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2 The Current Regulation of Conflicts of Laws in International Commercial Arbitration

From: Conflict of Laws and Arbitral Discretion: The Closest Connection Test

Benjamin Hayward

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved.date: 20 September 2021

Subject(s):
Implied choice — Rome Convention — Rome I Regulation and choice of law — Legal risk in multi-state transactions — Applicable law in multi-state transactions

The Current Regulation of Conflicts of Laws in International Commercial Arbitration

The question is how the arbitral tribunal will determine the applicable law within the scope of its broad discretion … Surprisingly … there is notable diversity in approaches adopted by arbitrators.

Greenberg, Kee, and Weeramantry1

I.  Introduction

2.01  This chapter analyses the ways in which arbitral conflicts are currently regulated. In doing so, it distils the regulatory status quo which is critiqued and challenged in Chapters 3 to 6. Diversity is a salient feature of this status quo, and this diversity is examined here in detail.

II.  The Legal Framework for Resolving Conflict of Laws Questions in International Commercial Arbitration

2.02  In this section, the legal framework governing arbitral conflicts is identified and explained. This framework consists of domestic law, arbitration rules, international conventions, and the concept of party autonomy.

A.  Domestic Law

2.03  Domestic law plays an important role in regulating arbitration through the concept of the law of the arbitration (lex arbitri).2 While there has been ‘long debate’ over the issue of delocalized arbitration,3 claims that arbitration can be completely detached from State laws no longer find support,4 and delocalization is at the present time considered a particular feature of French law rather than a general principle.5 Arbitration’s hybrid character is now largely accepted.6 This book is not situated within the broader theoretical debate over the nature of arbitration, but instead takes the relevance of the seat in regulating arbitral procedure as given.7 Domestic law therefore sits at the baseline of the legal framework for regulating arbitral conflicts of laws.

2.04  Pursuant to the seat theory, lex arbitri apply territorially to arbitrations seated within a relevant State.8 This ‘well-established’ proposition9 is reflected in Art 1(2) Model Law 2006, providing that the Model Law 2006 ‘appl[ies] only if the place of arbitration is in the territory of this State’.10 As explained by Park, using a simple analogy, ‘[j]ust as an agreement to arbitrate in London means driving to hearings on the left hand side of the road, so it means that proceedings are subject to the English Arbitration Act’.11 In this sense, parties effectively choose their governing lex arbitri by their choice of seat.12 This choice brings with it the application of a lex arbitri’s private international law provision.

2.05  Arbitral laws typically include private international law provisions. Examples can be seen extracted from the arbitral laws considered by this book in the tables presented later in this chapter. Not all arbitration laws do, however.13 The Swedish Arbitration Act 1999 contains no private international law provision,14 and the Brazilian Arbitration Law 1996 (unchanged in this respect following its recent 2015 amendments) recognizes party autonomy for choice of law, but ‘fails to indicate which law is applicable in absence of an agreement’.15 As the content of a State’s lex arbitri is a matter for that State to decide,16 private international law provisions found in arbitral laws vary. These differences are explored in Section III of this chapter, though as a general proposition, it can be said that a seat’s lex arbitri will usually provide at least a loose procedural framework for the resolution of arbitral conflicts.17

B.  Arbitration Rules

2.06  Arbitration rules represent an overlay on the lex arbitri in regulating arbitral conflicts. While lex arbitri govern the conduct of arbitrations, they may do so ‘with a very free rein [sic]’ given that arbitration rules chosen by the parties will apply to the exclusion of lex arbitri provisions save as to mandatory rules.18 ‘Mandatory rules’ is a term used here distinct from ‘mandatory laws’, referring to mandatory procedural rules (as opposed to mandatory substantive laws).

2.07  Arbitration rules are an important element of the legal framework for regulating arbitral conflicts as private international law provisions found in arbitral laws are not mandatory rules. A private international law provision in arbitration rules thus ‘[c]onceptually … constitutes a contractual replacement’ of a lex arbitri’s provision.19 Whether or not a lex arbitri’s private international law provision is mandatory is a question for that State’s law;20 however, in general terms the weight of authority is in favour of their non-mandatory characterization.21 The point is given legislative clarity in the United Kingdom, through a statutory enunciation of the Arbitration Act 1996 (UK)’s mandatory rules, which might represent a high-water-mark example.22 As the Arbitration Act 1996 (UK), s 46 is not listed, its non-mandatory nature is legislatively confirmed.23

2.08  Some authorities differ in their understanding of private international law provisions,24 including ICC Case No 9415/1998,25 which considered the Netherlands Arbitration Act 1986. However, non-mandatory characterization is the preferable view as it most faithfully accords with the fundamental concern of mandatory rules with due process,26 and the law and economics conceptualization of ‘immutable rules’.27 It is also supported by way of analogy with the non-mandatory character28 of provisions guaranteeing the parties’ procedural autonomy,29 and by virtue of the majority position being reflected in arbitral practice.30 At the very least, a choice of arbitration rules could be seen as an ‘indirect’ choice of law,31 through party choice of the arbitral rules’ conflicts methodology.32 This was the approach taken in ICC Case No 9415/1998, in order to ensure that the parties’ chosen rules (the ICC Rules 1988, embodying the pure voie indirecte as illustrated in Table 2.1) could be given effect, notwithstanding what was held to be a mandatory pure voie directe provision in the Netherlands Arbitration Act 1986.33

2.09  For completeness, it is acknowledged that notwithstanding the adoption of arbitration rules containing a private international law provision, it may be that the lex arbitri’s provision is ultimately given effect in a particular case. This occurred in the Preliminary Award on Issues of Jurisdiction and Contract Validity in ICC Case No 6401/1991.34 The tribunal, seated in Geneva and comprised of Chairman Reymond and Arbitrators von Mehren and Lazareff, determined that the closest connection test in Art 187(1) Swiss Private International Law Act 1987 was the ‘appropriate’ conflict of laws rule to apply pursuant to the pure voie indirecte approach in Art 13(3) ICC Rules 1988.35 To similar effect is ICC Case No 6476/1994.36 Nevertheless, in cases like these, it is still the chosen rules’ private international law provision that is applied (and which then ultimately leads back to the lex arbitri).

2.10  Like domestic arbitral laws, arbitration rules typically contain private international law provisions.37 Not all do38—among the arbitral rules considered by this book, the Paris Rules 2013, CIETAC Rules 1989, DIA Rules 1990, JCAA Rules 1997, JCAA Rules 1992, and SCC Rules 1988 contain no private international law provision; while the CIETAC Rules 2005, CIETAC Rules 2000, CIETAC Rules 1998, CIETAC Rules 1995, CIETAC Rules 1994, Czech Rules 2015, Czech Rules 2012, Franco-Arab Rules 2005, KLRCA Fast Track Rules 2010, SIAC Rules 2007, SIAC Rules 1997, and SIAC Rules 1991 contain provisions relating to the application of law, but do not identify any methodology by which conflicts of laws are to be resolved.39 However, in the usual case, the relevant rules will contain a private international law provision, and this provision will take precedence over the lex arbitri’s corresponding provision given its non-mandatory character.

C.  International Conventions

2.11  In addition to domestic law and arbitration rules, international conventions form part of the legal framework for resolving arbitral conflicts. Though in some cases becoming part of domestic law (such as in the case of monist States), international conventions are analysed here in their international character.

2.12  Interestingly, the highly important New York Convention does not address the issue of the governing substantive law.40 As explained by Born, this ‘silence’ means that arbitrators have ‘the same broad authority’ regarding the conflict of laws as in the actual application of substantive law, as both fall outside the Art V New York Convention bases for resisting recognition and enforcement.41 Consistently with this proposition, case law recognizes errors of law as unreviewable under the New York Convention framework.42 This is a matter returned to in Chapter 3.

2.13  For this reason, the New York Convention affects the legal framework for resolving arbitral conflicts precisely because of what it does not say. The extent of the New York Convention’s direct relevance here is the ultra petita defence,43 given the scope for overlap between applicable law and jurisdictional matters. Nonetheless, it should be emphasized that Art V(1)(c) New York Convention has possible relevance only in cases of true overlap—an error of law does not necessarily and of itself constitute an excess of jurisdiction.44

2.14  Other international conventions play a role in this legal framework by supplying potentially applicable conflicts rules. The European Union’s Rome Convention, despite not being binding on arbitral tribunals seated in European Union States,45 has been applied in arbitration.46 There is no reason to believe that its successor, the Rome I Regulation, will not experience similar application. Though European in origin, both are said to have universal application47 in the sense that they may require the application of the law of any State, whether or not a European Union member.48 This makes them particularly suitable for broader application in arbitration. Art 1(2)(e) Rome I Regulation and Art 1(2)(d) Rome Convention exclude arbitration agreements from the instruments’ respective scopes,49 though this refers only to the separable dispute resolution clauses themselves, and not the main contract.50 The Hague Convention 1955 and the Hague Convention 1986 have similarly been applied in international commercial arbitration as a source of conflict of laws rules.51

D.  Party Autonomy

2.15  The final element of the legal framework for regulating arbitral conflicts is party autonomy, a concept first introduced and related to the conflict of laws in Chapter 1.

2.16  Party autonomy plays an overarching role in arbitration, and also plays an overarching role in resolving questions of applicable law in arbitration.52 Including party autonomy in the legal framework regulating conflicts of laws might seem incongruous, given that there must necessarily be an absence of a relevant choice of law for a conflict of laws to arise. However, party autonomy is relevant to this legal framework in three respects.

2.17  First, adopting arbitration rules (containing a private international law provision) is itself an exercise of party autonomy, putting aside the theoretical possibility of arbitrators adopting arbitral rules pursuant to their broad procedural discretions.53 The parties effectively choose the conflicts methodology that those rules contain.54 Thus, if an LCIA or an ICC arbitration were conducted in London, it is the parties’ autonomy that displaces the Arbitration Act 1996 (UK), s 46(3) private international law provision that would otherwise apply.55 In this respect, party autonomy interfaces with the operation of arbitration rules.

2.18  Secondly, party autonomy is reflected in the parties’ choice of seat. Though the proposition is critiqued as artificial in Redfern and Hunter,56 it was explained earlier in this chapter that a choice of seat can be seen as an indirect choice of the applicable arbitral law, and it can even be seen as an indirect choice of that law’s conflicts methodology. In this respect, party autonomy interfaces with the operation of State law.

2.19  Thirdly, arbitration rules are contractual in nature.57 For this reason, ‘the parties by agreement can change the rules’.58 An example given by Blase, though perhaps unlikely to arise in practice, is where parties adopt the DIS Rules 1998 while those parties at the same time exclude from application all laws having a connection to the dispute.59 This analysis also facilitates the resolution of a combination problem—where parties choose the lex mercatoria, which is permitted by the lex arbitri, but which is not permitted by their chosen arbitration rules. Though this is a matter of choice of law, such choice is similarly rationalized as the parties derogating from their chosen arbitration rules’ private international law provision.60

2.20  This dimension of party autonomy is sometimes expressly reflected in arbitration rules.61 By way of example from the case law, in ICC Case No 9797/2000 the parties derogated from the ICC Rules 1998 by indicating in their arbitration agreement that ‘the parties may select an arbitrator who is a national of the same country as one of the parties’.62 Arbitral rules also sometimes purport to limit the scope of permissible derogation;63 however, these rules are themselves also contractual rather than having the inherent force of law.64 Ultimately, any propositions regarding party autonomy contained in arbitration rules are ‘no more than an affirmation by the parties themselves of their own autonomy’.65 Recognition or limitation of the right to derogate in arbitration rules merely assists in determining party intention pursuant to the parties’ lex arbitri power to agree on procedure,66 and also provides guidance as to what derogations (if any) an institution will tolerate when deciding whether or not to accept a reference to arbitration.67 Where the parties purport to modify an institution’s standard rules, that institution may elect to accept the reference to arbitration, but may also in some circumstances decline to accept the case.68

2.21  Party autonomy therefore sits alongside domestic law, arbitration rules, and international conventions in constituting the legal framework for resolving conflict of laws questions in international commercial arbitration.

III.  Provisions Regulating the Resolution of Conflicts of Laws in International Commercial Arbitration—A New Scheme of Classification

2.22  Having identified and explained the legal framework regulating arbitral conflicts, the specific private international law provisions contained in the arbitral laws and rules considered by this book can now be analysed. In this analysis, a novel fourfold scheme of classification for private international law provisions is developed, and is illustrated through Tables 2.1. The only arbitral rules omitted from these tables are those containing no private international law provision, and those which do contain provisions regarding the application of law but which stipulate no conflicts methodology—identified earlier in this chapter. This scheme of classification is useful in understanding the very particular, and quite different, ways in which private international law provisions operate in international commercial arbitration.

2.23  Implicit in the need for any scheme of classification is a lack of uniformity among these existing provisions.69 This lack of uniformity is traditionally recognized by distinguishing the voie directe from the voie indirecte.70 This categorization reflects (respectively) the ‘divergence of approach as to whether arbitrators should directly choose the governing law or merely have freedom to select the relevant choice of law rule’.71 It can be added, to this description, that the voie directe preserves arbitrators’ powers to voluntarily adopt conflicts rules, in their discretion.72

2.24  This book builds upon this distinction by identifying two sub-categories within each family. This fourfold scheme of classification thereby developed comprises the pure voie indirecte, the restricted voie indirecte, the pure voie directe, and the guided voie directe. Plotted against axes of directness and discretion, the relationships between these four approaches are represented by the matrix in Figure 2.1.

A.  The Voie Indirecte

2.25  The phrase voie indirecte literally translates to ‘the indirect path’. In arbitral conflicts scholarship, it refers to the family of private international law provisions requiring arbitrators to apply conflict of laws rules in identifying the governing law.73 However, a careful analysis of arbitral laws and rules demonstrates that not all voie indirecte provisions are the same. This book further classifies the voie indirecte into ‘pure’ and ‘restricted’ categories. They are differentiated on the basis of the way in which arbitrators are instructed to use conflicts rules.

1.  The Pure Voie Indirecte

2.26  A pure voie indirecte provision is one requiring arbitrators to apply a conflict of laws rule, but not identifying the particular rule to be applied, or the source from which it should be drawn. The only criteria given are that the rule should be ‘appropriate’ or ‘applicable’,74 with it being ‘doubtful’ whether there is any meaningful difference between the two.75 It is also questionable whether these criteria carry practical meaning—the wide,76 effectively ‘unfettered’77 discretions conferred by these provisions are explored in Chapter 3. Born argues that divorcing these criteria of all meaning ‘would be unwise’ and that ‘the only way to answer this query [ie. what is considered appropriate] is by applying a reasoned, predictable analysis to select the best-suited choice-of-law rules’.78 Past ICC practice similarly suggests that the terms were ‘intended to inspire ICC arbitrators to apply choice of law rules which have some logical relationship to the parties and to the dispute’.79 Nevertheless, the result of these discretions is the effectively non-reviewable nature of conflicts determinations under this category of provision, as well as under the other three categories, this discretion being analysed in detail in Chapter 3.

