No CrossRef data available.
Article contents
International Commercial Arbitration: The Conflict of Laws Issues in Determining the Applicable Substantive Law in the Context of Investment Agreements
Published online by Cambridge University Press: 21 May 2009
Extract
The parties to an investment agreement, i.e., a State or its controlled enterprise and a foreign private entity, often fail to reach an agreement as to the substantive law applicable to any dispute that may arise during the course of their contractual relationship. Sometimes, such disagreement occurs owing to the conflicting interests of the parties. As a distinguished jurist has aptly put it:
‘While the host State is primarily interested in subjecting foreign investments to its national legal system because it wishes to retain the fullest legislative freedom in pursuance of its national economic policies, the foreign investor is primarily interested in excluding the application of the law of the host State because he fears that the host State may use its sovereign legislative power to change the legal environment to the detriment of his investment.’
- Type
- Articles
- Information
- Copyright
- Copyright © T.M.C. Asser Press 1993
References
1. See generally, Transnational Corporations, Vol. I, No. 1, UN Publications (1992);Google ScholarCampbell, D., ed., The Transnational Person: Private Rights in the International Business Community (1992).Google Scholar
2. Jaenicke, G., ‘Consequences of a Breach of an International Agreement Governed by International Law, by General Principles of Law, or by Domestic Law of the Host State’, in Dicke, D.C., ed., Foreign Investment in the Present and a New International Economic Order (1987).Google Scholar
3. In this article ‘conflict of laws'and ‘private international law’ have been used interchangeably, so have ‘conflict of laws’ and ‘conflicts of law’.
4. The terms ‘delocalization’ and ‘denationalization'used in this article are interchangeable.
5. As adopted by the UN Commission on International Trade Law on 21 June 1985.
6. Art. 28(2) of the Model Law on International Commercial Arbitration provides that: ‘Failing any designation (of law applicable to the substance of the dispute) by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable’. See 2 Arbitration Int. (1986) p. 11, at p. 18, also in Redfern, A. and Hunter, M., Law and Practice of International Commercial Arbitration, 2nd edn. (1991) App. 21, p. 798, at p. 806, pp. 508–527;Google Scholar see also Herrmann, G., ‘UNCITRAL Adopts Model Law on International Commercial Arbitration’, 2 Arbitration Int. (1986) p. 2;CrossRefGoogle ScholarHerrmann, G., ‘The UNCITRAL Model Law – Its Background, Salient Features and Purposes’, 1 Arbitration Int. (1985) p. 6.CrossRefGoogle Scholar
7. See Redfern, and Hunter, , op. cit. n. 6, at pp. 525–527.Google Scholar
8. See Anton, A.E., Private International Law (1990) pp. 268–273.Google Scholar
9. See generally, Lando, O., ‘The Conflict of Laws of Contracts: General Principles’, 189 Hague Recueil (1984–VI) pp. 225–448;Google ScholarWeintraub, R.J., ‘Fundamental Developments in Choice of Law for Contracts’, 187 Hague Receil (1984–IV) pp. 239–306;Google ScholarDavid, R., L'Arbitrage dans le Commerce International (1982);Google ScholarBatiffol, H., Les Controls en droit international Privé Comparé (1981);Google ScholarSmedresman, P.S., ’Conflict of Laws in International Commercial Arbitration: A Survey of Recent Developments’, 7 Calif. WILJ (1977) p. 263.Google Scholar
10. Rules for the International Chamber of Commerce Court of Arbitration, Art. 13.3 reprinted in 15 ILM (1976) p. 395; Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, March 18, 1965, Art. 42.1: 17 UST 1270; TIAS No. 6090, 576; UNTS 159 reprinted in 4 ILM (1965) p. 532; UN Conventions on International Trade Laws (UNCITRAL) Rules of Arbitration Art. 33(1) in II YB Com. Arb. (1977) p. 161; Model Law on International Commercial Arbitration (1985) Art. 28(2); European Convention on International Commercial Arbitration (1961), 484 UNTS 364, 16 May 1961, VII (I). See also B.P. v. Libya, 53 ILR (1979) p. 326.Google Scholar
See also Craig, W.L. et al. , International Chamber of Commerce Arbitration, 2nd edn. (1990) at pp. 283–292;Google ScholarDore, I.I., Arbitration and Conciliation under the UNCITRAL Rules: A Textual Analysis (1986).Google Scholar
11. See Goldman, B., ‘Les conflits de lois dans l'arbitrage international de droit privé’, 109 Hague Recueil (1963-II) pp. 347, 409.Google Scholar
12. See generally, Prebble, J., Choice of Law to Determine the Validity and Effects of Contract (thesis, Cornell University, 1972);Google ScholarPrebble, J., ‘Choice of Law to Determine the Validity and Effect of Contracts: A Comparison of English and American Approaches to Conflict of Laws’, 3 Cornell LR (1973) p. 433;Google ScholarJaffey, A.J.E., ‘Essential Validity of Contracts in the English Conflicts of Laws’, 23 ICLQ (1974) p. 1;CrossRefGoogle ScholarJaffey, A.J.E., ‘The English Proper Law Doctrine and the EEC Convention’, 33 ICLQ (1984) p. 531;CrossRefGoogle ScholarUche, U.U., ‘Conflict of Laws in a Multi-Ethnic Setting: Lessons from Anglophone Africa’, 228 Hague Recueil (1991-III) p. 273.Google Scholar
13. Lipstein, K., ‘International Arbitration between Individuals and Governments and the Conflicts of Laws’, in Cheng, B. and Brown, E.D., eds., Contemporary Problems in International Law (1988) p. 177, at pp. 182–189;Google Scholar see also Freund, P.A., ‘Characterization with Respect to Contracts in the Conflict of Laws’, in Lectures on the Conflict of Laws and International Contracts (1949) at pp. 158–164;Google ScholarRobertson, A.H., Characterization in the Conflict of Laws (1940).Google ScholarFrihagen, A., ‘The Legal Characterisationof Resource Interests: Does it Matter?’, in Energy Law‘ 88Google Scholar (Proceedings of the advanced seminar on petroleum, minerals & energy resources law organised by the IBA's Section on Energy & Natural Resources Law in Sydney, Australia, March 1988) p. 345; P.D. Cameron, ‘The Legal Structure and Characterisationof a Resource Interest: Does it Matter?’, ibid. p. 356; Lalive, P. A., The Transfer of Chatties in the Conflict of Laws: A Comparative Study (1955) pp. 1–29.Google Scholar
14. Böckstiegel, K.H., Arbitration and State Enterprises (1984) p. 26.Google Scholar See also. R. v. International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC, where the court said ‘… in every case where a Government be a Party or not the general principle which determines the proper law of the contract is the same’, p. 531. See generally, Šarčević, P., ed., International Contracts and Conflict of Laws (1990);Google ScholarBriggs, A., ‘The Formation of International Contracts’, 2 LMCLQ (05 1990) p. 192Google Scholar.
