The Arbitral Scenario and the Applicable Laws - Chapter 6.2 - Transnational Litigation and Commercial Arbitration - 3rd Edition

Joseph Lookofsky is Professor of Private and Commercial Law at the University of Copenhagen. He received his B.A. in Economics from Lehigh University, his J.D. from the New York University School of Law, and was admitted to the New York State Bar in 1971. He received his Danish law degrees (cand.jur. and dr.jur.) from the University of Copenhagen and joined the Law Faculty there in 1982.

Ketilbjorn Hertz is Senior Consultant with the Danish Ministry of Justice, which he joined in 1997. He received degrees from the University of Copenhagen, B.A. in law in 1991, cand.jur. in 1993, B.A. in French in 1998, and Ph.D. in law in 1998.

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Originally from Transnational Litigation and Commercial Arbitration - 3rd Edition

6.2. THE ARBITRAL SCENARIO AND THE APPLICABLE LAWS

6.2.1. The Arbitral Scenario

An agreement to arbitrate is, in effect, a special kind of forumselection clause. Whereas some forum-clauses evidence an agreement to litigate before the courts of a particular State, an arbitration clause in a contract between merchants residing in different nation-States indicates an agreement to resolve disputes — not in any national court, but rather — by other, alternative means.

The question of whether such an agreement is valid and binding, thus effectively “ousting” the jurisdiction of national courts, is regulated by both national and international law. Under the national law of most commercially well-developed jurisdictions, and as supplemented by the 1958 New York Convention, an agreement to arbitrate will usually be held to bind, provided the parties have voluntarily reached an ad idem agreement.1

Recognition and enforcement of the parties’ agreement to arbitrate commercial disputes is a particular application of the familiar principle of contractual freedom. At least within the limits of what the courts deem to be reasonable and fair, the parties can lay down their own private — in this case private procedural — law.

One way to lay down the procedural law is to incorporate, by reference, a standardized set of arbitral rules (e.g.):

All disputes arising in connection with the present contract shall be settled by arbitration under the UNCITRAL rules.

Table of Contents:

CHAPTER 6 INTERNATIONAL COMMERCIAL ARBITRATION

6.2 The Arbitral Scenario, Institutions and Applicable Laws

6.2.1 The Arbitral Scenario 6.2.2 Institutional Arbitration 6.2.3 From Procedure to Conflicts and Substantive Law 6.2.4 International Regulation: An Introduction to the 1958 New York Convention