wrong having regard to at least three English authorities. Once he is acting under the Arbitration Act, he cannot by the form of his award exclude its application. Really, the term "functus officio" begs the question (In re Palmer, ex parte Brims [1898] 1 Q.B. 419).

On discretion, it is unarguable that the award was so right and clear that the court should not grant the respondents a stated case. The discretion point is, however, put by the appellants in a different way - by reference to the grip of the court over the arbitrator. What the Scottish courts would do if the English court ordered the arbitrator to state a case is a matter of Scots law. If Scottish conflicts rules are the same as English conflicts rules on this subject, the answer to the question whether they would enforce such an order is "no," any more than the English courts would enforce an interlocutory award of an American court. This is, however, of no importance, because refusal to comply with the order is in the end going to lead to a final judgment, and final judgments are always recognised by foreign states. The respondents would apply to have the arbitrator removed, and to start a new arbitration. The Scottish courts would enforce a final order of that kind, and they would not enforce the existing award. The principle that a court does not make an order which it cannot enforce is inapplicable to a situation where, ex concessis, one starts off with one party to the proceedings being foreign. Also, with regard to the service of proceedings on people out of the jurisdiction, or resident abroad, the court regularly assumes jurisdiction under R.S.C., Ord. 11, over residents abroad, provided that it has jurisdiction to entertain the proceedings in the first place.

It does not therefore, matter that the arbitrator lives in Glasgow if he is subject to the English courts. Suppose, for example, that the arbitration had started in England and the arbitrator had then gone to Germany and held the arbitration there: is it to be supposed that the English courts would have lost all control over it? Surely not.

Under R.S.C., Ord. 73, r. 3 (2), the proper respondents would be the arbitrator and the other party to the reference. In applying to set aside an award, however, the arbitrator is not joined, even if there is a question of malpractice: see the precedents in Russell on Arbitration. R.S.C., Ord. 73, r. 7 (1) does not apply to proceedings requiring the arbitrator to state a case at all; that is governed by R.S.C, Ord. 11, r. 9 (1), which leaves the question of service of the originating summons out of the jurisdiction at large for the discretion of the court. The arbitrator would only need to be served if the appellants could not be served with the necessary process. They could not be served out of the jurisdiction, except with regard to the case stated, but there is no problem there because they are in this country. The fact that an order on an arbitrator to state a case is left out of R.S.C., Ord. 73, r. 7, indicates that it is thought desirable that the court should retain discretion and control. It is deliberately left out of the restriction imposed by Ord. 73, r. 7.

The question has been put: how could the respondents have prevented the appointment of the Scottish arbitrator to sit in Scotland? They could not have. All that this shows, however, is how invalid the point is that the appointment of a Scottish arbitrator sitting in Scotland determines the law of the arbitration. The whole point of "consent" to Scottish procedure is not so much that the arbitration was conducted by a Scot - nothing could have been done about that - nor that he was sitting in Scotland - nothing could have been done about that either - but no more than that the respondents did not raise at the earliest opportunity the doubt which occurred to them as to whether the arbitration was to be governed by Scottish procedure. If the proper law of the contract is manifestly English law, then the fact that the arbitration proceedings are held in Scotland is no more than prima facie evidence, and is certainly not conclusive, that that law is intended to govern the arbitration. It is perhaps put rather too high in Dicey and Morrisat p. 1048; it is a factor, though no doubt quite a strong factor, in determining the proper law of the arbitration. Whether, however, it is prima facie evidence or an important factor does not matter much because, if it is prima facie evidence, this means prima facie in all the circumstances.

There is nothing here to displace the overall presumption from the rest of the contract that the parties intended the arbitration to be held as an English arbitration. Admittedly, if the proper law of the contract was English and the arbitration was English by operation of law rather than by agreement, that might be a bit weaker because it could more easily be shown that there was an agreement to hold it elsewhere. Even if the arbitration was English by operation of law, however, the difficulty of finding that there was a "split" of the proper law is still very considerable

Dicey and Morris's suggestion at p. 1048 is the high water-mark against the respondents, but, in any event, it is displaced because there was no choice of the parties here to have a Scots arbitration. The first time that the question arose was when they had to ask: are we arbitrating by Scottish law or English law? This is what is relevant even if the question should have been asked earlier. The choice of the arbitrator was not the appellants' or the respondents', so that there was no contest at that stage. "Consent" cannot apply in a situation where there is no option to do

anything else. When the arbitrator was appointed, all that the respondents could have done was to make a fuss. It is a loose use of the word "procedure" to use it in the relation to the form of pleadings in Scotland. These can be in any form in Scotland; they are not governed by any law at all. If any real question of substance had arisen and the respondents had agreed on Scottish procedure, that would have been a different matter. But the first time that this arose was when they asked the arbitrator to state a special case. Far from consenting then, they took proceedings. It does not matter how the pleadings were headed. There were no standard forms or procedure to consent to. No estoppel has been pleaded.

To summarise the respondents' submissions:

1. The parties entered into a building contract in standard form which was intended to be governed by English law. This assumption rests on the following foundations: (a) On the appellants' own evidence, the contract was "in English form." This is virtually a concession that the proper law of the contract was English. (b) The English form was not adopted fortuitiously, but at the express request of the English architect. Its selection was regarded by the appellants themselves as perfectly natural. (c) The selection of the English form was an act of choice between the English form and an extant Scottish form in almost universal use in Scotland by building contractors for building work in Scotland. (d) The appellants are a very large company engaged in work both in Scotland and in England, and it was for them just as convenient and a matter of indifference whether they contracted under English law or Scottish law. (e) We know that the appellants had the advantage of the services of a lawyer engaged in a "consultative capacity to advise them on questions arising, inter alia, on building and civil engineering contracts." So, again, the appellants were alive to these matters. (f) The sponsorship of the English standard form is by English associations or authorities, or, in the case of the R.I.B.A., where not confined to English members, at least bodies with specified Scottish counterparts. (g) The terminology of the contract is English. It manifestly uses "common law" to mean the common law of England. One reference to something which is not known to Scots law is that to receivership under a debenture. (h) The standard form postulates a large body of English case law and practice which the parties take on with the contract and for which there is no counterpart in Scotland. No Scottish case on the R.I.B.A. contract has been cited.

