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  • Print publication year: 2015
  • Online publication date: August 2015

2 - The laws and rules applicable to arbitration

Summary

Introduction

Having discussed generally the function and objectives of arbitration and after reviewing the fundamental principles that underlie it, it is now time to examine the various laws and rules that permeate the regulation and operation of international arbitration. The richness of arbitration is reflected in the nature and diversity of these rules. Some are formal laws, others are multilateral and bilateral treaties and yet others are of a private origin. Whatever their nature they are all applicable alongside each other in a web of intricate relationships. Understanding the content of these laws and rules, as well as how they operate and interact is crucial. The chapter goes on to explain the role of domestic laws, starting with the operation of substantive rules, namely the governing law of the parties’ agreement, trade usages (lex mercatoria) and equity (ex aequo et bono). It then traces procedurally-oriented laws, particularly the law of the seat (lex arbitri), the law of the arbitration clause and the law of the country of enforcement (in respect of foreign awards). Finally, the chapter will examine the role of treaties and customary international law, pertinent soft law, particularly the role of model laws, institutional rules derived from arbitral institutions, as well as the problem of ethical standards and the application of ethical codes.

The role of domestic law(s)

Save for the recognition and enforcement of foreign arbitral awards, which is chiefly regulated by the 1958 New York Convention (a multilateral treaty), all other aspects of the arbitral process are governed by domestic law(s). Domestic law, whether general or specific to arbitration, is therefore of immense significance. No wonder the choice of seat, which in turn dictates the application of the procedural law of the seat (lex arbitri), is arrived at by reference to its efficiency, non-intrusiveness and other similar arbitration-friendly qualities. In the practice of international arbitration more than one domestic law typically comes into play. The parties may be of a different nationality and thus subjected to distinct personal laws (e.g. as regards their capacity) and additionally the substantive law of the main agreement may be governed by one or several domestic laws or trade usages.