1993

HL

Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd. House of Lords [1993] AC 334

The plaintiffs employed the defendants to construct a tunnel in the English Channel. Clause 67 of the contract provided settlement of differences during the progress of the works, by a panel of experts (not arbitrators) and final settlement by arbitration in Brussels under the rules of Conciliation and Arbitration of the International Chamber of Commerce. Clause 68: the construction, validity and performance of the contract shall in all respects be governed by and interpreted with the principles common to both English law and French law, and in the absence of such common principles by such general principles of international trade law as have been applied by national and international tribunals. Subject to the French and English public policy provisions On the ground of lack of payment the defendants threatened to suspend works, the plaintiffs look for an injunction to continue working.

Lord Mustill: ‘The proper substantive law of this contract is the law, if such it can be called, chosen in clause 68. But the curial law [law that governs the relationship between the parties themselves and the arbitrator in the conduct of the arbitration] (lex arbitri) must I believe be the law of Belgium’ ‘I have no doubt that the dispute resolution mechanism of clause 67 were the subject of careful thought and negotiations. The parties chose an indeterminate ‘law’ to govern their substantive rights; and a location for that process outside the territories of the participants. This conspicuously neutral, ‘anational’ and extra judicial structure may well have been the right choice for the special needs of the Channel Tunnel venture. But whether it was right or wrong, it is a choice which the parties have made. The appellants now regret that choice … they now wish to obtain far reaching relief through the judicial means which they have been so scrupulous to exclude…to order an injunction here would be to act contrary both to the general tenor of the construction contract and to the spirit of international arbitration’