2. No case has been cited in which the proper law governing the conduct of an arbitration has ever been held to be different from the proper law of the contract. Dicey and Morris, op. cit., p. 1048, state that this could be achieved by way of an express provision, but there is no such provision in this contract. It follows that, if the proper law of the arbitration is to be held to be Scots law, this conclusion must come about by some inference or implication derived from the contract, or, if the contract does not yield such, from some other circumstance ex post facto. There is absolutely nothing in this contract from which it could be said to be governed by Scottish law. The overwhelming inference is that it is governed by English law. So, if something is to override this inference, it must be something which occurred after the making of the contract (see Dicey and Morris, op. cit., p. 1047). If Dicey and Morris are right in

saying that, prima facie, the law of the country in which the arbitration is held governs it, for which statement there is no authority, still, prima facie means no more than that one must look at all the circumstances. The right question is: did anything happen to displace or alter the original manifest expectation of the parties that the dispute would be arbitrated according to English law?

3. No estoppel has been pleaded. The respondents rely on two references to the Arbitration Act, 1950, in the arbitration agreement. They say that, on any reasonable construction of the arbitrator's appointment, the conclusion is reached that the arbitration was intended to be governed by the Act of 1950. The words of the application for appointment are not to be struck out as being merely otiose. They are specific words, making clear reference to an English Act of Parliament. Either they are absolutely meaningless or the arbitrator is to conduct the arbitration according to the Arbitration Act.

4. There are ample grounds in this case on which the evaluation of the proper law which was made by the Court of Appeal could be made, and it would be wrong for this House to say that it was wrong in law or to interfere, assuming that a different conclusion were possible.

This is a question of law, but a question of law stemming from the conclusion to which one comes on the facts. The Court of Appeal was unanimous and ought not to be overruled by this House.

Mackay Q.C. in reply. "Submission to arbitration" is a phrase capable of more than one meaning. It may mean one particular dispute, or it may be a general clause submitting all disputes. It may mean other things also. On the ordinary use of language, the phrase used here means no more than that "submission to arbitration" has the meaning which it has in the Act. The passage in the application for appointment referring to the submission to arbitration describes a provision in the contract. It does not prescribe procedure. It is nothing more than a description of a particular clause. In the Act, the phrase occurs only in section 4 (2), which, as it happens, extends also to Scotland. It is plain that, in the context of section 12 of the Act, "submission to arbitration" must embrace many arbitrations which are not subject to English procedure. This ties up with the three R.I.B.A. printed forms, because, in a case where there is no provision for arbitration, the phrase does not occur. So, the phrase in the application for appointment does not take the matter any further.

In looking at the realities of the situation, one should see the course which the matter took. It was not expressed in the contract that the arbitration should be governed by the law of England. Either the respondents could object to the arbitration being held in Scotland because that was inconsistent with the original contract or they could not object because it was consistent. The arbitrator's first act was to appoint a Scottish solicitor to be clerk in the submission and neither party took any objection. The clerk wrote his letter in January 19, 1967, to the respondents' English solicitors in London before any point, trivial or otherwise, had arisen. That was a clear indication that the procedure known to him, rather than the procedure known to the solicitors, was the procedure to be followed. The phrase "procedure" would be understood as it would be understood by solicitors: Don v. Lippmann 5 Cl. & F. 1. Later letters made it plain

that Scottish arbitration procedure was being applied. The respondents evinced agreement to that course being followed. This is not a mere matter of trivia. "Scottish arbitration procedure" means "Scottish law regulating arbitration procedure." This law is fairly general in character, but, equally, arbitrators are entitled to decide questions of law as well as fact and to decide them finally. The English Evidence Acts apply to arbitration proceedings but do not apply to Scotland. If the reason given by the clerk in his letter of May 24, 1967, was a good reason, then it would have been a good reason in the case of any of these matters.

The whole conduct of the parties in the arbitration evinced a common intention that the law governing at least the procedure should be that of Scotland. The position should be tested as at the moment when the question arose regarding the case stated. The pleadings are not just Scottish because they could be either, but are characteristically Scottish. The pleas-in-law are unknown to English law, and one plea on which the respondents' case depends is the relevancy of the averments. They are asking for a decree arbitral, which is a Scottish form.

The fact that the arbitration took place in Scotland is of very considerable importance. If it was perfectly in accordance with the contract that it should be so, then it was also perfectly within the contract that it should be governed by the law of Scotland.

With regard to, e.g., section 12 of the Arbitration Act, 1950, it is, of course, plain that "arbitration agreement" can be one answering the definition in the statute, but section 12 does not apply to an arbitration governed by the law of Scotland.

With regard to the proper law of the contract, it is accepted that the appellants are in a fairly big way of business, but this question should be approached on the basis of the evidence.

Regarding the deliberate use of the R.I.B.A. form, this is not a case where the R.I.B.A. form is intended only for use in England. There is no evidence to this effect. Scottish architects as such are directly represented in the list of members of the bodies who sanctioned the form. There is a form for Scotland on the one hand and a form for widespread use on the other.

One cannot make assumptions one way or the other from the fact that there are a considerable number of English decisions on the R.I.B.A. form. The law governing procedure in Scotland is such that arbitrations normally could never get to court. [Reference was made to Howden & Co. Ltd. v. Powell Duffryn Steam Coal Co. 1912 S.C. 920.]

There are, therefore, no circumstances amongst those preceding the making of the contract which evince the intention on the part of the contracting parties to choose English rather than Scottish law for the contract. There is nothing to be gathered from the wording of the contract. "System of law" in the contract quite clearly means, in the context, Scottish law. "Common law" is clearly Scottish common law. Clause 18 is quite consistent with Scottish law.

What Lord Denning M.R. said at [1969] 1 W.L.R. 377, 380, is contrary to Bonython v. Commonwealth of Australia [1951] A.C. 201, and to what this House has held, since he does not give proper weight to the place of performance.

It is accepted that the arbitrator is not a necessary party to the proceedings, but it would be necessary for the order to be served on him, otherwise there is no procedure for letting him know where he stands. The main use which the appellants make of R.S.C., Ord. 73, r. 7, however, is the importance which it gives to the place where the arbitration takes place. The arbitrator has no office in England, so the proceedings could not be served at all where the arbitration proceedings had take place entirely outside the jurisdiction.

The respondents have accepted that the R.I.B.A. form might be used in circumstances where it would not carry the implication that the proper law was the law of England. If this is so, there are many other reasons for choosing the R.I.B.A. form.

If the R.I.B.A. wanted a form for general use, it was natural to leave out reference to English law. If, on the other hand, they had wanted English law to be applicable, it would have been very simple for them to have said so.

Their Lordships took time for consideration.

