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CS Professional · Arbitration, Mediation and Conciliation · International Law of Arbitration

Sundaram Textiles Ltd (incorporated in India) and Weiss GmbH (incorporated in Germany) have a commercial contract with arbitration seated in Mumbai. The contract says 'the law of Germany governs the contract'. It says nothing on conflict of laws rules. How should the tribunal read this designation under Section 28?

The designation is read as German substantive law. Section 28(1)(b)(ii) says a designation of a country's law refers directly to its substantive law, not its conflict of laws rules, unless the parties express otherwise. The Mumbai seat does not displace the chosen law.

  1. AAs referring to German substantive law, not its conflict of laws rules, unless otherwise expressedCorrect
  2. BAs referring to German conflict of laws rules first, which may point to Indian law
  3. CAs referring to Indian substantive law because the seat is in Mumbai
  4. DAs leaving the tribunal free to choose any law it considers appropriate

Explanation

Under Section 28(1)(b)(ii), a designation of the law of a given country is construed, unless otherwise expressed, as directly referring to that country's substantive law and not its conflict of laws rules. The option pointing to conflict rules reverses this. Free choice of law arises only when parties make no designation.

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