Choice of law lThe law which governs the contract and parties' obligations under it. lThe arbitrators will, under most of the jurisdictions, apply the law chosen by the parties lHowever, the mandatory rules might in some instances override the choice of law lIf the law was not chosen by the parties, the arbitrators will have to do so Choice of law II. lMost usual choice is the national law of some state lPossible problem: Under some legal systems, the conflict of law rules are not excluded in the case of the choice of law. lThe chosen law might, as a result, stipulate that different legal system shall be applied => parties should address this issue Neutral applicable law lThe parties might choose the law that has no connection whatsoever to their contractual relationship lMost countries will recognize choice of a neutral law lHowever, the United States require relationship between the applicable law and the contract Dépecage lThe parties might decide that different parts of their contract will be governed by different laws lIt can cause difficulties because of inconsistencies between the laws lIf there is no choice of law by the parties, the arbitral tribunal might decide to apply different laws to different parts of the contract lSecondly, similar situation might arise when the mandatory rules of some state have to be applied The tronc commun doctrine lWhen the parties are from different jurisdictions, the approach should be to ascertain which parts of their national laws are similar and apply those common parts in the dispute lMost of the courts would uphold such a choice of law, but would not apply this doctrine by themselves lThis approach requires an extensive legal research of the applicable laws Stabilization clauses lThe law is a continuously developing system and its changes might influence the contractual relationships between the parties lThe parties might avoid this risk by implementing a so-called stabilization clause lThe stabilization clause stipulates that the law which was valid as of a selected date will be used and the its latter changes shall be disregarded lIf a state is a party, it might agree not to change its own laws. Mandatory rules lThe set of rules that have to be applied even though the parties have chosen a different law lThe goal of the mandatory rules is to protect the proper functions of country's political system, economy, society Contract Sans Loi I. lThe contract does not have to be governed by a national law, but other set of rules lLex Contractus lThe principle that the contracts should be performed is raised to the level of the law lThis principle has not been fully endorsed yet lIt might be impossible to draft a contract fully isolated from the national and international law lThe New York convention requires a defined legal relationship. Lex Contractus: there is no defined legal relationship Contract Sans Loi II. lEquity principles lThe tribunal shall decide the case on the basis of what is fair and reasonable lThe tribunal might apply no law at all, or to use the equity to mitigate some effects of applicable law. The second approach is more frequent. Lex Mercatoria lThe law of merchants lIts origin is not precisely determined lThe set of rules and principles followed by the merchants in the international trade lSome claim that it is a-national, because it is not derived from the national legal system lThere are some lists of principles of lex mercatoria, but they are not definite and its principles are very vague lSome experts claim that lex mercatoria can fulfil the function of a proper law Lex Mercatoria II. lThere is ongoing codification of Lex Mercatoria, which undermines the criticism of its uncertainty Many courts will uphold a choice of Lex Mercatoria nowadays lMost arbitration legislation permit a choice of Lex Mercatoria Lex Mercatoria III. - Rules lCentral transnational database – over 70 principles of LM lUNIDROIT – Principles of international commercial contracts lINCOTERMS – Contractual terms + definitions of words used in IC contracts lInternational rules for the interpretation of Trade Terms (by ICC) Public international law lUsed to resolve disputes among states and individuals lConsists of: international conventions, I. Custom, general principles, judicial decisions, jurisprudence.. Conflict of Laws lThe arbitral tribunal has to determine which law was chosen by the parties lThey can do so expressly or tacitly lIf they choose the principles of equity, the applicable law should be determined by the tribunal because of the mandatory principles lSimilarly, if the Lex Mercatoria is chosen, the law that will fill its gaps should be chosen Conflict of Laws II. lIf the parties have not chosen a law, the arbitral tribunal can: lApply the conflict of laws rule lDirectly select the applicable law lHowever, the tribunal has to determine on which law it should base its decision between the conflict of laws rule and direct selection of applicable law. There are several way of doing that: Conflict of Laws II. lLaw of the place which would have had a jurisdiction but for the arbitration clause lLaw of the seat of the arbitration lLaws of all countries which have a connection with a dispute lThe application of no law lThe application of the law derived from the international treaties