March 3. LORD REID. My Lords, the appellants are building contractors whose registered office is in Scotland. The respondents are an English company who owned premises in Dumbarton which they wished to convert into a bonded warehouse. They accepted the appellants' tender for the work and the contract made by the parties was in the form published by the Royal Institute of British Architects. This contract contained an arbitration clause and when disputes arose the parties, having been unable to agree, applied in terms of this clause to the president of the institute to nominate an arbitrator. He nominated Mr. Underwood, a fellow of the institute, who practiced in Glasgow. Mr. Underwood then, thy an interloctutor in Scots form dated January 19, 1967, appointed a Glasgow solicitor to be clerk in the submissions. Thereafter all the proceedings in the arbitration were in Scots form, Scots counsel and solicitors being employed by both parties. After all the evidence had been heard counsel for the respondents asked the arbiter to state a case for the decision of the English High Court. The arbiter refused to do so on the ground that this was a Scottish arbitration. The respondents then, on June 28, 1968, applied to the High Court for a direction to the arbitrator to state his award in the form of a special case. Mr. Underwood did not do so: he issued his final award on December 10, 1968.

The question in this appeal is whether this was a Scottish or an English arbitration. If it was governed by the law of Scotland the arbiter acted correctly. Under Scots law an arbiter is the final judge both of fact and law, and Mr. Underwood was entitled and, indeed, bound to issue his final award. But if the arbitration was governed by the law of England he was bound to state a case in order that questions of law which had arisen might be decided by the English court.

Two questions were argued: first, whether the proper law of the parties' original contract was Scots or English law, and secondly, if the proper law was English law, was the arbitration nevertheless governed by the law of Scotland? I shall first consider what was the proper law of the contract.

The general principle is not in doubt. Parties are entitled to agree what is to be the proper law of their contract, and if they do not make any such agreement then the law will determine what is the proper law. There have been from time to time suggestions that parties ought not to be so entitled, but in my view there is no doubt that they are entitled to make such an agreement, and I see no good reason why, subject it may be to some limitations, they should not be so entitled. But it must be a contractual agreement. It need not be in express words. Like any other agreement it may be inferred from reading their contract as a whole in light of relevant circumstances known to both parties when they made their contract. The question is not what the parties thought or intended but what they agreed.

It has been assumed in the course of this case that it is proper, in determining what was the proper law, to have regard to actings of the parties after their contract had been made. Of course the actings of the parties (including any words which they used) may be sufficient to show that they made a new contract. If they made no agreement originally as to the proper law, such actings may show that they made an agreement about that at a later stage. Or if they did make such an agreement originally such actings may show that they later agreed to alter it. But with regard to actings of the parties between the date of the original contract and the date of Mr. Underwood's appointment I did not understand it to be argued that they were sufficient to establish any new contract, and I think they clearly were not. As I understood him, counsel sought to use those actings to show that there was an agreement when the original contract was made that the proper law of that contract was to be the law of England. I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later.

The facts mainly relied on the show that there was an agreement that English law should be the proper law of this contract are that the R.I.B.A. form of contract is in English form and that there was in common use at the time a Scottish form of contract drawn up by a different professional body. What reason, then, could there be for adopting the English form other than an intention that the law of England should be the proper law of this contract? But there could be a very good reason. If an English architect is appointed to act in any building contract he may well prefer that the contract should be in a form with which he is familiar, because any form of building contract is exceedingly complicated. And the parties may accede to his wish without giving a thought to the question of proper law. Indeed, this is what seems to have happened in the present case. So I cannot find any agreement as to what should be the proper law of the contract, and I must consider how the law will determine that question.

At one time it was thought that the problem could be solved by means of an implied term in the contract. But this creates difficulties similar to those discussed in the more recent authorities dealing with restoration, and I think that the better view now is to apply a more objective test. Two slightly different tests have been formulated: "the system of law by reference to which the contract was made or that with which the transaction has its

closest and most real connection" (per Lord Simonds in Bonython v. Commonwealth of Australia [1951] A.C. 201, 219) and "with what country has the transaction the closest and most real connection" (per Lord Denning in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, 1068). It has become common merely to refer to the system of law but I think that the two tests must be combined for all are agreed that the place of performance is a relevant and may be the decisive factor, and it is only in a loose sense that the place of performance can be equated to the system of law prevailing there. In Bonython's case the question was the meaning of "pound sterling," the choice being between its meaning according to the law of England and its meaning according to the law of Queens land. So it was quite accurate to refer only to the two systems of law. But in the United Railways of Havana case the decisive factor was the place of performance and in the choice between Philadelphia and New York nothing turned on any difference between the systems of law in the Commonwealth of Pennsylvania and the State of New York.

In the present case the form of the contract may be said to have its closest connection with the system of law in England but the place of performance was in Scotland and one must weigh the relative importance of these two. No other factor has any real weight in this case.

So I must first see how closely the contract is connected with the law of England. In appearance it is in English form but some of its provisions can only refer to the law of Scotland. Clause 4 requires the contractor to comply witch Acts of Parliament and bye-laws. As all the work was to be done in Scotland that can only mean Scottish legislation. Clause 18 requires the contractor to indemnify the employer against claims or proceedings arising under any statute or at common law: that can only mean the common law of Scotland because it is there that such claims will arise and they will have to be determined by Scots law. It is true that there is a reference to "property real or personal" but in the context that refers to property in Scotland and must mean property heritable or movable. On the other hand, there are references in clauses 11 and 31 to English rates being applied in the absence of agreement to the contrary. Some importance was attached to a reference in clause 25 to a receiver, but that would be equally apposite in a Scottish contract if the contractor were an English company. I can find nothing else in the contract which would not be equally apposite if the contract is a Scottish contract. I should perhaps refer in particular to the arbitration clause - clause 35. The first part provides for disputes being referred "to the arbitration and final decision" of a person to be agreed. That is completely accurate if the contract is a Scottish contract but if it is an English contract one must read in the right to take questions of law to the court. And then there is a provision that in the absence of agreement an "arbitrator" is to be appointed by the President of the Royal Institute of British Architects. As its name implies that is a society with Scottish as well as English fellows. So, unless one lays undue stress on the use of the English term "arbitrator," that is a provision equally applicable to a Scottish contract for which the president would probably appoint one of the Scottish fellows, as he did in the present case.

So the contract has many connections with the law of England but it also has very important connections with the law of Scotland. I cannot

therefore hold that the form of the contract is in any way decisive as to the proper law.

The other important factor is the place of performance. All the work under the contract was to be done in Scotland, and, apart from the possibility of an arbitration being conducted in England, substantially every question which could arise in the course of carrying out the contract would arise in Scotland. The contractor was a Scottish contractor.

