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CS Professional · Arbitration, Mediation and Conciliation · Conceptual Framework of International Commercial Arbitration

Bharat Textiles Ltd (India) and Orion Ltd (UK) agree to arbitration seated in India. Their contract says 'English law governs this agreement' and does not authorise the tribunal to decide as amiable compositeur. Which approach should the tribunal follow on the substance of the dispute?

The tribunal should apply English substantive law, not its conflict of laws rules, because a designation of a country's law is read that way unless the parties say otherwise. It cannot decide as amiable compositeur without express authority, and it must take contract terms and trade usages into account.

  1. AApply English substantive law, not its conflict of laws rules, and take into account contract terms and trade usagesCorrect
  2. BApply English conflict of laws rules first to find the applicable law
  3. CDecide ex aequo et bono since it is an international dispute
  4. DApply Indian substantive law regardless of the designation

Explanation

Under section 28(1)(b)(i) and (ii), the tribunal applies the law the parties designated, read as the country's substantive law and not its conflict rules unless otherwise expressed. Section 28(2) allows ex aequo et bono only if expressly authorised, and section 28(3) requires regard to contract terms and trade usages. Indian law applies by default only in non-international arbitrations.

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