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Conflict of Laws and Arbitral Discretion - The Closest Connection Test by Hayward, Benjamin (5th January 2017)

5 A Proposed Bright-Line Test—The Closest Connection Test

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, 2015. All Rights Reserved.date: 27 May 2020

Subject(s):
Choice of law clauses — Stateless applicable law — Unidroit Principles and choice of law — Contractual obligations — Legal risk in multi-state transactions — Applicable law in multi-state transactions

This chapter recommends the closest connection test as the basis for the reform of arbitral conflicts of laws. It assesses thirteen different ways in which the governing substantive law can be identified, based primarily on the conflicts rules addressed in Chapter 2. To facilitate this analysis, these thirteen methodologies are divided into three groups: ‘Category A rules’ are those considered out-of-favour in the modern international commercial arbitration environment; ‘Category B rules’ are those enjoying some contemporary endorsement in arbitral conflicts of laws, but which remain controversial; and ‘Category C rules’ are those rules considered mainstream in contemporary arbitral conflicts discourse. Only Category A’s international instruments rule and Category C’s closest connection test emerge as potentially feasible bright-line tests. On further comparison of these two alternatives, the closest connection test emerges as the optimal conflict of laws rule for international commercial arbitration.

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