2.27  An exemplar pure voie indirecte provision is Art 28(2) Model Law 2006. Under that provision, where the parties make no choice of law, ‘the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable’. It requires the use of a conflict of laws rule, though only requires that rule be ‘applicable’,80 and leaves its identification to the tribunal’s discretion.81 It does not provide arbitrators with any further criteria assisting their identification of the rule to be adopted.82

2.28  Table 2.1 presents the arbitral laws and rules surveyed by this book making use of the pure voie indirecte approach. For each law or set of rules, it identifies the relevant provision, and the criterion that the provision employs.

Table 2.1  Pure voie indirecte provisions

Laws/rules

Relevant provision

Criteria (emphasis added)

Model Law 2006

Art 28(2)

‘[T]he law determined by the conflict of laws rules which it considers applicable

Model Law 1985

Art 28(2)

‘[T]he law determined by the conflict of laws rules which it considers applicable

Arbitration Act 1996 (UK)

s 46(3)

‘[T]he law determined by the conflict of laws rules which it considers applicable

UNCITRAL Rules 1976

Art 33(1)

‘[T]he law determined by the conflict of laws rules which it considers applicable

CIArb Cost Controlled Rules 2000

[Arbitration Act 1996 (UK), s 46(3)]1

‘[T]he law determined by the conflict of laws rules which it considers applicable

CIArb Rules 1999

[Arbitration Act 1996 (UK), s 46(3)]2

‘[T]he law determined by the conflict of laws rules which it considers applicable

CIDRA Rules 2005

Art 32(1)

‘[T]he law determined by the conflict of laws rules which it considers applicable

CRCICA Rules 2007

Art 33(1)

‘[T]he law determined by the conflict of laws rules, which it considers applicable

CRCICA Rules 2002

Art 33(1)

‘[T]he law determined by the conflict of laws rules, which it considers applicable

CRCICA Rules 2000

Art 33(1)

‘[T]he law determined by the conflict of laws rules which it considers applicable

CRCICA Rules 1998

Art 33(1)

‘[T]he law determined by the conflict of laws rules which it considers applicable

CRCICA Rules 1995

[Art 33(1) UNCITRAL Rules 1976]3

‘[T]he law determined by the conflict of laws rules which it considers applicable

DIA Rules 2008

Art 33(2)

‘[T]he law determined by the conflict of laws rules which it considers applicable after having consulted the parties

DIA Rules 2007

Art 33(2)

‘[T]he law determined by the conflict of laws rules which it considers applicable after having consulted the parties

DIA Rules 2006

Art 34(2)4

‘[T]he rules of law which follow from the conflict of laws rules which it considers applicable

DIA Simplified Rules 2008

Art 19(2)

‘[T]he law determined by the conflict of laws rules which he considers applicable after having consulted the parties

DIA Simplified Rules 2007

Art 20(2)

‘[T]he law determined by the conflict of laws rules which it considers applicable after having consulted with the parties

DIA Simplified Rules 2006

Art 21(2)5

‘[T]he rules of law which follow from the conflict of laws rules which it considers applicable

DIS Rules 1992

Art 21(2)

‘[T]he legal provisions of the conflict of laws rules that it holds applicable

IAMA Rules 2007

[Art 28(2) Model Law 1985]6

‘[T]he law determined by the conflict of laws rules which it considers applicable

IAMA Rules 1999

[Art 33(1) UNCITRAL Rules 1976]7

‘[T]he law determined by the conflict of laws rules which it considers applicable

ICAC Rules 2010

Art 26(1)

‘[A] law determined by the conflict of laws rules, which it deems appropriate

ICAC Rules 2006

Art 26(1)

‘[A] law determined by the conflict of laws rules, which it deems appropriate

ICAC Rules 1995

Art 13(1)

‘[T]he law determined by the conflict of laws rules which it considers applicable

ICC Rules 1988

Art 13(3)

‘[T]he law designated as the proper law by the rule of conflict which he deems appropriate

JCAA Rules 1991

[Art 33(1) UNCITRAL Rules 1976]8

‘[T]he law determined by the conflict of laws rules which it considers applicable

KLRCA Fast Track Rules 2013

Art 6(1)

‘[T]he law determined by the conflict of laws rules which it considers applicable

KLRCA Fast Track Rules 2012

Art 6(1)

‘[T]he law determined by the conflict of laws rules, which it considers applicable

KLRCA Rules 2003

[Art 33(1) UNCITRAL Rules 1976]9

‘[T]he law determined by the conflict of laws rules which it considers applicable

KLRCA Rules 1998

[Art 33(1) UNCITRAL Rules 1976]10

‘[T]he law determined by the conflict of laws rules which it considers applicable

KLRCA Rules 1991

[Art 33(1) UNCITRAL Rules 1976]11

‘[T]he law determined by the conflict of laws rules which it considers applicable

VIAC Rules 2001

Art 16(1)

‘[T]he law that is designated by the choice of law rules that he (it) considers to be applicable

VIAC Rules 1991

Art 16(1)

‘[T]he law that is designated in the choice of law rules that they consider to be authoritative

Notes:

1  Pursuant to Art 1(1) CIArb Cost Controlled Rules 2000, those rules adopt (verbatim) the Arbitration Act 1996 (UK), s 46(3).

2  Pursuant to Art 1(1) CIArb Rules 1999, those rules adopt (verbatim) the Arbitration Act 1996 (UK), s 46(3).

3  The CRCICA Rules 1995 adopt (verbatim) Art 33(1) UNCITRAL Rules 1976.

4  Art 33 DIA Rules 2006 appears, at first impression, to embody a voie directe approach—however, this broader position is qualified by Art 34(2) DIA Rules 2006.

5  As under the DIA Rules 2006, the voie directe approach ostensibly embodied in Art 20 DIA Simplified Rules 2006 is qualified by Art 21(2) DIA Simplified Rules 2006.

6  Pursuant to Art 22(1) IAMA Rules 2007, Art 28(2) Model Law 1985 is applicable to international arbitrations conducted under those Rules.

7  Pursuant to Art 21(1) IAMA Rules 1999, Art 33(1) UNCITRAL Rules 1976 is applicable to international arbitrations conducted under those Rules.

8  Pursuant to Art 1(2) JCAA Rules 1991, those rules adopt (verbatim) Art 33(1) UNCITRAL Rules 1976.

9  Pursuant to Art 1(1) KLRCA Rules 2003, those rules adopt (verbatim) Art 33(1) UNCITRAL Rules 1976.

10  Pursuant to Art 1(1) KLRCA Rules 1998, those rules adopt (verbatim) Art 33(1) UNCITRAL Rules 1976.

11  Pursuant to Art 1(1) KLRCA Rules 1991, those rules adopt (verbatim) Art 33(1) UNCITRAL Rules 1976.

2.29  As can be seen from Table 2.1, thirty-three of the private international law provisions considered by this book make use of the pure voie indirecte approach, of which five are (at the time of writing) in force.

2.  The Restricted Voie Indirecte

2.30  Conflicts provisions embodying the restricted voie indirecte require arbitrators to apply a conflicts rule, and also specifically identify the rule to be applied. An example can be seen in the Swiss Private International Law Act 1987, the ‘most famous example’ of codified private international law.83 Art 187(1) Swiss Private International Law Act 1987 provides that absent party choice of law, ‘[t]he Arbitral Tribunal shall decide the case … according to the rules of law with which the case has the closest connection’. This provision identifies the closest connection test as ‘a specific conflict of laws rule’,84 giving it a restricted voie indirecte character.

2.31  Restricted voie indirecte provisions invariably adopt the closest connection test. This is the case in each of the examples considered by this book. This is an analytical simplification, for present purposes, as Chapter 6 will demonstrate that six distinct variations of the closest connection test are conceivable. However, adopting a higher level of abstraction at this stage, restricted voie indirecte provisions require the application of the closest connection test. This is so even under Art 14(2) HCC Rules 2011 and its predecessors. Though directing arbitrators to apply Hungarian private international law, that private international law is Art 4 Rome I Regulation (and was Art 4 Rome Convention before that) given Hungary’s membership of the European Union, and Chapter 6 will demonstrate that these provisions embody closest connection test variations.

2.32  It should be noted for completeness that arbitrators applying a restricted voie indirecte rule contained in the seat’s lex arbitri are not applying the ‘conflict rules of the seat’, as that rule is explained in Section IV of this chapter. Restricted voie indirecte provisions are ‘specific to international arbitration’, forming part of the relevant State lex arbitri, and are separate to the generally applicable private international law of the State that is the seat.85 For this reason, their correct application by arbitrators as part of the overall arbitral procedure is important in securing the enforceability of an award, in light of Art V(1)(d) New York Convention and Art 34(2)(a)(iv) Model Law 2006. Nevertheless, as Chapter 3 will demonstrate, some scope for discretion still remains.

2.33  Table 2.2 presents the arbitral laws and rules considered by this book making use of the restricted voie indirecte, their relevant provisions, and the tests that they employ.

Table 2.2  Restricted voie indirecte provisions

Laws/rules

Relevant provision

Test (emphasis added)

Swiss Private International Law Act 1987

Art 187(1)

‘[T]he rules of law with which the case has the closest connection

CAM Rules 2004

Art 3(3)

‘[T]he rules with which the subject matter of the dispute has its closest connection

CAM Rules 1996

Art 13

‘[T]he law with which the contract has its closest connection

CRCICA Rules 2011

Art 35(1)

‘[T]he law which has the closest connection to the dispute

DIAC Rules 1994

Art 33

‘[T]he law/laws most closely connected with the subject of the [d]ispute

DIS Rules 1998

Art 23(2)

‘[T]he law of the State with which the subject-matter of the proceedings is most closely connected

HCC Rules 2011

Art 14(2)

‘[T]he law which it considers to be applicable according to international treaty or failing this, according to the rules of the Hungarian private international law

HCC Rules 2008

Art 14(2)

‘[T]he law which it considers to be applicable according to international treaty or failing this, according to the rules of the Hungarian private international law

HCC Rules 2005

Art 14(2)

‘[T]he law which it considers to be applicable according to the rules of Hungarian private international law

HCC Rules 2001

Art 14(2)

‘[T]he law which it considers to be applicable according to the rules of Hungarian private international law

HCC Rules 2000

Art 14(2)

‘[T]he law which it considers to be applicable according to the rules of Hungarian private international law

HCC Rules 1993

Art 13(2)

‘[T]he law which it considers to be applicable according to the rules of Hungarian private international law

HCC Rules 1989

Art 13(2)

‘[T]he law which it considers to be applicable according to the rules of Hungarian private international law

HKIAC Rules 2008

Art 31(1)

‘[T]he rules of law with which the dispute has the closest connection

JCAA Rules 2014

Art 60(2)

‘[T]he substantive law of the country or [S]tate to which the dispute referred to the arbitral proceedings is most closely connected

JCAA Rules 2008

Art 41(2)

‘[T]he law of the country or [S]tate to which the dispute in the arbitral proceedings is most closely connected

JCAA Rules 2004

Art 41(2)

‘[T]he law of the country or [S]tate to which the dispute in the arbitral proceedings is most closely connected

Swiss Rules 2012

Art 33(1)

‘[T]he rules of law with which the dispute has the closest connection

Swiss Rules 2004

Art 33(1)

‘[T]he rules of law with which the dispute has the closest connection

2.34  A total of nineteen private international law provisions considered by this book are restricted voie indirecte provisions. Six are in force, at the time of writing.

B.  The Voie Directe

2.35  In contrast to the voie indirecte, voie directe translates literally to ‘the direct path’. It denotes the family of private international law provisions authorizing arbitrators to directly choose a governing law, without a requirement to apply conflicts rules.86 Arbitrators have, however, the discretion to voluntarily apply conflicts rules in identifying the governing substantive law.

2.36  Analysis of the private international law provisions considered by this book leads to the identification of separate ‘pure’ and ‘guided’ sub-categories of the voie directe. These are differentiated by the degree of objective guidance that arbitrators are given in identifying the governing law.

1.  The Pure Voie Directe

2.37  This book’s usage of the term pure voie directe reflects the traditional usage of voie directe in the literature. It also corresponds to what Lew, Mistelis, and Kröll describe as the ‘[u]nlimited voie directe’.87 Pure voie directe provisions do not require arbitrators to apply conflicts rules, and instead authorize a direct choice of the governing law. Compared to the restricted voie indirecte, such provisions ‘aim … at shifting the focus from Savigny’s a priori abstract localisation of legal issues and their linkage to a particular national legal system to the determination of applicable substantive rules’.88 No specific guidance is given to arbitrators in making their direct choice, other than the stated criteria that this law should be ‘appropriate’, or ‘applicable’, or some variation thereof. As with the pure voie indirecte, these different criteria probably do not carry different meanings.

2.38  A well-known example is Art 1496 French New Code of Civil Procedure 1981, the ‘first’ voie directe provision.89 Absent party choice, pursuant to that provision, ‘[t]he arbitrator shall resolve the dispute … in accordance with the rules of law he or she considers appropriate’. No conflicts analysis is required—the provision ‘prescribes what an arbitral tribunal must do [but] does not regulate how it must carry out its task’.90 This same position is now reflected in Art 1511 French Arbitration Law 2011.

2.39  Table 2.3 presents the arbitral laws and rules surveyed by this book adopting the pure voie directe, their relevant provisions, and the criteria employed.

