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The cases of implied choice of laws always fall into some categories as follows; firstly, choice of forum as choice of law. If the parties make no express choice of law, but agree that any disputes between them shall be arbitrated in a particular country, it may be inferred that they intended the law of that country to govern the substantive issues. Many courts have applied this rule, choice of forum as choice of law. It, however, has been criticized as ignoring the fact that a particular forum may be chosen for many reasons other than the desire to have the law of that place governed the dispute. It may be chosen for many other reasons, for instance, its geographical convenience for parties, the high reputation of the arbitration services. Now the law of the forum have often been applied as the applicable law designated by the parties when other connecting factors, such as the place of performance or making of the contract, or the place of business of one of the parties, have also pointed to the forum country. Secondly, the parties have used a contract formula current in a particular country, the law of which country is often applied as the applicable law. Finally, parties make an implied negative choice of law, what would be not the applicable law. Most of implied negative choice of law was contained in the contract where one party is a sovereign state, to protect private party. Implied choice of law is obviously artificial to choose a substantive law for the parties if they gave no thought to the questions of the applicable law. This makes it clear that a tacit choice must only be found where it is reasonably clear that it is a genuine choice by the parties.
II. CHOICE OF LAW BY ARBITRATORS
If arbitration proceeding are commenced, the arbitral tribunal or arbitrator has to face the problem of choosing between various system of law may apply to an international commercial contract, where parties failed to provide a clause choosing the substantive law. The arbitrators’ task is exceptionally difficult in such a situation. Although this question is of crucial importance, a homogeneous answer has not yet been given. Will the arbitrators apply the conflict of laws rules pertaining to the seat of arbitration, or those of the country which has the ‘closet connection’ with the dispute? Or will they not apply conflict of laws rules at all? The arguments focus mostly on two opinions (a) application of conflict of laws system, (b) direct application of substantive law
(a) Application of Conflict of Laws System
If arbitrators must apply the conflict rules of a country, they do not do so by definition, because they are not a court (a court applies its own conflict rules by definition). So if they are bound to apply any particular conflict rules, it must be because some rule of law binds them to do so. There are, however, various of conflict of law system may be applied by arbitrators to an international commercial contract, which will usually serve to indicate what law is to be chosen as the law applicable to a contract absence choice of applicable law. One national system may direct them to apply the conflict rules of the country whose law governs the arbitration, and another may direct them to apply whatever conflict rules they consider appropriate. Which, if any, should they follow? If there is an additional stage in the hierarchy: an ultimate conflict rule which tells them what conflict rules, if any, they can use to select the domestic law which they must apply in deciding the case, or ultimately this must be a matter for them to decide for themselves, what could be the source of such a rule? Even if the arbitrators are empowered free to choose the appropriate conflict of laws rule, they have to face the determination which rule among several is appropriate.
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