The Arbitrators' Duty to Respect the Parties' Choice of Law in Commercial Arbitration

Abstract

This article contributes to the debate regarding the extent to which parties ought to be free to choose the law applicable to their disputes by considering that debate in the context of commercial arbitration. While there are several articles discussing the pros and cons of allowing parties greater autonomy with respect to choice of law, few, if any, consider how the arguments may be different in the context of commercial arbitration. I argue that there is no valid reason for arbitrators to ignore the parties' choice of law in commercial arbitration. Arbitrators derive their authority from the arbitration agreement and are limited by it. Therefore, they do not have the power to disregard the parties' choice of law. Moreover, respect for the parties' choices encourages the use of arbitration. In making this argument, I analyze judicial choice of law rules and their implications for arbitration, including the new Uniform Commercial Code provision on choice of law, (about which very little has been written to date), and various state law rules. I also recognize that some scholars oppose giving parties so much autonomy because it may undermine a state's public policies and its attempts to protect its citizens. Finally, I consider the constitutional limitations on party autonomy. In response to these concerns, I suggest that arbitration is sufficiently different from litigation that these concerns are not as compelling in an arbitration context.

Keywords: arbitration, choice of law, dispute resolution