Tzortzis v. Monarch Line

It is the leading illustration of implied choice, and it shows implied choice defeating the objectively closest system. That is what makes it worth learning: the second rung of the ladder is not a weak version of the third.

The contract was most closely connected with Sweden, and Swedish law would have been the proper law on an objective test. A clause required arbitration in England.

The choice of an English arbitral tribunal was a clear implied choice of English law, and English law governed.

Step one — the presumption. Where the parties have chosen a tribunal but not a law, there is a presumption that they intended the dispute to be governed by the law of the country where the chosen tribunal is situated. The maxim is qui elegit judicem elegit jus — he who chooses the judge chooses the law.

Step two — the test for implied choice. Where no law is named, the intention is inferred from the terms and nature of the contract and the circumstances, and the test is objective in all but name: the judge places himself in the position of a reasonable and prudent man in the same circumstances.

Step three — why the objective connection yields. The ladder has three rungs in order. An implied choice is still a choice, and the court reaches the third rung — the closest and most real connection — only when it cannot find one.

It opens: How is an implied choice of law established? — and it is the first of three illustrations that should be learnt as a set.

Give the other two. The Assunzione: where the indications are evenly balanced, performance decides. Amin Rasheed Shipping Corporation v. Kuwait Insurance Company: English marine insurance law applied on the terms and surrounding circumstances, the decisive fact being that at the time of contracting Kuwait had no law of marine insurance — an inference not from the parties' state of mind but from the impossibility of any other reading.

Then show the Indian Supreme Court refusing to let the maxim run in the other direction. In NTPC v. Singer Company the parties had expressly chosen Indian law and the exclusive jurisdiction of the courts at Delhi; the arbitration was held in London only because the arbitrators chose the venue. A venue chosen not by the parties but by the tribunal cannot displace an express choice. Here, choosing an English tribunal implied English law because nothing else had been chosen; there, a law had been chosen, so the inference could not run.

It does not decide that an arbitration or jurisdiction clause always determines the proper law; it creates a presumption, and an express choice defeats it.