(7) Sources of rules (Three potentially relevant sources of rules ( The…
(7) Sources of rules
Art 28 ML
“(1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. (if they made that express choice, trubinal must adhere to it) Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules. … (avoid to "rom wer": if a rule ie A28.1 directs one to particular state, it might have its own rules that will redirect to another country etc. process of hopping around).
(3) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so.” (known as equity clauses: where parties provide in their agreements that arbitrators revolve dispute by deciding in accordance of what is fair, just or equitable. Not predctable esp in commercial law).
rules of law, e.g. religious laws
non-national systems of rules, e.g. lex mercatoria or UNIDROIT Principles of International Commercial Contracts
Equity clauses (permitting tribunal to decide on equity rules on what is fair)
Lex merchantoria, also treat as honourable agreement. Wants to enforce it as distinct.
- E.g. amiable composition, or ex aequo et bono
- Liberty Reinsurance Canada v QBE Insurance & Reinsurance (Europe) Ltd  OJ No 3599 (Ontario)
The arbitration clause provided: “Each party shall present its case to the arbitrators within sixty (60) days following the date of their appointment. The board shall [interpret] this Contract as [an] honourable agreement and not merely as a legal obligation and shall make its decision with regard to the custom and usage of the insurance and reinsurance business.”
It is a valid equity clause.
interpretation of the parties’ agreement
- ICC Case 5505 (1998) XIII YB Comm Arb 110:
- facts: k had the clause “Should no agreement be arrived at, [the parties] must finally undertake to submit the matter according to the regulation for agreement and arbitration of the International Chamber of Commerce to one or more arbitrators as per the said laws. The arbitration will take place in Switzerland, the law applicable is that known in England.” [Parties had nothig to do w england. Neither did the dispute. Didn't say it applied to substantive dispute. Arbitrators said it has no connection to law of england. ]
- tribunals said law applicable is english law = express choice.
- Held: The parties have a reasonable interest in the application of English law to the substantive dispute, and the choice of English substantive law cannot be held invalid on the basis of no connection between the matter and English law (at ).
If express choice in favour of it, will be held as applicable seat of law.