Table 2.3  Pure voie directe provisions

Laws/rules

Relevant provision

Criteria (emphasis added)

French Arbitration Law 2011

Art 1511

‘[T]he rules of law it considers appropriate

French New Code of Civil Procedure 1981

Art 1496

‘[T]he rules of law he or she considers appropriate

UNCITRAL Rules 2010

Art 35(1)

‘[T]he law which it determines to be appropriate

CPR Ad Hoc Rules 2007

Art 10(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

AAA International Arbitration Rules 1997

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

AAA International Arbitration Rules 1991

Art 29(1)

‘[S]uch law or laws as it determines to be appropriate

ACICA Expedited Rules 2016

Art 29(1)

‘[T]he rules of law which he or she considers applicable

ACICA Expedited Rules 2011

Art 29(1)

‘[T]he rules of law which he or she considers applicable

ACICA Expedited Rules 2010

Art 29(1)

‘[T]he rules of law which he or she considers applicable

ACICA Expedited Rules 2008

Art 29(1)

‘[T]he rules of law which he or she considers applicable

ACICA Rules 2016

Art 39(1)

‘[T]he rules of law which it considers applicable

ACICA Rules 2011

Art 34(1)

‘[T]he rules of law which it considers applicable

ACICA Rules 2005

Art 34(1)

‘[T]he rules of law which it considers applicable

CIArb Rules 2015

Art 35(1)

‘[T]he law which it determines to be appropriate

CIETAC Rules 2015

Art 49(2)

‘[T]he law applicable to the merits of the dispute’

CIETAC Rules 2012

Art 47(2)

‘[T]he law as it applies to the merits of the dispute’

CPR Administered Rules 2013

Art 10(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

Czech Rules 2007

Art 8(1)

‘[T]he rules of the applicable material law’

Czech Rules 2002

Art 8(1)

‘[T]he rules of the applicable material law’

Czech Rules 1996

Art 8(1)

‘[T]he rules of the applicable material law’

DIA Rules 2013

Art 17(3)

‘[T]he rules, which it considers appropriate after having invited the parties to comment

DIA Simplified Rules 2013

Art 14(3)

‘[T]he rules, which he or she considers appropriate after having invited the parties to comment

DIAC Rules 2007

Art 33(1)

‘[T]he law(s) or rules of law which it considers to be most appropriate

Franco-Arab Rules 2010

Art 16

‘[S]uch rules of law as it considers appropriate

HKIAC Rules 2013

Art 35(1)

‘[T]he rules of law which it determines to be appropriate

IAMA Rules 2014

Art 35(1)

‘[T]he law which it determines to be appropriate

ICAC Rules 1988

Art 13(1)

‘[T]he applicable rules of substantive law’

ICC Rules 2012

Art 21(1)

‘[T]he rules of law which it determines to be appropriate

ICC Rules 1998

Art 17(1)

‘[T]he rules of law which it determines to be appropriate

ICDR Rules 2014

Art 31(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

ICDR Rules 2009

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

ICDR Rules 2008

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

ICDR Rules 2006

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

ICDR Rules 2005

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

ICDR Rules 2003

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

ICDR Rules 2001

Art 28(1)

‘[S]uch law(s) or rules of law as it determines to be appropriate

JAMS Comprehensive Rules 2014

Art 24(c)

‘[T]he rules of law and equity that he or she deems to be most appropriate

JAMS Comprehensive Rules 2010

Art 24(c)

‘[T]he rules of law and equity that the Arbitrator deems to be most appropriate

JAMS Construction Rules 2014

Art 24(c)

‘[T]he rules of law and equity that the Arbitrator deems to be most appropriate

JAMS Construction Rules 2009

Art 24(c)

‘[T]he rules of law and equity that the Arbitrator deems to be most appropriate

JAMS Rules 2011

Art 18(1)

‘[T]he law or rules of law that it determines to be most appropriate

JAMS Rules 2005

Art 18(1)

‘[T]he law or rules of law which it determines to be most appropriate

KLRCA Rules 2013

[Art 35(1) UNCITRAL Rules 2010]1

‘[T]he law which it determines to be appropriate

KLRCA Rules 2012

[Art 35(1) UNCITRAL Rules 2010]2

‘[T]he law which it determines to be appropriate

KLRCA Rules 2010

[Art 35(1) UNCITRAL Rules 2010]3

‘[T]he law which it determines to be appropriate

LCIA Rules 2014

Art 22(3)

‘[T]he law(s) or rules of law which it considers appropriate

LCIA Rules 1998

Art 22(3)

‘[T]he law(s) or rules of law which it considers appropriate

NAI Rules 2015

Art 42(2)

‘[T]he rules of law which it considers appropriate

NAI Rules 2010

Art 46

‘[T]he rules of law which it considers appropriate

NAI Rules 1998

Art 46

‘[T]he rules of law which it considers appropriate

NAI Rules 1993

Art 46

‘[T]he rules of law which it considers appropriate

NAI Rules 1986

Art 46

‘[T]he rules of law which it considers appropriate

SCC Rules 2010

Art 22(1)

‘[T]he law or rules of law which it considers to be most appropriate

SCC Rules 2007

Art 22(1)

‘[T]he law or rules of law which it considers to be most appropriate

SCC Rules 1999

Art 24(1)

‘[T]he law or rules of law which it considers to be most appropriate

SIAC Rules 2016

Art 31(1)

‘[T]he law or rules of law which it determines to be appropriate

SIAC Rules 2013

Art 27(1)

‘[T]he law which it determines to be appropriate

SIAC Rules 2010

Art 27(1)

‘[T]he law which it determines to be appropriate

VIAC Rules 2013

Art 27(2)

‘[T]he applicable statutory provisions or rules of law which it considers appropriate

VIAC Rules 2006

Art 24(2)

‘[T]he legislation considered by him (it) as appropriate

Notes:

1  The KLRCA Rules 2013 adopt (verbatim) Art 35(1) UNCITRAL Rules 2010.

2  The KLRCA Rules 2012 adopt (verbatim) Art 35(1) UNCITRAL Rules 2010.

3  The KLRCA Rules 2010 adopt (verbatim) Art 35(1) UNCITRAL Rules 2010.

2.40  As can be seen from Table 2.3, the pure voie directe is the most common approach among the private international law provisions considered by this book. Sixty of these provisions adopt the pure voie directe, of which twenty-five are (at the time of writing) in force.

2.  The Guided Voie Directe

2.41  Guided voie directe provisions do not require arbitrators to apply a conflicts rule, and authorize a direct choice of the governing law. However, unlike the pure voie directe, guided voie directe provisions identify that arbitrators should take objective factors into account. These factors are considerations, rather than constituting tests or a rule. Thus, such provisions are voie directe in nature, but incorporate flexible guidance, differentiating them from the pure voie directe.

2.42  The clearest example of a guided voie directe provision among the private international law provisions considered by this book is Art 3(3) CAM Rules 2010. Under this provision, absent a choice of law, ‘the Arbitral Tribunal shall apply the rules it determines to be appropriate, taking into account the nature of the relationship, the qualities of the parties and any other relevant circumstance’. The power to apply rules found ‘appropriate’ confirms this provision’s voie directe character; however, three objective factors are given as an open-ended list of considerations informing this discretion. That this list is open-ended is confirmed by the third factor (‘any other relevant circumstance’). That they are only considerations is evident from the instruction that arbitrators take them ‘into account’.

2.43  The process of Art 3(3) CAM Rules 2004’s revision into the currently in force Art 3(3) CAM Rules 2010 is instructive in appreciating this provision’s intended operation. The revision, away from the restricted voie indirecte, represented a ‘major modification’91 and is consistent with the CAM Rules 2010’s objective of improving efficiency.92 By way of contrast, the CAM Rules 2004 had sought ‘to improve the quality of the arbitral proceedings’, as measured by efficiency, transparency, and timeliness.93 The CAM Rules 2010 pursued their efficiency focus through ‘enlarged’ arbitrator powers,94 and Art 3(3) CAM Rules 2010 evidences this means. This is confirmed by Coppo’s analysis of the former position as ‘narrower’,95 as compared to Art 3(3) CAM Rules 2010.

2.44  Coppo’s assessment of Art 3(3) CAM Rules 2010 as reflecting ‘international practice’96 (citing Art 17 ICC Rules 1998),97 and Giovannini and Renna’s observations of its significant conferral of discretion,98 demonstrate affinity with the pure voie directe. However, Coppo also explains that under Art 3(3) CAM Rules 2010, ‘arbitrators [must] anchor their choice to some objective criteria’.99 This aspect of the provision reflects the institution according weight to predictability,100 which is the purpose generally underpinning the conflict of laws. This aspect of Art 3(3) CAM Rules 2010 differentiates it from the pure voie directe and reflects the focus on innovation said to be seen in the CAM Rules 2010 as a whole.101

2.45  The other provisions addressed by this book approximating a guided voie directe approach are Art 30(3) BCICAC Rules 2000, Art 32 DIA Rules 2004, and Art 22(2) LCIA India Rules 2010. Unlike Art 3(3) CAM Rules 2010, these provisions emphasize objectivity, but do not identify specific considerations guiding arbitrators’ direct choice of law. As subjective considerations, including arbitrators’ subjective assessments of the contents of laws, are permissible within the pure voie directe,102 this non-exclusive emphasis on objectivity also qualifies these provisions as guided voie directe in nature.

2.46  Table 2.4 summarizes this discussion and identifies the criteria adopted by these four provisions. At the time of writing, two of these four provisions are in force.

Table 2.4  Guided voie directe provisions

Laws/rules

Relevant provision

Criteria (emphasis added)

BCICAC Rules 2000

Art 30(3)

‘[T]he rules of law it considers to be appropriate given all the circumstances surrounding the dispute

CAM Rules 2010

Art 3(3)

‘[T]he rules it determines to be appropriate, taking into account the nature of the relationship, the qualities of the parties and any other relevant circumstance

DIA Rules 2004

Art 32

‘[T]he question [ie. identification of the applicable substantive law] shall be decided by the Arbitration Tribunal taking into account all relevant circumstances

LCIA India Rules 2010

Art 22(2)

‘[T]he law(s) or rules of law which it considers appropriate, given all the circumstances surrounding the dispute

C.  Observed Trends in the Adoption of Private International Law Provisions

2.47  Having distilled four specific sub-categories of private international law provisions, attention is now turned to trends observable in their adoption.

2.48  Of the four approaches, the guided voie directe represents a clear minority position. Further, none of its adopting institutions (the BCICAC, CAM, DIA, and the former LCIA India) are major global institutions, instead focusing more closely on regional arbitration.

2.49  Of the remaining approaches, the pure voie directe is predominant. This is consistent with Cordero-Moss’ observation of a ‘clearly recognisable trend’ away from precise mechanisms in private international law provisions,103 and the assessment in commentary and the case law of the pure voie directe as the prevailing contemporary approach.104 Though the restricted voie indirecte was seen as ‘[t]he more contemporary approach’105 in 1997, and actually ‘innovative’ (even if ‘regressive’ at ‘first sight’)106 in 1989, the comparatively more liberal pure voie indirecte is now thought ‘traditional’107 and dated.108 On a qualitative assessment, the pure voie directe is seen in the current rules of five of the world’s busiest arbitral institutions—the ICC, the LCIA, the HKIAC, SIAC, and CIETAC.109 It is also the approach embodied in Art 35(1) UNCITRAL Rules 2010; where in the revision of Art 33(1) UNCITRAL Rules 1976, UNCITRAL deliberately chose the pure voie directe over a restricted voie indirecte alternative.110 This choice received ‘[b]road support’ and was thought to be a modernization.111 Interestingly, this was so even though Paulsson and Petrochilos’ UNCITRAL-commissioned report recommended retention of the pure voie indirecte.112

2.50  Nevertheless, the intrinsic importance of the two voie indirecte sub-categories should not be overlooked. This is due to their retention in two particular private international law provisions—Art 187(1) Swiss Private International Law Act 1987 and Art 28(2) Model Law 2006. On the restricted voie indirecte’s retention in the former, Switzerland is a key arbitral centre113 with renowned arbitral laws114 and has ‘an enviable reputation’ in arbitration.115 Art 187(1) Swiss Private International Law Act 1987 interestingly retains the restricted voie indirecte even though its Chapter 12 generally ‘aim[s] to establish a framework and therefore regulate only the most fundamental questions’.116 On the pure voie indirecte’s retention in Art 28(2) Model Law 2006, UNCITRAL identifies (at 1 July 2016) 102 jurisdictions as having enacted Model Law 2006 or Model Law 1985 legislation, inclusive of individual territorial units (such as in the United States) within seventy-two unique States.117 The instruments are considered a ‘baseline’ for the modernization of State arbitration laws,118 and have significantly progressed the cause of harmonization,119 particularly in the Asia-Pacific region where there is the highest concentration of Model Law jurisdictions. As ‘prototype’ law,120 States can depart and have departed from the instruments in local enactments,121 including with respect to this particular provision.122 Nevertheless, the pure voie indirecte’s retention in such an important international instrument is telling.

2.51  Without disregarding the importance of both voie indirecte sub-categories, significant momentum towards the pure voie directe is observable from this section’s analysis. Furthermore, while the guided voie directe is clearly a minority approach, it is closely related to the pure voie directe, and reinforces the voie directe’s overall predominance as a family of private international law provisions.

2.52  These trends, at face value, would seem to lean against this book’s recommendation of a (modified) Art 4 Rome Convention rule for arbitral conflicts of laws. However, as will be demonstrated in Chapter 3, the theoretical and practical difficulties inhering in the current regulatory regime justify a move away from this regulatory status quo.

IV.  Potentially Applicable Conflict of Laws Rules in International Commercial Arbitration

2.53  Within the legal framework identified in Section II of this chapter, in applying provisions of the categories distilled in Section III, arbitrators have many specific conflicts rules to draw upon. While restricted voie indirecte provisions specify a rule, the pure voie indirecte grants wide scope for arbitrators’ choice among rules, and under the two voie directe approaches arbitrators may still apply conflicts rules in their discretion. This section compares ten potentially applicable conflicts rules. While each is presented individually, their application can overlap in practice.123

2.54  The ten rules compared here do not represent an exhaustive list. Under the prevailing conflicts discretions, the width of which are analysed in Chapter 3, arbitrators are ‘free to select a conflict rule from a national conflict system, a relevant international convention, academic writing, or even a rule which the arbitrators for good or esoteric reasons considered appropriate’.124 Arbitrators can even permissibly ‘invent’ sui generis conflicts rules for particular cases.125 The list of conflicts rules potentially applicable in international commercial arbitration can therefore never be closed under these prevailing discretions. Nevertheless, the ten rules compared here represent those addressed in the case law and literature, including both those rules commonly applied and also rules formally recognized but largely theoretical.

A.  The Conflicts Rules of the Seat of Arbitration

2.55  First, arbitrators may apply the conflicts rules of the arbitral seat. This approach can be taken on the basis that those rules automatically and mandatorily apply (as was once thought), or on the basis that they are an option open for tribunals to adopt in their discretion.

1.  The Seat’s Conflicts Rules as Automatically and Mandatorily Applicable

2.56  Pursuant to a now-largely-historical view, the seat’s conflict of laws rules were considered automatically and mandatorily applicable.126 Arbitrators adopting this view would simply apply the conflicts rules otherwise applied by State courts whose forum was the arbitral seat. Thus, writing in 1988, Jaffey noted that ‘[t]he English courts have always taken it for granted that when an arbitration is governed by English law, the arbitrators are bound to apply the English conflict of laws’.127

2.57  This rule’s principal advantage is the promotion of simplicity and certainty. Though discretion might remain in then applying the seat’s conflicts rules according to their terms, it is removed from the process of identifying those rules as initially applicable.

2.58  A further advantage of this rule is some consistency with (historical) arbitration theory. While modern international arbitration does not consider that tribunals have a forum, this is not the view that has always held sway. Pursuant to the jurisdictional theory of arbitration,128 if an alternative view is taken (as it once was),129 arbitrators could easily be conceived of as required to apply the seat’s conflicts rules as part of the law of the forum (lex fori).130 This position was taken in Art 11 Institute of International Law Resolution on Arbitration in Private International Law 1957, and was also the position advanced by FA Mann in his classic 1967 paper ‘Lex Facit Arbitrum’.131

2.59  This rule suffers significant disadvantages, and is now considered ‘outdated’ and ‘obsolete’.132 Two fundamental problems exist with this rule today. First, under now-prevailing arbitration theory, it is said to be inappropriate to equate arbitrators with State court judges,133 and this is the practical effect of adopting this conflicts rule. As tribunals are now considered to have no forum,134 arbitrators owe no State the allegiance that would require application of the seat’s conflicts rules.135 A seat is not a forum,136 arbitrators have no lex fori, and the seat’s conflicts rules therefore cannot automatically and mandatorily apply.

2.60  Secondly, turning from theory to a black letter law analysis, modern private international law provisions do not support a requirement to apply the seat’s conflicts rules. This is evident from this book’s analysis of private international law provisions across Tables 2.1. Mandatory application of the seat’s conflicts rules is only consistent with the particular restricted voie indirecte approach evidenced in Art 14(2) HCC Rules 2011 and its predecessors.

