E. The Applicable Law

Determining the applicable law can be a complex issue in arbitration. Different laws can be applicable to the arbitration agreement, to the arbitral proceedings and to the contract. In principle, the parties may choose which law(s) shall be applicable. If the arbitral tribunal applies a different law than was chosen by the parties, the award can be set aside under Art. 34 Section I lit. (a) (iv) UNCITRAL Model Law or refused enforcement pursuant to Art. V Section 1 lit. (d) New York Convention for the arbitral procedure would fail to be in accordance with the agreement of the parties.[1] Yet, there are also cases in which the parties did not designate any applicable law to a specific question. Furthermore, even if the parties agreed on a specific law, the mandatory provisions of the arbitration law of the seat of the arbitration (the lex loci arbitri) and public policy considerations of both, the lex loci arbitri and the law of the enforcement state may play a role. As a consequence, the determination of the applicable law is often more complex than in proceedings before state courts.

[1] Some state courts however based their decision to set aside an award or to refuse its enforcement in such cases on that the arbitral tribunal exceeded its authority (cf. Art. 34 Section I lit. (a) (iii) UNCITRAL Model Law and Art. V Section 1 lit. (c) New York Convention).

Last modified: Monday, 31 August 2015, 8:33 AM