15. Böckstiegel, , op. cit. n. 14, at p. 23;Google Scholar see also Böckstiegel, , ‘Arbitration between States and Private Enterprises in the International Chamber of Commerce’, 59 AJIL (1965) p. 579;Google Scholar Panel (I), ‘Arbitration between Governments and Foreign Private Firms’, Proc. Am. Soc. Int. L. (April 28, 1961) p. 69; Spofford, C.M., ‘Third-Party Judgment and International Economic Transactions’, 113 Hague Recueil (1964-III) p. 121;Google ScholarMann, F.A., ‘State Contracts and International Arbitration’, 42 BYIL (1967) p. 1;Google ScholarKetcham, W.T. Jr, ‘Arbitration between a State and a Foreign Private Party’, in Symposium, Rights and Duties of Private Investors Abroad (1965) p. 403;Google ScholarRay, G.W. Jr, ‘Law Governing Contracts between States and Foreign Nationals’, in the 1960 Proceedings of the Institute on Private Investment Abroad, p. 5;Google ScholarBroches, A., ‘Choice of Law Provisions in Contracts with Governments’, 26 Record of the Assoc. of the Bar of the City of NY (1971) p. 42,Google ScholarLalive, J.-F., ‘Contracts between a State or State Agency and a Foreign Company’, 13 ICLQ (1964) p. 987;CrossRefGoogle ScholarOlmstead, C.J., ‘Economic Development Agreements, Part II: Agreements between States and Aliens; Choiceof Law and Remedy’, 49 California LR (1961) p. 504;CrossRefGoogle ScholarSuratger, D., ‘ConsiderationsAffecting Choice-of-Law (Clauses in Contracts between Governments and Foreign Nationals’, 2 IJIL (1962) p. 273;Google ScholarBaloro, J., ‘The Legal Status of Concession Agreements in International Law’, 19 Comp. & ILJ of SA (1986) p. 410;Google ScholarHassan, M.M., ‘State and International Commercial Arbitration’, Revue Hellénique (1989–1990) pp. 315–339;Google ScholarBouchez, L.J., ‘The Prospects for International Arbitration: Disputes between States and Private Enterprises’, in Soons, A.H.A., ed., International Arbitration: Past and Prospects (1990)Google Scholar with comments on it by Jaenicke, G.J., on p. 155;Google ScholarSimmons, K.R., ‘International Arbitration between States and Corporate Entities: A Cautionary Note’, in Lew, J.D.M., ed., Contemporary Problems in International Arbitration (1986) p. 273;Google Scholar P. Lalive, ‘Arbitration with Foreign States or State Controlled Entities: Some Practical Questions’, ibid. p. 289; J.P. Carver, ‘The Strengths and Weaknesses of International Arbitration Involving a State as a Party: Practical Implications’, ibid. p. 264; A.H. Herrmann, ‘Dispute between State and Foreign Companies’, ibid. p. 250; Westberg, J.A., ‘The Applicable Law Issue in International Business Transactions with Government Parties – Rulings of the Iran-United States Claims Tribunal’, 2 ICSID Rev. (1987) p. 473;CrossRefGoogle ScholarCrook, J.R., ‘Applicable Law in International Arbitration: The Iran-US Claims Tribunal Experience’, 83 AJIL (1989) p.278;CrossRefGoogle ScholarEisemann, P., Report on the Present Situation of International Commercial Arbitration Between State or State Enterprises (1975)Google Scholar (paper presented to the Fifth International Arbitration Congress, New Delhi); Domke, M., ‘The Israeli-Soviet Oil Arbitration’, 53 AJIL (1959) p. 708;CrossRefGoogle ScholarDomke, M., ‘Arbitration between Governmental Bodies and Foreign Private Finns’, 17 Arbitration J. (NS) (1962) p. 129;Google ScholarBroches, A., ’Choice of Law Provision in Contracts with Governments’, in Reese, W.L.M., ed., International Contracts: Choice of Law and Language (1962) p. 64;Google ScholarBoggiano, A., Contratos Internacionales (1990).Google Scholar
16. Government of Kuwait v. American Independent Oil Co. (1984) 66 ILR 560 (6), 561 (8);Google ScholarDelaume, G.R., ‘State Contracts and Transnational Arbitration’, 75 AJIL (1981) p. 784, at p. 802.CrossRefGoogle Scholar
17. See generally, Klein, F.-E., ‘The Law to be Applied by the Arbitrator to the Substance of the Dispute’, in Schultszand, J.C.van den Berg, A.J., eds., The Art of Arbitration (1982) p. 189.Google Scholar
18. See S.P.P., (Middle East) Ltd. et al. v. Arab Republic of Egypt, 22 ILM (1983) p. 752,Google Scholar at p. 769 para. 49; see also ICC Award (16 June, 1960), Arb. Rechtspraak, 1960, 281 (in English); Ad hoc Arb. Award (15 August, 1957), Arb. Rechtspraak, 1959, p. 243 (in Dutch); Arb. Court ofthe Bulgarian Chamber of Commerce, Award 21/56, 1/ 56, 5/55, 2/56, 16/56, 10/56, 17/56, 9/56, 67/64, reported in Journal de droit international (1967) pp. 171 et seq. and p. 175. See the Final Award in ICC Case No. 6268 of 18 May 1990,16 YB Comm. Arb. (1991) p. 119, at pp. 120–122.
19. See S.P.P.(Middle East) Ltd. et al. v. Arab Republic of Egypt 22 ILM (1983) p. 752, at p. 769,Google Scholar para. 49, in favour ofthe lex loci solutionis; see also Petroleum Development Ltd. v. Sheikh of Abu Dhabi (1951) 18 ILR p. 144;Google Scholar ICC Arbitration No. 1472, Award 196S, in Revue de l‘arbitrage (1973) p. 141.
See also Foreign Trade Arbitration Commission, Moscow: Award 4 May 1957 Necton S.A. (Belgium) v. Prodintorg, Collected Arbitration cases FTAC No. 61, also in Journal du droit international (1960) p. 880;Google Scholar see also Collected Arbitration Cases FTAC (4 vols, covering 1934–1965) Nos. 18, 29, 34, 36, 40, 44–46, 50, 52–54, 56, 60, 62, 68, 75–78, 125, 131.
See the Interim Award in ICC Case No. 6560 of 1990, 17 YB Comm. Arb. (1992) pp. 226–229; see also the Final Award in ICC Case No. 6283 of 1990, 17 YB Comm. Arb. (1992) p. 178, at p. 179.
20. See the Interim Award in ICC Case No. 6560 of 1990, 17 YB Comm. Arb. (1992) pp. 226–229; see also the Final Award in ICC Case No. 6283 of 1990, 17 YB Comm. Arb. (1992) p. 178, at p. 179.
21. See the Final Award in ICC Case No. 5885 of 1989, 16 YB Comm. Arb. (1991) p. 92; see also the Hague Convention on the Law Applicable to International Sales (1955) Art. 3(1).
22. ICSID Convention of 1965 Art. 42(1).
23. Sapphire International Petroleum Ltd. v. National Iranian Oil Co. (1963), 35 ILR p. 171;Google ScholarSaudi Arabia v. Arabian American Oil Co. (1959), 27 ILR p. 165, at p. 166;Google ScholarRevere Copper and Brass Inc. v. Overseas Privatelnt. Corp. (1978), 56 ILR p. 294;Google Scholar for other possibilities see 18 Int. Lawyer, (1984) p. 245, at pp. 255–256; Ann. IDI (1979–11) p. 281Google Scholar, Arts. 1 and 2.
Reese, W.L.M., ’Dépaçage: A Common Phenomenon in Choice of Law’, 73 Columbia LR (1973) p. 58:CrossRefGoogle Scholar ‘Dépeçage can be defined broadly to cover all situations where the rules of different States are applied to govern different issues in the same case. It can be defined more narrowly to be present only when the rules of different States are applied to govern different substantive issues, and most restrictive definitions would confine the term to situations where by applying the rules of different States to different issues a result is reached which could not be obtained by exclusive application of the law of any one of the States concerned’.
24. See Dicey and Morris on the Conflict of Laws, 10th edn. (1980) vol. 2, at p. 1127;Google ScholarSassoon, D.M., ‘Choice of Tribunal and the Proper Law of the Contract’, J. Bus. L. (1964) p. 18;Google ScholarCollins, L., ‘Arbitration Clauses and Forum Selecting Clauses in the Conflict of Laws: Some Recent Developments in England’, 2 J. Mar. L. & Comm. (1971) p. 363.Google Scholar
25. 47(2) Ann. IDI (1957) p. 491, at p. 496.
26. See 48(2) Ann. IDI (1959) at p. 264.
27. Mann, F.A., ‘The Theoretical Approach Towards the Law Governing Contracts between States and Private Foreign Persons’, 11 Revue Beige (1975) p. 562, at p. 565.Google Scholar See also Mann, , ‘Lex Facit Arbitrum’, in Sanders, P., ed., International Arbitration: Liber Amicorum for Martin Domke (1967) p. 157, at pp. 159–160.Google Scholar See the observations of Mann in 63(1) Ann IDI (1989) p. 173; Graveson, R.H., Conflict of Laws, 7th edn. (1974) p. 57.Google Scholar But see ‘The UNCITRAL Model Law – Lex Facit Arbitrum’ – The Notes Editors, 2 Arbitration Int. (1986) no. 3, pp. 241–261.
28. In many awards arbitrators relied on the rules of lex fori. See, for instance, the Sapphire award, 35 ILR at p. 171;Google ScholarAlsing Trading Co. Ltd. and Svenska Tandsticks Aktiebolaget v. Greece (Award of 22 December 1954), 23 ILR p. 633,Google Scholar at p. 637. Cf., BP. v. Libya, 53 ILR p. 309,Google Scholar at pp. 326–27; The Government of Kuwait v. Aminoil, 66 ILR at p. 560.Google Scholar
29. In the Economic Commission for Europe (ECE), the negotiatorsof the European Convention on International Commercial Arbitration 1961 rejected the Institut's position and adopted an alternative approach that has gained a wide following. According to the Convention, arbitrators have wide discretion as to the applicable conflict of laws to determine the proper law when such a provision to this effect is absent in the contract. See Art. VII(I) of the European Convention on International Commercial Arbitration 1961,484 UNTS 364, reprinted in Brower, C. and Marks, L., eds., International Commercial Arbitration (1983) p. 215.Google Scholar See also Art. 13(3) of the ICC Arbitration Rules, 28 ILM (1989) p. 231; Art. 33 of the UNCITRAL Arbitration Rules and Art. 28 of UNCITRAL's 1985 Model Law on International Commercial Arbitration, 15 ILM (1976) p. 701, and 24 ILM (1985) at p. 1302, respectively.
30. Batiffol has stressed the contrast between State judges, who are bound by the conflict rules of their State, and international arbitrators, who are not rendering justice in the name of any State. See Batiffol, H., ‘L'arbitrage et les conflits de lois’, Revue de l'arbitrage (1957) p. 111;Google Scholar ICC Award No. 1250 of May 1954, 5 YB Comm. Arb. (1980) p. 168; see also Holleaux, in Revue de l'arbitrage (1964) p. 134;Google ScholarCarlston, K.S., ‘PsychologicalandSociologicalAspectsoftheJudicialand Arbitration Processes’, in Sanders, , ed., op. cit. n. 27, p. 44;Google Scholar I.N.D. Wallace, Q.C., ‘Control by the Courts: A Plea for More, Not Less’, 6 Arbitration Int. (1990) no. 3, p. 253
31. See the Kuwait v. Aminoil arbitration case, Aminoil Counter-Memorial (5 January 1981), vol. I (Text), Pleadings, Book 4, pp. 103–111, para. 226 et seq. [The Pleadings are available at the Research Centre for International Law, University of Cambridge, UK].