2.61  It is noted for completeness that a further purported disadvantage of applying the seat’s conflicts rules is their embodiment of ‘national and sometimes political interests’, supposedly rendering those rules unsuitable for international disputes.137 This criticism is also levelled at other approaches, such as using the conflicts rules of the State most closely connected to the dispute.138 However, as explained by Born, this critique is ‘misconceived’ as any legal rules (conflicts, or substantive) reflect State interests, and the ‘central role’ that States (and their laws) play in international law means that there is ‘nothing inappropriate’ about this.139

2.  The Seat’s Conflicts Rules as an Option for the Tribunal

2.62  The seat’s conflict of laws rules may alternatively be adopted by tribunals voluntarily through an exercise of discretion.140 This was the approach taken in ICC Case No 10303/2000141 as well as in ICC Case No 11061/2001,142 and it is also common practice within the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.143 Under this approach, the question is not whether arbitrators are required to apply the seat’s conflicts rules, but whether they should.

2.63  Many considerations feed into this assessment. Arbitrators may be attracted to this rule due to their theoretical leanings concerning arbitration.144 Principal among practical considerations is whether the seat’s identity has any real meaning in the circumstances of the case, and there may be room for disagreement as to what those circumstances actually are. In ICC Case No 11061/2001,145 the tribunal relied upon the Singaporean seat being chosen by the parties, that seat being chosen as a neutral venue, and Singapore being ‘a significant commercial country’, as justifying this approach.146

2.64  As with mandatory application of the seat’s conflicts rules, a consistent practice of their discretionary application has advantages in simplicity and certainty. In ICAC practice, it is observed that consistent application of the seat’s private international law ‘creates favourable conditions when preparing for the hearing of the dispute’ as the approach is often known and foreseen by parties.147 Where true conflicts exist at the substantive and the conflict of laws levels, Born argues for the presumptive application of the seat’s rules on the bases of simplicity, neutrality, predictability, and fairness, which he contends ‘rational commercial parties desire’.148 The approach is also ‘convenient’.149 The seat’s conflicts rules furthermore form part of a ‘comprehensive’ conflicts system—capable of identifying the applicable law not only for the parties’ contract, but also for tortious and other non-contractual claims that might arise.150 Though particular aspects of these overall State conflicts systems have proved problematic in the past, such as the United Kingdom’s historical common law rule for torts,151 modern conflict systems applicable in the seats considered by this book have done away with such historical anomalies.152

2.65  While this rule has attractions where the parties ‘freely choose the seat’ and by doing so ‘indirectly’ select its conflicts rules,153 the seat ‘may be chosen for many reasons, unconnected to the particular conflicts of laws rules in the jurisdiction’.154 In the extreme case of online arbitration, the seat may even effectively be ‘fictitious’.155 The literature identifies scores of factors that parties might take into account when selecting a seat, including:156

  • •  convenience and cost;

  • •  geographical convenience, travel expenses, and transportation facilities;

  • •  the seat’s neutrality vis-à-vis the parties;

  • •  the seat’s reputation for its arbitration services;

  • •  the available arbitral institutions, and support staff;

  • •  visa requirements, and the ability to enter the arbitration site;

  • •  customs requirements affecting documents and exhibits;

  • •  currency regulations and income tax affecting arbitrator fees;

  • •  office space, hotel, and meeting room facilities;

  • •  telecommunications infrastructure;

  • •  rules regarding the choice of non-local counsel;

  • •  the availability of experienced local counsel;

  • •  arbitrator availability;

  • •  the seat’s lex arbitri, and its New York Convention membership; and

  • •  the degree of judicial intervention at the seat.

2.66  Multiple factors are considered in assessing the attractiveness of a seat with party priorities likely to differ,157 though none of the considerations listed here has any relationship to the seat’s conflicts rules. Attaching the required meaning to the parties’ choice of seat is therefore problematic.

2.67  Another disadvantage of this rule is its assumption that the parties choose the arbitration’s seat. This will not always be the case. Where the parties do not, an institution or the arbitrators might be empowered to do so by default.158 In other cases, arbitration rules might fix the seat,159 though this is still in reality a choice by the parties (since the parties choose the rules)160 and these cases can be put to one side. Where the parties have not truly chosen the seat, ‘there is even less reason’ to consider the seat’s conflicts rules.161 This was a consideration in ICC Case No 8672/1996, where the tribunal noted that French conflict rules (Paris being the seat) ‘need not be referred to’ as the seat’s location was chosen by the ICC Court and was therefore ‘fortuitous’.162 ICC statistics disclose that in 2015, 12 per cent of seats were selected by the ICC Court.163 Cases where parties do not choose the seat demonstrate a significant disadvantage of this rule, though do not reflect on its predictability advantages.

B.  The Substantive Law of the Seat of Arbitration

2.68  Secondly, arbitrators may apply the substantive law of the seat of arbitration. This approach can be taken on two alternative bases—one based on an implied choice of law, and the other on the use of a conflicts rule.

1.  The Seat’s Substantive Law as an Implied Choice

2.69  As Chapter 1 explained, choice of law is different from the conflict of laws. However, for the purposes of completeness and comparison, application of the seat’s substantive law based on an implied choice of law is explored here. It is important to keep the distinction between choice and the conflict of laws in mind, however, as while party subjectivity was once thought relevant to the conflict of laws, the parties’ subjective intentions are now firmly recognized as relevant only to choice of law in particular.164

2.70  The Latin maxim qui indicem forum elegit jus provides that ‘a choice of forum is a choice of law’.165 This is the basis of applying the seat’s substantive law under this approach, adapted to arbitration as qui elegit arbitrum elegit ius.166 Party seat selection, though not that of the arbitrators or an institution,167 evidences an implicit party choice of law. Thus, in Tzortzis v Monark Line AB, the choice of an English seat raised ‘an irresistible inference’ of a choice of English law,168 and the tribunal in Société MN v Koospol SA implied a choice of Czech law from a Czech seat.169 This approach is closely associated with the English jurisdiction,170 but not particularly the continental tradition;171 thus, in SCC Case No 177/1999,172 the SCC Award of 17 July 1992,173 and in ICC Case No 9875/1999,174 this implication was not made. It is, however, permissible under the private international law provisions considered by this book, as none requires choices of law to be express. The key question is the legitimacy of treating seat selection as evidencing a choice of law. The ease with which an implied choice is found affects the necessity of resorting to default conflicts rules, the matter essentially being one of the standard of proof. In this way, this rule affects the conflict of laws, even though it is a choice of law rule in itself.

2.71  This approach historically had ‘strong support’,175 though its application across jurisdictions was by no means consistent.176 It enjoys support in principle through the juridical link between the seat and the proceedings, and in the State court context it has been argued to be ‘cost saving, efficient and preferred by business’.177 State courts will only find a choice of law on the basis of exclusive jurisdiction clauses, since non-exclusive clauses are not considered as evidencing the required intent.178 Given that a chosen forum’s ‘probative value’ lies in the ‘mutual … negative obligation[s]’ inherent in the choice,179 the negative effects of arbitration agreements180 alongside the seat’s supervisory jurisdiction facilitate the analogy of arbitration agreements to exclusive jurisdiction clauses.181 This analogy lends support to adopting the qui indicem forum elegit jus maxim in the arbitration context.

2.72  Nevertheless, this approach is now recognized as ‘irrational and inaccurate’.182 Arbitral case law dating back even to the 1980s evidences a resistance to implying a choice of law from a choice of seat, absent evidence of ‘an actual agreement or concurrent intentions of the parties’.183 The approach rests on an automatic presumption but does not adequately assess ‘the actual terms of the parties’ agreement’,184 which is inconsistent with the true basis of choice of law (being party intention). Further, any ‘usual’ assumption that this approach is supported by arbitrators being nationals of the seat and therefore only being familiar with that State’s law is said to be ‘patently unsustainable’.185

2.73  Focusing attention on party intention, the very basis of choice of law, there are many potential reasons for choosing seats unconnected with their substantive law.186 These were identified in Section IV.A. Further, there is ‘no compelling basis’ for implying a choice of law where arbitral institutions or arbitrators identify the seat, as this does not reflect upon the parties’ intentions.187 While it might be argued that choosing an institution or choosing ad hoc arbitration implies the adoption of all determinations of that institution or the arbitrators, that this must have limits is evidenced by the existence of provisions limiting arbitral liability,188 which potentially impliedly recognize the possibility for this liability to otherwise exist. Even English law declined to imply a choice of law from an institution’s selection of the arbitral seat, and also party choice of the seat, where the arbitration agreement gave two options, to be selected between at one party’s election.189

2.74  Modern thinking treats the choice of seat as ‘no longer an absolute presumption’, but rather one factor among all the circumstances that might have relevance to a case.190 Thus, in ICC Case No 5717/1988, an argument that choice of London as the seat and the English language for contracting ‘in itself’ implied a choice of English law was rejected.191 A similar conclusion was reached by the House of Lords in Compagnie d’Armement Maritime SA v Compagnie Tunisienne de Navigation SA, which held that the choice of seat may be a relevant factor, but is not always decisive.192

2.75  This approach has been described as ‘comparable … but distinct’ to application of the seat’s conflict of laws rules,193 and the key distinction is its basis in choice (rather than the conflicts) of law. As the focus of this book is on conflicts of laws, this approach is not considered any further, beyond its exposition here for comparative purposes.

2.  The Seat’s Substantive Law Through a Conflict of Laws Rule

2.76  It is theoretically possible that arbitrators could otherwise apply the seat’s substantive law through a conflicts analysis. While the main focus of the literature and the case law is on implied choice, an alternative conceivable approach would be adopting a simple conflict of laws rule providing that the seat’s substantive law shall apply. The difference is more than semantic. Implied choice is based on party intention, whereas a conflicts analysis may be anchored instead in purely objective factors such as the seat’s juridical connection to the dispute. Application of the seat’s law through a conflicts rule, as opposed to an implied choice of law, is therefore more conceptually sound.

2.77  While theoretically possible, this is not a rule recognized or applied in practice, though it seems to be the basis of an approach taken in Yemeni legislation described by Blessing in 1996.194 It is adverted to by Greenberg, Kee, and Weeramantry, though those authors suggest that it is ‘artificial to presume’ that the seat’s law ‘would be an appropriate law to apply by virtue only of the fact that it is the law of the seat of arbitration’.195

C.  The Conflict Rules Most Closely Connected to the Dispute

2.78  Thirdly, arbitrators might apply the conflict of laws rules of the State most closely connected to the dispute. This conflicts rule requires arbitrators first to assess which State has the closest connection to the dispute, and then to apply its ordinary conflict of laws rules. This methodology clearly depicts the ‘conflict of conflicts of law question’ referred to in the literature.196

2.79  The main advantage of this rule is that it overcomes the problematic analytical gap in applying the seat’s conflicts rules. Using the conflict of laws rules of the State most closely connected to the dispute allows arbitrators to make a practical and theoretical connection between the parties’ substantive dispute and the conflicts rules applied.

2.80  This conflicts rule has been critiqued, however, for its introduction of a renvoi ‘which is neither necessary nor useful’.197 Renvoi has been recognized as a useful concept in some conflicts contexts, though in the case of contract it is ‘generally disfavored’.198 The two-stage nature of this rule’s conflicts enquiry risks ‘anomalous result[s]’ as it ‘aggravates … uncertainties’, and it is argued by Born that ‘[n]one of this makes practical or analytical sense’.199 This view is not universally held, with Greenberg, Kee, and Weeramantry suggesting that the approach is among ‘[b]etter conflict of laws rules’,200 though those authors do not give any supporting rationales. Possible justification could lie in a presumed consistency with party expectation, though this would ultimately be unconvincing. It is difficult to accept that parties would expect the most closely connected State’s conflicts rules to apply,201 as opposed to its substantive law—that is, the closest connection test, addressed in Section IV.D. If the most closely connected State’s conflicts rules led to that State’s substantive law applying, then the two stages of analysis are unnecessary; and if they do not, then by definition the substantive law applied is more loosely connected to the parties’ dispute than the conflicts rules which were used to reach that conclusion.

D.  The Substantive Law Most Closely Connected to the Dispute

2.81  Fourthly, an arbitral tribunal might apply the closest connection test. Under the closest connection test, arbitrators apply the substantive law of the State most closely connected to the parties’ dispute. This differs from the conflicts rule addressed in Section IV.C, as it involves one stage of analysis rather than two. Despite sometimes being referred to as a method of directly applying substantive law,202 the closest connection test is actually a conflicts rule as it represents a device used by tribunals to determine the applicable law. However, for present purposes, this definition of the process involved in applying the closest connection test is being given at a high level of abstraction; as Chapter 6 will demonstrate, there are six different conceivable variations of the closest connection test.

2.82  This section has so far described the closest connection test as seeking the closest connection to the parties’ ‘dispute’. However, as is evident from Table 2.2, different solutions are taken on this point. Some private international law provisions refer to the parties’ dispute;203 though others refer to the case,204 the contract,205 or even the subject-matter of the dispute.206 For the purposes of the present discussion, the term ‘dispute’ is used as a convenient shorthand expression, though the implications of this varying terminology are addressed in Chapter 6.

2.83  The closest connection test has several advantages. The test is widely recognized around the world. According to Nygh it is a principle recognized with ‘near unanimity’,207 though it exists as a conflict of laws rule independently of the general principles of the conflict of laws.208 When applying this conflicts rule, a tribunal need not anchor its analysis in a particular State conflict of laws system.209 The closest connection test, though ‘a very simple method’,210 is itself the relevant conflicts rule applied. Arbitrators may, however, support their application of the closest connection test with reference to State conflicts systems211 or international conventions212 embodying the approach, which can further strengthen the legitimacy of their analysis. In this sense, the test overlaps with the application of conflicts rules found in international instruments and the application of general principles of the conflict of laws.

2.84  Where embodied in an applicable restricted voie indirecte provision, arbitrators will be required to apply the closest connection test. This is because in these circumstances, the test forms part of the applicable procedural framework. Its disregard could therefore give rise to challenge of the resulting award for defective procedure under Art V(1)(d) New York Convention or Art 34(2)(a)(iv) Model Law 2006. Challenges of this kind require a procedural irregularity ‘to have had a potential impact upon the decision reached’,213 and as explained in Chapter 1, conflicts questions can have a significant impact on the outcome of a case. However, the closest connection test’s application is not confined to restricted voie indirecte contexts,214 and it is able to be applied within each of the other three sub-categories of conflicts provision identified in this chapter. Application of the closest connection test therefore enjoys consistency with all four categories of provision distilled in this book.

