• Journal of Arbitration Studies
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• v.33 no.2
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• pp.85-108
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• 2023

In international commercial arbitrations that arise from an international commercial contract, arbitral tribunals ruling on the merits of the arbitration apply the law governing the contract. The parties to contract are free to designate the law under the principle of parties autonomy. This paper examines this principle under the Korean Arbitration Act, and makes some legislative suggestions. For this purpose, this paper first discusses what is the scope of matters covered by the law governing the contract, what are the rules of conflict-of-laws for determining the law governing the contract, and what happens when the arbitral tribunal incorrectly applies the law governing the contract? Then, this paper further goes to examine issues such as the form of choice-of-law agreement, the explicit or implicit choice of law, the parties' ability to choose the rules of law including lex mercatoria, the change of choice-of-law agreement, the independence of choice-of-law clause.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.29
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• pp.39-61
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• 2006

The governing law in international commercial arbitration may be divided into governing arbitration law and governing substantive law. The former governs the parties' arbitration agreement and the conduct of any subsequent arbitration. But the later governs the parties' substantive rights and obligations, which means the law that governs contract formation and performance, and the law to be applied by the arbitrator to the merits of the dispute. The purpose of this paper is to examine how to determine the substantive governing law when there is express choice or implied choice between parties. Moreover this author checked any restrictions on party autonomy and also any possibilities to deviate from the governing law. In case of express choice the sources of the law or rules of law might be the national law of one of the parties, the neutral law, the general principles of law or lex mercatoria according to the arbitration law selected by the arbitral tribunal. Some arbitration laws or rules empower the arbitrator to decide the case ex aequo et bono or to act as amiable compositions. If the governing law could be determined expressly or impliedly by the parties, the arbitral tribunal would make a selection. In this case the criteria for selecting a governing law are not exactly same from country to country. But failing any indication by the parties as to governing law, the arbitral tribunal should apply the rules of law, the law or the law under the rule of conflict that the arbitrators consider applicable, according to the governing arbitration law. Among the connecting factors offered by the conflict rules, (which means the factors that the arbitrators consider applicable), some legal systems give precedence to the formation of the contract, other system to the place of performance of the contract, and others to the closest connection or centre of gravity. But the Rome Convention, which unified the conflict rules of the contracting states, gives precedence to the law of the domicile of the party which has to effect the performance which is characteristic of the contract. Finally this author suggested the Choice of Law Clause which covers governing substantive law and governing arbitration law at the same time. Thus the UNIDROIT Principles as well as any national law may be included as a governing law in international arbitration. So when we make sales or service contract, we should take into consideration of the UNIDROIT Principles as a governing law or a supplement to the governing law.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.36
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• pp.87-109
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• 2007

This Comment explores the ICSID case of CMS Gas Transmission Company v. Argentine Republic, awarded on May 12, 2005. The Part II of this Comment first describes the relevant facts of the case including the some background for readers' understanding and the Part III summaries the claimant's requests and the decisions rendered by the Arbitral Tribunal in the Award. At Part IV, the Comment addresses the issue of determinating laws applicable to the merits of dispute in case that the parties of the case have not chosen a governing law, and at Part V, takes a close look into three main issues of (i) the indirect expropriation of the investment, (ii) the breach of fair and equitable treatment and (iii) the protections under umbrella clauses. In this CMS case, we see first that while the Tribunal affirmed that any indirect expropriation can occur from incidental interference depriving the foreign investor of the use or reasonable-to-be-expected economic benefit even if not necessarily to the obvious benefit of the host State, the Tribunal denied the occurrence of indirect expropriation in this case by holding that the Government of Argentina has not breached the standard of protection laid down in the Treaty. Secondly, however, regarding the issue of fair and equitable treatment, we see that the Tribunal, finding Argentina's breach of obligations, affirmed that the foreign investor can expect the host State to act in a consistent manner, free from ambiguity and totally transparently in its relations with the foreign investor, which can give the foreign investor certain degree of foreseeability. Thirdly and finally, we see that, on base of the effect of the umbrella clause, the Tribunal recognized the obligation of the host State undertaken not to freeze the tariff regime or subject it to price controls and not to alter the basic rules governing contracts between the foreign investor and the host State without the first's written consent. However, the protection under the umbrella clause is available only when there is a specific breach of rights and obligations under BIT or a violation of contract rights protected under BIT.