|
(b) Direct Application of Substantive Law
Should the arbitral tribunal be obliged to proceed to its choice by way of conflict rules? If they have the resource of conflict of law rules, why do not they follow the same way to choose the applicable law directly? The modern tendency is that the arbitral tribunal is given complete freedom to choose the applicable law in the absence of any choice of law by the parties. French law states that: “The arbitrator shall settle the dispute in accordance with the rules which the parties have chosen, and in the absence of such a choice, in accordance with those rules which he considers to be appropriate.” The trail blazed by French law has now been followed by other countries, including Switzerland and the Netherlands. The assumptions of this theory are if an arbitral tribunal can be trusted to settle a dispute, why cannot it be trusted to choose the law applicable to the substance of the dispute? If the parties are free to agree upon the governing law, why should the arbitral tribunal not be allowed to choose an applicable law for them without any recourse to rules of private international law? If the arbitral tribunal is given complete freedom to choose the applicable law for the contract where parties failed to choose, the arbitrators should put them in the same situation of parties and try to search for the systems or rules of law the parties might have agreed, if they had chosen to do so.
Advantages of direct application of substantive law by arbitral tribunal are mostly based on the practical grounds. Firstly, the right of arbitral tribunal will be extended. Secondly, the time consumed to choose the applicable conflict of laws rules will be saved, and in addition to that. This theory causing criticism is principally based on theoretical grounds. Dr Beda Wortmann criticised it:
“If arbitrator apply the national law directly without any recourse to conflict of law rules, they are always influenced by certain considerations having led them to exactly this particular system of law. These considerations are nothing more than application of conflict of laws rules because the arbitrators will almost always look at factors, such as the ‘closet connection’ of the contract, in order to determine the applicable law. Therefore the arbitrators de facto use conflict of laws considerations, even if they are not aware of doing so. However, in this case it is better when they unveil their deliberations not only to enable the parties to foresee the applicable law but also to make themselves realize that they are deciding a question of conflict of laws.”
CONCLUSION
All the time, the principle of the autonomy of the parties, which should be first given thought in international commercial arbitration, has been accepted by most civilized countries. If the parties do not wish the arbitral tribunal to have freedom to choose the applicable law for them, they should agree on the applicable law in their contract or after dispute has arisen (or indeed when the dispute is being heard).
|
