Originally from International Arbitration Law and Practice, Third Edition

The choice of the applicable substantive law in international arbitration, when not made by the parties, is one of the most difficult issues the arbitrators have to decide on.1 Even the notion of the merits, to which the choice should be applied, is debated.2

A survey on the arbitrator’s task to determine the substantive law exists in the literature.3

Arbitration has overcome the battle for supremacy4 between national law and the autonomy of arbitration.

The alternative to the arbitrators’ application of a national law – apart from the rarity of their choosing the principles of international law and of the general principles of the law is the exclusion of any national law, which only seldom occurs.

However, although this solution is attractive, it has not been universally accepted. Several judgments and some authors have rejected it.

In the Andersen5 arbitration agreement it was held that

“[t]he arbitrator shall decide in accordance with the terms of the Agreement … the arbitrator should not be barred to apply the substantive law of any jurisdiction …”

For the sake of expedience, this study will assume that the dispute concerns a contractual relationship – which largely prevails in arbitral disputes – deliberately leaving aside, for simplicity, liability in tort.