It therefore appears to me that the weight to be attached to the place of performance being in Scotland is considerably greater than the weight to be attached to such connections as there are between the form of the contract and the law of England and so I would hold that the law of Scotland is the proper law of this contract.

If that is right the second question does not arise. But if the proper law of the contract is the law of England, I think that the actings of the parties after the appointment of Mr. Underwood sufficiently show an agreement that the arbitration proceedings should be governed by the law of Scotland.

I would allow the appeal.

LORD HODSON. My Lords, the question for determination on this appeal is: "What law governs certain arbitration proceedings" which have taken place between the parties in Scotland before a Scottish arbiter.

The matter arises in this way. An English company called Whitworth Street Estates (Manchester) Ltd. (registered in London), owned premises in Dumbarton in Scotland which they wished to convert into a whisky bonded warehouse. On May 10, 1965, this English company entered into an agreement in the English Royal Institute of British Architects' standard form with James Miller & Partners Ltd., building contractors of Glasgow, for them to do the work of conversion.

Disputes having arisen between the parties, they resorted to arbitration in pursuance of the arbitration clause contained in the agreement. This provided that in case of any dispute or difference it:

"is hereby referred to the arbitration and final decision of a person to be agreed between the parties, or, failing agreement ... a person to be appointed on the request of either party by the president or a vice-president for the time being of the Royal Institute of British Architects."

Upon an application by the English company for him to state his award in the form of a special case the arbiter refused to do this, for by Scottish law he was not bound to do so, his decision being final on law and fact. Master Elton made the order to state a case. This order, reversed by the judge in chambers, was restored by the Court of Appeal. Hence this appeal to your Lordships.

The arbiter in the meantime made a final award in favour of the contractors, who are now the appellants.

So far as the proper law of this contract is concerned, there has been a division of judical opinion which indicates that the factors to be considered are evenly balanced in this case.

The contract was not in terms made by reference to any system of law and the proper law falls to be determined as that with which the transaction has its closest and most real connections: see Bonython v. Commonwealth

of Australia [1951] A.C. 201, a decision of the Privy Council in which the judgment of the Board was delivered by Lord Simonds at p. 219. These observations were applied in this House in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, 1035, 1050, 1068, 1081. Although my noble and learned friend, the Master of the Rolls, now regrets having used the word "country" instead of "system of law" in this connection (see his judgment in this case [1969] 1 W.L.R. 377, 380) I do not myself see that this variation of language is important, although in some contexts one word may be more appropriate than another.

Applying this test I have for myself come to the same conclusion as the Court of Appeal as to the proper law of the contract. The parties not having expressly chosen the proper law or stated their intention in terms the court must act on the evidence before it and fix the presumed intentions of the parties as best it can. As the Master of the Rolls pointed out there are factors which point to Scotland where the contract was to be performed, always an important consideration. The contract concerned land in Scotland owned by one party. The other party was a Scottish contractor. The workmen to be employed would be Scottish and their relations with their employers would be governed by Scottish law. On the other hand, all the members of the Court of Appeal held, and I agree with them, that the contract itself was from its inception one intended to be governed by English law. The parties deliberately used the R.I.B.A. form which has many connections with English law. An English architect was employed, and, although a Scottish form could have been used, the English form was adopted at his request. I need not enumerate other considerations, for the question is, to my mind, determined by the use of the English form, the selection of which shows the intention of the parties to be bound by English law. I should add that I cannot assent to the view which seems to have found favour in the eyes of the Master of the Rolls and Widgery L.J. that as a matter of construction the contract can be construed not only in its surrounding circumstances but also by reference to the subsequent conduct of the parties.

I am satisfied, however, that, whether the proper law of the contract is English or Scottish, the arbitration being admittedly a matter of procedure as opposed to being a matter of substantive law is on principle and authority to be governed by the lex fori, in this case Scottish law. Furthermore, the parties have, in my judgment, plainly submitted to the Scottish arbitration on the footing that Scottish procedure was to govern.

The leading case of Don v. Lippman (1837) 5 Cl. & F. 1, a Scottish appeal to your Lordships' House, was concerned with the law of prescription and it was held that the sectional period according to the lex fori prevailed over the lex contractus. Lord Brougham, at p. 13, held that there is this distinction between the contract and the remedy: that whatever relates to the remedy is to be governed by the lex fori, the law of the country to whose courts application is made for performance. I see no reason why this principle should not be applied to arbitration proceedings. It appears from Norske Atlas Insurance Co. Ltd. v. London General Insurance Co. Ltd. (1927) 43 T.L.R. 541, 542, that MacKinnon J. was of this opinion. An opinion to the same effect is to be found in Dicey and Morris, Conflict of Laws, 8th ed. (1967), where the editors submit, at p. 1048:

"Where the parties have failed to choose the law governing the arbitration proceedings, those proceedings must be considered, at any rate prima facie, as being governed by the law of the country in which the arbitration is held, on the ground that it is the country most closely connected with the proceedings."

I agree with this submission.

Here the parties did not, in the first place, choose the law which should govern the arbitration proceedings but they subsequently accepted a Scottish arbiter in Scottish arbitration proceedings. This agreement involved no variation of the original contract for it is not inconsistent with the terms of that agreement that arbitration, if any, should take place in Scotland and be governed by Scottish procedure. That Scottish arbitration procedure was to be followed was accepted by the parties as is shown by the correspondence which took place following the appointment of the arbiter in Glasgow. The arbiter himself made the position abundantly clear by appointing as his clerk a Glasgow solicitor. Scottish procedure was followed throughout without objection until the application was made for a case to be stated. Then for the first time, when it was realised that this procedure was not available in Scotland, was any attempt made to depart from what had previously been agreed. The respondents submit that in agreeing to Scottish procedure they were not contemplating the case stated process which is used in England but not in Scotland. This will not avail them since, as was admitted, stating a case is a procedural matter and the respondents cannot pick and choose from the various operations involved in Scottish procedure. The form of the application made by the appellants for the appointment of an arbitrator does not avail the respondents - merely because of the use of the form of words "where there is a submission to arbitration, within the meaning of the Arbitration Act, 1950." There was in truth a submission within the meaning of the English Act, which does not apply to Scotland, but this does not lead to the conclusion that the English Act was to govern the Scottish arbitration proceedings.

I would allow the appeal.

