56 - Contract and Treaty Interpretation in International Arbitration

Summary

Traditionally, the choice of an interpretive method and practice is contingent upon the governing law and nature of the agreement under scrutiny. In this respect, international commercial and investment tribunals have significantly contributed to shaping the pivotal role of legal interpretation within the parameters of international adjudication.

It is now undisputed that the internationalization of wide-ranging economic activities and the emergence of State contracts have reshaped the classic distinction between contracts and treaties, and softened the sharp dichotomy between the national and international orders. Despite the straightforwardness of the distinction between contract and treaty in principle, it is also evident that the distinction is not so clear-cut in practice and international arbitral tribunals are often asked to resolve disputes involving these two types of instruments. This practice has rendered it more difficult to separate the issue of interpretation from that of applicable law.

This entry’s point of departure is an analysis of the scope of the rules of interpretation in light of the growing overlap between legal orders, treaties and contracts. Engaging in a comparison of the methods of interpretation in contracts and treaties, the authors then examine the arbitrators’ gap-filling power when facing an ambiguous term or silence. Arbitral tribunals’ use of aids to interpretation and extrinsic evidence or ‘supplementary means’ to interpretation are also discussed.