Do Not Choose A Governing Law That You Are Not Familiar With It!

Recently Simon Lee Esq. of Wans Law Firm LLP represented client for an international arbitration under CIETAC(China International Economy and Trade Arbitration Commission). It was a dispute on paying commission or not. The governing law of the Agreement is British Law (this is a mistake itself. Exactly speaking, it shall be English Law). The drafter, the lawyer and parties acknowledged that they did not have idea about the definition of agency, agency relationship and fiduciary duty when they were writing and negotiation the Agreement. Choosing British law is a compromise between choosing PR China Law and USA Law. Unfortunately, they chose a law that they were not familiar and further unfortunately a dispute happened. The so called “Agent” filed an arbitration claiming its commission of several million US dollars. The respondent fought back, claiming that the so called “Agent” breached the fiduciary duty under English Equity Law as there was agency relationship between parties. Therefore, Agreement shall be terminated and damages shall be recovered from the so call “Agent”.

Both parties spent huge resource to study the definition of agency and fiduciary duty, securing expert opinion and retaining English lawyers for the arbitration.

Though, the finding of the tribunal seemed to be no agency relationship because  dispute was settled, choosing a governing law without knowledge about it caused both partied to spend a lot(S.L).