reason for a particular country to insist on regulating the entire transaction, since this may in practice have extra-territorial ramifications. 174 This consideration is one of the reasons why most countries are apt to treat international contracts less stringently than their domestic counterparts.
The liberal treatment of international arbitration has also been justified on the basis of comity and the special needs of international commerce. 175 In Scherk v. Alberto-Culver Co., 176 the court, swayed by the "truly international (character of the) agreement," disregarded the fact that securities disputes could not be arbitrated domestically, and held that such disputes were arbitrable in international disputes. The same consideration influenced the Mitsubishi court, 177 and the French courts in the San Carlo178 and Galakis179 cases.
Recognition of the fact that international arbitration is amenable to the needs of the international business community has made arbitration attractive as a means of decongesting the court system. The more the process is utilized, the less the pressures on the overcrowded court system. 180 The doctrine of objective arbitrability is nonetheless a means by which States declare what they consider the outer limits of private arbitration and the proper scope of matters that fall within the exclusive jurisdiction of national courts. Arbitrators should respect the rules on arbitrability of those jurisdictions whose policy interests are directly implicated by the parties' commercial transactions.
In this chapter we examined the law relating to arbitration agreements. The chapter outlined the doctrine of the juridical autonomy of arbitration agreements, and its corollary principle that the law applicable to an arbitration agreement is not necessarily coterminous with that applicable to the substantive contract. It was noted that it is spurious to utilize the law of the seat of arbitration as an alternative test in determining the validity of arbitration agreements, and the formulation of a "close connection test" was advocated.
It was argued that different considerations applied in determining the law relating to the capacity of States to arbitrate and the authority of their officials to bind them in valid arbitration agreements. It was submitted that the efficacy of national law restrictions should be different in either case. Whereas international public policy precludes a State or its agency from relying on its incapacity under its national law as grounds for challenging an arbitration agreement, private parties should be required to verify the authority of State officials--under the national law of the State concerned-- to bind the State or its agencies in a valid arbitration agreement.
Finally, it was suggested that objective arbitrability should be determined in accordance with the law of the country whose national interests