LORD GUEST. My Lords, the arbiter in this arbitration which took place in Scotland was ordered by Master Elton upon the application of the respondents by way of originating summons to state his award in the form of a special case for the decision of the High Court in terms of section 21 of the Arbitration Act, 1950. The appellants appealed from the master's order on the ground that the proper law of the contract under which the arbiter was appointed was Scots law and, as the Arbitration Act did not apply to a Scottish arbitration, the stating of an award in the form of a special case was inappropriate. Eveleigh J. allowed the appellants' appeal, but the respondents' appeal to the Court of Appeal was successful and the order of Master Elton was restored.

Two questions were argued before this House. The first was whether the proper law of the contract was Scots or English. The second question was whether, assuming that the proper law of the contract was English, the law governing the procedure in the arbitration was Scots or English.

Upon the first question I have no doubt that the parties never chose

English law as the proper law of the contract or evinced any intention to be bound by this law. In order to answer the question the courts must import a choice of law. There are very strong factors either way and one of the most important is the fact that the place of performance of the contract was in Scotland. But equally I recognise that there are persuasive factors in the opposite direction, one of them being the R.I.B.A. form of contract. On balance I am not disposed to differ from the majority of your Lordships who think that the proper law of the contract is English.

I now turn to the crucial question; what is the curial law of the arbitration. It is said that there is no case where it has been held that the law of the arbitration was different from the law of the contract. I am not impressed by this argument when it is conceded, aisles it was by Mr. Finer for the respondents, that this could be the position. This concession could not have been withheld in view of the observations in Don v. Lippmann, 5 Cl. & F. 5 and Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202.

No question arises as to any split in the proper law of the contract or any variation of the proper law. When the stage of an arbitration is reached, there must arise, apart from a particular term in the contract or some agreement between the parties, the question what procedural law is to be adopted by the arbiter. This question must be: what procedural law did the conduct of the parties evince their intention to adopt?

In the present case the parties did not agree upon an arbiter and it therefore became necessary for the president of the Royal Institute of British Architects to appoint an arbiter. It may be that the appellants thought that if they did not agree to the respondents' nominee, the president, in view of his practice spoken to by Mr. Stringer, would probably appoint a Scots arbiter. However that may be, the president did in fact appoint an architect practising in Scotland as arbiter. In the application by the appellants for the appointment made to the president of the Royal Institute of British Architects there occurs a reference to a "submission to arbitration, within the meaning of the Arbitration Act, 1950." It was argued for the respondents that this was inclusive of the matter and amounted to a consent by the appellants to an arbitration under the English Arbitration Act, 1950, and an acceptance by the arbiter of the jurisdiction of the English High Court under that Act. In my view, far too great an emphasis has been laid on this expression. The expression "submission to arbitration" only occurs in section 4 (2) of the Act of 1950 in reference to foreign arbitrations and the reference in the application only imports what the law would in any case imply. The arbiter's power and jurisdiction stem not from this application and his acceptance of office. but rattan the arbitration clause in the contract. This form was merely the machinery for the appointment of the particular arbiter in view of the failure to agree upon an arbiter.

At this stage of the appointment of an arbiter I am satisfied that neither party applied his mind to what procedural law should be adopted. But as soon as the arbiter was in the saddle matters took a more definite turn. The arbiter appointed a Scottish solicitor as his clerk. He made it clear to the parties that he was adopting Scots procedure. The respondents instructed Scots solicitors and Scots counsel as did the appellants. The pleadings took Scottish form and the respondents tabled pleas to the relevancy in Scots form and used Scots terminology for the remedies which

they sought on the counterclaim, namely, "decree arbitral." The form of order by the arbiter was a Scots interlocutor. The seat of the arbitration continued to be in Scotland. With all these proceedings the respondents acquiesced and took not a single objection.

Apart from the contract itself there was not a single factor in the parties' conduct which suggested that any other procedural law was being adopted but Scots law. I have little doubt that until the critical question arose as to the form of the award, neither party had any doubt that it was the Scots form of procedure which was being adopted. That was certainly the view of the arbiter and I feel certain that it would have been the view of "the officious bystander" to the proceedings.

It has been suggested that the seat of the arbitration is unimportant and that an arbiter might decide to sit in several different places and that no party would restrain him for so doing. That may be so. However, the provisions of R.S.C., Ord. 73, r. 7, do indicate that the territorial nature of the arbitration is important: see also the passage in Dicey and Morris,op. cit., p. 1048.

Where all the proceedings take Scots form and the arbiter plainly indicates that he is following Scots procedure, then, in the absence of any protest, the parties will, in my opinion, be taken to have agreed that the arbitration will be governed by the curial rules of Scotland.

As a pure matter of convenience I should have thought it extremely unlikely that a Scottish architect advised by a Scots solicitor before whom Scots counsel instructed by a Scots solicitor appeared would think for one moment of applying the English rules of procedure. The view of respondents' counsel at any rate was that the respondents had consented to the arbitration taking place in Scotland "under Scottish procedure" (see reason 3 in the respondents' case.)

Mr. Finer for the respondents conceded that the application for the arbiter to state his award in the form of a special case under section 21 of the Arbitration Act, 1950, was a question of procedure. If the Scots law of procedure is applicable to the arbitration, then as the Arbitration Act, 1950, does not apply to Scotland the respondents must fail to obtain this remedy or, indeed, any other remedy under the Act of 1950.

I would allow the appeal and restore the order of Eveleigh J.

VISCOUNT DILHORNE. My Lords, the appellants carry on business in England and Scotland. Their registered office is in Scotland. They have an office in England.

The respondents, whose registered office is in England, entered into a contract with the appellants for the conversion of a building owned by them in Dumbarton into a bonded warehouse for whisky.

The contract was in the form issued by the Royal Institute of British Architects in 1963, headed "Private Edition Without Quantities." The architect was English and a member of a firm which had its offices in London.

The first question for determination is: what is the law which governs the contract? The agreement the parties entered into is silent on this point. One might expect that, where a building contract is to be carried out in Scotland by a Scottish company and with Scottish labour, the parties would

enter into a contract governed by Scottish law. Alight certainly would not be unreasonable to do so. Nevertheless, where the employer of the contractor was English, he and his architect might well require the use of an English form of contract with the intention that it should be governed by English law.

The use of the R.I.B.A. form gave rise, we were told, to:

"no difficulty of interpretation whatever either during the execution of the work or during the arbitration proceedings, and in particular no difficulty attributable to the use of the language of English law."

That was stated in an affidavit filed on behalf of the appellants by a Mr. Hutton, a solicitor and notary public of Edinburgh who was engaged in a consultative capacity by them to advise, inter alia, on building and civil engineering contracts.

