Does the applicable law have an impact on the legal effects of contract terms? Is there a convergence between the common law and the civil law? To what extent does the principle of good faith influence the effects of a contract? Does arbitration ensure a uniform interpretation of contracts?

That a commercial contract is international may seem intuitive to some observers, yet it is difficult to find an accepted definition for the term. What is even more difficult is identifying the legal rules to which international commercial contracts are subject. Are international contracts subject to some sort of international law? What are the sources of this law and what is its scope of application? To the extent that international contracts are subject to national rules, which law’s rules are applicable? These questions become even more pressing when the practice of international contracting is taken into consideration: contracts are often written as if their terms were the only source with which to regulate the parties’ relationship and as if any sources of law were irrelevant.

To what extent does soft law ensure harmonisation? Does it replace the governing law or does it complement it?

Does arbitration permit a self-sufficient contract? To what extent can relevance be disregarded without affecting the validity and enforceability of an award? What power does the arbitral tribunal have?

Contract practice andthe reasons for its standardised style. A discussion ofboilerplate clauses. A presentation of the theories of the relational contract and of the autonomous contract.

How is the governing law of a contract determined? What are the effects of the parties' choice of law? How is the governing law chosen in arbitration?

The excursus made in this book was meant to determine the relationship between an international contract and the sources that regulate it. Even if the parties have not thought of any governing law when drafting the contract; even if they have intended expressly to avoid a certain governing law; even if they have chosen a certain set of transnational rules to govern their transaction; even if they have made use of model contracts that are meant to be used in a variety of jurisdictions – the contract may nevertheless be subject to the mandatory rules, the overriding mandatory rules or the ordre public of state laws that the parties had not taken into consideration or had intended to avoid. Moreover, the contract will be interpreted and construed on the basis of the legal tradition of the applicable law, thus attaching different legal effects to the same wording, depending on the applicable law.

The chapter discusses arbitration’s function in the development of the substantive law applicable to the resolution of an arbitral dispute. In the context of commercial arbitration, this will frequently include national commercial law, as well as, to a restricted extent, non-national sources; while in investment arbitration, this will most commonly include international investment law – possibly in addition to the applicable national law. Undoubtedly, arbitration has also contributed to the development of the procedural law of arbitration through its practice; but this chapter only refers sporadically and occasionally to instances of procedural law development.

It is often affirmed that international arbitration does not have a forum. This statement can be seen as one of the manifestations of the doctrine that considers arbitration as a purely international phenomenon, detached from national laws. I have criticised this doctrine in many writings and will not repeat my arguments here.1 What this chapter deals with is one specific aspect, namely the significance for international arbitration of the arbitration law of the country in which the arbitral tribunal has its formal seat, the lex arbitri. The analysis will show that the statement according to which arbitration has no forum cannot de understood to mean that the lex arbitri has no significance for arbitration.