2.85  The main disadvantage of the closest connection test lies in its practical application. Some tribunals have relatively little difficulty in determining where the closest connection lies.215 In principle the test is ‘straightforward’; however, identifying the closest connection ‘is not always easy’ in practice.216 This difficulty extends beyond the test’s application in arbitration, and was the subject of comment by Lord Denning MR at common law in Coast Lines Ltd.217

2.86  As already identified, the closest connection test also has several different variations. Variations on seeking connection to the ‘dispute’ were already referred to; in addition, the test can be structured in up to six different ways. This can be seen as a disadvantage, as arbitrators applying the closest connection test must also determine which of these specific variations should be applied. For example, in ICC Case No 4650/1985, the tribunal applied what was in substance a bare closest connection test and placed primary importance on the place of performance.218 It ultimately applied the law of Georgia, USA on this basis.219 This can be contrasted with the approach taken in ICC Case No 5713/1989, where the tribunal applied a characteristic performance variation.220 While it is not explicit on the face of the published report of ICC Case No 4650/1985, it appears that Georgia, USA was also the place of the architect service-provider’s residence. The rule’s form therefore made no meaningful difference on that occasion. In other cases, however, such as in ICC Case No 3755/1988,221 the place of performance and the place of the characteristic performer’s residence may readily differ. That case involved the turnkey construction of a factory222 and in such circumstances, the act of characteristic performance would occur at the construction site rather than in the State of the construction company (which is the place of the characteristic performer’s residence).

E.  The Cumulative Application of Connected Conflicts Rules

2.87  A fifth conflict of laws rule that arbitrators might apply is the cumulative approach. The cumulative approach involves arbitrators applying all connected States’ conflicts rules simultaneously—that is, cumulatively—in search of a convergence in result and their identification of a common substantive law.223 If their results do converge, a situation described by Rubino-Sammartano as a ‘happy coincidence’,224 the tribunal is justified in applying the identified law on the basis of that cumulative result.225 This was the basis of the conflicts determination in ICC Case No 953/1956, where it was described as the approach that ‘above all’ must be applied absent party agreement.226

2.88  An important preliminary step in applying the cumulative approach is the identification of the States whose conflicts rules will simultaneously be applied. Gaillard and Savage suggest that arbitrators ‘should only consider the choice of law rules of legal systems which had a connection with the case at a time when the parties were required to act in a certain way, under the contract or otherwise’.227 Examples include the parties’ home States, and the place of contractual performance.228 Other conceivably relevant systems include the places of negotiation and contract formation. The rationale is that these would be the foreseeable legal systems whose conflicts rules the parties could theoretically have ‘been in a position to know’ at the time of performance.229 For this reason, Gaillard and Savage suggest that the seat’s conflicts rules are not necessarily included.230 However, in practice, arbitrators sometimes do consider the seat’s rules. In ICC Case No 7250/1992, the tribunal included the seat’s conflicts rules in its application of the cumulative approach as the parties chose Paris as the seat and it was asserted to be ‘within their reasonable expectation that French rules of conflict be given some weight’.231 Whether or not the seat’s conflicts rules are considered may depend upon one’s view as to the nature and function of arbitration.232

2.89  Arbitrators adopting the cumulative approach apply the relevant States’ conflicts rules in the same manner as judges sitting in those States.233 The important factor is convergence in result rather than in form.234 To illustrate, Lew, Mistelis, and Kröll offer an example where ‘one of the jurisdictions adheres to the law of the place where the contract was made and the other to the law of the place of performance, if the contract was concluded and was to be performed in the same place’.235

2.90  Where the relevant State conflicts rules do converge in result, the situation is sometimes referred to as a ‘false conflict’.236 This description has led to some theoretical confusion in the literature. For example, Danilowicz suggests that where a ‘false conflict’ exists, ‘it is not necessary to determine the applicable legal system’ and in applying the cumulative approach ‘the arbitrator may proceed to apply the substantive law directly’.237 The preferable view is that in cases of false conflict, the tribunal is not directly applying substantive law, but is actually applying a conflict of laws rule. While the cumulative approach might avoid the application of a single conflicts system,238 it is the cumulative approach itself—that is, the methodology of simultaneously applying all connected conflicts systems—that represents the conflict of laws rule applied.

2.91  The cumulative approach has ‘found favour over the years’239 as it is seen to be theoretically sound.240 The approach removes any perception of ‘subjectivity or arbitrariness’,241 respects the interests of the connected States,242 and duly recognizes the international character of the parties’ relationship.243 It also secures predictability244 given that the parties (if referring to any of the connected conflicts systems) would have come to the same conclusion as to the governing substantive law. In this way, the cumulative approach is also consistent with furthering party expectation.245 The parties, pursuant to the cumulative approach, are each ‘given justice according to their own standards’.246 Party expectation is one of the key bases underpinning arbitral conflicts analyses, and predictability and order represent the very purposes of the conflict of laws.

2.92  This rule’s most frequently cited limitation is that its successful application requires a false conflict.247 While the convergence that this rule requires ‘is not uncommon’,248 the potential for conflicts rules to diverge illustrates its ‘inherent limits’.249 Even conflicts systems based on similar concepts may differ in the detail of their rules and thus lead to different results.250 For example, a seller’s State might adhere to a strong characteristic performance presumption (leading to the application of the seller’s law in a sales contract), while a buyer’s State could adopt a bare closest connection test and give greater weight to the place of actual performance (possibly the buyer’s residence, or a third State).251 Both are variations of the closest connection test, though these two rules would diverge in their results.

2.93  A further and more fundamental disadvantage of the cumulative approach is that it also arguably represents a non-solution, having the potential to damage the adjudicatory process. This critique follows from two considerations. First, the search for a false conflict is arguably futile—if a false conflict is demonstrated, then the same result would have been reached by applying any one of the State conflicts rules consulted.252 The cumulative approach thus fails to differentiate itself through its result compared to many of the other conflicts rules considered in this section. Secondly, real difficulties emerge if a false conflict is sought but not found. Where a difference is revealed, ‘the tribunal must then choose between laws at a time when the impact of the differences is known’.253 If the conflict between the potentially applicable substantive laws is of a type that may directly determine or significantly impact upon the outcome of the case, the tribunal’s decision may create an appearance of prejudgment before all the facts of the case are known.

F.  Conflict of Laws Rules Found in a Relevant International Instrument

2.94  As a sixth possible conflict of laws rule, arbitrators may adopt conflicts rules found in a relevant international instrument. This is referred to in the literature as applying ‘transnational rules of conflict’.254 Like the closest connection test, it is not necessary to ground the application of these rules in State conflicts systems. Arbitrators may simply decide that such rules are the most appropriate conflicts rules and apply them on that basis.255 This approach overlaps with the application of general principles of the conflict of laws, and in many cases the two rules could potentially coincide in their application. However, the two rules are distinct and the international instruments rule is comparatively narrower since its analysis is confined to deriving conflicts rules from one particular type of source.

2.95  This approach (and its overlap with general principles) is evidenced in ICC Case No 6527/1991, where the tribunal applied a closest connection test with a presumption in favour of the seller’s residence based on Art 8(1) Hague Convention 1986 and Art 4(1) and (2) Rome Convention.256 After noting that it would ‘apply the general principles of international private law as stated in international conventions’,257 it additionally observed that these instruments ‘may be considered as representative of the prevailing principles in the field’.258

2.96  The advantage of applying conflicts rules derived from international conventions is that ‘[b]y definition [they] reflect a certain consensus’.259 The international origins of the relevant rules give them a particular credibility in international commercial arbitration. However, those international origins also represent a disadvantage of the approach. Different instruments concluded between different States at different points in time and in different geographic regions are bound to differ in their detail. This point is evidenced well by the methodological differences between even Art 4 Rome I Regulation and Art 4 Rome Convention, two European Union instruments, which are analysed in Chapter 6. Such differences in detail could matter in the resolution of a conflicts dispute, and could then in turn affect the outcome of a case.

G.  The Conflicts Rules of the State Which Would Have Had Jurisdiction

2.97  Another (seventh) conflicts rule to which reference is made ‘occasionally’ is application of the conflict of laws rules of the State which, absent the parties’ arbitration agreement, would have had jurisdiction over the dispute.260 This conflicts rule is attributed in the literature261 as originally proposed by the renowned Italian jurist Anzilotti in 1906.262

2.98  There are no readily apparent advantages of applying this rule. Contemporary thinking suggests that ‘there are few reasons to recommend’ the approach.263 The rule is considered of ‘historic interest’ only as arbitration ‘is no longer considered an attempt to deprive national courts of jurisdiction’.264 It is perhaps unsurprising then that in 1998 the rule was observed to have ‘never formed the basis of any known arbitral award’,265 though it is difficult to know that this is the case for sure.266

2.99  There are obvious practical obstacles in discharging the ‘difficult burden’267 of identifying the relevant State’s rules under this test. Jurisdictional rules such as the lis alibi pendens and forum non conveniens doctrines may complicate the analysis, and there may also be multiple States that would have had jurisdiction but for the arbitration clause.268 Conversely, ‘[i]t may even be the case that no jurisdiction would clearly consider that it has a sufficient link’.269 Additional theoretical difficulties arise, as ‘the norms of a system that the parties rejected should not readily be determinative within their arbitral proceedings’.270

H.  The Conflicts Rules of the Arbitrator’s Home Jurisdiction

2.100  An eighth ‘conceivable’ conflict of laws rule is application of the conflicts rules of the arbitrator’s home jurisdiction.271 Again, there do not seem to be any readily apparent advantages to this rule.272 At most, it might be thought that an arbitrator is likely to be more familiar with the conflicts rules of their home jurisdiction. However, while ‘nationality’ is an issue ‘to keep in mind’ when selecting an arbitrator,273 this does not make the conflicts rules of the arbitrator’s home jurisdiction appropriate or applicable per se. As Born argues, selecting an ‘appropriate’ conflicts rule is a question ‘with right answers and wrong answers’, and is not ‘purely discretionary’.274 On this basis, Born suggests that this rule cannot be adopted, if having no connection to the parties’ dispute, merely because of familiarity and convenience to the arbitrator.275 Further, on a practical level, difficulties may arise where tribunals are comprised of three arbitrators,276 and in addition ‘the question occurs of which test should be followed: the nationality, the domicile, or the residence of the arbitrator?’277 This conflicts rule does not provide any answers to these difficult practical problems.

I.  The Conflicts Rules of the Place of Likely Enforcement

2.101  The ninth conflict of laws rule considered in this section involves application of the conflicts rules of the State of likely enforcement. This is another approach that Gary Born describes as in the ‘conceivable’ category, to which reference is ‘occasionally’ made.278

2.102  The theoretical basis and the most frequently cited advantage of applying this conflicts rule is that the rule is said to increase the prospects of award enforceability.279 This rationale is also commonly given in support of the cumulative approach.280 However, in both cases, it is difficult to see how this can be so. Arbitrators’ decisions as to the applicable law are not typically bases upon which awards may be refused recognition and enforcement,281 or annulled in the arbitral seat.282 Unless an arbitrator is applying a restricted voie indirecte provision, where disregard of the mandated conflicts rule would amount to defective procedure within the meaning of Art V(1)(d) New York Convention and Art 34(2)(a)(iv) Model Law 2006, an arbitrator’s choice of conflicts rule is not reviewable. On this basis, it is questionable that applying the conflicts rules of the place of likely enforcement (or, equally, the conflicts rules of all connected States) positively affects enforceability;283 and thus it is questionable whether this purported and commonly cited advantage is real.

2.103  The main practical difficulty in applying this conflicts rule is identifying the place of likely enforcement.284 This will often be uncertain at the time that the proceedings are conducted, as there may be several possible enforcement venues.285 The enforcement State could in practice be any New York Convention jurisdiction where the potential award debtor holds assets, and need not be committed to in advance.286 Following the recent Australian decision of Traxys Europe v Balaji Coke Industry, it could also in theory be any New York Convention jurisdiction at all given the Federal Court of Australia’s finding that (at least for the purposes of Australian law) an absence of assets within a jurisdiction does not enliven the public policy defence to enforcement.287 In addition, an award debtor need not necessarily be a respondent—a respondent may seek the recognition and enforcement of an award against a claimant where a counterclaim is successfully raised, or where a successful respondent has been awarded costs. All of these factors multiply the places of possible enforcement, which complicates the practical application of this rule.

J.  General Principles of the Conflict of Laws

2.104  The tenth and final conflict of laws rule for this chapter’s purposes is the application of general principles of the conflict of laws. As explained by Gaillard and Savage, this ‘involves finding common or widely-accepted principles in the main systems of private international law’.288 Unlike the cumulative approach, ‘arbitrators do not limit their analysis to the conflict of laws rules of the jurisdictions connected with the dispute’ and instead undertake a ‘comparative analysis of all conflict systems … to establish the existence of universally recognized principles of conflict of laws’.289

2.105  General principles are ‘often’ sourced from arbitral case law and relevant international conventions.290 ICC Case No 6149/1990 is an example of an award drawing upon international conventions for the identification of general principles.291 Conventions can be referred to for the identification of general principles ‘whether or not in force’ because identifying general principles does not require conventions to be in force—rather, ‘[b]y definition, those instruments reflect a certain consensus’.292 Gaillard and Savage suggest that the Rome Convention, the Hague Convention 1955, and the Hague Convention 1986 have been applied in this capacity;293 the latter an example of an instrument not in force294 and unlikely to ever enter into force.295 A review of awards published in the ICC International Court of Arbitration Bulletin confirms the application of all three instruments in practice.296 There is also no reason why the Rome I Regulation, being the Rome Convention’s successor, could not represent a possible source of general principles of the conflict of laws,297 notwithstanding its technical nature as a legal act of the European Union rather than as an international convention.298 As at 1 July 2016, no published award has been identified applying Art 4 Rome I Regulation in international commercial arbitration;299 though SCC Case No 158/2011 did refer to Art 9 Rome I Regulation as reflecting general principles relating to mandatory law,300 CAM Case No 7211/2013 applied Arts 3(1) and 10(1) Rome I Regulation to determine an arbitration agreement’s validity (by analogy only, given that Art 1(2)(e) Rome I Regulation excludes arbitration agreements from the instrument’s scope),301 ICC Case No 16981/2012 applied Art 3(1) Rome I Regulation to confirm the validity of a party choice of law,302 and ICC Case No 17507/2013 rejected an argument that Art 4 Rome I Regulation should be applied.303 Scholarly writings and both formal and informal codifications of the law provide further sources from which general principles can be discerned.304

2.106  Applying general conflicts principles has several advantages. First, it removes the analysis from the strictures of any single State’s conflicts rules.305 The general principles approach is more fluid—it allows an appropriate rule to be derived from a variety of (and a variety of types of) international sources—and in this way allows arbitrators to undertake a truly international analysis. This is arguably more in keeping with the transnational character of international commercial arbitration and the ‘objectives’ of arbitrating parties.306 This is not to say that State conflicts rules are inappropriate to apply in international commercial arbitration by virtue only of their source in State law—as already explained, this is a notion rejected by Born on the basis of convincing rationales.307 However, the truly transnational character of general principles does align comfortably with the nature of arbitration as a process for resolving international commercial disputes.

2.107  The key difficulty with applying general principles of the conflict of laws lies in identifying what those principles are. The literature is divided as to whether general principles do or do not truly exist.308 For example, Lando has suggested that findings of general principles by tribunals have ‘sometimes been done with some audacity’,309 though on the other hand Gaillard and Savage argue that the method ‘has gained vital support from the convergence of international conventions on the law applicable to contracts’.310 Commentary often identifies the closest connection test as a general principle,311 with a characteristic performance variation of that test applied as a general principle in ICC Case No 4327/1984,312 as well as in ICC Case No 6149/1990.313 Thus, some overlap exists between this test and the closest connection test. However, it must be noted for completeness that not all authorities agree that the closest connection test constitutes a general principle,314 and even putting aside this point the closest connection test can also be formulated in six different ways.

