Chapter 9 Applicable Law for International Arbitration

Applicable Law in Int’l Arb. Applicable law for the arbitration agreement Applicable law for the arbitration procedure Applicable for merits of the case

Applicable Law for Arbitration Agreement Arbitration agreement : contract between the parties to settle their dispute by arbitration Principles of private international law or conflict of law rules in national law

General Principles of Private International Law Parties’ autonomy Closest relationship with the contract Compulsory application of particular law in different countries

Chinese Practices CAL, Contract Law 1999 Art.16, Judicial Interpretation of CAL in 2006 First – that of selected by the parties Second – that of the seat of arbitration Lastly - that of the national court

Development in the Field The national court should make the international arbitration agreement effect as possible as it can. Art.187 of Swiss PL: an arbitration agreement is valid if it conforms either to the law chosen by the parties, or to the law governing the subject matter of the dispute, in particular the main contract, or to Swiss law.

Zueblin Case Construction agreement with FIDIC Green Book General Conditions by reference in its appendix：Arbitration 15.3 ICC Rules Shanghai shall apply Woco brought the lawsuit to the Ct. Zueblin brought the case to ICC for Arbitration

Zueblin Case （2） Court decided its jurisdiction according to local law; Arbitral tribunal decides its jurisdiction according to the arbitration agreement and the applied ICC Rules. Court refused enforcement due to the invalid arbitration agreement.

AL of the Arb. Procedure Whether the parties may select to apply procedure law of the other country? Process to negotiate NYC Nationality of the award

Deciding Authority Arbitration institution Arbitration tribunal National court

Union of India v. Mcdonell Douglas Corporation (269) The applicable law of the arbitration “In the event of dispute or difference arising out of or in connection with this agreement, which cannot be resolved by amicable settlement, the same shall be referred to an arbitration tribunal consisting of three members………The arbitration shall be conducted in accordance with the procedure provided in the Indian Arbitration Act of 1940 or any reenactment or modification thereof……The seat of the arbitration proceedings shall be London……

Indian Supreme Ct. Case National Thermal Power Corporation (India) v. The Singer Company (USA) Construction Contract with arbitration clause: ICC Rules, seat decided by ICC, Indian law apply Award made in London Indian ct. refused enforcement and set aside the award

Conclusion of AL in Procedure The seat decided the applicable law for the arbitration procedure; The seat could be decided by the parties, and by the arbitration institution or the court in the absence of the agreement between the parties

Chinese Practices No special provision on the seat apart from CIETAC, but the name of arbitration commission; The location of the arbitration commission is usually considered as the seat of arbitration, since there is no distinction between the seat, the place of hearing and that of deliberation of the case by the tribunal.

Applicable Law for Zueblin Case Arbitration agreement Arbitration procedure Merits of the case (main contract)

AL for Int’l Arb. Agreement NYC has no provision National law decides the issue

Delocalized Arbitration Denationalized arbitration International award has no relation with the legal order of any country Such award is floating until it is enforced.

Gotaverken Case 1980 Gotaverken (Sweden) v. Libyan General National Maritime Transport ICC Rules, Paris French court refused setting aside the award on the ground of lack of jurisdiction; The Swedish court enforced the award.

SEEE Case SEEE (France) v. Yugoslavia K to build railway in 1932 Award made by two arbitrators in Vaud, Switzerland in 1956 Court in Vaud refused setting aside because Art.514 of Vaud CPL required uneven number of arbitral tribunal. The award was a Swiss award. The Dutch court enforced the award as Swiss award in 1973, while the French court enforced it as a-national award made in another NYC member state.

Chromalloy Case (1996,US) Chromalloy Aeroservices Inc. (USA) v. Ministry of Defence (MOD) of the Republic of Egypt Contract of sale and service for 4 years MOD terminated K before it expired Arbitrated and set aside in Egypt French and US court ruled to enforce

AL for the Merits of the Case What law should be applied to decide the merits of the case? Proper law (applicable law) of the contract

Basic Principles Parties’ autonomy Closest relationship with the contract General principles of law, lex mercatoria, law merchant

Norsolor(France) v. Pabalk(Turkey) at 381 Agency contract with arbitration clause Arbitrated by ICC sole-arbitrator tribunal in Vienna Tribunal applied neither law of the parties, but equity Whether the tribunal may rule in equity as amiable compositeurs

Harmonization of the Applicable Law in International Contract CISG: Vienna Convention on Contract for the International Sales of Contract by UNCITRAL Principles of European Contract Law UNIROIT (International Institute for Unification of Private Law) Principles for International Commercial Contract

Application the Uniform Law in the International Arbitration Art.17 of ICC Rules (1) The parties shall be free to agree upon the rules of law to be applied by the Arbitral Tribunal to the merits of the dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate. (2) In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages. (3) The Arbitral Tribunal shall assume the powers of an amiable compositeur or decide ex aequo et bono only if the parties have agreed to give it such powers.

Art.1474 French CCP The arbitrator shall decide the dispute according to the rules of the law unless the parties have authorized him in the arbitration agreement to rule as amicable compositeur.

Chinese Practices Contract Law 1999 Parties’ autonomy in general in priority: provisions in the contract Compulsory applicable law for the particular contracts: joint venture contracts Application of bilateral and multilateral convention