The UKSC set out the 3 key issues it had to consider:
(i) What law governs the arbitration agreement?
(ii) If English law governs the arbitration agreement, is there any real prospect that a court might find at a further hearing that Kout became a party to the arbitration agreement in the FDA?
(iii) As a matter of procedure, was the Court of Appeal justified in giving summary judgment refusing recognition and enforcement of the award?
Issue (i) – what law governs the arbitration agreement?
The UKSC observed that it was desirable for a uniform meaning be provided for the conflict of laws rules in respect of arbitral awards under the New York Convention, but that there was “nothing approaching a consensus” among national courts and jurists on their application in cases such as this.
As a result, the UKSC had to form a view based on first principles, drawing from its own conclusions in Enka v Chubb. It recognised that the circumstances of Kabab-Ji v Kout differed from Enka v Chubb, where the governing law question arose prior to any arbitration proceedings and no governing law clause was present in the underlying agreement. However, it said that the Enka v Chubb principles applied “with equal force” after an award has been made.
The UKSC found that the governing law clause of the relevant contract (which stated that "this Agreement" shall be governed by the laws of England) was ordinarily and reasonably understood to denote all clauses incorporated into the contract, which included the arbitration clause. The UKSC also found no good reason to infer that the parties intended to exclude the arbitration provisions from the governing law clause. Therefore, applying the principles established in Enka v Chubb, it followed that the law applicable to the arbitration agreement was English law.
Counsel for Kabab-Ji raised two primary arguments in contesting this conclusion. Firstly, that a clause in the FDA referencing the arbitrator applying "principles of law generally recognised in international transactions" (i.e. UNIDROIT Principles of International Commercial Contracts) meant that the arbitration clause was governed by a composite of national law and international principles, which did not qualify as "law" for the purposes of the New York Convention and the Act. The UKSC recognised that this case was raised to determine which law governs the arbitration agreement and not to review the laws to be applied by arbitrators in the course of a dispute. Secondly, it was argued that the presumed position should be that both parties intended the arbitration agreement to be valid and effective, and thus where applying English law would invalidate the agreement, the UKSC should infer that English law would not extend to it. The UKSC noted that this 'validation principle' argument presupposed that an agreement had been made and did not apply to the wider question of whether a valid agreement has arisen at all.
Issue (ii) - if English law governs the arbitration agreement, is there any real prospect that a court might find at a further hearing that Kout became a party to the arbitration agreement in the FDA?
The Supreme Court held that the English Court of Appeal was both entitled and correct to conclude that as a matter of English law there was "no real prospect" that a court might find at a further hearing that Kout became a party to the arbitration agreement in the FDA. Kabab-Ji could not point to any written agreement that joined Kout to the contract (and arbitration agreement) with Al Homaizi and, crucially, the contract contained a clause to the effect that it could only be modified in writing.
Issue (iii) - was the Court of Appeal justified in giving summary judgment refusing recognition and enforcement of the award?
Finally, the UKSC confirmed that the English Court of Appeal was correct to refuse an adjournment pending the French proceedings. In applying French laws, the French courts as the competent authority in this case, had departed from a conflict of laws approach and created “substantive rules of international arbitration”. It followed that the French and English courts were not considering the same issues and may well reach different final conclusions; in such circumstances the risk of contradictory judgments "cannot be avoided" and so that provided no reason for an adjournment.