Lex Mercatoria and Its Limits in International Arbitration

Nederlands Internationaal Privaatrecht 2020

15 Pages Posted: 27 Dec 2021

See all articles by Zlatan Meskic

Zlatan Meskic

Prince Sultan University

Almir Gagula

University of Zenica

Date Written: November 20, 2020

Abstract

This contribution aims to provide guidance on the usual steps an arbitrator undertakes when using lex mercatoria in international arbitration. The first step is the identification of rules that represent lex mercatoria and deserve such a qualification. It involves a discussion on the private international law analysis, especially absent a choice of law by the parties and its relationship to (potentially) applicable national law. The statistics presented in this paper show that parties in an overwhelming majority of cases choose national law as the applicable law and that lex mercatoria needs to co-exist with national law. Here, the joint use of national law and lex mercatoria is discussed in the context of the example of construction arbitration as the most common area of international arbitration practice. The growing popularity of certain legal solutions of lex mercatoria in procedural or substantive matters followed by a codification trend contribute to an effect of a rebuttable presumption in the fields of its application. This triggers the question as to how the right to be heard can be preserved, especially when the initiative for the use of lex mercatoria does not come from the parties, but from the arbitral panel. The lack of a strict judicial review of the applicable law used in arbitration gives the arbitrators the power to find the right balance between the guidance offered by lex mercatoria and parties’ expectations.

Keywords: arbitration, lex mercatoria, applicable law, conflict of laws

Suggested Citation

Meškić, Zlatan and Gagula, Almir, Lex Mercatoria and Its Limits in International Arbitration (November 20, 2020). Nederlands Internationaal Privaatrecht 2020, Available at SSRN: https://ssrn.com/abstract=3991311 or http://dx.doi.org/10.2139/ssrn.3991311

Zlatan Meškić (Contact Author)

Prince Sultan University ( email )

Rafha Street,
Riyadh, Riyadh 11585
Saudi Arabia
+966566762364 (Phone)

Almir Gagula

University of Zenica ( email )

Fakultetska 3
Zenica, 72000
Bosnia and Herzegovina

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