2.108  That ‘the exact nature of these general principles is often debated’315 means their determination by arbitrators may be imprecise and unpredictable.316 Pilich goes so far as to suggest that ‘invoking general principles … becomes instead but a turn of speech serving in fact to hide the discretionary choice of law still made by the arbitrators themselves’.317 This is a further disadvantage counting against the use of general principles as a conflict of laws rule.

V.  Conclusion

2.109  With such a variety of potentially applicable conflict of laws rules in international commercial arbitration, it is no wonder that ‘there is notable diversity in approaches adopted by arbitrators’.318 There is essentially a ‘conflict of conflicts of law question’ in international commercial arbitration.319 The way in which arbitral conflicts are currently regulated results in arbitrators having ‘various options available … as to the law or rules to apply’, but ‘[t]he first question for the arbitrators is how to determine this selection’.320

2.110  This chapter has examined the current regulation of conflicts of law in international commercial arbitration. Attention has been given to the legal framework regulating conflicts questions, the various categories of private international law provisions operating in international commercial arbitration, and ten conflict of laws rules that may operate within this framework and through those provisions. It has shown that ‘notable diversity’321 is the regulatory status quo.

2.111  Having distilled this status quo, this book now goes on to critique the current regulatory regime, and makes the case for reforming arbitral conflicts based on the closest connection test. It specifically recommends a (modified) Art 4 Rome Convention rule. As Waincymer observes, ‘[t]here are no unified conflicts rules’ in international commercial arbitration.322 This book, however, argues that there should be.

Footnotes:

1  Simon Greenberg, Christopher Kee, and J Romesh Weeramantry, International Commercial Arbitration—An Asia-Pacific Perspective (Cambridge University Press 2011) 105 [3.37].

2  J Gillis Wetter, ‘The Present Status of the International Court of Arbitration of the ICC: An Appraisal’ (1990) 1 American Review of International Arbitration 91, 93.

3  Jeffrey Waincymer, Procedure and Evidence in International Arbitration (Kluwer 2012) 169 (hereafter Waincymer, Procedure and Evidence).

4  Lord Michael Mustill, ‘The New Lex Mercatoria: The First Twenty-Five Years’ in Maarten Bos and Ian Brownlie (eds), Liber Amicorum for the Rt Hon Lord Wilberforce (Oxford University Press 1987) 149, 153; Stavros Brekoulakis, ‘International Arbitration Scholarship and the Concept of Arbitration Law’ (2013) 36 Fordham International Law Journal 745, 767.

5  Jan Paulsson, ‘Arbitration in Three Dimensions’ (2011) 60 International and Comparative Law Quarterly 291, 303–06; Roy Goode, ‘Litigation or Arbitration? The Influence of the Dispute Resolution Procedure on Substantive Rights’ (2007) 19 Pace International Law Review 53, 62.

7  See, eg, Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43; [2006] 1 AC 221, [21].

8  Lord Lawrence Collins (ed), Dicey, Morris and Collins on the Conflict of Laws (15th edn, Sweet & Maxwell 2012) 829 [16R-001(2)], 842 [16-033]. cf Lion-Dairy & Drinks Pty Ltd v Huhtamaki Australia Pty Ltd [2013] VSC 555 (18 October 2013) [24]—regarding the non-applicability of a lex arbitri (the Arbitration Act 1996 (NZ)) outside the seat.

9  Nigel Blackaby and others, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015) 171 [3.53] (hereafter Blackaby, Redfern & Hunter 6th edn).

10  Limited exceptions—Arts 8, 9, 17H, 17I, 17J, 35, 36 Model Law 2006—relate to the role of State courts in referring parties to arbitration, granting and enforcing interim measures, and recognizing and enforcing foreign arbitral awards, which do not relate only to arbitrations seated within the State in question.

11  William W Park, ‘Duty and Discretion in International Arbitration’ (1999) 93 American Journal of International Law 805, 814.

12  FirstLink Investments Corp Ltd v GT Payment Pte Ltd [2014] SGHCR 12 (19 June 2014) [15].

13  Marc Blessing, ‘Regulations in Arbitration Rules on Choice of Law’ in Albert Jan van den Berg (ed), Planning Efficient Arbitration Proceedings/The Law Applicable in International Arbitration (ICCA Congress Series Volume 7, Vienna, 1994) (Kluwer 1996) 391, 434–35 (hereafter Blessing, ‘Regulations’).

14  While the Swedish Arbitration Act 1999, s 48 regulates the law applicable to an arbitration agreement, no provision regulates determination of the substantive law governing the merits of a dispute—Kaj Hobér, ‘Arbitration Reform in Sweden’ (2001) 17 Arbitration International 351, 352, 355–56.

15  Jan Kleinheisterkamp, International Commercial Arbitration in Latin America—Regulation and Practice in the MERCOSUR and the Associated Countries (Oceana Publications 2005) 330. See Art 2 Brazilian Arbitration Law 1996.

17  Nigel Blackaby and others, Redfern and Hunter on International Arbitration (5th edn, Oxford University Press 2009) 180 [3.50].

18  ibid. See, eg, Art 2(2) ACICA Rules 2016; Art 1(3) CIArb Rules 2015; Art 1(2) IAMA Rules 2014; Art 1(2) ICDR Rules 2014.

19  ICC Case No 9415/1998 (2002) 13(2) ICC Bull 74, 77 [57]. See also Arts 2(e), 19(1) Model Law 2006.

20  Gary Born, International Commercial Arbitration (2nd edn, Kluwer 2014) 2636 (hereafter Born, ICA 2nd edn).

21  See, eg, Waincymer, Procedure and Evidence (n 3) 993; Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) 282 [5-018]–[5-020]; Klaus Peter Berger, International Economic Arbitration (Kluwer 1993) 506; Peter Burckhardt and Philipp Groz, ‘The Law Governing the Merits of the Dispute and Awards ex Aequo et Bono’ in Elliott Geisinger, Nathalie Voser, and Angelina Petti (eds), International Arbitration in Switzerland—A Handbook for Practitioners (2nd edn, Kluwer 2013) 153, 155; Blessing, ‘Regulations’ (n 13) 405; Marc Blessing, ‘Choice of Substantive Law in International Arbitration’ (1997) 14(2) Journal of International Arbitration 39, 50.

22  Arbitration Act 1996 (UK), s 4(1)–(3) and sch 1.

23  Audley Sheppard, ‘Applicable Substantive Law’ in Julian Lew and others (eds), Arbitration in England, With Chapters on Scotland and Ireland (Kluwer 2013) 225, 226–27 [12-8].

24  See, eg, Friedrich Blase, ‘Proposing a New Road Map for an Old Minefield—The Determination of the Rules Governing the Substance of the Dispute in International Commercial Arbitration’ (2003) 20 Journal of International Arbitration 267, 273, 279.

25  ICC Case No 9415/1998 (2002) 13(2) ICC Bull 74, 77 [58].

26  See, eg, Jean-François Poudret and Sébastien Besson, Comparative Law of International Arbitration (Stephen Berti and Annette Ponti tr, 2nd edn, Sweet & Maxwell 2007) 470 [545]; Art 182(3) Swiss Private International Law Act 1987; TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361, 383 [73], 388 [87].

27  Ian Ayres and Robert Gertner, ‘Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules’ (1989–90) 99 Yale Law Journal 87, 88.

28  Michael Pryles, ‘Limits to Party Autonomy in Arbitral Procedure’ (2007) 24 Journal of International Arbitration 327, 331–33.

29  See, eg, Art 19(1) Model Law 2006.

30  See, eg, ICC Case No 4237/1984, in Sigvard Jarvin and Yves Derains (eds), Collection of ICC Arbitral Awards, 1974–1985 (Kluwer 1990) 167, 169–71.

31  Poudret and Besson (n 26) 578 [683].

32  Jeff Waincymer, ‘International Arbitration and the Duty to Know the Law’ (2011) 28 Journal of International Arbitration 201, 210.

33  ICC Case No 9415/1998 (2002) 13(2) ICC Bull 74, 77 [59].

34  ICC Case No 6401/1991 (1992) 7(1) Mealey’s B-1.

35  ibid, B-21–B-22.

36  ICC Case No 6476/1994 (1996) 7(1) ICC Bull 86, 87.

37  ICC Case No 7110/1995 (1999) 10(2) ICC Bull 39, 45.

38  See, eg, ICC Case No 1512/1971 (1976) I YBCA 128, 129.

39  Art 43 CIETAC Rules 2005; Art 53 CIETAC Rules 2000; Art 53 CIETAC Rules 1998; Art 53 CIETAC Rules 1995; Art 53 CIETAC Rules 1994; Art 9 Czech Rules 2015; Art 9 Czech Rules 2012; Art 21 Franco-Arab Rules 2005; Art 13(9) KLRCA Fast Track Rules 2010; Art 24 SIAC Rules 2007; Art 26 SIAC Rules 1997; Art 24 SIAC Rules 1991.

40  Guido Carducci, ‘The Arbitration Reform in France: Domestic and International Arbitration Law’ (2012) 28 Arbitration International 125, 147; Symeon Symeonides, ‘Contracts Subject to Non-State Norms’ (2006) 54 American Journal of Comparative Law 209, 212; Michael Kerr, ‘Concord and Conflict in International Arbitration’ (1997) 13 Arbitration International 121, 128.

41  Born, ICA 2nd edn (n 20) 2620.

42  See, eg, Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 415, 439 [133].

43  Art V(1)(c) New York Convention.

44  Lesotho Highlands (n 7) [23]–[24], [30]–[32].

45  Guido Carducci, ‘The Impact of the EU “Rome I” Regulation on International Litigation and Arbitration, A-National Law, Mandatory and Overriding Rules’ (2011) 22(2) ICC Bull 31, 32, 34, 42.

46  Born, ICA 2nd edn (n 20) 2627. See, eg, ICC Case No 6360/1990 (1990) 1(2) ICC Bull 24, 24; ICC Case No 6527/1991 (1996) 7(1) ICC Bull 88, 89; ICC Case No 7177/1993 (1996) 7(1) ICC Bull 89, 89–90; ICC Case No 7250/1992 (1996) 7(1) ICC Bull 92, 93. See also Chalbury McCouat International Ltd v PG Foils Ltd [2010] EWHC 2050 (TCC); [2011] 1 All ER (Comm) 435—where the Rome Convention was applied by the Technology and Construction Court to determine the law likely applicable to the substance in an arbitration for the purpose of the Arbitration Act 1996 (UK), s 2(4).

47  Alexander Bělohlávek, Rome Convention/Rome I Regulation—Commentary—New EU Conflict-of-Laws Rules for Contractual Obligations (Juris Publishing 2010) 657–58 [2.1]–[2.2], 659–60 [2.17]–[2.19]; Report on the Convention on the Law Applicable to Contractual Obligations by Mario Giuliano, Professor, University of Milan and Paul Lagarde, Professor, University of Paris I [1980] OJ C282/1, 13 (hereafter GL Report).

48  Art 2 Rome I Regulation; Art 2 Rome Convention.

49  See, eg, Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2013] EWHC 4071 (Comm); [2014] 1 Lloyd’s Rep 479, [100]; Arsanovia Ltd v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm); [2013] 2 All ER (Comm) 1, [8].

50  Bělohlávek (n 47) 410 [01.1054]; GL Report (n 47) 12 [5].

51  See, eg, ICC Case No 5885/1989 (1990) 1(2) ICC Bull 23, 24—Hague Convention 1955; ICC Case No 5713/1989 (1990) 1(2) ICC Bull 24, 24—Hague Convention 1955; ICC Case No 6527/1991 (1996) 7(1) ICC Bull 88, 88–89—Hague Convention 1986; ICC Case No 7237/1993 (1996) 7(1) ICC Bull 91, 91–92—Hague Convention 1955 and Hague Convention 1986.

52  Julian Lew, Loukas Mistelis, and Stefan Kröll, Comparative International Commercial Arbitration (Kluwer 2003) 412 [17-4].

53  Poudret and Besson (n 26) 463 [534].

54  Rupert Reece, Alexis Massot, and Marie-Hélène Bartoli, ‘Searching for the Applicable Law in WTO Litigation, Investment and Commercial Arbitration’ in Jorge Huerta-Goldman, Antoine Romanetti, and Franz Stirnimann (eds), WTO Litigation, Investment Arbitration, and Commercial Arbitration (Kluwer 2013) 199, 200, 202.

55  Emmanuel Gaillard and John Savage (eds), Fouchard, Gaillard, Goldman on International Commercial Arbitration (Kluwer 1999) 866 [1538].

56  Blackaby, Redfern & Hunter 6th edn (n 9) 176 [3.63]–[3.64].

57  Emilia Onyema, International Commercial Arbitration and the Arbitrator’s Contract (Routledge 2010) 15. See, eg, SIAC Award of 16 January 2012 [2012] 1 SAA 253, 256 [10].

58  Christopher Drahozal, ‘Commercial Norms, Commercial Codes, and International Commercial Arbitration’ (2000) 33 Vanderbilt Journal of Transnational Law 79, 117.

59  Blase (n 24) 282–83.

60  ibid, 281; Simon Greenberg, Luke Nottage, and Romesh Weeramantry, ‘The 2005 Rules of the Australian Centre for International Commercial Arbitration—Revisited’ in Luke Nottage and Richard Garnett (eds), International Arbitration in Australia (The Federation Press 2010) 79, 95.

61  See, eg, Art 2(1) ACICA Expedited Rules 2016; Art 2(1) ACICA Rules 2016; Art 1(1) CIArb Rules 2015; Art 4(3) CIETAC Rules 2015; Art 2(1), (2) DIAC Rules 2007; Art 26(2) ICAC Rules 2010; Art 3(2) JCAA Rules 2014; Art 1(2) Paris Rules 2013.

62  ICC Case No 9797/2000 (2000) 15(8) Mealey’s A-1, A-1.

63  See, eg, Art 2(1) CAM Rules 2010; Art 2(1) CAM Rules 2004.

64  cf Gaillard and Savage (n 55) 786 [1425].

65  ibid.

66  See, eg, Arts 2(e), 19(1) Model Law 2006.

67  Teresa Giovannini and Valentina Renna, ‘The Italian Experience of Arbitration and the Arbitration Rules of the Chamber of Arbitration of Milan: A Parallel View’ (2010) 14 Vindobona Journal of International Commercial Law and Arbitration 297, 304. See also Youssef Takla, ‘Non-ICC Arbitration Clauses and Clauses Derogating from the ICC Rules’ (1996) 7(2) ICC Bull 7, 8–9.

68  Waincymer, Procedure and Evidence (n 3) 194–95, 387.

69  Giuditta Cordero-Moss, ‘Can an Arbitral Tribunal Disregard the Choice of Law Made by the Parties?’ (2005) 1 Stockholm International Arbitration Review 1, 10.

70  See, eg, Linda Silberman and Franco Ferrari, ‘Getting to the Law Applicable to the Merits in International Arbitration and the Consequences of Getting it Wrong’ in Franco Ferrari and Stefan Kröll (eds), Conflict of Laws in International Arbitration (Sellier European Law Publishers 2010) 257, 264–65.

