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Laws Applicable to
an International
Arbitration
06/02/2021 BY ACERIS LAW LLC (HTTPS://WWW.ACERISLAW.COM/AUTHOR/ACERIS/)

There are several di7erent laws that are applicable to an international

arbitration. Such laws include the law governing the arbitration
(Section
Section A
A), the law applicable to the merits of the dispute (Section
Section
B ), the law applicable to the arbitration agreement (Section
Section C
C), the
law governing the parties’ capacity to arbitrate (Section
Section D
D) and the
law(s) of the place(s) of the enforcement of an arbitral award (Section
Section
E ). In international arbitration, it is possible for each of these laws to
be that of a di7erent State.
:
 A) The Law Governing the
Arbitration (“lex
lex arbitri
arbitri”)
The lex arbitri (also called the “procedural law” of the arbitration, the
“curial law” or the “loi de l’arbitrage“) is a body of national rules that
sets the general framework for the conduct of an international
arbitration. This is almost always the law of the seat of the
arbitration (https://www.international-arbitration-
attorney.com/seat-arbitration-international-commercial-
arbitration/)
arbitration/).

The lex arbitri regulates important matters, including the procedure

for the annulment of arbitration awards, the allocation of competence
to decide jurisdictional challenges between domestic courts and
arbitral tribunals, judicial assistance in relation to the constitution of
the arbitral tribunal, the grounds for challenging arbitrators, judicial
assistance in ordering evidence-taking, interlocutory judicial review (if
permitted) of procedural rulings of the arbitral tribunal, the availability
of interim measures of protection (https://www.international-
:
 arbitration-attorney.com/interim-measures-in-international-
arbitration-a-need-for-irreparable-harm/)
arbitration-a-need-for-irreparable-harm/), as well as the extent of
the powers of the arbitrators, amongst others.

The lex arbitri normally does not specify in detail how an arbitration is
to be conducted, however. The detailed arbitral procedure is
determined mainly by the applicable institutional rules (e.g., 2021 ICC
Rules (https://www.acerislaw.com/wp-
content/uploads/2021/01/2021-ICC-Arbitration-Rules.pdf)) or ad
content/uploads/2021/01/2021-ICC-Arbitration-Rules.pdf)
hoc rules (e.g., the 2013 UNCITRAL Arbitration Rules
(https://www.acerislaw.com/wp-
content/uploads/2018/08/2013-UNCITRAL-Arbitration-
Rules.pdf)
Rules.pdf)), the tribunal’s procedural orders and the arbitration
agreement itself.

Each country has its own lex arbitri, which forms part of its domestic
law and may be found incorporated into its Code of Civil Procedure, as
is the case, for instance, in France (French
French Arbitration Law
(https://www.iaa-network.com/wp-
content/uploads/2016/10/French-Arbitration-Law.pdf)
content/uploads/2016/10/French-Arbitration-Law.pdf)) and
Germany (German
German Arbitration Law (https://www.iaa-
network.com/wp-content/uploads/2013/07/German-
Arbitration-Law.pdf)
Arbitration-Law.pdf)), or as an “autonomous” piece of legislation, as
is the 1996 English Arbitration Act
(https://www.acerislaw.com/wp-
content/uploads/2020/06/1966-English-Arbitration-Act.pdf) (see
also our commentary on the 1996 English Arbitration Act here
(https://www.international-arbitration-
attorney.com/arbitration-in-the-united-kingdom-the-1996-
arbitration-act/)
arbitration-act/)). A comprehensive list of most domestic
arbitration laws may be found here (https://www.international-
arbitration-attorney.com/arbitration-law-of-world/)
arbitration-attorney.com/arbitration-law-of-world/).
:
 84 States and a total of 117 jurisdictions have based their lex arbitri on
the 1985 UNCITRAL Model Law on International Commercial
Arbitration (https://www.acerislaw.com/wp-
content/uploads/2020/12/1985-UNCITRAL-Model-Law-on-
International-Commercial-Arbitration.pdf) and its 2006 revised
version (https://www.acerislaw.com/wp-
content/uploads/2020/12/2006-UNCITRAL-Model-Law-on-
International-Commercial-Arbitration.pdf) (see UNCITRAL Model
Law status here (https://www.acerislaw.com/wp-
content/uploads/2021/02/Status-of-UNCITRAL-Model-Law-on-
International-Commercial-Arbitration.pdf)
International-Commercial-Arbitration.pdf)). This has resulted in a
welcome level of uniformity amongst the various domestic lex arbitri,
which enhances legal certainty and encourages the use of
international arbitration by commercial parties for the resolution of
their disputes.

