The Applicable Law in International Arbitration


The applicable law in arbitration is an issue that can be raised in several stages of the arbitral procedure, either to the arbitral tribunal or to a court. Such circumstances generate issues of concurrent jurisdictions which is dysfunctional.Critically analyse the above assertion.


Applicable Law in Arbitration

The international Arbitration is generally categorized by three types of laws: 
(1) The law of the underlying contract
In most of the cases, theinternational arbitrations arise out of the commercial transactions that happen in the complex cross-border situations. These situations give rise to a variety of issues such as the capacity of the parties to sign a contract to the recognition and enforcement of laws and rules for the proper resolve of the dispute. However, the fundamental questions that arise at this point in time as to what is the statute of the rules that govern the underlying contract. In this regard, the substantive contractual issues are the ones that in majority of the cases refer to the interpretation, validity, rights of parties, performance, breaches as well as remedies being derived from a contract . It is a fact that in case of cross-border transaction, the different laws are interpreted in terms of different jurisdictions, thereby lacking what criteria should be used in order to determine the law that go a long way for governing these substantive contractual issues. is a cheap assignment writing service available on the internet. If you believe you will be unable to complete your assignment on your own, you can get assistance by hiring our homework writers or evidence law assignment helpers. We assure you that you will get high-quality assignment writing as per your university guidelines.

(2) The law of the seat of the arbitration
It isnatural that any case of international arbitration demands a fair question as to what would be the law to settle the dispute and how the conflict of the laws be taken to a logical conclusion as far as the parties belonging to different jurisdictions are concerned. Therefore, at this point the concept of the seat of arbitration becomes of a paramount importance. The seat of the arbitration is intended to determine the applicability of the law that effectively governs arbitration in terms of procedural aspects. In the event that the parties have not specifically chosen for arbitration process then the conduct of the arbitration shall be determined under the law of the place of the seat of arbitration. The Seat of Arbitration may well be quite independent of the place or the venue where the hearings or other parts of the arbitral process occur or take place. However, it is very important to note that the parties involved often execute a side agreement stating that the law that governs the agreement of arbitration is different for a particular dispute. Also, the amount of information contained in arbitration clauses varies greatly from contract to contract.
(3) The law of the arbitration agreement.
As per the law of the arbitration agreement, the validity of the arbitration agreement is predominantly governed by the law that had been chosen by the parties. In addition to that, the parties choose a law which applies to their contract and a procedural law is applied to any future arbitration, then the parties involved in the international contracts should expressly choose a law that governs the arbitration agreement stated in the contract . However, the typical international business contracts do not contain specific choice of the clauses of laws for the agreements that are contained in such contracts. The substantive validity of the arbitration agreement would be absent as per the choice of law.

Issues with the Law of Arbitration

1.    Choice of Law in International Arbitration Agreements 
It is the primary area behind the creation of controversy and, thus, has haunted various jurisprudences and their practices because it is basically the choice of law determination in the international arbitration agreements. The parties that are involved in the international transactions often tend to include a clause that represent their choice of law as a part of their arbitration agreement. The natural questions arise at this point in time are: does the law which has been chosen by the parties to an international contract able to govern the procedural rules regarding the arbitration or is it only limited to the to the considerable contract rights of the parties?  The recent international arbitration practices favor the inclusion of an express choice of law clause that is responsible for establishing the law governing the parties’ contractual agreement as a whole. However, the problem arises whenever the parties interpret the arbitration agreement in a different manner and then the resort to the judicial assistance might as well be necessary to resolve the pre-arbitration dispute.