32. See Böckstiegel, K.-H., The Legal Rules Applicable in International Commercial Arbitration Involving States or State-ControlledEnterprises (1982) p. 52;Google ScholarLew, J., Applicable Law in International Commercial Arbitration (1978) pp. 252–253;Google Scholar see also Nusaire, Y.A.M., International Arbitration: the Place and the Stages of Arbitration (thesis, C.P.M.L.S., University of Dundee, 1987).Google Scholar
33. Böckstiegel, , op. cit. n. 14, at p. 27.Google Scholar
34. S.P.P. (Middle East) Ltd. et al. v. Arab Republic of Egypt, 22 ILM (1983) p. 752, at p. 769,Google Scholar para. 49. Cf., ICC Arbitration award 16 June 1960, Arb. Rechtspraak, 1960, p. 281 (in English); Ad hoc Arbitration award 15 August 1957; Arb. Rechtspraak, 1959, p. 243 (in Dutch); Arbitration court of the Bulgarian chamber of commerce awards 21/56, 1/56,5/55,2/56, 16/56, 10/56,17/56, 9/56, 67/64 as reported by Kojouharoff, in Journal du droit international (1967) p. 171 et seq, and p. 175;Google Scholar Foreign Trade Arbitration Commission, Moscow: Award of 4 May 1957, NectionS.A. (Belgium))v. Prodintorg; see Collected Arbitration cases FTAC No. 61, also published in Journal du droit international (1960) p. 880;Google Scholar see Collected Arbitration cases FTAC (four vols. covering 1934–1965) Nos. 18, 29, 34, 36, 40, 44–46, 50, 52–54, 56, 60, 62, 68, 75–78, 125, 131; ICC Arb. No. 1472 Award 1968, see Revue de l'arbitrage (1973) p. 141;Google Scholar see also Hober, K., ‘Arbitration in Moscow’, 3 Arbitration Int. (1987) no. 2, pp. 119–163.CrossRefGoogle Scholar
35. See Saudi Arabia v. Aramco (1959), 27 ILR p. 117, at pp. 166, 167;Google ScholarPetroleum Development Ltd. v. Sheikh ofAbu Dhabi (1951), 18 ILR p. 144, at p. 149;Google Scholar see also Kuwait v. Aminoil, the Government's Memorial (May 1980), Pleadings, Bk. 3, paras. 3.35–3.37, at pp. 59–60.
36. This is also known as the ‘Centre of gravity’ or ‘most significant contacts’ theory of the contract conflict of laws.
37. Clarke, M.A., The Law of Insurance Contracts (1989) at p. 23.Google Scholar
38. The Resolution ‘The Proper Law of the Contract in Agreements between a State and a Foreign Private Person’ of the Institut de Droit International (adopted by the Institut at its Athens Session, September 4–13, 1979), 58 Ann. IDI (1979) pp. 193, 195 (Arts. 1 and 5).Google Scholar
39. Idem.
40. [1949] 1 KB p. 482, at pp. 490, 491.
41. In re United Railways of Havana & Reg la Warehouses Ltd. [1961] AC p. 1007, at p. 1068.
42. [1951] AC 201, 219; see also Tomkinson v. First Pennsylvania Banking and Trust Co. [1961] AC 1007;Google ScholarRossano v. Manufacturers Life Insurance Co. Ltd. [1963] 2 QB 352, per McNair, J.Google Scholar
43. Mann, F.A., ‘The Proper Law of the Conflicts of Law’, 36 ICLQ (1987) p. 437, at pp. 437–438:CrossRefGoogle Scholar ‘The expression “the proper law” is peculiarto the law of England and the Commonwealth. It does not seem to be usual in the United States and it means little, if anything to a Continental lawyer, for it makes sense only in an uncodified system of law. Taken literally, the term simply denotes the appropriate legal system. It says nothing about the all-important question how you find that system, how you identify it. There is, however, room for the impression that if you ask an English lawyer for a definition he will go a little further and mention the legal system with which the matter in issue is closely or, perhaps, most closely connected. John Morris certainly used the phrase in this sense’.
See also Dicey and Morris on The Conflict of Laws, vol. 2, 11th edn. (1987) pp. 1190–1197:Google Scholar ‘When the intention of the parties to a contract with regard to the law governing it is not expressed and cannot be inferred from the circumstances, the contract is governed by the system of law with which the transaction has its closest and most real connection’. Rule 145 sub-rule 3, ibid.; Graveson, R.H., ‘The Proper Law of Commercial Contracts as Developed in the English Legal System’, in Lectures on the Conflict of Laws and International Contracts (1949),Google ScholarSummer Institute on International and Comparative Law: University of Michigan Law School (1951) pp. 1–33;Google ScholarCarter, P.B., ‘Contract in English Private International Law’, 57 BYIL (1986) p. 1;Google ScholarNorth, P., Private International Law Problems in Common Law Jurisdictions (1993) p. 103 et seq.Google Scholar
44. 80/934/EEC, Official Journal of the European Communities (1980) L. 266.Google Scholar The Convention entered into force on 1 April 1991 in France, Italy, Denmark, Luxembourg, Greece, Germany, Belgium and the UK: ibid. (1991) C. 52/1. See also generally, Plender, R., The European Contracts Convention: The Rome Convention on the Choice of Law for Contracts (1991);Google ScholarNorth, P. M., Contract Conflicts (1982);Google ScholarJayme, E., ‘The Rome Convention on the Law Applicable to Contractual Obligations (1980)’, in Šarčević, , ed., op. cit. n. 14, p. 36.Google Scholar
45. Restatement (2nd) S. 188 (1971).Google Scholar See also Leflar, R., American Conflicts Law, 3rd edn. (1977) pp. 306–309;Google ScholarWrood, P., Law and Practice of International Finance (1980) p. 12.Google Scholar RecentNew York cases have followed the rule that a contractual provision setting forth the law applicable to the agreement in question will be followed so long as the transaction bears a reasonable relationship to the law chosen or, more precisely stated, to the jurisdiction whose law is chosen. See A.S. Rampell Inc. v. Hyster Co. 3 N.Y. 2d 369, 144 N.E. 2d 371, 165 N.Y.S. 2d 475 (1957); Reger v. Nat‘l Ass'n of Bedding Manufacturers Group Insurance Trust Fund, 83 Misc. 2d 327, 372 N.Y.S. 2d. 97 (Sup. Ct. Westchester County 1975); Fleischmann Distilling Corp. v. Distillers Co. Ltd. 395 F. Supp. 221 (S.D.N.Y. 1975); B.M. Heede Inc. v. West India Machinery and Supply Co. 272 F. Supp. 236 (S.D.N.Y. 1967); General Electric Co. v. Masters Mail Order Co. 244 F. 2d 681 (2d Cir.), Cert, denied, 355 U.S. 824 (1957). See generally, Gruson, M., ‘Governing Law Clauses in Commercial Agreements – New York's Approach’, 18 Columbia JTL (1979) p. 323.Google Scholar
46. Uniform Commercial Code – 1978 Official Text, The American Law Institute, National Conference of Commissioners on Uniform State Laws (1980) at p. 8. See also Comment, ‘The Uniform Commercial Code and Conflict of Laws’, 9 AJCL (1960) p. 458;CrossRefGoogle ScholarCullen, R.K., ‘Conflict of Laws Problems Under the Uniform Commercial Code’, 48 KYLJ (1960) p. 417;Google Scholar B. Katzenbach in W.D. Malcolm, ‘Panel Discussion on the Uniform Commercial Code’, 12 Business L. (1956) p. 49, at p. 68; Nordstrom, R.J., ‘Choice of Law and the Uniform Commercial Code’, 24 Ohio St. LJ (1963) p. 364;Google ScholarNordstrom, R.J. and Ramerman, D.B., ‘The Uniform Commercial Code and the Choice of Law’, Duke LJ (1969) p. 623;Google ScholarRheinstein, M., ‘Conflict of Laws in the Uniform Commercial Code’, 16 Law & Comp. Prob. (1951) p. 114;CrossRefGoogle ScholarTuchler, D.J., ‘Boundaries to Party Autonomy in the Uniform Commercial Code: A Radical View’, 11 St. Louis ULJ (1967) p. 180.Google Scholar
47. The Foreign Economic Contract Law of the People‘s Republic of China (Art. 5), adopted by the 10th session of the Standing Committee of the Sixth National People's Congress on March 21, 1985, State Council Bulletin, No. 9, at p. 217, reprinted and translated in 12 China Bus. Rev. (1985) No. 4, pp. 54–55. See also Zheng, H., ‘A Comparative Analysis of the Foreign Economic Contract Law of the People's Pepublic of China’, 4 China LR (1986) p. 227Google Scholar, also ’Recent Developments in the Foreign Economic Contract Law of the People's Republic of China’, 13 World Competition Law & Econ. Rev. (1989) p. 106;Google Scholarde Lisle, J.L., ‘Foreign Investment: Foreign Economic Contract Law’, 27 Harvard Int. LJ (1986) p. 275;Google Scholar see also generally, Potter, P.B., The Economic Contract Law of China: Legitimation and Contract Autonomy in the PRC (1992).Google Scholar
48. See the Interim Award in ICC Case No. 6560 of 1990, 17 YB Comm. Arb. (1992) p. 226, at p. 227, see also the Final Award in ICC Case No. 6283 of 1990, 17 YB Comm. Arb. (1992) p. 178, at p. 179.
