Law Applicable to the Merits of International Arbitration and Current Developments in European Private International Law: Conflict-of-Laws Rules and the Applicability of the Rome Convention, Rome I Regulation and Other EU Law Standards in International Arbitration

CZECH YEARBOOK OF INTERNATIONAL LAW, pp. 25-46, A. Belohlavek & N. Rozehnalova, eds., JurisPublishing, Inc., 2010

36 Pages Posted: 12 Dec 2010

Date Written: March 6, 2010

Abstract

The determination of the applicable law may never exceed the limits of the contract entered into by the parties and their expectations and legal certainty. This criterion is to be understood as the main dogma. The global financial and economic crisis only confirmed that commercial practices became extremely brutal, and the current global situation confirms that any arbitral or choice-of-forum clause, i.e., an authorisation of the tribunal to choose any law or rules or even principles of law, does not indicate a greater willingness of the parties to settle potential disputes in a fair manner. The tribunals have to determine the applicable law as a legal system of a particular country using standard conflict-of-laws methods and conflict-of-laws rules as prescribed by applicable lex arbitri or (if authorised by lex arbitri and/or by the parties themselves) to first determine the relevant choice-of-law methods and rules. They have to reflect on the contract as well as potentially applicable lex arbitri if these contain binding instruction for conflict-of-laws resolution. In respect to the applicability of the Rome I Regulation in arbitration, the author‘s opinion is that the tribunals must apply it at once if they have to apply particular conflict-of- laws rules (as adapted by a number of national lex arbitri rules) and such conflict-of-laws rules are those of a country bound by the Regulation. The refusal to apply it would endanger certainty and foreseeability. Nevertheless, the arbitrators might do so, and they often have to find a more rational and commercially practical approach in interpreting the Regulation. In addition, they often determine the limits of the parties‘ autonomy, which in EC law are in fact (de iure) rather broad. And this occurs even though EU administrative structures usually attempt to subordinate arbitration conducted in EU countries under the ECJ (EU Tribunal) adjudicated standards, which are (in contrast to the Rome I Regulation itself) not binding for the arbitrators if determining substantial law issues.

Keywords: Arbitration, Arbitration Clause, Choice of Forum Clause, Arbitration Agreement, Governing Law, Applicable Law, Law Governing the Merits of Dispute, Place of Arbitration, Arbitral Tribunal Litigation, ICC, LCIA, Substantial Law, Choice of Law, Private International Law, Conflict-of-Law

JEL Classification: K12, K33, K40

Suggested Citation

Belohlavek, Alexander J., Law Applicable to the Merits of International Arbitration and Current Developments in European Private International Law: Conflict-of-Laws Rules and the Applicability of the Rome Convention, Rome I Regulation and Other EU Law Standards in International Arbitration (March 6, 2010). CZECH YEARBOOK OF INTERNATIONAL LAW, pp. 25-46, A. Belohlavek & N. Rozehnalova, eds., JurisPublishing, Inc., 2010, Available at SSRN: https://ssrn.com/abstract=1723715.

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