Mr. Ross Q.C., of the Scottish bar, in an affidavit also filed on behalf of the appellants, recognised that the contract was "in English form."

There was some controversy on whether this form of R.I.B.A. contract had, apart from its use in this case, ever been used, at the time this contract was entered into, without modification as a contract for the construction of building work in Scotland. Mr. Hutton and Mr. Ross both said that it had, Mr. Ross with modifications. It was not, however, disclosed whether either of the parties to the contract where it was used in the R.I.B.A. form for building work in Scotland was English. In the absence of information on that, no useful inference can, in my opinion, be drawn from the use of the R.I.B.A. form in relation to building work in Scotland.

There was at this time no R.I.B.A. form of contract specially adapted for use in Scotland. One was issued later. There was in use in Scotland a form of contract called the "Regulations and General Conditions of Contract for Building Works in Scotland" and, in relation to building work in Scotland where both parties were Scottish, one would expect that that form of contract would generally have been used, not one "in English form" where the language used was "the language of English law" and where, as, in my opinion, Lord Denning M.R. rightly said, the contract was "redolent of English law." The forms issued by the R.I.B.A. are revised from time to time in the light of decisions in the English courts.

In Rex v. International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] A.C. 500, Lord Atkin said, at p. 529:

"The legal principles which are to guide an English court on the question of the proper law of a contract are well settled. It is the law which the parties intended to apply. Their intention will be ascertained by the intention expressed in the contract if any, which will be conclusive. If no intention be expressed the intention will be presumed by the court from the terms of the contract and the relevant surrounding circumstance. In coming to its conclusion the court will be guided by rules which indicate that particular facts or conditions lead to a prima facie inference, in some cases an almost conclusive inference, as to the intention of the parties to apply a particular law: e.g., the country where the contract is made, the country where the counteract is to be performed, if the contract relates to immovables the country where they are situate, the country under whose flag the ship sails in

which goods are contracted to be carried. But all these rules but serve to given prima facie indications of intention: they are all capable of being overcome by counter indications, however difficult it may be in some cases to find such."

In this case Widgery L.J. said in the Court of Appeal [1969] 1 W.L.R. 377, 383:

"To solve a problem such as arises in this case one looks first at the express terms of the contract to see whether that intention is there to be found. If it is not, then in my judgment the next step is to consider the conduct of the parties to see whether that conduct shows that a decision in regard to the proper law of the contract can be inferred from it. If the parties' conduct shows that they have adopted a particular view with regard to the proper law, then it may be inferred that they have agreed that that law shall govern the contract accordingly. Finally, if one fails in this inquiry also and is driven to the conclusion that the parties never applied their minds to the question at all, then one has to go to the third stage and see what is the proper law of the contract by considering what system of law is the one with which the transaction has its closest and most real connection."

I agree with this approach, subject to one qualification. I do not consider that one can properly have regard to the parties' conduct after the contract has been entered into when considering whether an inference can be drawn as to their intention when they entered into the contract, though subsequent conduct by one party may give rise to an estoppel.

Their conduct at the time of entry into the contract may, however, be very relevant and regard can, I think, properly be had to that.

If in this case one had to reach the third stage and consider with which system of law the transaction had its closest and most real connection, one is not required to consider only with what system of law the language and form of the contract is most closely connected. One must have regard to other factors. Where the contract is to be carried out is one and an important one. If this stage was reached in this case, I would hold without any hesitation that the Scottish system of law was the one with which the transaction had its closest and most real connection.

I do not, however, think that in this case one gets to that stage for, in my opinion, the conduct of the parties at the time the contract was entered into shows that despite the fact that the work was to be done in Scotland both parties intended that the contract should be governed by the law of England.

Both parties knew that the work was to be done at Dumbarton with Scottish labour. It appears from the evidence given by Mr. Hayworth on behalf of the appellants at the hearing of the arbitration that he first appreciated that there was likely to be a R.I.B.A. contract when he had a meeting in London with Mr. Seymour, the architect. In answer to the next question he said "we knew there would have to be some sort of agreement, and the surveyors, being a London-based firm, we thought it probably would be an R.I.B.A. contract." Mr. Hayworth was the appellants' chief surveyor.

It is to be presumed that the English respondents with their English architect would naturally choose a form of contract with which the architect

was familiar, a contract "in English form" and one governed by English law.

Mr. Hayworth, it is not unreasonable to assume as he was the appellants' chief surveyor and in view of the appellants' extensive business in England and Scotland, was familiar both with the R.I.B.A. form of contract and with the form called the "Regulations and General Conditions of Contract for Building Works in Scotland" He did not object to the use of the R.I.B.A. form and suggest the use of the Scottish form. He agreed to the use of the R.I.B.A. form and, by doing so, in the circumstances of this case must be taken to have agreed that the contract in English form and with its language based on English law should be governed by the law of England.

If I have reached the wrong conclusion on this, and the contract should be regarded as governed by the law of Scotland, then there appears no ground for holding that the arbitration by a Scottish arbitrator appointed in accordance with the terms of the contract and held in Scotland was not subject to Scottish procedure.

If I am right about this, it is still necessary to consider what procedural law applied in relation to the arbitration.

In Dicey and Morris, op. cit., it is said, at pp. 1047-1048:

"No case appears to have been reported in which the parties either chose as the law governing the arbitration proddings a system of law other than the proper law of the contract, or failed to exercise their power to choose the law governing the arbitration altogether. It cannot however be doubted that the courts would give effect to the choice of a law other than the proper law of the contract. Thus, if parties agreed on an arbitration clause expressed to be governed by English law but providing for arbitration in Switzerland, it may be held that, whereas English law governs the validity, interpretation and effect of the arbitration clause as such ... the proceedings are governed by Swiss law. It is also submitted that where the parties have failed to choose the law governing the arbitration proceedings, those proceedings must be considered, at any rate prima facie, as being governed by the law of the country in which the arbitration is held, on the ground that it is the country most closely connected with the proceedings."

I think this is right. In this case, pursuant to the arbitration clause in the contract, which, if my view be right, is governed by English law, the president of the R.I.B.A. nominated as arbitrator a Mr. Underwood who lives in Glasgow. The application to the president was made by the appellants. It followed a form issued by the R.I.B.A. It began by referring to the contract and then said "where there is a submission to arbitration, within the meaning of the Arbitration Act, 1950, of any dispute or difference ..." It then stated that a dispute or difference had arisen and asked for the appointment of an arbitrator.