B) The Law Applicable to the

Merits of the Dispute (“lex
lex
contractus
contractus”)
The lex contractus, or governing law of the contract, is the substantive
law which applies to the merits of the parties’ dispute. The lex
contractus governs the existence, validity and interpretation of the
main contract. It also governs any non-contractual claims (e.g., tort
claims), which may be brought before an arbitral tribunal, depending
on the scope of the arbitration agreement.
:
 Parties in international arbitration generally have considerable
freedom to choose the law they wish to govern their contract. Such
law does not necessarily have to be the o`cial law of a State. The
parties may empower the arbitrators to take into account rules of law,
such as trade usages, the 2016 UNIDROIT Principles of International
Commercial Contracts, the lex mercatoria or Sharia law, amongst
others. It is even possible for the arbitrators, if expressly empowered
to do so, to decide a case “ex aequo et bono” or as “amiable
compositeur”, i.e., with the natural sense of justice, without the need
to refer to any legal rules (see, e.g., Article 28(3) of 2006 UNCITRAL
Model Law (https://www.acerislaw.com/wp-
content/uploads/2020/12/2006-UNCITRAL-Model-Law-on-
International-Commercial-Arbitration.pdf)
International-Commercial-Arbitration.pdf)). It is also not
uncommon for arbitral tribunals to rule on a dispute with no more
than a passing reference to the law, when such dispute depends
largely on matters of fact (for example, in international construction
arbitrations (https://www.international-arbitration-
attorney.com/international-construction-arbitration/) or
construction dispute board proceedings
(https://www.international-arbitration-attorney.com/dispute-
boards-and-international-construction-arbitration/)
boards-and-international-construction-arbitration/).)

It is essential for parties in contracts with an international element to

include a governing law to enhance predictability and avoid the cost
and wasted time of arguing over the applicable law, should a dispute
arise.

In the absence of a governing law clause, arbitrators (and courts) will

be called to determine the most appropriate law to be applied, which
will normally be the law with which the dispute has the closest
connection (see also a discussion on the relevance of the Rome I
and Rome II Regulations for determining the law applicable to
:
 the merits of an international arbitration
(https://www.international-arbitration-attorney.com/rome-i-
rome-ii-applicable-law-and-international-arbitration/)
rome-ii-applicable-law-and-international-arbitration/)).

Notably, many lex arbitri, as well as applicable institutional rules,

empower arbitrators, when determining the lex contractus, to apply
directly the law (or rules of law) they deem appropriate (the so-called
direct approach). This is envisaged, for instance, in Article 1511 of
the French Code of Civil Procedure
(https://www.acerislaw.com/wp-
content/uploads/2020/12/French-Law-on-Arbitration.pdf) (see
also a brief discussion here
(https://www.acerislaw.com/arbitration-in-france-2020/)
(https://www.acerislaw.com/arbitration-in-france-2020/),
question 6), Article 21(1) of the 2017 ICC Rules
(https://www.acerislaw.com/wp-content/uploads/2020/12/ICC-
2017-Arbitration-and-2014-Mediation-Rules-english-
version.pdf.pdf)
version.pdf.pdf), as well as Article 22(3) of the 2020 LCIA Rules
(https://www.acerislaw.com/wp-content/uploads/2020/12/LCIA-
Arbitration-Rules-2020.pdf)
Arbitration-Rules-2020.pdf). This also means that, unlike national
judges, arbitrators are generally not bound to follow the conventional
concict-of-laws path (the so-called indirect approach), even though, in
practice, they might stand guided by widely accepted concict-of-laws
rules.

It is also worth mentioning in this respect that the terms lex fori (i.e.,
the law of the court where proceedings are brought) and lex causae
(i.e., a foreign law chosen to be applied by the forum court), which are
widely used in concict of laws, are not easily transposable to the
international arbitration context. That is because, unlike judges,
arbitrators are not organs of any legal forum, which means that they
do lack a proper lex fori, whilst any law is arguably equally “foreign” to
them.
:
 C) The Law Applicable to the
Arbitration Agreement Itself
In practice, parties usually do not specify the law applicable to their
arbitration agreement. This law governs the existence, validity and
interpretation of the arbitration agreement itself (see also our
recommendations for drafting an arbitration clause in 2021
(https://www.international-arbitration-attorney.com/drafting-
an-arbitration-clause-in-2021-recommendations/)
an-arbitration-clause-in-2021-recommendations/)).

