Chapter 9 Applicable Law for International Arbitration

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Chapter 9 Applicable Law for International
Arbitration
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Applicable Law in Intl Arb.

• Applicable law for the arbitration agreement
• Applicable law for the arbitration procedure
• Applicable for merits of the case

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Applicable Law for Arbitration Agreement

• Arbitration agreement contract between the
  parties to settle their dispute by arbitration
• Principles of private international law or
  conflict of law rules in national law

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General Principles of Private International Law

• Parties autonomy
• Closest relationship with the contract
• Compulsory application of particular law in
  different countries

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Chinese Practices

• CAL, Contract Law 1999
• Art.16, Judicial Interpretation of CAL in 2006
• First that of selected by the parties
• Second that of the seat of arbitration
• Lastly - that of the national court

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Development in the Field

• The national court should make the international
  arbitration agreement effect as possible as it
  can.
• Art.187 of Swiss PL an arbitration agreement is
  valid if it conforms either to the law chosen by
  the parties, or to the law governing the subject
  matter of the dispute, in particular the main
  contract, or to Swiss law.

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Zueblin Case

• Construction agreement with FIDIC Green Book
  General Conditions by reference in its
  appendixArbitration 15.3 ICC Rules Shanghai
  shall apply
• Woco brought the lawsuit to the Ct.
• Zueblin brought the case to ICC for Arbitration

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Zueblin Case (2)

• Court decided its jurisdiction according to local
  law
• Arbitral tribunal decides its jurisdiction
  according to the arbitration agreement and the
  applied ICC Rules.
• Court refused enforcement due to the invalid
  arbitration agreement.

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AL of the Arb. Procedure

• Whether the parties may select to apply procedure
  law of the other country?
• Process to negotiate NYC
• Nationality of the award

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Deciding Authority

• Arbitration institution
• Arbitration tribunal
• National court

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Union of India v. Mcdonell Douglas Corporation
(269)

• The applicable law of the arbitration
• In the event of dispute or difference arising
  out of or in connection with this agreement,
  which cannot be resolved by amicable settlement,
  the same shall be referred to an arbitration
  tribunal consisting of three membersThe
  arbitration shall be conducted in accordance with
  the procedure provided in the Indian Arbitration
  Act of 1940 or any reenactment or modification
  thereofThe seat of the arbitration proceedings
  shall be London

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Indian Supreme Ct. Case

• National Thermal Power Corporation (India) v. The
  Singer Company (USA)
• Construction Contract with arbitration clause
  ICC Rules, seat decided by ICC, Indian law apply
• Award made in London
• Indian ct. refused enforcement and set aside the
  award

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Conclusion of AL in Procedure

• The seat decided the applicable law for the
  arbitration procedure
• The seat could be decided by the parties, and by
  the arbitration institution or the court in the
  absence of the agreement between the parties

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Chinese Practices

• No special provision on the seat apart from
  CIETAC, but the name of arbitration commission
• The location of the arbitration commission is
  usually considered as the seat of arbitration,
  since there is no distinction between the seat,
  the place of hearing and that of deliberation of
  the case by the tribunal.

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Applicable Law for Zueblin Case

• Arbitration agreement
• Arbitration procedure
• Merits of the case (main contract)

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AL for Intl Arb. Agreement

• NYC has no provision
• National law decides the issue

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Delocalized Arbitration

• Denationalized arbitration
• International award has no relation with the
  legal order of any country
• Such award is floating until it is enforced.

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Gotaverken Case 1980

• Gotaverken (Sweden) v. Libyan General National
  Maritime Transport
• ICC Rules, Paris
• French court refused setting aside the award on
  the ground of lack of jurisdiction
• The Swedish court enforced the award.

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SEEE Case

• SEEE (France) v. Yugoslavia
• K to build railway in 1932
• Award made by two arbitrators in Vaud,
  Switzerland in 1956
• Court in Vaud refused setting aside because
  Art.514 of Vaud CPL required uneven number of
  arbitral tribunal. The award was a Swiss award.
• The Dutch court enforced the award as Swiss award
  in 1973, while the French court enforced it as
  a-national award made in another NYC member
  state.

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Chromalloy Case (1996,US)

• Chromalloy Aeroservices Inc. (USA) v. Ministry of
  Defence (MOD) of the Republic of Egypt
• Contract of sale and service for 4 years
• MOD terminated K before it expired
• Arbitrated and set aside in Egypt
• French and US court ruled to enforce

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AL for the Merits of the Case

• What law should be applied to decide the merits
  of the case?
• Proper law (applicable law) of the contract

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Basic Principles

• Parties autonomy
• Closest relationship with the contract
• General principles of law, lex mercatoria, law
  merchant

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Norsolor(France) v. Pabalk(Turkey) at 381

• Agency contract with arbitration clause
• Arbitrated by ICC sole-arbitrator tribunal in
  Vienna
• Tribunal applied neither law of the parties, but
  equity
• Whether the tribunal may rule in equity as
  amiable compositeurs

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Harmonization of the Applicable Law in
International Contract

• CISG Vienna Convention on Contract for the
  International Sales of Contract by UNCITRAL
• Principles of European Contract Law
• UNIROIT (International Institute for Unification
  of Private Law) Principles for International
  Commercial Contract

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Application the Uniform Law in the International
Arbitration

• Art.17 of ICC Rules
• (1) The parties shall be free to agree upon the
  rules of law to be applied by the Arbitral
  Tribunal to the merits of the dispute. In the
  absence of any such agreement, the Arbitral
  Tribunal shall apply the rules of law which it
  determines to be appropriate.
• (2) In all cases the Arbitral Tribunal shall take
  account of the provisions of the contract and the
  relevant trade usages.
• (3) The Arbitral Tribunal shall assume the powers
  of an amiable compositeur or decide ex aequo et
  bono only if the parties have agreed to give it
  such powers.

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Art.1474 French CCP

• The arbitrator shall decide the dispute according
  to the rules of the law unless the parties have
  authorized him in the arbitration agreement to
  rule as amicable compositeur.

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Chinese Practices

• Contract Law 1999
• Parties autonomy in general in priority
  provisions in the contract
• Compulsory applicable law for the particular
  contracts joint venture contracts
• Application of bilateral and multilateral
  convention

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