49. See the Final Award in ICC Case No. 6363 of 1991, 17 YB Comm. Arb. (1992) p. 186, at pp. 190–191.
50. Award 1961 No. Vb 1024, cited by Mora in Questions of International Law (1964) p. 141.Google Scholar See also ICC Award, No. 805, Doc. No. 410/81, 24 October 1951; ICC Award No. 1001, Doc. No. 410/777, 12 October 1960; ICC Award No. 1005, Doc. No. 410/592, 10 April 1958; ICC Award No. 1846, Doc. No. 410/1953, 24 February 1971; ICC Award No. 1177, Doc. No. 410/1614,13 March 1968; ICC Award No. 1445, Doc. No. 410/1492,18 January 1967; ICC Award No. 1009, Doc. No. 410/514, 13 November 1957; ICC Award No. 1442, Doc. No. 410/1665, 25 September 1968; ICC Award No. 1082, Doc. No. 410/744, 15 June 1960; ICC Award No. 1687, Doc. No. 410 /1855,10 June 1970; ICC Award No. 1529, Doc. No. 410/1658, 10 July 1968; ICC Award No. 1717 (1972).
51. See the Interim Award in ICC Case No. 6560 of 1990, 17 YB Comm. Arb. (1992) p. 226.
52. Ibid., at p. 229.
53. Lew, , op. cit. n. 32, p. 342.Google Scholar
54. Soviet Union: Civil Code (1964) Art. 566; Statute of Japan (Private International Law) Art. 7(2); Sawada, T., ‘Practice of Arbitration Institutions in Japan’, 4 Arbitration Int. (1988) No.2, p. 120;CrossRefGoogle Scholar Thailand: Private International Law Art. 13; Czechoslovakia: Private International Law and International Civil Procedural Law Art. 10(3); Bustamante Code Art. 186; Poland: Code on Private International Law Art. 29.
55. Batiffol, H., Private International Law (1970–1971);Google ScholarGraveson, , op. cit. n. 27, p. 418;Google Scholar Thailand: Private International Law Art. 13.
56. The former German Democratic Republic: The Act Concerning the Law Applicable to International Private, Family and Labour Law Relationships as well as to International Commercial Contracts Art. 12(2).
57. Cherian, J., International Contracts and Arbitration (1975) p. 22;Google ScholarArsanjani, M.H., International Regulation of Internal Resources (1981) p. 200.Google Scholar When different rules of conflict all point to the same applicable law, the arbitrator is inclined to consider a choice as superfluous. See also Ramazani, K., ‘Choice-of-Law Problems and International Oil Contracts: A Case Study’, 11 ICLQ (1962) p. 503,CrossRefGoogle Scholar who observed in the context of the oil contract concluded between the National Iranian Oil Company and the Pan American International Oil Company that: ‘… the application of the (objective) tests of sovereignty, nationality of the agent, the place of contracting, and the place of performance would indicate that the applicable law is Iranian Law. Furthermore, other tests such as the nature of the subject-matter and the place where it is situated, lex loci rei sitae, would also indicate the same because the subject-matter is Iranian Petroleum located within the Iranian domain’ (p. 509).
58. Delaume, G.R., ‘Convention on the Settlement of Investment Disputes Between States and Nationals of Other States’, 1 Int. Lawyer (1966) p. 64, at p. 78;Google Scholar to this effect, see in a recent arbitration Wintershall A.G. v. Government of Qatar, 28 ILM (1989) p. 795 et seq.Google Scholar
59. Westring, G., ‘Construction and Management Contracts’, in Horn, N. and Schmitthoff, C., eds., 2 The Transnational Law of International Commercial Transactions (1982) p. 175, at pp. 181–183Google Scholar; Davis, M., ‘Choice of Applicable Law in International Construction Contracts’, in Uff, J. and Jones, E., eds., International and ICC Arbitration (1990) pp. 213–227.Google Scholar
60. Oberreit, W.W., ‘Turnkey Contracts and War: WhoseRisk?’, in Horn, and Schmitthoff, , eds., op. cit. n. 59, pp. 191–196.Google Scholar
61. Plaff, D., ‘International Licensing Contracts, Transfer of Technology and Transnational Law’, in Horn, and Schmitthoff, , eds., op. cit. n. 59, pp. 199, 208–209Google Scholar; see also Licensing Guide for Developing Countries (World Intellectual Property Organization No. 620E, 1977) p. 635; J. Kasto, International Law of Technology (1992); M. Blakeney, Legal Aspects of the Transfer of Technology to Developing Countries(1989); Mudenda, G.N., The Development of the Mining Industry in Zambia: A Study in the Transfer of Technology (thesis, University of Sussex, 1984)Google Scholar; G. Oldham et al., Technology Transfer to the Chinese Offshore Oil Industry (1988), SPRU Occasional Papers, no. 27; Kassim-Momodu, M., ‘Transfer of Technology in the Petroleum Industry: the Nigerian Experience’, 22 JWT (1988) no. 4, pp. 51–66.Google Scholar
62. See, e.g., ICC Award 16 June 1960; G.M. Brumbaugh, ‘Choice-of-Law Provisions in Licensing Contracts’, in Reese, , ed., op. cit. n. 15, pp. 36–43.Google Scholar
63. See the Serbian Loans case, PCIJ Series, A. Nos. 20/21 (1929); see also Messageries Maritimes case, Arrêt de la Cour de Cassation, Ch. Civ. 21, Juin 1950, D. 1951, p. 749. The Government of Kuwait, in Kuwait v. Aminoil, stated in its Memorial that there was ‘a strong presumption, not only in French law but also in other legal systems too, including public international law, that, where a State is a party to a contract, the law of that State is the proper law of the contract’. See the Government's Memorial (May 1980), Pleadings, Bk. 3, para. 3.37, at p. 60; see also the Government's Reply (April 1981), Pleadings Bk. 9, paras. 2.40–2.41, paras. 2.42–2.54, at p. 22, pp. 23–27.
64. See Mann, , in Revue Beige, loc. cit. n 27, at p. 564:Google Scholar ‘The rule that in looking for the proper law of transactions with States very great, though by no means overriding, weight has to be given to the character of the State party is universal, supported by common sense and applicable to legislative instruments with particular force’. See also in Mann, , Further Studies in International Law (1990) p. 264, at p. 266Google Scholar; Sornarajah, M., The Pursuit of Nationalized Property (1986) p. 103.Google ScholarSchwarzenberger, G., Foreign Investments and International Law (1969) p. 5.Google Scholar Schwarzenbergerand Delaume have argued that a sovereign State cannot be presumed to have subjected a contract to which it is a party to any legal system other than its own: Schwarzenberger, G., ‘The Arbitration Pattern and the Protection of Property Abroad’, in Sanders, , ed., op. cit. n. 27, pp. 317–318Google Scholar; Delaume, G., Transnational Contracts: Applicable Law and Settlement of Disputes, re-issue (1985) vol. 2Google Scholar, Ch. 14; Lew, J.D.M., Applicable Law in International Commercial Arbitration (1978) pp. 348–349:Google Scholar ‘In international law, it is beyond question that a sovereign State is entitled to regulate the rights pursuant to and the conditions of investment within its territory. A person investing in a foreign country does so knowing he is subject to the laws of that country; he accepts the laws of the country of investment as regulating the taxation payable and his right to remit to his own country the benefits of its investment; he also accepts die risk as he does in his own country of changes which may occur in government and the policy towards foreign investors and their property’.