The respondents contended that the words quoted above show that the arbitration proceedings were to be subject to English law. I reject this contention. I do not think that the reference to the Arbitration Act, whether it relates to "arbitration" or to "submission to arbitration" has that effect. The form of application made by the appellants cannot alter the contract entered into.

On January 19, 1967, the respondents' solicitors were notified by the "clerk to the arbiter" of his appointment as clerk. He is a Scottish solicitor. His letter contained the following sentence: "If there are any points in our procedure you wish to be advised please let me know."

The inference to be drawn from the appointment of a Scottish solicitor as clerk and the reference to "our procedure" was that Scottish procedure would be followed.

On May 24, 1967, the matter was put beyond all doubt. The clerk to the arbiter then wrote to the respondents' solicitors telling them that procedure proposed by them "was not in accordance with Scottish arbitration procedure."

The respondents appointed Scottish solicitors to act for them in the arbitration. The pleadings were in Scottish form and the procedure followed at the hearing was Scottish.

It was not until towards the end of the hearing after all the evidence had been given that any question arose as to the law applicable to the arbitration. Counsel for the respondents then asked for a case to be stated. In the course of his address he said that he had never conceded that Scots law applied. The arbitrator said that he had never been in doubt "and that is why I am astonished that it is raised now."

In the light of these facts I cannot escape from the conclusion that the respondents accepted that the arbitration was subject to Scottish procedure and so, too, to Scottish law.

It is not, in my opinion, necessary to consider whether their acceptance of this amounted to a variation of the contract or filled a gap in that contract. Having followed that procedure in an arbitration held in Scotland from the inception of the arbitration, the hearing of which occupied 11 days, their contention that English law governed the procedure at the arbitration in my view fails. It was conceded by Mr. Finer in the course of his able argument that stating a case is part of the procedural law, and it was common ground that, unless the procedural law was English, the arbitrator could not be required to state a case.

In my opinion, the order of Eveleigh J. was right and should be restored.

I would allow the appeal.

LORD WILBERFORCE. My Lords, this dispute arises out of a building contract to execute substantial works of conversion to a warehouse of the respondents at Dumbarton. The respondents are an English company; the appellants' registered office is in Scotland but they have a large business on both sides of the border. The parties adopted the Royal Institute of British Architects' form of contract without quantities, 1963 ed., which contains no express choice of law. It includes an arbitration clause covering any dispute in connection with the contract, but there was no provision as to the place of arbitration, or as to its procedure. In the absence of agreement, the arbitrator was to be nominated by the president of the Royal Institute of British Architects.

Disputes arose and in the autumn of 1966 the appellants withdrew from the site. On October 28, 1966, the appellants issued a writ in the Queen's Bench Division in England claiming £48,500. They applied for judgment under R.S.C., Ord. 14, and concurrently the respondents applied for a stay

pursuant to section 4 of the Arbitration Act, 1950. On November 30, 1966, the master dismissed the appellants' application and made an order staying further proceedings.

On December 5, 1966, the appellants requested the president of the Royal Institute of British Architects to appoint an arbitrator. He nominated Mr. Walter Underwood, F.R.I.B.A., a member of a Glasgow firm. Mr. Underwood accepted the nomination and appointed Mr. J. A. H. Lockhart, a solicitor and notary public practicing in Glasgow, to be clerk in the submission. The arbitration proceeded, pleadings were drafted, the record was closed and a proof was fixed. Finally, on December 10, 1968, Mr. Underwood made an award.

Meanwhile the respondents, on June 28, 1968, had issued, in England, an originating summons for an order that the arbitrator should state his award in the form of a special case under section 21 (1) (b) of the Arbitration Act, 1950. This they served on the appellants at their English place of business. They also served a concurrent originating summons on the arbitrator in Scotland. The master made the order sought, but this was rescinded by Eveleigh J. in chambers. His order was in turn reversed by the Court of Appeal and the appellants now appeal to the House.

In the judgments of the Court of Appeal the main question examined was whether the proper law of the building contract was the law of England or the law of Scotland. This was dealt with by all three members of the court: they reached, unanimously, a conclusion in favour of the law of England. But there was a second question, to which attention was given particularly by Davies L.J., namely, what law should be taken to govern the arbitration procedure, a question which he answered also in favour of English law. Both questions were canvassed in this House. An answer is required to each of them. I deal first with the proper law.

I do not find it to be necessary to restate in quotation from well-known judgments, still less in my own language, the principles upon which the courts should decide what is the proper law of a contract where different elements point different ways. The guidance given by Rex v. International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] A.C. 500, Bonython v. Commonwealth of Australia [1951] A.C. 201 and In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007 is consistent and clear. I only refer to these authorities because I find in the judgments of the Court of Appeal certain tests, at least indicated, which appear to differ from those which the authorities have validated. Particularly I find this divergence to lie in the reliance, in preference to surrounding circumstances, on subsequent conduct of the parties and also (though this may be a matter of terminology) in the antithesis apparently drawn between the "country" (viz., Scotland) and the "system of law" (viz., England) with which the contract was said to be connected. Reliance on subsequent conduct seems to have had considerable influence on the opinions expressed and, I would respectfully think, led the members of the court to attribute insufficient importance to the fact that the building site, and so the place of performance, was in Scotland. In my opinion, once it was seen that the parties had made no express choice of law, the correct course was to ascertain from all relevant contemporary circumstances including, but not limited to, what the parties said or did at the time, what intention ought to be

imputed to them on the formation of the contract. Unless it were to found an estoppel or a subsequent agreement, I do not think that subsequent conduct can be relevant to this question.

On this basis, I find the choice of the system of law with which the contract should be taken to be most closely connected a difficult one. The Royal Institute of British Architects is a United Kingdom institution with English and Scottish members. In 1963 it issued only one relevant form of contract - that which the parties used. It was only later that it produced a specifically Scottish version. There was some difference of opinion as to the extent to which this form was used in relation to Scottish contracts, or contracts with a Scottish element: it was certainly not used very often, but I think that it is established that it was used. There was another form, not issued by the Royal Institute of British Architects, which was adapted for Scottish use, but there was not the slightest evidence that the Royal Institute of British Architects' form was deliberately chosen or preferred. The Royal Institute of British Architects' form uses English terminology and it is true to say that it has been constructed over the years in part by reference to decided English cases. But both of these factors can be over-estimated. As to terminology, whichever the governing law were to be it might be necessary, if a Scottish party were involved, to translate these into terms known in Scotland, a process familiar enough to Scottish lawyers. And the reference to the common law and to statute law must, on any view, include the law of either country, for it is used in relation to accidents occurring at the location of the works, and the works in this case were to be in Scotland. That the form reflects English decisions is one of the weightiest factors on this side. The other factor to which I would give weight is that the superintending architect was a London architect, and it can be accepted that it was on his suggestion that the Royal Institute of British Architects' form was used. But, again, one must not put too much weight on this fact. Mr. Seymour no doubt put forward the Royal Institute of British Architects' form as that which he knew best, but it does not follow from this that he put it forward as a document governed by English law. We have not the benefit of his evidence, and it is quite possible that he may have thought of it as a document suitable for general use: more probably, he never thought of the governing law at all. Such are the straws in a southerly wind.