Where the seat of arbitration is in a di7erent jurisdiction from the law

governing the contract, a failure to specify the law applicable to the
arbitration agreement may lead to inconsistent outcomes before
domestic courts. For instance, in Kabab-Ji SAL (Lebanon) v Kout
Food Group (Kuwait)
(https://www.bailii.org/ew/cases/EWCA/Civ/2020/6.html)
(https://www.bailii.org/ew/cases/EWCA/Civ/2020/6.html)([2020]
EWCA Civ 6), the English court (applying English law as the law
governing the arbitration agreement) found that a party had not
become an additional party to an arbitration agreement and refused
recognition and enforcement of an arbitral award, whereas a French
court ruling upon the same legal issue in Kabab-Ji SAL (Lebanon) v
Kout Food Group (Kuwait) (CA Paris, 23 June 2020, n°17/22943) refused
to set aside the award after applying French law to the arbitration
agreement.

This issue arises as it is almost undisputed today that the arbitration

clause is a separate agreement from the main contract in which it is
contained (the so-called principle of autonomy or separability of
the arbitration clause (https://www.international-arbitration-
attorney.com/does-an-arbitration-clause-survive-the-
:
 termination-of-a-contract/)
termination-of-a-contract/)). This means that, in the absence of a
choice by the parties, the law applicable to the arbitration agreement
need not necessarily be the law governing the main contract, yet such
a law is an option usually considered, along with the law of the seat.

The 1958 New York Convention on the Recognition and

Enforcement of Foreign Arbitral Awards
(https://www.acerislaw.com/wp-content/uploads/2020/06/New-
York-Convention-1-1.pdf) (the “New
New York Convention
Convention”) favors the
law of the seat as the default option, absent a parties’ express or
implied choice, as envisaged under its Article V(1)(a), which provides
that the arbitration “agreement [needs to be] valid under the law to
which the parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made”, i.e., under
the law of the seat. This default option has also been adopted by many
institutional rules, for instance, the 2020 LCIA Rules
(https://www.acerislaw.com/wp-content/uploads/2020/12/LCIA-
Arbitration-Rules-2020.pdf), which provide in Article 16(4) that “the
Arbitration-Rules-2020.pdf)
law applicable to the Arbitration Agreement and the arbitration shall
be the law applicable at the seat of the arbitration” (see also our
commentary on the key changes introduced by the 2020 LCIA
Rules here (https://www.international-arbitration-
attorney.com/ambitious-new-2020-lcia-arbitration-rules-with-
an-increase-in-costs/)
an-increase-in-costs/)).

D) The Law Applicable to the

Parties’ Capacity to Arbitrate
:
 The New York Convention (https://www.acerislaw.com/wp-
content/uploads/2020/06/New-York-Convention-1-1.pdf) again
gives guidance in this respect in Article V(1)(a), which establishes as a
ground for refusing recognition of an award the case where the
“parties to the [arbitration] agreement […] were, under the law
applicable to them, under some incapacity”. In terms of corporate
entities, which are the parties usually involved in international
commercial arbitrations, “the law applicable to them” is normally the
law of the State of their incorporation.

E) The Law of the Place of

Enforcement of an Award
(“lex
lex executionis
executionis”)
Under the New York Convention
(https://www.acerislaw.com/wp-content/uploads/2020/06/New-
York-Convention-1-1.pdf)
York-Convention-1-1.pdf), which today counts 166 State parties
(https://www.acerislaw.com/wp-
content/uploads/2021/02/Status-1958-New-York-
Convention.pdf)
Convention.pdf), the latest one being Sierra Leone
(https://www.international-arbitration-attorney.com/near-
global-enforceability-of-arbitration-awards-sierra-leone-
becomes-the-166th-state-party-to-the-new-york-convention/)
becomes-the-166th-state-party-to-the-new-york-convention/),
an arbitral award that falls under its scope may be enforced in almost
any jurisdiction where the losing party has assets. The New York
Convention sets out only the general framework for enforcement, in
other terms, the minimum standards that need to be met, however.
:
 One should bear in mind in this respect that, as a general rule,
recognition and enforcement of an award, on the one hand, and actual
execution against the debtor’s assets, on the other hand, are two
distinct and consecutive proceedings. The former is governed by the
New York Convention in conjunction with the national procedural law
of the country in which recognition is sought, while the latter is
governed exclusively by the national law of the country where
execution against the award debtor’s assets is pursued.

This means that award creditors should bear in mind that domestic
enforcement rules and court procedures will also be applicable, in the
State where they will seek to enforce an arbitral award and actually
seize the assets of the liable party. While this may seem complex, this
is advantageous as compared to litigation, where a court decision may
not be enforceable in a foreign jurisdiction at all.

***

In sum, there are several di7erent laws that may have a bearing on an
international arbitration. To avoid unnecessary concicts, it is advisable
for parties to make an explicit and clear choice of the seat of
arbitration, the law of which will govern the arbitration procedure (“lex
arbitri”), the law governing the merits of a dispute (“lex contractus”),
and ideally the law governing the arbitration agreement itself when
the lex arbitri and lex contractus are di7erent.
:
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