Applicable Law Chosen by Arbitrators -- A Critical View on the Arbitrators Use of the Method of Voie Directe, Lex Contractus and Equity - SAR 2003 - 1

Author(s):

Declan Mac Guinness

Page Count:

28 pages

Media Description:

1 PDF Version from "Stockholm Arbitration Reporter"

Published:

December, 2003

Practice Areas:

Authority of the Arbitral Tribunal,

Right to Determine Applicable Law

Author Detail:

Declan Mac Guinness, LLM, Assistant Director, Faculty of Law, Stockholm University,

PDF286.56 KB

$40.00

Description:

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Stockholm Arbitration Report (SAR)

Preview Page SAR 2003 - 1

I. INTRODUCTION

The lack of clarity in an arbitration clause in an international contract can lead to future problems for the parties to the contract and their representatives. No matter how straightforward it may appear, the fact remains that many, if not the majority, omit essential provisions that ought to be included. The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) recommends a standard clause: Any dispute, controversy or claim arising out of or in connection with this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. To supplement this, the Institute recommends three additions: the number of arbitrators desired, the place and language of the arbitration and a governing law clause. The Institute recommends that the third addition should read: This contract should be governed by the substantive law of …

The use of this standard clause, including the various additions, increases the parties’ prospects of being able to predict the outcome of future disputes. The choice of applicable substantive law is ostensibly a vital element of the clause in so far as it gives lawyers representing the parties the ability to predict the outcome of the dispute and advise their clients
accordingly.

Table of Contents:

Table of Contents Page

I. INTRODUCTION II. LAWS, RULES AND CONVENTIONS II.1. The Swedish Arbitration Act of 1999 II.2. The two preliminary methods used by arbitrators to determine the applicable law III.3. International Arbitration Rules III. CHOICE OF LAW METHODS USED III.1. The responsibilities of the arbitrator III.2. The use of lex contractus and awards made “in equity” III.3. Ambiguously written clauses III.4. Failure to present evidence in support of the claim that a certain national law is applicable IV. DIRECT CHOICE IV.1 Definition

IV.2 Disputes occurring before 1st April 1999 IV.3 Case study: SCC case no. 117/1999 IV.4 Comments on the choice made in SCC case no. 117/1999 V. CONCLUSIONS V.1. What then is our goal? V.2. Arbitration in law contra arbitration in equity V.3. What is “equity”? V.4. Does the method of direct choice lead to an increase or a decrease in the predictability of international disputes? V.5. Is there a globally accepted sense of fairness? V.6. Is the goal of increased predictability in international arbitration attained by the increased use of the direct choice method, lex contractus interpretations and equity?