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

In an international commercial arbitration seated in Mumbai between Kaveri Motors Ltd and a Japanese firm, the contract says nothing about the governing law. How must the tribunal determine the substantive law under section 28(1)(b)?

The tribunal applies the rules of law it considers appropriate given all the circumstances surrounding the dispute. Under section 28(1)(b)(iii), this applies where parties designate no law in an Indian-seated international commercial arbitration. Indian substantive law is compulsory only in domestic arbitrations, and ex aequo et bono needs express party authorisation.

  1. AIt must apply Indian substantive law
  2. BIt must apply the law of the Japanese party's country
  3. CIt must apply the rules of law it considers appropriate given all the circumstances surrounding the disputeCorrect
  4. DIt must decide ex aequo et bono

Explanation

Section 28(1)(b)(iii) provides that failing designation by the parties, the tribunal applies the rules of law it considers appropriate given all the circumstances. Indian substantive law is mandatory only for non-international arbitrations seated in India. Deciding ex aequo et bono requires express authorisation under section 28(2).

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