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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Arvind Textiles Ltd (Surat) and Bharat Spinners Ltd (Coimbatore) are both Indian companies. Their supply contract provides for arbitration seated in Delhi and does not mention any governing law. The arbitration is not international commercial. Which law must the tribunal apply to the substance of the dispute?

The tribunal must apply the substantive law for the time being in force in India. For an arbitration seated in India that is not international commercial, the tribunal has no freedom to choose another body of rules, and equity-based decisions need express party authority.

  1. AThe rules of law the tribunal considers appropriate in the circumstances
  2. BThe substantive law for the time being in force in IndiaCorrect
  3. CThe law of the place where the goods were delivered
  4. DPrinciples of equity, as an amiable compositeur

Explanation

For a domestic arbitration seated in India, the tribunal must decide in accordance with the substantive law for the time being in force in India. The 'appropriate rules of law' approach is for international commercial arbitration only. Equity-based decision needs express authorisation from the parties.

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