Mandatory laws at the seat of arbitration

In arbitration, the parties are free to choose the law to determine the substantive issues in dispute (the substantive law). This freedom is recognised by section 46(1)(a) of the Arbitration Act 1996 (the 1996 act) which requires the arbitral tribunal to decide the issues in dispute in accordance with the law chosen by the parties or, under section 46(1)(b), ‘if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal’. This latter provision allows the parties to choose a substantive law which may include religious law, such as sharia law or Jewish law. However, as illustrated by the recent decision of the English High Court in Djanogly v Djanogly [2025] EWHC 61 (Ch), the parties’ choice of substantive law may be restricted by any mandatory laws to which the parties and the arbitral tribunal must adhere.     

The dispute involved RSD, his father (DD) and his brother (AD). DD claimed that he was entitled to financial maintenance from RSD under Jewish law. Under Jewish law, children are obliged to provide financial support to their parents if their parents are impoverished and the children are not. DD also claimed repayment of a loan which he alleged had been made to a company known as SAS Financial Services Ltd which was owned by RSD and AD. The parties agreed to submit their dispute to the Beth Din by way of ad hoc arbitration with a seat in England. Applying Jewish law to the substantive issues in dispute, the Beth Din determined, inter alia, that RSD was liable to pay over £100,000 to DD. RSD challenged the award in the High Court under sections 67, 68 and 69 of the 1996 act. The matter came before Miles J.

On the section 68 challenge, RSD argued that there was a serious irregularity because:

• Section 13 of the 1996 act, which provides that the limitation acts in English law also applied to arbitration, is a mandatory provision which applied to arbitration.
• The Limitation Act includes the Limitation Act 1980 and the Foreign Limitation Periods Act 1984. RSD argued that the Foreign Limitation Periods Act 1984 does not disapply English limitation law (that is, the Limitation Act 1980) because Jewish law is not the law of any other country applicable in accordance with the rules of private international law. 
• It followed that the Beth Din was bound to apply the Limitation Act 1980. Under the provisions of the Limitation Act 1980, DD’s claims for payment were statute-barred. 
• RSD argued that the Beth Din did not deal with RSD’s limitation argument and that this was a serious irregularity within section 68 of the 1996 act which caused substantial injustice. RSD further argued that the Beth Din breached its duty of fairness under section 33 of the 1996 act by failing to give RSD a reasonable opportunity to deal with the limitation point and instead predetermined that English limitation law did not apply. 
• Finally, RSD argued that the Beth Din had exceeded its power by determining a claim which was time-barred, which was a serious irregularity within section 68(2)(b) of the 1996 act. 

Miles J confirmed that the Limitation Act 1980 applies to arbitration, and because section 13 of the 1996 act is a mandatory provision, the parties cannot contract out of it. Miles J concluded that Jewish law is not the law ‘of any other country’ in accordance with the rules of private international law of the English courts and, as a consequence, could not be disapplied under section 1 of the Foreign Limitation Act 1984. As such, the Limitation Act 1980 applied and should have been considered by the Beth Din. 

Miles J also found that RSD had raised the limitation as a defence and repeatedly referred to section 13 of the 1996 act and the Limitation Act 1980, and AD had also addressed the argument in his documents. It was also clear that the Beth Din did not deal with the limitation issue. Finally, Miles J held that, had the Beth Din addressed the limitation issue, they may have reached the correct conclusion in favour of RSD. Thus, the failure of the Beth Din to address the limitation issue was a serious irregularity within the meaning of section 68(2)(d) of the 1996 act. 

The decision serves as a useful reminder of the importance of arbitrators issuing well-reasoned awards that explicitly address all legal defences and procedural issues raised by the parties. An arbitral award must contain sufficient reasoning to allow the parties and, where necessary, the courts, to understand how the tribunal reached its conclusions. A failure to do so may, as Djanogly demonstrates, render an award susceptible to challenge under section 68(2)(d) of the Arbitration Act 1996 on the grounds of procedural unfairness.

The decision serves as a useful reminder of the importance of mandatory laws at the seat of arbitration and the need for the arbitral tribunal to consider and adhere to those laws, regardless of whether the substantive law is religious law or any other source of law. 

The decision is consistent with similar cases such as Halpern v Halpern [2007] EWCA Civ 29 and Musawi v Musawi [2007] EWHC 2981 (Ch) which have confirmed that religious law and principles cannot override mandatory laws. 

The decision also reinforces the importance of procedural fairness and the obligation of arbitral tribunals to provide clear reasons for their decisions and to engage with all arguments raised by the parties. A failure to do so risks the arbitral award being susceptible to challenge and, as a consequence, increasing costs and delays for the parties.

Masood Ahmed is an associate professor of law at the University of Leicester and a member of the Law Society’s Dispute Resolution Committee. Lal Akhter is a Fellow of the Chartered Institute of Arbitrators, an unregistered barrister, and an alternative dispute resolution specialist at Docket Live, Leicester