2.    Incorporation of "Trade Norms"
The majority of international commercial codes, including the Uniform Commercial Code (UCC), consider the usual business practices (trade usages) as a crucial source of interpretation for the courts to consider it in the situation of resolving the disputes. However, this incorporation strategy on the part of the courts has been criticized by scholars from around the world by arguing that the heavy reliance on commercial norms have often been inappropriate, so, it may distort the true nature of the parties’ agreement. This reliance on the commercial norms does pose the restriction on the ability of contracting parties for allocating part of their agreement to the extra-legal means of enforcement. However, the cost may be outweighed by the benefits of incorporating commercial norms into commercial codes . While following the procedures of drafting the contract provisions and obligations, considering as to what extent do trade usages should be consulted as well as whether the availability of this interpretive source should be expressly addressed in the contract is important. Conversely, in the event of lack of express language, the question arises, whether is it safe to make an assumption that the trade usages would be consulted and applied in any kind of subsequent dispute? Similarly, is it relatively safe or practical to identify relevant usage and explicitly try to pick and choose as to which one to apply or not?

3.    Arbitration between foreign investors and states
It is a factual deduction from here to assume that there is no guide to the international arbitration which would be complete without a brief discussion in terms of considering the availability of the cases of international arbitration as a means to resolve disputes between investors and states that fall under the purview of bilateral investment treaties (BITs) or multilateral trade agreements such as North America Free Trade Agreement. For not very long, the value and significance of arbitration as a mechanism of dispute resolution has grown with the increase in the number of BITs and also, the foreign investors have become more and more familiar with the substantive protections as well as procedural rights that were created by many BITs. According to the data, with more than 2,500 BITs that were concluded through the world, the savvy foreign investors are wise to think about obtaining specialist legal advice both when they structure a foreign investment, which would determine whether these protections as well as rights will ultimately be available and thereafter, a dispute actually arises . The intention of the discussion here, therefore, is to introduce BITs, but it should be mistakenly understood to serve as a replacement for the advice. 

Arbitral Procedures

Establishing Rules and Procedures in Arbitrations
As a matter of fact, the contract which includes an agreement to arbitration disputes, typically outlines some of the key attributes that relate to any of the potential future arbitration. In view of this, the rules and procedures which would be used in an arbitration are essentially the part of this agreement. If in case, an outside (third party) service is going to be used to handle an arbitration, the contract, therefore, may specify whether that service’s prior-established guidelines and procedures will be used . Due to the fact that the variety of arbitration services along with the flexibility being provided to the parties in order to draw up their own rules, there is no single set of guidelines or procedures which will apply to all the arbitrations. However, regardless of the rules being used, the following are some of the key issues which are typically addressed. 

  • Number of Arbitrators - It would be on the part of the parties to draft an outline in the contract whether one or a panel of three or more arbitrators shall be included to decide their dispute. As per the general rule, the more complicated as well as significant an issue is, the chances are multiple arbitrators will be involved more likely.

  • How Arbitrators will be Chosen - Parties do generally have a choice to appoint arbitrators in several ways including agreement, selection from a list of arbitrators through the process of elimination.

  • Timelines for Arbitration - Rules can establish timelines for resolving a dispute, including when notices are provided as to how long hearings would last, etc.

  • Evidence - Even in the cases of ordinary litigation, the rules of evidence can be complex. But they are often more relaxed in arbitrations that allow more evidence to be considered. However, there is also relatively less time to discover and present the evidence as well.

  • Awards - Rules often dictate the form that an award can take, as well as any potential deadlines for the decisions to be made.

  • Confidentiality and Records - Rules may allow parties to keep and receive records of the proceedings, and/or to keep such records entirely confidential.

