IMPORTANCE OF THE LAW

How important is the law in international commercial arbitration? That may depend upon the particular case. In some arbitrations, the arbitrators' task will primarily be to understand the facts and to apply the contract terms to the facts. Procedural issues will be resolved in accordance with the rules chosen by the parties. Legal questions may not be raised or argued. In other arbitrations, difficult or technical legal questions may be at the core of the dispute.

Although party autonomy is an important element of arbitration, nonetheless, the parties' contract, and their dispute, do not exist in a legal vacuum. There are layers of laws and rules that may be applicable, and complications increase when more than one national law may properly apply to the arbitration. Typically, the parties will choose a law to govern the contract. This law, which is the substantive law, is likely to be the national law of one of the parties. Or, in a contract for the sale of goods, it could be an international law such as the United Nations Convention on Contracts for the International Sale of Goods (CISG).

The law applicable to the arbitration procedure is usually a different national law – the arbitration law at the seat of the arbitration. In addition to these two laws, other laws may come into play. This chapter will discuss the various laws, as well as what happens when parties have not chosen a governing law or a seat for the arbitration.