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“The general rule is that any natural or legal person who has the capacity to enter into a valid contract has the capacity to enter into an arbitration agreement” . Normally speaking, whether parties have the capacity to agree to arbitration depends on their own national law. Article V(1)(a) of the New York Convention makes clear that capacity is to be determined not by the law chosen by the parties, but by the law applicable to them: it is accepted that this refers to their “personal” law (that of their nationality or domicile).
An important exception to this general rule is the situation where the capacity to arbitrate may be directly or indirectly affected by the party claiming lack of capacity. Specifically, it would be contrary to fundamental principles of good faith for a state party to an international contract, having freely accepted the arbitration clause, later to invoke its own legislation to contest the validity of its agreement to arbitrate.
4. Law applicable to the arbitration agreement
This question relates to which system of law is going to apply to decide the arbitration agreement is null and void under Model Law. Model Law didn’t answer this question directly, but we can find the rules of it by the setting aside of an award or refusing to enforce an award. It is said that the agreement to arbitrate is examined either by reference to the law stipulated by the parties or, failing such a stipulation, to the law of the place of arbitration. The parties’ freedom to choose the law applicable to their contract is a general principle. No case is known in which an arbitrator has set aside the parties’ express choice of law on the ground of lack of connection with the intended legal system.
However, Article 34(2)(b) claims obedience to the public policy of the forum. Besides, mandatory rules are the other limit in the international practice. The details will be concerned hereunder. Given the fact that the law applicable to the arbitration clause is rarely the subject of specific stipulation, it is hardly surprising to find that most national court decisions under the Model Law have applied the law of the country where the award was rendered. This means that, although arbitrators are free to decide on the validity of the arbitration clause without reference to a national law, they still should deem themselves to be bound by a principle, arbitrators “shall make every effort to make sure that the Award is enforceable at law”. Professor Catherine Kessedjian made a statement at the Hague meeting in 1997, “ when an arbitrator is considering the law applicable to arbitration agreement, the most thing should be concerned is his product---if the award is enforceable.” But, this opinion was doubted by Marc Blessing, who thinks “the prime duty of arbitrators is to make a correct decision, it is reasonable to pay attention on the enforceable of awards. However, compared with the whole arbitration system, its valuable is limited. It is no need to immolate the arbitrators’ belief to make a wrong decision and get a enforceable award in return.”
In my view, the two options show two different value judgments. One side, from the efficiency role, arbitrators do have a duty to remove all the obstacles which block the enforced processing of an arbitration award, to reduce the time and financial loss of the arbitration parties. On the other hand, to keep the order of international commercial law and the reputation of international commercial arbitration, arbitrators should pursue the real justice and equity, and obey the law and morality. Sometimes it is difficult to measure what is the real justice and equity, especially when arbitrators are facing different countries’ mandatory rules and public policy. At the same time, the efficiency of arbitration is one of most important reasons that merchant prefer arbitration to litigation.
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