Law Governing Substantive Issues
An arbitral tribunal accomplishes its central mission, the resolution of the parties' dispute, by determining the contractual obligations of the parties and using the balance of obligations as a guide in resolving the dispute. As contractual documents are generally designed to allocate contractual duties and obligations, an arbitral tribunal called upon to resolve a contractual dispute would logically be drawn, as a first step, to an examination of the parties' contractual provisions. But on what grounds are contractual provisions binding on parties, and why is the choice of law of the parties, as expressed in their contract, effective in law? Are parties bound to choose only national laws to govern their agreements or can they submit their agreements to non-national standards, such as the lex mercatoria? What happens in cases where the parties do not make a choice of law? These are the issues that will be considered in this chapter.
This chapter commences with a brief synopsis of the doctrine of party autonomy as it relates to the choice of substantive law. It examines the practical implications of a choice of the lex mercatoria or amiable composition by arbitrating parties. It then considers the theory of implied choice of law, and concludes with an examination of how substantive law is determined in the absence of an express choice by the parties.
One of the few principles of law that is commonly recognized and accepted in almost all national jurisdictions is that of party autonomy. In the context of applicable substantive law, this principle enables the parties to a contract to determine the law to govern the substance of their contract. The principle has its origins in the adherence of Victorian judges to the