Chapter 4 discusses applicable laws and rules as well as various concepts in international arbitration such as delocalization, territoriality, lex arbitri and lex mercatoria. The chapter considers various choice of law issues that arise when parties fail to chose the governing law of the contract or of the arbitration clause or if they do not choose the seat of the arbitration.. Although the arbitrator has a duty to apply the proper law, the application of the laws and rules of an arbitration is a complex process. Arbitrators have broad discretion, which is, however, limited in number of ways such as by mandatory laws, party autonomy, international principles, best practices, and by the duty to try to render an enforceable award. In the book, the author includes insights from a number of international arbitrators and counsel, who tell firsthand about their own experiences of arbitration and their views of best practices. Throughout the book, the principles of arbitration are supported and explained by the practice, providing a concrete approach to this important means of resolving disputes.

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?

Lex arbitri (or ‘law of the arbitration’) is the law applicable to an international arbitration based upon the legal seat designated by the parties. The content of lex arbitri is dictated not by international law, but rather by the national law on international arbitration of the chosen jurisdiction. Typically, lex arbitri will address issues relating to the constitution of the arbitral tribunal and the conduct of the arbitration, including the extent to which local courts may be called upon to assist the arbitration process or may review and enforce any potential award, and the legal limits of arbitration in a jurisdiction.This chapter will consider the impact of lex arbitri on international commercial arbitration on the one hand and international investment treaty arbitration on the other.ICSID investment arbitrations are substantially ‘delocalized’ through the legal framework of the ICSID Convention, reducing their dependency on lex arbitri.By contrast, non-ICSID investment arbitrations are ‘localized’ in the seat of arbitration, and therefore are subject to lex arbitri.The direction of travel of international investment treaty proceedings, shown by complex bespoke procedural regimes in specific IIAs and negotiations for a Multilateral Investment Court, international investment disputes may ultimately ‘graduate’ out of dependence on lex arbitri.

An arbitration agreement is an agreement between parties to a legal relationship to submit an existing or any future disputes to arbitration. It follows that an agreement of the parties to arbitrate is the cornerstone of arbitration, as it contains the consent of the parties to submit their dispute to arbitration. There are two basic types of arbitration agreements. The first one is a submission agreement, which consists in an agreement to submit an existing dispute to arbitration. The second is an arbitration clause, which consists in an agreement to submit a future dispute to arbitration.1

Bulgaria has traditionally been an arbitration-friendly jurisdiction, both for domestic and international disputes.1 Arbitration as a means of dispute resolution was first implemented in Bulgaria at the end of the nineteenth century with the first Civil Procedure Act (1892). At this time arbitration was used mainly to solve commercial disputes between merchants with the assistance of local and national chambers of commerce. In the first half of the twentieth century, arbitration was widely used to resolve both civil and commercial cases, and the arbitrators had extensive powers, including resolving disputes ex aequo et bono. Also during this period, the first reported international commercial arbitration proceedings involving Bulgarian parties occurred, mainly in the international trade and infrastructure construction sectors. Throughout the socialist period (1944–1989), arbitration was allowed only in respect of legal disputes between Bulgarian socialist organisations (i.e., state-owned entities engaged in industry and trade, such as industrial plants, foreign trade enterprises, tourist companies, state-owned banks, etc.) and foreign enterprises or entities, and it was the privileged dispute resolution mechanism for such disputes. The existence of this sort of arbitration allowed Bulgarian practitioners to conserve and develop their knowledge in the field during the socialist period. In particular, the Arbitration Court at the Bulgarian Chamber of Commerce and Industry allowed some prominent scholars and practitioners to regularly engage in domestic and international arbitration proceedings and to develop, as a follow up, domestic legislation and academic materials on the topic.

Upon the dissolution of the Soviet Union in 1991, Ukraine as a young independent state faced many challenges including the proper administration of trade disputes with foreign parties. For a certain period there were no such institutions that could resolve these disputes. To prevent the creation of a legal vacuum, the Parliament of Ukraine, along with the establishing of the foreign trade legal framework for Ukrainian nationals and adopting the Law on Foreign Economic Activity,1 recommended that the Ukrainian Chamber of Commerce and Industry (UCCI) establish a permanent arbitration body for prompt and efficient consideration of “foreign economic disputes.” For this purpose, on August 11, 1992, the International Commercial Arbitration Court (ICAC) and the Maritime Arbitration Commission (MAC)2 were created. However, almost from the very inception both institutions could hardly operate because of lack of legal basis for their functioning. To improve this complicated situation, the Law on International Commercial Arbitration3 (the International Arbitration Statute; ICA Law) was adopted on February 24, 1994 (effective April 20, 1994).4

Nigeria1 has a mixed legal system consisting of common law, sharia law,2 and customary law.3 At the pinnacle of these laws is the 1999 Constitution.4 The judiciary powers are vested in courts established by the constitution.5 Arbitration in Nigeria is governed by the federal statute Arbitration & Conciliation Act 1988 (ACA),6 which incorporates the 1985 UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL Model Law), with some minor modifications. Nigeria is a federal system where several states have enacted their own arbitration legislation. One example of this is the Lagos State Arbitration Law of 2009 (LSAL).7 It applies to all arbitration proceedings in the state of Lagos that are not specifically governed by any other law. As compared to the federal statute, the Lagos Arbitration Act is more modern, having been adopted in 2009.

The popular image of the American legal system is that it is run amok with litigation-happy disputants. Whether this is true from an empirical perspective is debatable, but in fact American federal law and policy favors arbitration as the country’s preferred means of dispute resolution. This is a longstanding position dating back to the enactment of the 1925 Federal Arbitration Act (FAA). However, the history of this Act and its implementation has been inconsistent. It was forgotten at one point as individual American states enacted statutes to limit the use of mandatory arbitration in consumer contracts. Eventually, the US Supreme Court recognized the FAA as prevailing law and voided state laws limiting the use of arbitration under the federal preemption doctrine.1 In more recent times, the US Supreme Court expanded the scope of private arbitration clauses to include statutory claims, such as in the areas of antitrust, collective bargaining, and civil rights. Even more recently, it has begun to limit the availability of arbitration by placing restrictions on class action arbitration.

Switzerland has long been a New York Convention (NY Convention)1 state. Although Switzerland’s arbitration law is not based on the UNCITRAL Model Law (Model Law), it does by and large conform to the fundamental principles of the Model Law as amended in 2006, in particular in relation to the interpretation of arbitration agreements, and the vacation and enforcement of international arbitration awards.

Swiss law distinguishes between international arbitration and domestic arbitration. This proceeds from article 176 of Switzerland’s arbitration statute,of the Swiss Private International Law Act2 (PIL), which defines the scope of international arbitration as arbitrations with their seat in Switzerland and in which, at the time of the conclusion of the arbitration agreement,3 at least one of the parties had neither its domicile nor its habitual residence in Switzerland. Domicile for registered corporate entities is treated as the place of formal registration.4 For registered corporate entities, habitual residence does not apply. No other provision in Swiss international arbitration law is more stringent than those under the NY Convention.5