65. See Aminoil Counter-Memorial (5 January 1981), vol. I (Text), Pleadings, Bk. 4, para. 240, at p. 109.
66. See Lalive, , loc. cit. n. 15, p. 987,Google Scholar at p. 993. As is well-known to both the Anglo-American and Civil law systems, ‘according to the “objectivist theory” the proper law is that of the country with which the contract has “the most real connection”, while under the “subjectivist theory” it is contended that the applicable law is that to which the parties intended, or may fairly be presumed to submit themselves’. See also Ramazani, R.K., ‘Choice-of-Law Problems and International Oil Contracts: A Case Study’, 11 ICLQ (1962) p. 503, at p. 505.CrossRefGoogle Scholar Concerning the two theories, seeCohn, E.J., ‘The Objectivist Practice on the Proper Law of Contracts’, 6 ICLQ (1957) p. 373CrossRefGoogle Scholar et seq.; Chesire's International Contracts (1948); Mann, F.A., “The Proper Law of a Contract, a Reply’, 3 ICLQ (1950) p. 197Google Scholar; also Mann, , ‘England Rejects “Delocalised” Contracts and Arbitration’, 33 ICLQ (1984) p. 193, at p. 194: ‘(t)he search for the proper law impliedly chosen, i.e., a proper process of construction, will almost invariably render it unnecessary to resort to Viscount Simonds's deceptive formula (in Bonython v. Commonwealth of Australia [1951] AC 201, 219: “the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connection”) – deceptive, because the search for the closest and most real connection is in essence nothing else than the search for the implied term’. See also Jaffey in ICLQ (1984), loc. cit. n. 12, p. 531, at p. 545.CrossRefGoogle Scholar
67. Sometimes, the State or its controlled enterprise is mandatorily required by law to contract by reference to its own law, for instance in Saudi Arabia. This will probably be an advantage for the State contracting party. See Böckstiegel, , op. cit. n. 14, at pp. 29–30;Google ScholarSornarajah, M., The Pursuit of Nationalized Property (1986) p. 103.Google Scholar
68. See Paulsson, J., ‘Delocalization of International Commercial Arbitration: When and Why it Matters’, 32 ICLQ (1983) p. 53.CrossRefGoogle Scholar
69. See generally A. Samuel, Jurisdictional Problems in International Commercial Arbitration (1989) Ch. 1; de Vries, H.P., ‘International Commercial Arbitration: A Traditional View’, 1 J. Int. Arb. (1984) p. 7;Google Scholar A.T. von Mehren, ‘To What Extent is International Commercial Arbitration Autonomous?’, in Le Droit des Relations Économiques Internationales: Études Offerts a B. Goldman (1982) p. 217; Rubelin-Devichi, J., L'arbitrage: Nature Juridique, droit interne et droit international privé (1965) para. 584, at p. 365Google Scholar; Straus, D.B., ’The Growing Consensus on International Commercial Arbitration’, 68 AJIL (1974) p. 709. Cf., Kuwait v. Aminoil, The Government's Memorial (December 1980), Pleadings, Bk. 5, paras. 3.39–3.42, pp. 67–69.CrossRefGoogle Scholar
70. Goldman, , loc. cit. n. 11, p. 351.Google Scholar
71. Redfern, A., “The Arbitration Between the Government of Kuwait and Aminoil, 55 BYIL (1984) p. 65, at p. 77.Google Scholar
72. See generally, Mann, , in ICLQ (1984), loc. cit. n. 66, p. 193.Google Scholar
73. See also Shaikh, C., ‘Proposed New Approach to Resolving Disputes in the Oil Industry’, 8 Oil & Gas L. and Taxation Rev. (1990) no. 5, pp. 119–120.Google Scholar
74. Art. VII(l)of the 1961 European Convention on International Commercial Arbitration, Art. 33(1) of the UNCITRAL Arbitration Rules, Art. 13(3) of the Rules of the ICC Court of Arbitration and Art. 28(2) of the 1985 UNCITRAL Model Law, reproduced in Derains, Y., ‘Public Policy and the Law Applicable to the Dispute in International Arbitration’, in Sanders, P., ed., Comparative Arbitration Practice and Public Policy in Arbitration (1987) p. 226, at pp. 230–232;Google Scholar see also Art. 1496 of the French Code of Civil Procedure 1981 and Art. 12 of the Djibouti Code on International Arbitration 1984. The New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitration Awards also impliedly confirms the arbitrator's discretion in this field.
75. B.P. v. Libya, 53 ILR, at p. 326.Google Scholar
76. ICC Arbitration No. 1776, Award 1970.
77. ICC Award No. 1048, Doc. No. 410/802, 11 January 1960.
78. See Goldman, , loc. cit. n. 11, p. 409.Google Scholar
79. B.P. v. Libya, 53 ILR, at p. 326.Google Scholar
80. Hirsch, A., ‘The Place of Arbitration and the Lex Arbitri’, 34 Arbitration J. (1979) no. 1, pp. 43–48Google Scholar; Lew, , op. cit. n. 64, at pp. 260–272.Google Scholar See generally, Samuel, A., ”The Effect of the Place of Arbitration on the Enforcement of the Agreement to Arbitrate’, 8 Arbitration Int. (1992) no. 3, pp. 257–280CrossRefGoogle Scholar; Park, W.W., ‘The Lex Loci Arbitri and International Commercial Arbitration’, 32 ICLQ (1983) p. 21.CrossRefGoogle Scholar See the Final Award in ICC Case No. 6268 of 18 May 1990, 16 YB Comm. Arb. (1991) p. 119, at p. 121. Cf., Kuwait v. Aminoil arbitration case, the Government‘s CounterMemorial, paras. 3·21,3·19–3·20; contra the Aminoil Reply (27 April 1981), PleadingsBk. 7, paras. 33–34, 40(b), 45.
81. ‘The arbitrator exercised his discretionary authority by selecting the law of the seat of arbitration (in that case Denmark) as the law applicable to the arbitral procedure. He apparently considered that an advantage of localizing the law in this way was that enforcement would be facilitated since the award made under the law of a contracting State would fall within the terms of the Convention on Enforcement of Foreign Arbitral Awards of 1958 (the so-called New York Convention). Attaching the award to the law of a particular State also provided the arbitrator with a developed procedural law for supplementary reference’. This point is brought out by Wetter, J.G. (who was Secretary of the tribunal) in The International Arbitral Process: Public and Private, vol. 2 (1979) pp. 409–410Google Scholar; see also the ICC Arbitration rules (reproduced in 13 YB Comm. Arb. (1988) p. 185) which stress in Art. 26 that the arbitrator ‘shall make every effort to make sure that the award is enforceable at law’.
82. Cf., Kuwait v. Aminoil arbitration case, the Government of Kuwait's Reply (April 1981), Pleadings Bk. 9, para. 2.47, at p. 25; Fouchard, P., L'arbitrage Commercial International (1965) paras. 554, 555.Google Scholar
83. 53 ILR, p. 297,Google Scholar at pp. 327–329.
84. Pleadings, Bk. 1, The Aminoil Memorial (2 June 1980), vol. I (Text) at p. 37, para. 104.
85. See Lando, O., ‘Conflict of Laws Rules for Arbitrators’, in Festschrift für Zweigert (1981) at pp. 157–178.Google Scholar
86. See Derains, Y.’ Report to the International Council for Commercial Arbitration Congress (Series No.2, Sanders, P., ed., UNCITRAL's Project for a Model Law on International Commercial Arbitration (1986) p. 169, at p. 189, ‘These methods (i.e., the three methods as mentioned) all tend to show that the parties had to expect that the law eventually chosen by the arbitrator would be applied. This is undeniably the case with respect to the cumulative application and the recourse to general principles of private international law, these two methods point to a law which a community to which the parties belong is unanimous in recognizing as applicable, whether it is a limited community, in the first case, or the international community, in the second. But this desire to meet the legitimate expectations of the parties is also not foreign to the method voie directe’.Google Scholar
87. Derains, , loc. cit. n. 74, p. 227,Google Scholar at p. 233; for more details see Derains, Y., ‘L'application cumulative par l'arbitre des systemes de conflit de lois intérésses au litige’, Rev. Arb. (1972) p. 93.Google Scholar
88. See, e.g., Lalive, P., ‘Les règies de conflit de lois appliquéesau fond du litige par l'arbitre international siégant en Suisse’, Rev. Arb. (1976) p. 155;Google ScholarLew, , op. cit. n. 32, at pp. 335–341.Google Scholar
89. ICC Award No. 953, Doc. No. 410/385,18 January 1956; ICC Award No. 787, Doc. No. 410/104,21 November 1952; ICC Award No. 986, Doc. No. 410/461,13 March 1957; ICC Award No. 1990, Doc. No. 410/2170,14 June 1972; ICC Award No. 953, Doc. No. 410 /385,18 January 1956.
90. See, e.g., Carolina Brass Inc. v. Iran, 12 Iran-USCTR (1986 III) pp. 139, 144Google Scholar. Cf., Iran v. United States (Case B I), 10 Iran-USCTR (1986 I) p. 207, at p. 216.Google Scholar
91. Lew, , op. cit. n. 32, at p. 335.Google Scholar
92. See ICC Case No. 1176.
93. Goldman, , op. cit. (1963) p. 347, at p. 414Google Scholar; Fouchard, op. cit. n. 82, for arguments in favour.
94. Akehurst, M., ‘Jurisdiction in International Law’, 46 BYIL (1972–1973) p. 145, at p. 222.Google Scholar
95. Liamco v. Libya, 62 ILR pp. 140–219, at p. 171;Google Scholar see also Saudi Arabia v. Aramco, 27 ILR p. 117, at pp. 161–162.Google Scholar
96. Diverted Cargoes case, ILR (1955) p. 820Google Scholar; 5 ICLQ (1956) p. 471Google Scholar; Rev. Crit. d.i.p. (1956) p. 278Google Scholar; 8 AFD I (1956) p. 427Google Scholar; Rev. Arb. (1956) p. 15Google Scholar. Alsing case (1954), 23 ILR p. 633Google Scholar; 8 ICLQ (1959) p. 320Google Scholar, with comments by Schwebel, . Aramco case (1958), 27 ILR p. 117, at p. 153 et seq.Google Scholar; Bastid in AFDI (1961) p. 300Google Scholar. Sapphire case (1963), 35 ILR p. 136 et seq. especially 170 et seq.Google Scholar; Lalive, in Annuaire Suisse (1962) p. 273Google Scholar; 13 ICLQ (1964) p. 1011Google Scholar; Texaco/Calasiaticv. Government of Libyan Arab Republic (1979), 53 ILR p. 442 et seq.Google Scholar; BP v. Libya (1979), 53 ILR p. 297, at p. 326 (Part VII, I)Google Scholar. European Convention on International Commercial Arbitration 1961 Art. VII, 484 UWTS( 1963–1964) p. 364, at p.374Google Scholar. See also Lipstein, K.,‘The General Principles of Private International Law’, 135 Hague Recueil (1972–1) p. 97, at pp. 167–193.Google Scholar
97. See ICC Award No. 1512/1971,1 YB Comm. Arb. (1975) at p. 129Google Scholar. It has been observed by K. Lipstein that ‘an international system of conflict of laws differs in substance from municipal private international law in four essential respects. It cannot rely on lex fori in matters of private law; renvoi is incapable, public policy is determined by international law; conflicts of classification are rare see 29 Transactions of Grotius Society (1944) p. 76Google Scholar; see also pp. 62–67. However, in other respects ‘rules of international conflict of laws’ do not appear to differ much from domestic rules of private international law (ibid.).
