New report sheds light on the HCCH Principles on Choice of Law’s role in determining the applicable law in international arbitration proceedings

Nino Sievi
Nino Sievi

Most arbitration laws and institutional rules leave the arbitrators a wide discretion when it comes to determining the law applicable to the merits of the dispute. One legal instrument from which arbitrators can take guidance when determining the validity and scope of a choice of law clause are the HCCH Principles on Choice of Law. A recent report shows that many arbitral institutions approve the concept of these principles and that arbitral tribunals in Switzerland have already applied such principles.

The Hague Conference on Private International Law (HCCH)  publishes annually a non-exhaustive list of arbitration centres that either have incorporated the HCCH Principles on Choice of Law into their own institutional rules or are advertising or facilitating their use in other ways compatible with the Principles. The list is geared towards providing information about arbitral institutions and rules that respect and interpret a contractually chosen law in accordance with the Principles. The newly released 2020 edition is accessible here. The list shows that many arbitral institutions approve the concept of the Principles and that arbitral tribunals in Switzerland have already applied these principles when determining the applicable law to the merits of a case.

The Principles sets forth general rules concerning choice of law in international commercial contracts. They affirm the principle of party autonomy with limited exceptions. They may be directly applied by arbitral tribunals or used to interpret and supplement rules of private international law. In general, the principles promote a liberal approach towards choice of law permitting that parties choose different laws for different parts of the contract. Further, no connection is required between the law chosen and the parties or their transaction. Finally, they explicitly enable parties to subject their agreement to non-state law.

The Principles provide further guidance on how a choice of law should interact with overriding mandatory rules and public policy (ordre public). In particular, the commentary on these rules provides useful guidance to arbitral tribunals dealing with such issues.

In summary, the HCCH Principles on Choice of Law provide useful guidance on how to deal with choice of law clauses in international arbitration. In the future, we expect more tribunals to refer to these principles when dealing with issues of choice law.

 

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