Originally from: Lowenfeld on International Arbitration

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Lex Mercatoria

Andreas F. Lowenfeld

11. LEX MERCATORIA: AN ARBITRATOR’S VIEW*

I. Framing the Debate

      In going through the surprisingly large literature on the topic of
lex mercatoria and international arbitration, I was struck most by a
comment by Mr. Justice Rogers of the Supreme Court of New South
Wales. In discussing the debates surrounding the adoption of the
UNCITRAL Model Arbitration Law, the judge refers to the “clash
in philosophy . . . between the civil law countries and the United
States, on the one hand, and the common law countries on the other
. . .” I have for some time thought that in their attitude to litigation,
the United States and France have more in common than the United
States and England, or say, France and Germany; I had not thought,
however, that England’s devotion to law and the former colonies’
and dominions’ devotion to the mother country’s law were so
passionate as to read the United States out of the common law world.
      In fact, the issue that Mr. Justice Rogers described as dividing the
delegates to the UNCITRAL Conference was not precisely the issue
on which we focus here, but it is closely related. The English view
— notwithstanding its rather grudging, market-driven relaxation of
judicial review of arbitration in international cases — on the whole is
founded on the belief in judicial supervision of the work of
arbitrators, whereas the American and majority continental view, at
least among the arbitration community, is that if parties to a contract
have agreed to submit their disputes to arbitration, the decision of the
arbitrators ought to be final, subject to challenge only for misconduct
of the arbitrators or (possibly) excess of jurisdiction by the arbitral
tribunal.
      The continental European and American view, if one can speak
of it as such with the understanding that there is in fact a range of
views, is that arbitrators — even if left free of judicial control —
must and do decide according to law. The debate is over what law
the arbitrators should apply: the law designated by the parties, the law
of the situs of the arbitration, the law that would be applied by the
courts at the situs, the law designated by the choice of law rules
selected by the arbitrators or — our topic — lex mercatoria.