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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Kiran Steel Ltd (India) and Nordhaus GmbH (Germany) have an international commercial arbitration seated in Mumbai. The contract designates German law as applicable to the substance of the dispute, and does not say whether conflict of laws rules are included. Which statement is correct about the tribunal's approach?

The tribunal must apply German substantive law directly. Where parties designate a country's law in an international commercial arbitration seated in India, it is construed, unless otherwise expressed, as referring to substantive law and not conflict of laws rules. The tribunal's own choice arises only without designation.

  1. AIt must apply German conflict of laws rules first, then German substantive law
  2. BIt must apply Indian substantive law since the seat is in Mumbai
  3. CIt may choose any rules of law it considers appropriate, ignoring the designation
  4. DIt must apply the substantive law of Germany, unless otherwise expressed, and not its conflict of laws rulesCorrect

Explanation

In an international commercial arbitration seated in India, the tribunal decides under the rules of law designated by the parties. A designation of a country's law is construed, unless otherwise expressed, as referring directly to its substantive law and not its conflict of laws rules. The tribunal's own choice of appropriate rules arises only when the parties designate none.

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