In the other direction there are two pointers. First, it is rather significant that the form does not contain any choice-of-law clause. For many years now it has been recognised as useful to insert an express provision, selecting a specified law, in standard forms of contract where there is an arbitration clause: its omission here may suggest that this United Kingdom document might according to the circumstances be governed by whatever legal system, within this country, best fitted the case. But more important than this argument a silentio is the, to my mind, very weighty fact that the place of performance was in Scotland; the work was to be done on a Scottish site, under Scottish regulations and probably by Scottish workmen. If any single factor carries more weight in these matters than others, it is the lex loci solutionis, and this factor must be particularly important where the whole contract is so visibly localised in one place.

The choice is, in my opinion, ultimately between the indicia which I have mentioned. Your Lordships' opinions are divided, and, as I am able

to decide this case on the second ground, it were tempting to leave this point aside. But, if decision is necessary, I think that the law of Scotland prevails.

I turn to the second question: what law is to govern the arbitration procedure? If the proper law of the contract is Scottish there could be no argument in favour of the intrusion of English law into the arbitration. But if the proper law is English, an interesting question arises. One must ask first whether, in principle, it is possible for the law governing the arbitral procedure to differ from that governing the substance of the contract. No authority was cited to us which explicitly answers this question one way or the other, but I have no doubt as to the answer. It is a matter of experience that numerous arbitrations are conducted by English arbitrators in England on matters governed by contracts whose proper law is or may be that of another country, and I should be surprised if it had ever been held that such arbitrations were not governed by the English Arbitration Act in procedural matters, including the right to apply for a case to be stated. (I leave aside as a special case arbitrations conducted under the rules of the International Chamber of Commerce, though even these may be governed by the law of the place of arbitration.) The principle must surely be the same as that which applies to court proceedings brought in one country concerning a contract governed by the law of another, and that such proceedings as regards all matters which the law regards as procedural are governed by the lex fori has been accepted at least since Lord Brougham's judgment in Don v. Lippmann, 5 Cl. & F. 1. In my opinion, the law is correctly stated by Professor Kahn-Freund and Dr. Morris in Dicey and Morris, op. cit., p. 1048, where they say:

"It cannot however be deleted that the courts would give effect to the choice of a law other than the proper law of the contract. Thus, if parties agreed on an arbitration clause expressed to be governed by English law but providing for arbitration in Switzerland, it may be held that, whereas English law governs the validity, interpretation and effect of the arbitration clause as such (including the scope of the arbitrators' jurisdiction), the proceedings are governed by Swiss law. It is also submitted that where the parties have failed to choose the law governing the arbitration proceedings, those proceedings must be considered, at any rate prima facie, as being governed by the law of the country in which the arbitration is held, on the ground that it is the country most closely connected with the proceedings."

The first part of this is well supported by Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202, per Lord Herschell L.C. and Lord Watson and also by N. V. Kwik Hoo Tong Handel Maatschappij v. James Finlay & Co. Ltd. [1927] A.C. 604, and both parts rest solidly on common-sense.

What law, then, should be taken to apply to the procedure here? The arbitration clause itself is silent, and I would agree that in the normal case, where the contract itself is governed by English law, any arbitration would be held under English procedure. Moreover, the mere fact that the arbitrator was to sit either partly or exclusively in another part of the United Kingdom, or, for that matter, abroad, would not lead to a different result: the place might be chosen for many reasons of convenience or be purely accidental; a choice so made should not affect the parties' rights.

But here there was much more than the fortuitous or convenient choice of a Scottish location. The selected arbitrator, an architect practicing in Glasgow, near where the works were situated, immediately on his acceptance announced the appointment of a Scottish solicitor as clerk in the submission and invited both parties to state if they wished advice as to "any points in our procedure." The indication that the arbiter (as he should now be called) intended to conduct the proceedings in the Scottish manner, advised by a Scots lawyer, could not have been clearer, and neither party objected. It would not be right to place too much emphasis on the form of pleadings adopted: pleadings are, after all only the manner in which parties state the facts on which they rely and arbitrations may use pleadings in any form with any degree of legal mystique, or no form at all. But, on a later occasion (May 24, 1962), the arbiter through his clerk again explicitly took the position that he intended to act in accordance with Scottish arbitration procedure, again without objection, and he maintained this position when formally asked to state a case.

The respondents' argument was that the arbitration had from the beginning been firmly placed under the control of the Arbitration Act, 1950. They pointed to the fact that in the application which the appellants made to the president of the Royal Institute of British Architects to nominate an arbitrator there was an explicit reference to the Act, and contended that this was both deliberate and decisive. In my opinion, it was neither: the reference, taken from the standard Royal Institute of British Architects' application form, was merely a means of describing the nature of the arbitration clause in the contract - as a submission to arbitration - so as to activate the nomination by the president, and had no bearing upon the procedure of the arbitration when instituted. This was the respondents' main (and unsuccessful) contention, but they also argued that, until their application for a case, the arbiter had been concerned merely with trivia and that there had been no real committal of the proceedings to any decisively Scottish form. I cannot agree with this. The right to ask for a case to be stated, which may, under the Arbitration Act, 1950, be invoked at any stage in the arbitration, is essentially a matter of procedure - the respondents did not, indeed, dispute this. It is clear that the arbiter embarked upon a continuous and close-knit process, starting with definition of the issues both of fact and of pleas in law and continuing with the hearing of evidence, which was inconsistent with the exercise by a foreign (sc., English) court of the powers of direction and control contained in the English Act, whether the general procedural powers of section 12 or the special powers contained in section 21.

I find no basis on which the English courts are entitled to exercise authority over the arbiter: in my opinion, he was bound to conclude the proceedings in accordance with the law of Scotland. In my opinion, the order of Eveleigh J. of October 31, 1968, rescinding the master's order was correct and should be restored and the appeal consequently allowed.

Solicitors: Beddington, Hughes & Hobart; Kramer & Co.

M. G.