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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Mehta Textiles Ltd (Surat) and a Dubai-based buyer agree to arbitration seated in Mumbai. The contract states that 'the law of England shall govern the contract' and says nothing about conflict of laws rules. The dispute is an international commercial arbitration. Which law will the tribunal apply to the substance of the dispute?

The tribunal applies English substantive law. In an international commercial arbitration seated in India, a party designation of a country's law is construed as directly referring to that country's substantive law, not its conflict of laws rules, unless the parties express otherwise.

  1. AThe substantive law of England, not its conflict of laws rulesCorrect
  2. BEnglish conflict of laws rules, which may then point to another country's law
  3. CThe substantive law in force in India, since the seat is Mumbai
  4. DThe law of the buyer's country, since the buyer is a foreigner

Explanation

Where the seat is in India and the arbitration is international commercial, the tribunal applies the rules of law designated by the parties. Designation of a country's law is read, unless otherwise expressed, as referring to its substantive law and not its conflict of laws rules. Option B ignores this presumption.

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