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CS Professional · Arbitration, Mediation and Conciliation · Arbitration: Introduction, Agreements and its Institutions

Nila Exports Pvt Ltd (Kochi) and Hartmann GmbH (a German company) have a commercial contract with arbitration seated in India under an institution's rules. The parties designated German law as applicable to the substance and said nothing more. The institution's rules are silent on the point. The tribunal asks how to treat the designation. Under Section 28, what is correct?

The designation is read as referring directly to German substantive law, not its conflict of laws rules. Under section 28(1)(b)(ii), in an international commercial arbitration seated in India, a designation of a country's law is so construed unless the parties expressly say otherwise.

  1. AIt is construed, unless otherwise expressed, as referring directly to German substantive law and not its conflict of laws rulesCorrect
  2. BIt is construed as including German conflict of laws rules
  3. CIt is ignored, and Indian substantive law applies
  4. DIt is replaced by whatever law the tribunal considers appropriate

Explanation

This is an international commercial arbitration (a foreign body corporate is a party) seated in India. Section 28(1)(b)(ii) says a designation of a country's law is construed, unless otherwise expressed, as directly referring to that country's substantive law and not its conflict rules. Option 3 applies only when there is no designation.

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