Comment
Author: Admin | 2025-04-28
Excluded). The Seat, or legal place, of the arbitration shall be the DIFC, Dubai, United Arab Emirates.Id. at *3. This language, according to the district court, was a forum selection clause. But the court of appeals disagreed, finding that, on a proper construction, the parties had agreed to refer any dispute to arbitration, and not to the DIFC-LCIA. As such, having surveyed case law and explained that “words like ‘administered by’ signal a clear intent to designate a forum, whereas words like ‘in accordance with’ signal only an intent to set the rules,” the court of appeals determined that the text of the agreement in question designated “only a set of rules and not a particular arbitral forum.” Id. at *8.Notwithstanding that, the court of appeals conceded that case law often treats the selection of a particular forum’s rules as an implicit forum selection clause. Id. at *8. However, the court declined to adopt the Second, Fourth and Eleventh Circuit’s “implied forum-selection clause approach.” Id. at *10.1 Instead, the Fifth Circuit expressed sympathy with the Ninth Circuit’s “doubts about adopting a blanket rule that any designation of arbitral rules necessarily means selection of a forum.” Id.2 The Fifth Circuit also found that the DIFC-LCIA’s successor, the DIAC, was functionally identical in many respects and could administer the arbitration according to the same rules. Id. at *10-11.The Fifth Circuit nevertheless analyzed how the case would be resolved under the implied forum-selection clause approach. It examined whether the alleged forum-selection clause was integral to the parties’ agreement and whether the district court had the authority to appoint a substitute arbitrator. On that question, the Fifth Circuit found that the district court erred by not compelling arbitration because the parties’ primary intent was to arbitrate disputes, even though the specific forum named in the agreement was no longer available. The court noted that the DIFC-LCIA was not designated “as the exclusive forum,” for example. Id. at *12. Nor did the agreement “make pervasive references to the DIFC-LCIA, much less to its ‘exclusive jurisdiction.’” Id. at *13 (citation omitted). This was compelling evidence that the parties’ “dominant purpose was to arbitrate generally” rather than before the DIFC-LCIA specifically. Id. at *11. Therefore, even if the parties impliedly selected the DIFC-LCIA as the arbitral forum, the implied forum selection clause was not integral to the parties’ agreement and could be severed; and the court could appoint a substitute arbitrator.Because the parties’ intent to arbitrate disputes was clear, the unavailability of the original forum did not invalidate the entire dispute-resolution process outlined in the contract. Ultimately, the Fifth Circuit reversed the district court’s decision and remanded the case for further proceedings consistent with its opinion, instructing the district court to consider whether the DIFC-LCIA rules can be applied by any other forum that may be available, including the LCIA, DIAC or other arbitral institution — consistent with the parties’ objective intent.Implications for International Commercial ArbitrationThe Fifth Circuit’s decision suggests that an agreement to arbitrate will generally
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