98. See the Williams case, The American-Venezuelan Claims Commission, in Moore, J.B., History and Digest of the Arbitrations to which United States has been a Party (1898) vol. IV, p. 4181, at p. 4182.Google Scholar
99. Böckstiegel, , op. cit. n. 14, at p. 27Google Scholar. Cf., von Mehren, A.T., ‘Special Substantive Rules for Multistate Problems: Their Role and Significance in Temporary Choice of Law Methodology’, 88 Harvard LR (1974) p. 347CrossRefGoogle Scholar. See generally, Lookofsky, J. M., Transnational Litigation and Commercial Arbitration:A Comparative Analysis of American, European andlnternationalLaw (1992)Google Scholar; El-Ahdab, A. H., Arbitration with the Arab Countries (1990)Google Scholar; Saleh, S., Commercial Arbitration in the Arab Middle East (1984).Google Scholar
100. Collier, J.G., Conflict of Laws (1987) at p. 363.Google Scholar
101. ICC Award 1959, see as reported in Fouchard, , op. cit. n. 82, at p. 389;Google Scholar ICC Award No. 3880/1982, 110 Clunet (1983) p. 897 and see Lew, , op. cit. n. 32, No. 283, pp. 327–335.Google Scholar
102. Economy Forms Corporations. Governmentof the Islamic Republic of Iran, the Ministry of Energy, Dam and Water Works Construction Co. (SABIR), Sakatemani Mani, Sahami Kass (MANA), and Bank Mellat (formerly Bank of Tehran), Award 55–165—1 (June 13, 1983), 3 Iran-USCTR (1984) p. 42, at p. 48.Google Scholar
103. Idem. For criticism on the case see Chen, in Chinese YIL & Aff. (1984) p. 137.Google Scholar
104. 7 Iran-USCTR (1984–III) p. 90.
105. Idem at p. 99; see also Uiterwyck Corp. v. Iran, para. 64, IALR (Iranian Assets Litigation Reporter), July 6, 1988, at pp. 16,095, 16, 102; Queens Office Tower Assocs v. Iran Nat';l Airlines Corp., 2 Iran-USCTR (1983–1) p. 247, at p. 250.
106. Texaco v. Libya, 53 ILR at p. 442.Google Scholar
107. Liamco v. Libya, 62 ILR at p. 171Google Scholar
108. Idem; in the Aramco Award the parties'; choice of law was approached in terms of the general principles of private international law, 27 ILR p. 117, at pp. 154, 156.Google Scholar
109. El-Kosheri, A.S. and Riad, T.F., ‘The Law Governing a New Generation of Petroleum Agreements: Changes in the Arbitration Process’, 1 ICSID Rev. (1986) no. 2, p. 273CrossRefGoogle Scholar; see also Kuwait v. Aminoil, The Government's Memorial (May 1980), Pleadings Bk. 3, paras. 3·32–3·33, at pp. 58–59Google Scholar. But see the Aminoil Counter-Memorial, vol. I (Text), para. 238 et seq.
110. Lew, , op. cit. n. 32, at p. 327.Google Scholar
111. Rabel, E., Conflict of Laws A Comparative Study (1958) p. viiGoogle Scholar; see also Pommier, J.-C., Principe d';autonomie et lois du control en droit international privé conventionnel (1992).Google Scholar
112. See Lipstein, K. in 135 Hague Recueil (1972–I)p. 97, at p. 168Google Scholar; Kahn-Freund, in 143 Hague Recueil (1974–III)p. 20 etseq.Google Scholar; Lew, , op. cit. n. 32, at p. 328Google Scholar, who observes: ‘several conflict rules have attained a wide acceptance in many sovereign private international systems and such have been applied as rules generally accepted’.
113. See Maniruzzaman, A.F.M., ‘International Arbitrator and Mandatory Public Law Rules in the Context of State Contracts: An Overview’, 7 J. Int. Arb. (1990) no. 3, p. 53Google Scholar; see also El-Kosheri, and Riad, , loc. cit. n. 109, p. 273.Google Scholar
114. See Lalive, P., ‘Transnational (or Truly International) Public Policy and International Arbitration’, in Sanders, P., ed., Comparative Arbitration Practice and Public Policy in Arbitration (1987) p. 257, at pp. 301–309Google Scholar; Zaphiriou, G.A., The Transfer of Chatties in Private International Law (1956) pp. 25–30.Google Scholar
115. See the Serbian Loans case (France v. Kingdom of Serbs, Croats and Slovenes) 1929 PCIJ Ser. A., Nos. 20–21, at pp. 40–42 (Judgment No. 14 of July 12); ICC Award No. 1717/1972,101 Clunet (1974) p. 890.
116. Lipstein, , loc. cit. n. 13, at p. 194.Google Scholar
117. Akehurst, M., ‘Jurisdiction in International Law’, 46 BYIL (1972–1973)p. 145, atp. 222.Google Scholar
118. Toope, S.J., Mixed International Arbitration (1990) p. 51.Google Scholar
119. Idem.
120. Lew, , op. cit. n. 32, p. 225.Google Scholar
121. Idem, No. 302 et seq.
122. Bellet, P., ‘Forward’, 16 Law & Policy Int. Bus. (1984) at p. 673Google Scholar. Bellet, an original member of the Iran-US Claims Tribunal, remarked, with regard to the applicable law issue to be faced by the Tribunal, that: ‘It would have been extremely awkward for these arbitrators to have resorted to classic rules of conflict of law, forcing the arbitrators to choose between Iranian law and American law. Widi tensions running high, it was worth avoiding such choices, particularly in cases where the parties alleged political or economic coercion in the execution of certain contracts. In this way claimants and their opponents were practically always in agreement not to invoke any rigid conflict of law rules’ (p. 673).
123. Under Art. V of the Claims Settlement Declaration, the Iran-US Claims Tribunal has great flexibility in its choice of law. Accordingly, the Tribunal has sometimes rejected the application of municipal law and has applied general principles of law. It has also adopted its own procedural law and choice-of-law principles. With regard to the Iran-US Claims Tribunal, Stein pointed out that the Tribunal has generally declined the invitation of the Claims Settlement Declaration to enter into subtle and academically satisfying discussions of conflict of laws principles, see the remarks made by Stein, T.L. in ASIL: Proceedings of the 78th Annual Meeting (1984) pp. 229–233.Google Scholar
124. See US Dept. St. Bull., at p. 4.; 1 Iran-USCTR (1982) p. 9, at p. 11.Google Scholar
125. For example, Art. VII(I) of the European Convention on International Commercial Arbitration, Art. 13(3) of the ICC Arbitration Rules, Art. 33 of the UNCITRAL Arbitration Rules and Art. 28 of UNCITRAL's 1985 Model Law on International Commercial Arbitration all require arbitrators to act within some system of conflict of laws rules (as they deem applicable or determine appropriate).
126. See for a good discussion: Von Mehren, , loc. cit. n. 99, p. 347.Google Scholar
127. See, e.g., ICC Award No. 2886/1977,105 Clunet (1978) p. 996Google Scholar; ICC Award No. 2172, Doc. No. 410/2384, 1974.
128. See 27 Transactions of the Grotius Society (1942) at p. 151.Google Scholar
129. The decisions of the Mixed Arbitral Tribunals (MAT) are cited according to Gidel, G., Recueil des décisions des Tribunaux Arbitraux Mixtes, 9 vols. (1921—1930) (references are to the volume and page of the Recueil): (1) p. 587Google Scholar, ibid., p. 847; ibid., p. 899 (903). (2) p. 89; ibid., p. 235; ibid., p. 247; ibid., p. 753; ibid., p. 786. (3) p. 155; ibid., p. 220; ibid., p. 286; ibid, p. 296; ibid., p. 328; ibid., p. 340; ibid., p. 387; ibid., p. 408; ibid., p. 534; ibid., p. 570; ibid., p. 872, ibid., p. 988 (991); ibid., p. 1020. (4) p. 366; ibid., p. 417. (5) p. 200 (213); ibid., p. 224; ibid., p. 346; ibid., p. 637, ibid., p. 790. (6) p. 565; ibid., p. 671. (7) p. 221; ibid., p. 429; ibid., p. 589; ibid., p.792; ibid., p. 881. (8) p. 933; ibid., p. 1000. (9) p. 424; ibid., p. 560.