71  Michael Pryles, ‘Choice of Law Issues in International Arbitration’ (1997) 15 The Arbitrator 260, 261.

72  Gaillard and Savage (n 55) 870 [1544]; ICC Case No 11754/2003 (2010) 21 ICC Bull Supp 20, 24 [29], 25 [32(1)]; ICC Case No 12494/2004 (2008) 19(1) ICC Bull 126, 127 [97].

73  Silberman and Ferrari (n 70) 264–65.

74  Or, in one example from Table 2.1 (Art 16(1) VIAC Rules 1991), ‘authoritative’.

75  Ole Lando, ‘The Law Applicable to the Merits of the Dispute’ (1986) 2 Arbitration International 104, 110.

76  ibid, 110.

77  Jonathan Hill and Adeline Chong, International Commercial Disputes—Commercial Conflict of Laws in English Courts (4th edn, Hart Publishing 2010) 832–33 [23.2.20].

78  Gary Born, International Commercial Arbitration (1st edn, Kluwer 2009) 2135 (hereafter Born, ICA 1st edn).

79  W Laurence Craig, William W Park, and Jan Paulsson, International Chamber of Commerce Arbitration (2nd edn, Oceana Publications 1990) 287.

80  Art 28(2) Model Law 2006.

81  Poudret and Besson (n 26) 583 [686].

82  Mateusz Pilich, ‘Law Applicable to the Merits of the Dispute Submitted to Arbitration in the Absence of the Choice of Law by the Parties (Remarks on Polish Law)’ in Alexander Bělohlávek and Naděžda Rozehnalová (eds), Czech (& Central European) Yearbook of Arbitration, Vol II: Party Autonomy Versus Autonomy of Arbitrators (Juris Publishing 2012) 191, 198 [10.12].

83  P Vlas, ‘On the Development of Private International Law in the Netherlands: From Asser’s Days to the Codification of Dutch Private International Law’ (2010) 57 Netherlands International Law Review 167, 180–81.

84  Fabrizio La Spada, ‘The Law Governing the Merits of the Dispute and Awards ex Aequo et Bono’ in Gabrielle Kaufmann-Kohler and Blaise Stucki (eds), International Arbitration in Switzerland—A Handbook for Practitioners (1st edn, Kluwer 2004) 115, 129.

85  Michael Schneider and Paolo Michele Patocchi, ‘The New Swiss Law on International Arbitration’ (1989) 55 Arbitration 268, 277 [28].

86  Silberman and Ferrari (n 70) 265.

87  Lew, Mistelis, and Kröll (n 52) 434 [17-69; heading]. The methodology which Lew, Mistelis, and Kröll describe as the ‘[l]imited voie directe’—at 436 [17-75]–[17-77]—corresponds to the term voie indirecte as used in this book.

88  Loukas Mistelis, ‘The UNIDROIT Principles Applied as “Most Appropriate Rules of Law” in a Swedish Arbitral Award’ (2003) 8 Uniform Law Review 631, 637.

89  Gaillard and Savage (n 55) 876 [1552].

90  Jean-Louis Delvolvé, Gerald Pointon, and Jean Rouche, French Arbitration Law and Practice: A Dynamic Civil Law Approach to International Arbitration (2nd edn, Kluwer 2009) 142 [268].

91  Benedetta Coppo, ‘The 2010 Revision of the Arbitration Rules of the Chamber of Arbitration of Milan’ (2010) 14 Vindobona Journal of International Commercial Law and Arbitration 283, 287 (hereafter Coppo, ‘The 2010 Revision’).

92  Benedetta Coppo, ‘The New Arbitration Rules of the Chamber of Arbitration of Milan’ in Cláudio Finkelstein, Jonathan Vita, and Napoleão Casado Filho (eds), Arbitragem Internacional: UNIDROIT, CISG e Direito Brasileiro (Quartier Latin 2010) 23, 24 (hereafter Coppo, ‘The New Rules’).

93  Rinaldo Sali, ‘The New Arbitration Rules of the Arbitration Chamber of Milan’ in Albert Jan van den Berg (ed), Yearbook Commercial Arbitration, Vol XXIX (Kluwer 2004) 349, 349–50 (emphasis added).

95  ibid, 34.

96  ibid.

97  ibid, 34 n 51.

98  Giovannini and Renna (n 67) 310.

101  See Coppo, ‘The New Rules’ (n 92) 42; ibid, 296.

102  Gaillard and Savage (n 55) 876 [1552]; Lew, Mistelis, and Kröll (n 52) 426 [17-44], 435 [17-73]. See also ICC Case No 2689/1977, cited in Mauro Rubino-Sammartano, International Arbitration Law and Practice (3rd edn, Juris Publishing 2014) 654.

103  Giuditta Cordero-Moss, ‘International Arbitration and the Quest for the Applicable Law’ (2008) 8(3) Global Jurist Advances [Article 2], 1.

104  See, eg, Born, ICA 1st edn (n 78) 2118; Lew, Mistelis, and Kröll (n 52) 427 [17-47], 434 [17-67] and [17-70]; W Laurence Craig, William W Park, and Jan Paulsson, International Chamber of Commerce Arbitration (3rd edn, Oceana Publications 2000) 320 (hereafter Craig, Park, and Paulsson, ICC 3rd edn); Margaret Moses, The Principles and Practice of International Commercial Arbitration (2nd edn, Cambridge University Press 2012) 81; Silberman and Ferrari (n 70) 265; ICC Case No 9415/1998 (2002) 13(2) ICC Bull 74, 76 [53].

105  Julian Lew, ‘Determination of Applicable Substantive Law’ (1997) 25 International Business Lawyer 157, 159 (hereafter Lew, ‘Determination’).

106  Schneider and Patocchi (n 85) 277 [28].

107  Georgios Petrochilos, ‘Arbitration Conflict of Laws Rules and the 1980 International Sales Convention’ (1999) 52 Revue Hellenique de Droit International 191, 197.

108  Binder (n 21) 340 [6-022].

109  See generally Born, ICA 2nd edn (n 20) 94.

110  Justice Clyde Croft, Christopher Kee, and Jeff Waincymer, A Guide to the UNCITRAL Arbitration Rules (Cambridge University Press 2013) 396–97 [35.3].

111  James Crawford, ‘Developments in International Commercial Arbitration: The Regulatory Framework’ in Luke Nottage and Richard Garnett (eds), International Arbitration in Australia (The Federation Press 2010) 253, 264.

112  Jan Paulsson and Georgios Petrochilos, ‘Revision of the UNCITRAL Arbitration Rules—A Report’ (United Nations Commission on International Trade Law) 138–39 [260] <http://www.uncitral.org/pdf/english/news/arbrules_report.pdf>.

113  Born, ICA 2nd edn (n 20) 146.

114  Emmanuel Gaillard, Legal Theory of International Arbitration (Martinus Nijhoff Publishers 2010) 89.

115  Christiana Fountoulakis, ‘The Parties’ Choice of “Neutral Law” in International Sales Contracts’ (2005) 7 European Journal of Law Reform 303, 307.

116  Schneider and Patocchi (n 85) 270 [6] (emphasis in original).

117  UNCITRAL, ‘Status—UNCITRAL Model Law on International Commercial Arbitration (1985), with Amendments as Adopted in 2006’ (United Nations Commission on International Trade Law 2016) <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html>.

119  Julian Lew, ‘Achieving the Dream: Autonomous Arbitration?’ in Julian Lew and Loukas Mistelis (eds), Arbitration Insights—Twenty Years of the Annual Lecture of the School of International Arbitration (Kluwer 2007) 455, 471 [20-53].

120  Binder (n 21) 12 [1-008].

121  ibid, 17–18 [1-011]–[1-013].

122  ibid, 336–37 [6-012]–[6-013]; Pieter Sanders, ‘Unity and Diversity in the Adoption of the Model Law’ (1995) 11 Arbitration International 1, 17–18; Pieter Sanders, ‘UNCITRAL’s Model Law on International and Commercial Arbitration: Present Situation and Future’ (2005) 21 Arbitration International 443, 460–61.

123  See, eg, ICC Case No 5717/1988 (1990) 1(2) ICC Bull 22, 22.

124  Lew, Mistelis, and Kröll (n 52) 431 [17-59].

125  Gaillard and Savage (n 55) 875 [1550].

126  Born, ICA 2nd edn (n 20) 2637.

127  AJE Jaffey, ‘Arbitration of International Commercial Contracts: The Law to be Applied by the Arbitrators’ in David Perrott and Istvan Pogany (eds), Current Issues in International Business Law (Avebury 1988) 129, 131.

128  Lew, Mistelis, and Kröll (n 52) 428 [17-51].

129  Peter Nygh, ‘Choice of Forum and Law in International Commercial Arbitration’ (1997) 24 Forum Internationale 1, 3.

130  Greenberg, Kee, and Weeramantry (n 1) 107 [3.46].

131  FA Mann, ‘Lex Facit Arbitrum’ in Pieter Sanders (ed), International Arbitration—Liber Amicorum for Martin Domke (Martinus Nijhoff Publishers 1967) 157, 167.

132  Gaillard and Savage (n 55) 867–68 [1541].

133  ibid, 867 [1541].

134  Poudret and Besson (n 26) 85 [114].

135  Moses (n 104) 81.

136  Bernard Poznanski, ‘The Nature and Extent of an Arbitrator’s Powers in International Commercial Arbitration’ (1987) 4(3) Journal of International Arbitration 71, 73.

137  Greenberg, Kee, and Weeramantry (n 1) 108 [3.46].

138  Lew, Mistelis, and Kröll (n 52) 430–31 [17-57].

139  Born, ICA 2nd edn (n 20) 2654.

140  Nygh (n 129) 21.

141  ICC Case No 10303/2000 (2008) 19(1) ICC Bull 114, 114.

142  ICC Case No 11061/2001, cited in Horacio Grigera Naón, ‘Choice-of-Law Problems in International Commercial Arbitration’ (2001) 289 Recueil des Cours de l’Académie de Droit International 9, 267–68.

143  Marina Bardina, ‘Determination of Substantive Law by International Commercial Arbitration in Russian Law, ICAC Rules and Arbitration Practice’ in Alexander Bělohlávek, Filip Černý, and Naděžda Rozehnalová (eds), Czech (& Central European) Yearbook of Arbitration, Vol III: Borders of Procedural and Substantive Law in Arbitral Proceedings (Civil Versus Common Law Perspectives) (Juris Publishing 2013) 123, 134 [7.38].

144  Gaillard (n 114) 112.

145  ICC Case No 11061/2001, cited in Naón (n 142) 266–69.

146  ibid, 267–68.

147  Bardina (n 143) 134 [7.40].

148  Born, ICA 2nd edn (n 20) 2659.

149  Greenberg, Kee, and Weeramantry (n 1) 107 [3.45].

150  ibid.

151  Phillips v Eyre (1870) LR 6 QB 1, 28–29.

152  See, eg, Art 4 Rome II Regulation—France and the United Kingdom; Art 133 Swiss Private International Law Act 1987—Switzerland.

153  Carlo Croff, ‘The Applicable Law in an International Commercial Arbitration: Is It Still a Conflict of Laws Problem?’ (1982) 16 International Lawyer 613, 625.

154  Moses (n 104) 81.

155  Alejandro López Ortiz, ‘Arbitration and IT’ (2005) 21 Arbitration International 343, 360.

156  Blackaby, Redfern & Hunter 6th edn (n 9) 221 [3.206]; Gary Born, International Arbitration: Cases and Materials (2nd edn, Kluwer 2015) 599; Janet Walker, ‘Getting the Best Seats (in International Arbitration)’ (2008) 5 Canadian Arbitration and Mediation Journal 19, 19, 21; Doug Jones, ‘International Arbitration: Navigating the Arbitral Institutions and Venues’ (2010) 23 International Law Practicum 116, 116–18; Stephen Bond, ‘Party Autonomy: The Choice of Place’ (1992) 8 Arbitration International 83, 85; Deborah Holland, ‘Drafting a Dispute Resolution Provision in International Commercial Contracts’ (2000) 7 Tulsa Journal of Comparative and International Law 451, 465.

157  Jones (n 156) 122.

158  See, eg, Art 176(3) Swiss Private International Law Act 1987.

159  See, eg, Art 15(1) ACICA Expedited Rules 2016—Sydney; Art 7(1) HCC Rules 2011—Budapest; Art 6(2) KLRCA Fast Track Rules 2013—Malaysia.

160  Jonathan Hill, ‘Determining the Seat of an International Arbitration: Party Autonomy and the Interpretation of Arbitration Agreements’ (2014) 63 International and Comparative Law Quarterly 517, 521.

161  Moses (n 104) 81.

162  ICC Case No 8672/1996 (2001) 12(1) ICC Bull 117, 117.

163  International Chamber of Commerce, ‘2015 ICC Dispute Resolution Statistics’ [2016] (1) ICC Bull 9, 16.

164  Blessing, ‘Regulations’ (n 13) 406–07.

165  Blackaby, Redfern & Hunter 6th edn (n 9) 220 [3.205].

167  Ernest Mezger, ‘The Arbitrator and Private International Law’ in Martin Domke (ed), International Trade Arbitration—A Road to World-Wide Cooperation (American Arbitration Association 1958) 229, 241.

168  Tzortzis v Monark Line AB [1968] 1 All ER 949 (CA) 953.

169  Award of 14 August 1953 of the Court of Arbitration of the Chamber of Commerce of Czechoslovakia (Société MN v Koospol SA) (1956) 83 JDI 453, 453, 455.

170  Jaffey (n 127) 133; Blessing, ‘Regulations’ (n 13) 396. See also GL Report (n 47) 16 [1].

171  Gaillard and Savage (n 55) 788 [1428].

172  SCC Case No 177/1999 [2002] StockAR 59, 64.

173  SCC Award of 17 July 1992 (1997) XXII YBCA 199, 202–03 [14]–[15].

174  ICC Case No 9875/1999 (2001) 12(2) ICC Bull 95, 96.

175  Gabriel Wilner, ‘Determining the Law Governing Performance in International Commercial Arbitration: A Comparative Study’ (1964–65) 19 Rutgers Law Review 646, 676. See, eg, Mann (n 131) 166.

176  Mikhail Badykov, ‘The Russian Civil Code and the Rome Convention: Implied Choice of the Governing Law’ (2008) 33 Review of Central and East European Law 181, 185.

177  Ole Lando and Peter Arnt Nielsen, ‘The Rome I Regulation’ (2008) 45 Common Market Law Review 1687, 1699.

178  Brooke Adele Marshall, ‘Reconsidering the Proper Law of the Contract’ (2012) 13 Melbourne Journal of International Law 505, 519, 521, 538.

179  ibid, 521.

180  See generally Born, ICA 2nd edn (n 20) 1253–306.

181  AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] UKSC 35; [2013] 1 WLR 1889, [21]; C v D [2007] EWHC 1541 (Comm); [2007] 2 All ER (Comm) 557, [29].

