Originally from European International Arbitration Review

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I. Introduction

It is common knowledge  that once the parties have initiated proceedings in a particular court, the law of the forum may operate to limit the autonomy of the parties.  In other words, once the parties have started court proceedings, a legal framework is imposed upon them which provides for certain rules with which they must necessarily comply and cannot opt out of.  When parties opt for arbitral proceedings instead of court proceedings, there is also a legal framework – that for arbitration proceedings – but it is generally less restrictive  and more flexible . The arbitration regime often allows parties to exercise autonomy in areas where the rules applicable in national courts do not permit party autonomy,  such as that of procedure.  Also, although the rules of conflict of laws applied both in national courts and in arbitration proceedings to determine the law applicable to the merits, i.e., the rights asserted by claimants and the defenses raised and counterclaims asserted by defendants,  grant the parties broad autonomy in choosing the applicable rules  (at least as regards contract disputes), the autonomy granted in arbitration appears to be even greater. 

But a simple reference to party autonomy is not sufficient to solve the question of which law an arbitral tribunal has to apply to the merits of a dispute , i.e., to the rights asserted by claimants and the defenses raised and counterclaims asserted by defendants.  In arbitral proceedings, the issue of the law applicable to the merits is more complex. Even when the parties have chosen the applicable law, that choice may raise issues that cannot be dealt with by simply applying the law chosen.