Originally from Arbitration of International Intellectual Property Disputes, Second Edition

I.     Introduction

This chapter discusses conflict of laws and choice of law as they pertain to the substantive law and to the lex arbitri to be used in international IP arbitration. There are several layers of complexity inherent in these topics. Conflict-of-laws analysis, by itself, can be difficult. Conflict of laws in an international arbitration adds a layer of complexity since, among other things, choice-of-law principles applicable in an international arbitration may be different from the well-developed ones used in the courts. Finally, disputes that pertain to IP add further complexity, namely, for example, whether the IP law in question is mandatory law and, if so, its effect on party choice.

One of the fundamental principles—maybe the fundamental principle—underlying international commercial arbitration is the parties’ freedom of choice. This freedom begins with their freedom to choose, within limits that this chapter will describe, the law governing the substance of their relationship. Assuming the parties have made a choice of law, the tribunal’s first question is, simply, whether there is any reason not to respect that choice. If the parties fail to make a choice of law, the tribunal usually must make one for them. In all cases, the tribunal’s decisions are constrained by mandatory law, which in the IP context can impose limits on the choice of law to govern validity, the choice of law to govern the scope and attributes of the intellectual property and the choice of law governing issues concerning the enforceability of otherwise valid intellectual property rights (for example in the latter case, the law governing claims of “patent misuse”). Because of the complexity of these issues, in the IP context, a simple, single-jurisdiction choice-of-law provision may be insufficient to meet the parties’ needs.

Once the tribunal has decided on the law governing the substance of the dispute, it may also need to decide the law governing the arbitration proceeding itself—the lex arbitri. It may also have to decide the law governing ancillary (but sometimes vital) issues such as the capacity of the parties to agree to arbitrate, the validity of the arbitration agreement and other issues relating to the arbitration agreement itself. As with its decisions on the substantive law, the tribunal must carry out these analyses in light of any mandatory rules of law that apply. The first topic of this chapter is the parties’ freedom to choose the governing substantive law, and its limits. These limits are somewhat more pronounced in the IP context than in general contract law. Next, the chapter discusses the substantive law that an arbitral tribunal will apply to an IP dispute in the absence of an agreement by the parties on choice of law. There are various approaches to conflict of laws prescribed by the procedural rules of some of the more prominent tribunals.  The national arbitration statutes at the seat of the arbitration also may bear on the tribunal’s conflict of laws decision as to the substantive governing law.