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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Sundaram Textiles Ltd and Kaveri Dyes Pvt Ltd have an arbitration seated in Chennai over a domestic supply contract. The clause is silent on the law to be applied. Which law must the sole arbitrator apply to decide the substance of the dispute?

The arbitrator must apply the substantive law for the time being in force in India. The seat is in India and the arbitration is domestic, so the Act requires decision under Indian substantive law, not a freely chosen legal system or mere fairness.

  1. AThe substantive law for the time being in force in IndiaCorrect
  2. BAny legal system the arbitrator considers most appropriate
  3. CThe conflict of laws rules of the country with the closest connection
  4. DPrinciples of fairness alone, without reference to any statute

Explanation

Where the place of arbitration is in India and the arbitration is not international commercial, the tribunal decides in accordance with the substantive law for the time being in force in India. The tribunal's freedom to choose appropriate rules of law applies only to international commercial arbitration where parties have designated none. Deciding on fairness alone is allowed only with express authorisation.

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