The Arbitration Process

The arbitrations, in general terms, are intended to efficiently streamline the process as well as decrease the costs whenever compared to resolving a dispute in the court. But, as a matter of fact, the arbitrations are not all run the same manner. Notwithstanding, some of the important exceptions, arbitration is generally considered to be more informal than the litigation, and is essentially intended to provide a more streamlined, time-saving and cost-effective method in order to resolve potential legal disputes.  
The process of arbitration method begins by involving one of the parties to send notice to another of their intent to arbitrate a dispute along with informing them the nature and basis for the legal proceeding. The other party, on the other hand, is then given a period of time to respond in writing, in which they are required to indicate whether they agree to resolve this dispute through arbitration . Once the case moves ahead by the establishment of the fact that the disagreement will be resolved in an arbitration, then the arbitration process itself begins, which is based on the rules and guidelines being selected by the parties or specified by the contract.
One of the primary reasons behind the fact that the arbitration is often considered as a quicker and cheaper than the litigation, is that the paperwork being involved in a dispute is sharply cut down when compared to a usual litigation. Generally, the procedures for many arbitrations could be cut down sharply on in some of the cases which are burdensome and expensive litigation tools collectively known as “Discovery”. The process of discovery is based on the intention for allowing exchanges of the documents and evidence between parties in a dispute. However, this process can often lead to expensive as well as time consuming disputes with mountains of paperwork. In other words, the arbitration process generally cuts down significantly on discovery, thereby allowing an arbitrator to make a more active role and possibly curtail excesses.

After the completion of these procedures, the process is somewhat similar to a courtroom trial in more ways than one. The parties are given the opportunities to make their arguments before the arbitrators, call witnesses and present evidences to establish as well as defend their respective cases. The rules for hearing of an arbitration may differ from those of a courtroom, but the opportunities to question or cross-examine the witnesses may be more limited. So, once the hearing is concluded, an arbitrator or panel is provided a certain amount of time which is specified to make decision and declare the ruling.

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Concurrent Jurisdictional Issues

Concurrent jurisdiction occurs when more than one court has the authority to hear and decide a civil or criminal case. For instance, in the United States, both federal and state courts have concurrent jurisdiction to hear and decide many types of cases. Similarly, many states have instituted specialized courts, such as small claims courts, traffic courts, and family courts, which hold concurrent jurisdiction with the higher state court in deciding cases of similar subject matter
The concept of concurrent jurisdiction has also raised some issues which in various international or regional tribunal have also explained in the recent years. They highlighted the possibility that multiple bodies will have conflicting, competing or concurrent jurisdiction over the same disputes gas also increased. These issues have emerged from the increasing overlap seen in the international, regional and domestic courts. It was acknowledged that such an overlap could produce certain benefits including the development of international norms as well as enhanced access to the justice for the individuals, states and other entities .
The different countries allow the process of concurrent jurisdiction to happen whenever the physical boundaries are crossed or where the laws governing the parties to a court action differ. The existence of the concurrent jurisdiction, both on federal, state and local levels, effectively lead to a phenomenon which is known as forum shopping. In the event of forum shopping, the parties to court case would attempt to have their civil or criminal matter being heard in the court as they feel that it would provide the most favorable decision. The forum shopping is most common in the cases where state and federal courts have a concurrent jurisdiction because the state and federal courts are abide by the different procedural rules. Therefore, often referred to the different substantive law in deciding cases.
The federal and state courts may have concurrent jurisdiction over specific crimes. For example, a person who robs a bank may be tried and convicted in state court for robbery, then tried and convicted in federal court for the federal offense of robbery of a federally-chartered savings institution. 


  • Bockstiegel K, 'States In The International Arbitral Process' (1986) 2 Arbitration International

  • Heidemann M, Methodology Of Uniform Contract Law (Springer 2007)

  • Mayer P, 'Mandatory Rules Of Law In International Arbitration' (1986) 2 Arbitration International

  • Moore M, 'International Arbitration Between States And Foreign Investors. The World Bank Convention' (1966) 18 Stanford Law Review

  • Mosimann O, International Commerce And Arbitration (Eleven International Publishing 2010)

  • Shackleton S, 'The Applicable Law In International Arbitration Under The New English Arbitration Act 1996' (1997) 13 Arbitration International

  • Shelton T, 'Concurrent Jurisdiction. Its Necessity And Its Dangers' (1928) 15 Virginia Law Review

  • Tang Z, Jurisdiction And Arbitration Agreements In International Commercial Law

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