Following the observations made by Claes Zettermarck, this presentation raises further points and comments on two of the four major areas, where applicable law comes into question in international arbitration which Claes has identified, namely the law applicable to the arbitration agreement and substantive law (i.e the proper law of the contract from which the dispute arises).
I. APPLICABLE LAW OF THE AGREEMENT TO ARBITRATE
It is extremely rare that the parties expressly agree on the law applicable to the arbitration agreement and indeed, recommended arbitration clauses of most popular arbitral institutions do not contain any provision as to the law applicable to the arbitration agreement.
Unlike the English Arbitration Act 1996 and the UNCITRAL Model Law, the Swedish Arbitration Act 1999 (“the Swedish Act”) does not define the arbitration agreement and does not specifically require the arbitration agreement to be in writing or to be evidenced in writing. Section 3 of the Swedish Act enshrines in Swedish law the well-established international arbitration principle of separability of the arbitration agreement. In reality most parties entering into an arbitration agreement by incorporation of an arbitration clause into their contract are not aware and most likely do not apply their mind to the fact that the arbitration clause may be governed by a law different to the one that they agree to apply to the substance of the contractual relationship, i.e. the substantive law.