131. Lipstein, , loc. cit. n. 13, at p. 194.Google Scholar
132. Ibid.
133. See von Mehren, A.T., ‘Choice-of-Law Theories and the Comparative Law Problem’, 23 AJCL (1975) p. 751 et seq.CrossRefGoogle Scholar
134. Lena Goldfields case (Lena Goldfield Ltd. v. USSR) Award of 2 September 1930, note by Nussbaum in 36 Cornell LQ (1950) p. 51Google Scholar; Abu Dhabi case (Petroleum Development Ltd. v. Sheikh of Abu Dhabi) Award of 28 August 1951 in ICLQ (1952) p. 247Google Scholar; ILR (1956) p. 144.Google Scholar
135. See the Texaco Award, 53 ILR p. 389, p. 441 et seqGoogle Scholar. But see Sornarajah, M., ‘The Myth of International Contract Law’, 15 JWTL (1981) p. 187.Google Scholar
136. It is considered that the lex mercatoria has die advantage of doing away with the choice-oflaw process. The published awards show several instances of a preference of the lex mercatoria for the intricacies of private international law; see, e.g., ICC Award No. 3131/26 October 1979, reported in IPRax (1984) p. 97 (Pabalk TicaretLtd. Sirketi v. Norsolor S.A.), also in 9 YB Comm. Arb. (1984) p. 109; the ICC ad hoc Award of 23 July 1981, 8 YB Comm. Arb. (1983) p. 89, at p. 91. See also Jessup, P.C., Transnational Law (1956)Google Scholar; Schmitthoff, C.M., ed., The Sources of the Law of International Trade (1964)Google Scholar;Goldman, B., ‘Frontièrs du droit et “lex mercatoria”, 9 Archives de Philosophie du droit (1964) p. 177 et seq.Google Scholar; Loquin, E., L';amiable composition en droit compare et international (1980)Google Scholar; Goldman, B., ‘La Lex Mercatoria dans les contrats et l'arbitrage internationaux: Realite et perspectives’, 106 Clunet (1979) p. 475Google Scholar; Fauchard, P., L'Arbitrage commercial international (1965) especially Art. 604 et seq.Google Scholar; Cremades, B.M. and Plehn, S.L., “The New Lex Mercatoria and the Harmonization of die Laws of International Commercial Transactions’, Boston UILJ (1984) p. 317Google Scholar; Cremades, B.M., ‘The Impact of International Arbitration on the Development of Business Law’, 31 AJCL (1983)p. 526CrossRefGoogle Scholar; Berman, H.J. and Kaufman, C., ‘The Law of International Commercial Transactions (Lex Mercatoria)’, 19 Harvard ILJ (1978) p. 221Google Scholar; Lando, O., ‘The Law Applicable to the Merits of the Dispute’, in Šarčević, P., ed., Essays on International Commercial Arbitration (1989) p. 129Google Scholar; Goldstajn, A., ‘The New Law Merchant’, JBL (1961) p. 12 and ‘Reflections on the Structure of the Modern Law of International Trade’, in Sarcevic, , ed., op. cit. n. 14, Ch. 2Google Scholar; Kahn, Ph., in Festschrift Schmitthoff (1973)Google Scholar; Derains, Y., ‘Le statut des usages du commerce internationaldevant les juridictionsarbitrates’, Rev. Arb. (1973) p. 122Google Scholar; Lando, O., ‘The Lex Mercatoria in International Commercial Arbitration’, 34 ICLQ (1985) p. 747 et seq.CrossRefGoogle Scholar; Cremades, B.M. and Plehn, S.L., ‘The New Lex Mercatoria and the Harmonization of the Laws of International Commercial Transactions’, Boston Univ. ILJ (1984) p. 317 et seq.Google Scholar; Dasser, F., Internationale Schiedsgerichte und Lex Mercatoria, Rechtsvergleichender Beitrag zur Diskussion Uber Ein Nichtstaatliches Handelsrecht (1989)Google Scholar; Strenger, I., ‘La notion de lex mercatoria en droit du commerce international’, 227 Hague Recueil (1991–II) p. 207Google Scholar; Reisman, W.M., Systems of Control in International Adjudication and A rbitration: Breakdown and Repair (1992) at pp. 134–139Google Scholar; Dely, F., International Business Law and Lex Mercatoria (1992); Horn, N. and Schmitthoff, C.M., eds., The Transnational Law of International Commercial Transactions (1982)Google Scholar; Osman, F., Les Principes Genéraux de la Lex Mercatoria: Contribution à l'étude d';un ordre Juridique Anational (1992).Google Scholar
137. For instance, in Elf Aquitaine Iran v. NIOC, 9 YB Comm. Arb. (1986) at pp. 97, 99, the sole arbitrator confirmed the parties' choice of equity, the general principles of law and international law without reference to any system of conflict of laws.Google Scholar
138. See, for example, the French Arbitration Decree of 14 May 1981 which amended Art. 1496 of the Code of Civil Procedure, 20 ILM (1981) p. 917Google Scholar. Art. 1496 of the French New Code of Civil Procedure reads: ‘The arbitrator shall decide the dispute according to the rules of law chosen by the parties, in the absence of such a choice, he shall decide according to rules he deems appropriate. In all cases he shall take into account trade usages’ (emphasis added). See also ICC Award No. 1422/1966, Lew, , op. cit. n. 32, no. 270Google Scholar. The 1984 Djibouti Code on International Arbitration contains in its Art. 12a a provision in similar terms: ‘The parties are free to determine the rules of law which the arbitrators shall apply to the substance of the dispute. Failing agreement by the parties, the arbitrators shall apply the rules of law which they consider appropriate’(emphasis added). In all cases, the arbitrators shall take into account ‘contractual provisions and shall apply international trade usages’ (as quoted by Derains, Y., ‘Public Policy and the Law Applicable to the Dispute in International Arbitration’, in Sanders, , ed., op. cit. n. 114, p. 227, at p. 230)Google Scholar. See also, for similar provisions, the Swiss Private International Law Act, ch. 12, Art. 187, and the Netherlands Arbitration Act 1986, Art. 1054. See the United Nations Commission on International Trade Law (UNCITRAL) Model Law adopted on 21 June 1985, Art. 28; see also Croff, C., ‘The Applicable Law in an International Commercial Arbitration: Is it Still a Conflict of Laws Problem?’, 16 Int. Lawyer (1982) p. 613, at p. 633.Google Scholar
139. See, e.g., ICC Award No. 2735/1976,104 Clunet, (1977) p. 947Google Scholar; see also two cases cited at p. 949, and ICC Award No. 2870/1978 (not reported). These cases provide evidence that, in practice, arbitrators sometimes rely upon a conflict of laws rule without disclosing from which legal system or other source it has been derived. See also ICC Award No. 1048, Doc. No 410/802, 11 January 1960.
140. See Kuwait v. Aminoil, The Government's Memorial, Pleadings Bk. 3, para. 3.34, at p. 59; see also The Government's Reply (April 1981), Pleadings Bk. 9, paras. 2·36–2·54, at pp. 20–27. See generally, Robert, J. and Carbonneau, T.E., The French Law of Arbitration (1983).Google Scholar
141. See Kuwait v. Aminoil, Aminoil Memorial (2 June 1980), vol. I (Text), Pleadings Bk 1, paras. 105–113, pp. 37–40; see also Aminoil Counter-Memorial (5 January 1981), vol. I (Text), paras. 226–243, at pp. 103‐111; 66 ILR p. 519, at pp. 559–562.Google Scholar
142. See I Amco Asia Corporation v. Indonesia [1988] LAR at pp. 38–40Google Scholar. See also Anderson, J.N.D. and Coulson, N.J., ‘The Moslem Ruler and Contractual Obligations’, 33 NY Univ. LR (1958) p. 917, at pp. 921–922.Google Scholar
143. See the Sapphire Award (1963), 35 ILR p. 136, at pp. 171–176Google Scholar. See also Maniruzzaman, A.F.M., ‘State Contracts with Aliens: The Question of Unilateral Change by the State in Contemporary International Law’, 9 J. Int. Arb. (1992) no. 4, pp. 141–171.Google Scholar
144. Idem;Texaco v. Libya, 53 ILR at p. 441Google Scholar et seq.; Revere Coppery. OPIC, 56 ILR p. 258, at pp. 272–279;Google ScholarSapphire International Petroleum Ltd. v. NIOC, 35 ILR p. 136, at pp. 170–176.Google Scholar
145. See, e.g., Ramazani, , loc. cit. n. 57, p. 503, at p. 505;Google ScholarLalive, , loc. cit. n. 15, p. 987, at p. 994.Google Scholar
146. See, e.g., the Alsing case, 23 ILR p. 633,Google Scholar where the private international law of the seat of the arbitral tribunal, i.e., the lex fori, was applied to determine the applicable law; see also the ICC case Mojzesi Lobelski v. State of Burundi, Award of 30 October 1968, in Jurisprudence du Port d'Anvers (1969) pp. 82, 89, 90.Google Scholar
147. For the text of the Resolution on ‘Arbitration Between States and Foreign Enterprises‘ (1989), see 5 ICSID Rev. (1990) p. 139 (Art. 6).Google Scholar
148. Lalive, , loc. cit. n. 15, at p. 994;Google Scholar see also Kuwait v. Aminoil, The Aminoil CounterMemorial (5 January 1981), vol. I (Text), Pleadings Bk. 4, para. 240, at p. 109.
149. See generally, Hanotau, M.B., ‘Dépecage in Choice of Law: An Analysis’, in Le Contrat économique international stabilité et evolution (1973) l–A–3;Google ScholarReese, , loc. cit. n. 23, p. 58.Google Scholar But see McLachlan, C., ‘Splitting the Proper Law in Private International Law’, 61 BYIL (1990) p. 311;Google Scholar M. Ekelmans, ‘Le dépecage du contrat dans la Convention de Rome du 19 juin 1980 sur la loi applicable aux obligation contractuelles’, in Mélanges offerts à Raymond von Elst (1986) p. 243.
