Establishing the Content of the Applicable Law in International Arbitration - Chapter 13 - Conflict of Laws in International Commercial Arbitration
Originially from Conflict of Laws in International Commercial Arbitration
The method of establishing the content of the applicable law is one of the most important, albeit seldom examined, topics in the theory and practice of international arbitration. In stark contrast to the abundance of publications relating to international arbitration, only a handful of scholars have attempted to shed light on this dark corner of alternative dispute resolution and to systematize the plethora of different approaches to the ascertainment of the content of the applicable law in international arbitral proceedings.2
Notwithstanding the limited attention in legal scholarship, which has resulted, among other factors, from the fallacy that conflict-of-laws do not fit with international arbitration,3 the method of establishing the content of the applicable law could alter the legal basis and, as a consequence, determine the outcome of the dispute. The importance of this so-called “contentoflaws”4 enquiry is vividly illustrated in the following example:
Party A and Party B entered into an international agreement for the distribution of heart rate monitors in Ruritania. The distribution agreement contained an arbitration clause for the resolution of all disputes arising from or in connection with the agreement. Following the unilateral termination of the contract by B, A filed a motion to initiate arbitral proceedings for breach of the distribution agreement. Both A and B made legal submissions on contract law grounds.5
This theoretical example raises a series of content-of-laws-related questions: who bears the burden of establishing the content of the applicable rules? Does it fall on the parties or on the arbitral tribunal? Is the tribunal limited by the arguments of the parties? Should it look beyond the submissions of the latter? What should the tribunal do if the parties have overlooked any relevant rules? Particularly under this latter scenario, what is the effect of any overriding mandatory rules on goodwill indemnity on the law applicable to the dispute?6 Depending on the approach adopted to the content-of-laws enquiry, the outcome of this dispute could vary significantly.