The arbitral tribunal's authority to determine the applicable law in international commercial arbitration: patterns and trends

• Author: Ramona Elisabeta Cîrlig
• Pages: 18-32

The arbitral tribunal’s authority to determine the applicable law

in international commercial arbitration: patterns and trends

Ramona Elisabeta CÎRLIG1

Abstract

Party autonomy prevails in determining the law applicable to the procedure and to

the merits in international commercial arbitration. Nevertheless, when parties fail to make

a choice or fail to reach an agreement, the arbitral tribunal has the authority to determine

the applicab le law. The paper’s aim is to present the legal grounds for this authority, its

extent and limits, and how it works in practice. In order to reach this, aim the paper starts

with a general analysis of the said legal grounds (the parties’ agreement, international

instruments, arbitration rules, national laws on arbitration), then continues with an

analysis of the limits imposed on the a rbitral tribunal’s authority, which is large but not

unlimited, and in the end looks at how this authority is exe rcised in practice, by scrutinizing

recent jurisprudence and boiling down patterns and trends. The study will contribute to a

better understanding of the current practice a nd trends in international commercial

arbitration as regards arbitral tribunal’s authority to determine the law applicable to the

procedure and the merits of a dispute.

Keywords: applica ble law, international commercial arbitration, authority of the

arbitral tribunal, party autonomy.

JEL Classification: K33, K41

1. Introduction

In international commercial arbitration party autonomy prevails in

determining the law applicable to the procedure and to the merits of the dispute.

Most often, parties include in their contracts choice of law agreements, which are

rigorously observed by arbitral tri bunals without no further discussion about

determining the applicable law. Nevertheless, there are several hypotheses when

the authority of the arbitral tribunal to determine the applicable law becomes the

centerpiece of the discussion in the arbitral dispute, with important implications for

the solution rendered in the dispute, and the finality of the award.

First of all, it is straightforward that when parties fail to choose the

applicable law, the arbitral tribunal will have the task of determining the applicable

law.

Secondly, although parties may not expressly choose the applicable law,

they could however provide in their agreement that they empower the arbitral

1 Ramona Elisabeta Cîrlig - Lawyer in the Bucharest Bar Association, Romania, ramona.cirlig@musat.ro.