150. See, e.g., the Lena Goldfields case, 36 Cornell LQ (1951) p. 31;Google ScholarSapphire International Petroleums Ltd. v. National Iranian Oil Co., 35 ILR p. 136;Google Scholar the Electricity Companies case (1966), reported in P. Weil, ‘Problèms relatifs aux contrats passes un Etat et un particulier’, 169 Hague Recueil (1969); Saudi Arabia v. Aramco 27 ILR p. 117;Google ScholarRevere Copper & Brass Inc. v. OPIC, 56 ILR p. 258;Google Scholar S.P.P. (Middle East) Ltd. etal. v. Arab Republic of Egypt, 22 ILM (1983)p. 752; Kuwait v. Aminoil, 66 ILR p. 518Google Scholar; Wintershall, A.G. et al. v. Government of Qatar [1990] LAR p. 81Google Scholar; Deutsche Schachtbau-und Tiefbohrgesellschaftm.b.H. (DST) (FRG) etal. v. The Government of the State of R'as Al Khaimah (UAE)and The R'as Al Khaimah Oil Company (i), ICC case no. 3572 of 1982, 14 YB Comm. Arb. (1989) at p. 111; the Consortium case (i.e., Mobil Oil Iran Inc. et al. v. Iran and NIOC (Partial Award in cases nos. 74, 76, 81, 150–311–74/76/81/159–3 of 14 July 1987)), 13 YB Comm. Arb. (1988) p. 288. See also Texaco v. Libya, 53 ILR p. 393;Google ScholarB.P. v. Libya, 53 ILR p. 297,Google Scholar Liamco v. Libya, 62 ILR p. 140.Google Scholar
von Mehren, R.B. and Kourides, P.M.,‘International Arbitrations between States and Foreign Private Parties: The Nationalization Cases’, 75 AJIL (1981) p. 476CrossRefGoogle Scholar; Greenwood, C., ‘State Contracts in International Law The Libyan Oil Arbitrations’, 53 BYIL (1982) p. 27Google Scholar; Mann, F.A., ‘The Aminoil ArbitrationGoogle Scholar; Redfern, A., “The Arbitration between the Government of Kuwait and Aminoil‘, 55 BYIL (1984) p. 65Google Scholar; Téson, F.R., ’State Contracts and Oil Expropriations: The Aminoil-Kuwait Arbitration’, 24 Va. JIL (1984) p. 323.Google Scholar
151. See Pleadings Bk. 3, The Government's Memorial (Text) (May 1980), S. 3.38, at p. 60; see also The Government's Counter-Memorial (December 1980), Pleadings Bk. 5, paras. 3.85–3.86, at p. 84; also paras. 3.87–3.89, at pp. 84–85; para. 3.97 (5), at pp. 88–89.
152. Ibid.; see also Paasivirta, E., Participation of States in International Contracts and Arbitral Settlement of Disputes (1990) at pp. 105–113; ICCA Report (Series No. 2) at pp. 188–189.Google Scholar
153. See the Lena Goldfields case, 36 Cornell LQ (1951) p. 31 (Art. 89 of the agreement concerned between the parties); see also Kuwait v. Aminoil, The Aminoil Memorial (2 June 1980), Pleadings, vol. I (Text), Bk. 1, paras. 114–117, at pp. 40–41. But see The Government's CounterMemorial (December 1980), Pleadings Bk. 5, para. 3.35; Delaume, op. cit. n. 64.
154. See Texaco. Libya, 53 ILR p. 389, at pp. 452–457,Google Scholar paras. 40–43;Revere Copper v. OPIC, 56 ILR p. 258, at pp. 272–279.Google Scholar
155. See vol. I (2 June 1980) (Text), Pleadings Bk. 1, p. 39.
156. Ibid., para 113, at pp. 39–40; see also the Aminoil Reply (27 April 1981), Pleadings Bk. 7, paras. 50–76, at pp. 20–30. Aminoil suggested that, in view of Art. 111(2) of the Arbitration Agreement (that’ … the specific terms of Article 111(2) taken in the context of the Arbitration as a whole and of the contractual relations between the parties’), the applicable law should be the general principles of law. Ibid., Aminoil Memorial, vol. I (2 June 1980) (Text), Pleadings Bk. 1, p. 39, para. 113. Art. 111(2) of the Arbitration Agreement between Kuwait and Aminoil provides that: ‘The law governing the substantive issues between the parties shall be determined by the Tribunal, having regard to the quality of the parties, the transnational character of their relations and die principles of law and practice prevailing in the modern world’.
See also CMI InternationalInc. v. Ministryoj'Roads andTransportationetal., 4 Iran-USCTR (1983) p. 263, at p. 268; Bermann, G.A., ‘Contracts between States and Foreign Nationals: A Reassessment’.in Smit, H. et al. ., eds., International Contracts (1981) Ch. 7, pp. 183–212Google Scholar; W.L.M. Reese, “The Law Governing International Contracts’, ibid., Ch. 1, pp. 3–50. See also ICCA Report (Series No. 2) p. 190: “The concern to apply the law best corresponding to the expectations of the parties therefore seems to be the. central element in the determination of the legal norms which die international arbitrator must apply in solving a dispute. When the parties have expressly chosen die applicable law, die object of this expectation is a priori known and, uierefore, becomes useless. Failing such a choice, the arbitrator tends to show what this expectation could legitimately be, either in concreto, or in consideration of a certain international consensus’.
157. See also ICSID Model Clauses, Doc. ICSID/S/Rev. 1., 7 July 1981.
158. Serbian & Brazilian Loans cases, Judgments 14 and 15 (1929) PCIJ, ser. A. No. 20, at p. 42, No. 21, at p. 121.
159. Saudi Arabia v. Aramco, 27 ILR at p. 117.Google Scholar
160. Ibid., at p. 167.
161. Broches, A., “The Convention on the Settlement of Investment Disputes between States and Nationals of Other States’, 136 Hague Recueil (1972–11) p. 331, at p. 392.Google Scholar
162. ICSID Documents Concerning the Origin and the Formulation of the Convention, vol. 2, part 2, p. 270 et seq.
163. See, e.g., Benvenuti & Bonfant, 21 ILM (1982) at p. 752Google Scholar; AGIP Co. v. Peoples' Republic of Indonesia, 24 ILM (1985) p. 1023Google Scholar; AMCO Asia Corp et al. v. The Republic of Indonesia, 24 ILM (1985) p. 1023;Google Scholar AMCO Asia Corp. etal. v. The RepublicofIndonesia (FinalAward of 5 June 1990 and Decision on Supplemental Decision and Rectification of 17 October 1990), 17 YB Comm. Arb. (1992) p. 73,Google Scholar at pp. 75—76; Liberian Eastern Timber Co. (Letco) v. Liberia, ICSID Award of 31 March 1986,Google Scholar 26 ILM (1987) pp. 661–662;Google ScholarKlöckner v. Cameroon, 1 ICSID Rev. (1986) p. 89CrossRefGoogle Scholar. See also Asian Agricultural Products Ltd. (AAPL) v. Republic of Sri Lanka, 30 ILM (1991) p. 580Google Scholar, also in 17 YB Comm. Arb. (1992) p. 106,Google Scholar see also comments on the case in Vasciannie, S.C., ‘Bilateral Investment Treaties and Civil Strife: The AAPL/Sri Lanka Arbitration’, 39 NILR (1992) p. 332, especially at pp. 335–339CrossRefGoogle Scholar. See also Burzynski, A., ‘Paving the Road for Settlement of Investment Issues: Polish ExperienceSo Far’, 18 Polish YIL (1989–1990)p. 135, at pp. 140–141Google Scholar; E.P.J. Myjer, ‘ICSID and the Settlement of Investment Disputes in Poland’, ibid., p. 143.
164. 11 YB Comm. Arb. (1986) p. 162.Google Scholar
165. Ibid., at p. 170.
166. 12 YB Comm. Arb. (1987) p. 129, at p. 132.Google Scholar
167. Idem.
168. See, e.g., the ICC Award in S.P.P. (Middle East) Ltd. and S.P.P. Ltd. v. Egypt and Egoth, 22 ILM (1983) p. 752,Google Scholar at pp. 768–770; an the Ad hoc Tribunal Award in Kuwait v. Aminoil, 66 ILR p. 518.Google Scholar In recent contract practice, the ICSID formula is sometimes found to be explicitly incorporatedinconcessioncontracts.Thus, a 1987 Ghanaian agreement provides that: ‘This Agreement shall be governed by and construed in accordance with the laws of Ghana and such principles of international law as may be applicable’.
169. Redfern, and Hunter, , op. cit. n. 6, at p. 12Google Scholar: ‘… an agreement to arbitrate represented a compromise on the part of the parties; and this is reflected in the language of the civil law which refers to a submission agreement as a compromis and to an arbitration clause as a clause compromissoire’. See also fn. 44: ‘The secondary meaning of compromis is given as ‘an agreement under which the parties make mutual concessions’. Robert's Dictionnaire de la languefrançaise.
170. See ICCA Report (Series No. 2) p. 189.