182  Lew, Mistelis, and Kröll (n 52) 415–16 [17-15].

183  ICC Case No 4650/1985 (1987) XII YBCA 111, 111 [2].

184  Born, ICA 2nd edn (n 20) 2638.

185  D Rhidian Thomas, ‘Arbitration Agreements as a Signpost of the Proper Law’ [1984] Lloyd’s Maritime and Commercial Law Quarterly 141, 148.

186  Blackaby, Redfern & Hunter 6th edn (n 9) 220–21 [3.206].

187  Okezie Chukwumerije, ‘Applicable Substantive Law in International Commercial Arbitration’ (1994) 23 Anglo-American Law Review 265, 292.

188  See, eg, Art 16 CIArb Rules 2015; Arts 44(4), 45 IAMA Rules 2014; Art 40 ICC Rules 2012; Art 38 ICDR Rules 2014; Art 30(c) JAMS Comprehensive Rules 2014; Art 13 JCAA Rules 2014; Art 31(1) LCIA Rules 2014; Art 12 Paris Rules 2013; Arbitration Ordinance (Hong Kong) cap 609, ss 104, 105; Arbitration Act 1996 (UK), s 29(1).

189  Star Shipping AS v China National Foreign Trade Transportation Corporation (The Star Texas) [1993] 2 Lloyd’s Rep 445 (CA) 448–49.

190  Lew, Mistelis, and Kröll (n 52) 415–16 [17-15].

191  ICC Case No 5717/1988 (1990) 1(2) ICC Bull 22, 22.

192  Compagnie d’Armement Maritime SA v Compagnie Tunisienne de Navigation SA [1971] 1 AC 572 (HL) 584 (Lord Reid), 588 (Lord Morris), 593 (Viscount Dilhorne), 596 and 600 (Lord Wilberforce), and 604–05 (Lord Diplock).

193  Born, ICA 1st edn (n 78) 2122.

195  Greenberg, Kee, and Weeramantry (n 1) 107 [3.43].

196  Filip De Ly, ‘Conflicts of Law in International Arbitration—An Overview’ in Franco Ferrari and Stefan Kröll (eds), Conflict of Laws in International Arbitration (Sellier European Law Publishers 2010) 3, 3.

197  Born, ICA 2nd edn (n 20) 2654.

198  Guangjian Tu, ‘The 2007 Interpretation of the Supreme Court of China on Contractual Choice of Law: Comments and Analysis’ (2011) 6 Law China 670, 672.

199  Born, ICA 2nd edn (n 20) 2654.

200  Greenberg, Kee, and Weeramantry (n 1) 112 [3.67].

201  Tu (n 198) 672.

202  See, eg, Croff (n 153) 632–33; Pierre Mayer, ‘Reflections on the International Arbitrator’s Duty to Apply the Law’ in Julian Lew and Loukas Mistelis (eds), Arbitration Insights—Twenty Years of the Annual Lecture of the School of International Arbitration (Kluwer 2007) 289, 294 [15-22].

203  Art 35(1) CRCICA Rules 2011; Art 31(1) HKIAC Rules 2008; Art 60(2) JCAA Rules 2014; Art 41(2) JCAA Rules 2008; Art 41(2) JCAA Rules 2004; Art 33(1) Swiss Rules 2012; Art 33(1) Swiss Rules 2004.

204  Art 187(1) Swiss Private International Law Act 1987.

205  Art 13 CAM Rules 1996.

206  Art 3(3) CAM Rules 2004; Art 33 DIAC Rules 1994; Art 23(2) DIS Rules 1998.

207  Nygh (n 129) 21.

208  Chukwumerije (n 187) 309.

209  ibid.

210  Greenberg, Kee, and Weeramantry (n 1) 110 [3.58].

211  See, eg, ICC Case No 5717/1988 (1990) 1(2) ICC Bull 22, 22.

212  See, eg, ICC Case No 5885/1989 (1990) 1(2) ICC Bull 23, 24; ICC Case No 5713/1989 (1990) 1(2) ICC Bull 24, 24.

213  Stuart Dutson, Andy Moody, and Neil Newing, International Arbitration—A Practical Guide (Globe Law and Business 2012) 207.

214  Born, ICA 2nd edn (n 20) 2655.

215  See, eg, ICC Case No 5717/1988 (1990) 1(2) ICC Bull 22; ICC Case No 5713/1989 (1990) 1(2) ICC Bull 24; ICC Case No 7177/1993 (1996) 7(1) ICC Bull 89.

216  Greenberg, Kee, and Weeramantry (n 1) 111 [3.59].

217  Coast Lines Ltd v Hudig & Veder Chartering NV [1972] 2 QB 34 (CA) 44.

218  ICC Case No 4650/1985 (1987) XII YBCA 111, 112 [4].

219  ibid.

220  ICC Case No 5713/1989 (1990) 1(2) ICC Bull 24, 24.

221  ICC Case No 3755/1988 (1990) 1(2) ICC Bull 25.

222  ibid, 25.

223  Born, ICA 2nd edn (n 20) 2649.

224  Rubino-Sammartano (n 102) 652.

225  AFM Maniruzzaman, ‘Conflict of Laws Issues in International Arbitration: Practice and Trends’ (1993) 9 Arbitration International 371, 387–88.

226  ICC Case No 953/1956 (1978) III YBCA 214, 214.

227  Gaillard and Savage (n 55) 872 [1547].

228  ibid.

229  ibid.

230  ibid.

231  ICC Case No 7250/1992 (1996) 7(1) ICC Bull 92, 92.

232  Vitek Danilowicz, ‘The Choice of Applicable Law in International Arbitration’ (1985–86) 9 Hastings International and Comparative Law Review 235, 266.

233  Greenberg, Kee, and Weeramantry (n 1) 108 [3.49].

234  Gaillard and Savage (n 55) 872 [1547].

235  Lew, Mistelis, and Kröll (n 52) 432–33 [17-63].

236  Born, ICA 2nd edn (n 20) 2649.

237  Danilowicz (n 232) 265.

238  Lew, Mistelis, and Kröll (n 52) 432 [17-62]; ibid.

240  Greenberg, Kee, and Weeramantry (n 1) 109 [3.52].

241  ibid.

242  ibid.

243  Lew, Mistelis, and Kröll (n 52) 433 [17-64].

244  Gaillard and Savage (n 55) 872 [1547].

245  Nikolay Natov, ‘The Autonomy of Arbitrators in Determining the Law Applicable to the Merits of a Case’ in Alexander Bělohlávek and Naděžda Rozehnalová (eds), Czech (& Central European) Yearbook of Arbitration, Vol II: Party Autonomy Versus Autonomy of Arbitrators (Juris Publishing 2012) 171, 184 [9.54].

246  Jaffey (n 127) 145.

247  See, eg, Born, ICA 2nd edn (n 20) 2650.

248  Greenberg, Kee, and Weeramantry (n 1) 109 [3.50].

249  Gaillard and Savage (n 55) 872 [1547].

251  ibid.

252  Born, ICA 2nd edn (n 20) 2650.

254  Reece, Massot, and Bartoli (n 54) 204.

255  See, eg, ICC Case No 6360/1990 (1990) 1(2) ICC Bull 24, 24—with respect to the Rome Convention.

256  ICC Case No 6527/1991 (1996) 7(1) ICC Bull 88, 88–89.

257  ibid, 88.

258  ibid, 89.

259  Gaillard and Savage (n 55) 874 [1549]—referring to the general principles of the conflict of laws, equally applicable to the discussion here.

260  Born, ICA 2nd edn (n 20) 2655.

261  Beda Wortmann, ‘Choice of Law by Arbitrators: The Applicable Conflict of Laws System’ (1998) 14 Arbitration International 97, 105.

262  Dionisio Anzilotti, ‘Clausola Compromissoria—Collegio Arbitrale da Costituirsi All’estero—Nullità’ (1906) 1 Rivista Di Diritto Internazionale 467, 472–73.

263  Born, ICA 2nd edn (n 20) 2656.

264  Danilowicz (n 232) 262.

265  Wortmann (n 261) 106. But see ICC Case No 953/1956 (1978) III YBCA 214, 214 [i].

266  Simon Greenberg, ‘The Law Applicable to the Merits in International Arbitration’ (2004) 8 Vindobona Journal of International Commercial Law and Arbitration 315, 322 n 25.

267  Croff (n 153) 624.

268  Waincymer, Procedure and Evidence (n 3) 995. See generally Mary Keyes, Jurisdiction in International Litigation (The Federation Press 2005) 181; Andrew Bell, Forum Shopping and Venue in Transnational Litigation (Oxford University Press 2003) 11–12 [1.26].

269  Judd Epstein and Jeffrey Waincymer, ‘Dispute Resolution in International Commerce: Reflections on Procedural Justice’ (1999) 12(3) Forum of International Development Studies 13, 34.

271  Born, ICA 2nd edn (n 20) 2655.

272  ibid, 2656.

273  Michael Black, Wendy Venoit, and George Pierson, ‘Arbitration of Cross-Border Disputes’ (2007) 27(2) The Construction Lawyer 5, 9.

274  Born, ICA 2nd edn (n 20) 2645.

275  ibid, 2645–46.

276  Wortmann (n 261) 109.

277  ibid, 108.

278  Born, ICA 2nd edn (n 20) 2655–56.

279  Danilowicz (n 232) 263.

280  Born, ICA 2nd edn (n 20) 2670.

281  See generally Art V New York Convention.

282  See, eg, Art 34 Model Law 2006.

283  Danilowicz (n 232) 263.

284  Wortmann (n 261) 109; Croff (n 153) 628.

286  Danilowicz (n 232) 263.

287  Traxys Europe SA v Balaji Coke Industry Pvt Ltd [No 2] (2012) 201 FCR 535, 561 [108].

288  Gaillard and Savage (n 55) 873 [1548].

289  Lew, Mistelis, and Kröll (n 52) 433 [17-65].

290  Gaillard and Savage (n 55) 874 [1549].

291  ICC Case No 6149/1990 (1995) XX YBCA 41, 54–55 [47]–[48].

292  Gaillard and Savage (n 55) 874 [1549]. See also ICC Case No 12494/2004 (2008) 19(1) ICC Bull 126, 127 [98]. For examples of cases where international conventions were treated as evidencing general principles notwithstanding that they were not strictly applicable—see, eg, ICC Case No 5713/1989 (1990) 1(2) ICC Bull 24, 24; ICC Case No 6527/1991 (1996) 7(1) ICC Bull 88, 88–89; ICC Case No 7177/1993 (1996) 7(1) ICC Bull 89, 89–90; ICC Case No 9887/1998 (2000) 11(2) ICC Bull 109, 110–11; ICC Case No 7319/1992 (1999) XXIV YBCA 141, 146 [18]; ICC Case No 10274/1999 (2004) XXIX YBCA 89, 93–94 [9].

293  Gaillard and Savage (n 55) 874–75 [1549].

294  Hague Conference on Private International Law, ‘Status Table—31: Convention of 22 December 1986 on the Law Applicable to Contracts for the International Sale of Goods’ (HCCH 11 December 2007) <https://www.hcch.net/en/instruments/conventions/status-table/?cid=61>.

295  James Fawcett, Jonathan Harris, and Michael Bridge, International Sale of Goods in the Conflict of Laws (Oxford University Press 2005) 961 [16.96].

296  See, eg, ICC Case No 5885/1989 (1990) 1(2) ICC Bull 23, 24—Hague Convention 1955; ICC Case No 5713/1989 (1990) 1(2) ICC Bull 24, 24—Hague Convention 1955; ICC Case No 9887/1998 (2000) 11(2) ICC Bull 109, 110—Hague Convention 1986; ICC Case No 7177/1993 (1996) 7(1) ICC Bull 89, 89—Rome Convention; ICC Case No 6360/1990 (1990) 1(2) ICC Bull 24, 24—Rome Convention; ICC Case No 6527/1991 (1996) 7(1) ICC Bull 88, 88–89—Hague Convention 1986 and Rome Convention.

297  cf Sheppard (n 23) 233 [12-32].

298  Art 288 Treaty on the Functioning of the European Union.

299  See, eg, Singapore International Arbitration Centre (ed), Singapore Arbitral Awards 2012, Vol I (LexisNexis 2012); Jean-Jaques Arnaldez, Yves Derains, and Dominique Hascher (eds), Collection of ICC Arbitral Awards, 2008–2011 (Kluwer 2013)—no Art 4 Rome I Regulation award reported in either. Similarly, no Art 4 Rome I Regulation award has been published in the ICC International Court of Arbitration Bulletin or in the ICC Dispute Resolution Bulletin as at 1 July 2016, or in the Yearbook Commercial Arbitration as of Volume XL in 2015.

300  SCC Case No 158/2011 (2013) XXXVIII YBCA 253, 268–70 [57]–[62].

301  CAM Case No 7211/2013 (2014) XXXIX YBCA 263, 270 [8]–[9].

302  ICC Case No 16981/2012 [2016] (1) ICC Bull 111, 116 [167]–[169].

303  ICC Case No 17507/2013 [2016] (1) ICC Bull 120, 124 [133]–[134].

304  Lew, Mistelis, and Kröll (n 52) 433 [17-65].

305  Rachel Engle, ‘Party Autonomy in International Arbitration: Where Uniformity Gives Way to Predictability’ (2002) 15 The Transnational Lawyer 323, 349.

306  Born, ICA 2nd edn (n 20) 2651.

307  ibid, 2654.

308  See, eg, ibid, 2652; Gaillard and Savage (n 55) 873 [1549]; Lew, Mistelis, and Kröll (n 52) 433 [17-66]; Chukwumerije (n 187) 303.

309  Lando (n 75) 111.

310  Gaillard and Savage (n 55) 874 [1549].

311  Greenberg, Kee, and Weeramantry (n 1) 110 [3.57]–[3.58]; Gerard Meijer, ‘International Commercial Arbitration’ in Marielle Koppenol-Laforce and others (eds), International Contracts—Aspects of Jurisdiction, Arbitration and Private International Law (Sweet & Maxwell 1996) 85, 96; Wolfgang Kühn, ‘Choice of Substantive Law in the Practice of International Arbitration’ (1997) 25 International Business Lawyer 148, 151.

312  ICC Case No 4237/1984, in Jarvin and Derains (n 30) 170–71.

313  ICC Case No 6149/1990 (1995) XX YBCA 41, 54–55 [47]–[49].

314  See, eg, ICC Case No 11061/2001, cited in Naón (n 142) 266–67; Born, ICA 2nd edn (n 20) 2659.

315  Greenberg, Kee, and Weeramantry (n 1) 109 [3.53].

316  ibid, 110 [3.57].

317  Pilich (n 82) 200 [10.17].

318  Greenberg, Kee, and Weeramantry (n 1) 105 [3.37].

319  De Ly (n 196) 3.

320  Lew, Mistelis, and Kröll (n 52) 412 [17-5].

321  Greenberg, Kee, and Weeramantry (n 1) 105 [3.37].

322  Jeffrey Waincymer, ‘The CISG and International Commercial Arbitration: Promoting a Complimentary Relationship Between Substance and Procedure’ in Camilla Andersen and Ulrich Schroeter (eds), Sharing International Commercial Law Across National Boundaries: Festschrift for Albert H Kritzer on the Occasion of his Eightieth Birthday (Wildy, Simmonds & Hill Publishing 2008) 582, 595.