It should hardly be necessary to preface a discussion of the applicable law in international arbitration by stressing its importance to the outcome of the dispute. Yet despite the particularly obvious relationship between the content of the law applicable to the merits and the result of an arbitration, it appears to be fashionable in certain circles to dismiss as devoid of any practical relevance the complex issues of private international law that may arise in this regard. According to these skeptics, rather than wasting their time on such purely academic questions, arbitrators should focus on adopting pragmatic solutions to determining what law to apply to a given dispute.1
In reality, the seemingly abstract questions of comparative law and conflict of laws, or even quasi-philosophical issues such as the interrelation between private and public international law or the hierarchy of norms in international commercial matters, frequently have significant practical ramifications and far-reaching financial repercussions. For example, in the second half of the 20th century a highly academic debate was waged in legal literature over the validity of stabilization clauses in international contracts,2 with numerous commentators arguing that the autonomy of the parties allows the applicable law to be frozen at any given time for the purposes of their contract, and that private parties should have the right to protect themselves from the legislative power of the State-party to the contract, where that State’s law is the governing law of the contract.