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

Sagar Shipping Ltd (India) and Nordic Marine AS (incorporated in Norway) have an arbitration seated in Delhi. The contract does not designate any governing law. Under the Act, how will the tribunal determine the law applicable to the substance of the dispute?

The tribunal applies the rules of law it considers appropriate given all the circumstances of the dispute. Where parties have designated no law in an international commercial arbitration seated in India, the Act gives the tribunal this discretion. Indian law is not compulsory, and equity-based decisions need express authorisation.

  1. AIt must apply Indian substantive law, as the place is in India
  2. BIt must apply Norwegian law, as the foreign party is involved
  3. CIt will apply the rules of law it considers appropriate given all the circumstances surrounding the disputeCorrect
  4. DIt must decide ex aequo et bono

Explanation

For international commercial arbitration with the place in India, section 28(1)(b)(iii) lets the tribunal apply rules of law it considers appropriate in the circumstances when parties have designated none. Indian substantive law is mandatory only in non-international arbitrations under 28(1)(a). Section 28(2) allows ex aequo et bono only with express authorisation.

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