Arbitration rules and non-state rules
The arbitration rules of the ICC refer in article 21.1 to ‘rules of law’ and in article 21.2 the applicability of relevant trade usages is specifically mentioned. This is similarly worded to the civil law jurisdictions discussed in section 7.2. The UNCITRAL Arbitration Rules use the wording rules of law, but specify that this is restricted to the choice made by the parties. When the arbitral tribunal decides the applicable law, the UNCITRAL Rules use the word law: ‘the arbitration tribunal shall apply the rules of law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law which it determines to be appropriate.*0 Therefore, if the applicable law is determined by the arbitral tribunal, it can only choose a law and not rules of law.
Comparing the earlier versions of the ICC and UNCITRAL Rules demonstrates a progressive development towards a wider acceptance of possible choices of law. The Arbitration Rules of the ICC in an earlier version read ‘the parties shall be free to determine the law to be applied by the arbitrator to the merits of the dispute. In the absence of any indication by the parties as to the applicable law, the arbitrator shall apply the law designated as the proper law by the rule of conflict which he deems appropriate.*' It does not use the wording ‘rules of law’ or a similar formula. The 1976 version of the UNCITRAL arbitration rules stated that ‘the tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable’.[1] This again uses the term law instead of rules of law. In both cases the current versions of the rules thus mark a change to a more inclusive concept of the applicable law.
The Rules of Procedure of the Inter-American Arbitration Commission use the term law throughout and specifically state that if the parties have not made a choice the arbitrator should apply the conflicts of law legislation that they deem applicable. As conflicts of law legislation can usually only lead to the application of a state law this would preclude non-state rules.
The ICSID Convention (Washington Convention) allows for the parties to choose non-state rules as the applicable law to the contract. It also allows for sources of international law to be the applicable law in the absence of a choice made by the parties. Meant by this arc the sources of international law as recognised under article 38 of the ICJ. Therefore, without the consent of the parties the tribunal is not free to apply non-state rules apart from those recognised under article 38 (which could be argued are not non-state rules in transnational commercial law as discussed in chapter 3.)
Overall, if we look at both domestic law and transnational instruments it can be concluded that a choice for non-state rules is almost always permissible in arbitration. The application of non-state rules in the absence of a choice of law clause is accepted in many jurisdictions and transnational instruments, but not in all. Therefore, the tribunal might need to apply a state law in the absence of a choice of law clause. The tribunal would in most cases be free to use non-state rules in addition to the applicable state law to either interpret the law or the contract.
- [1] International Chamber of Commerce, Rules of Conciliation and Arbitration - (Old) Conciliation and amended Arbitration Rules in force as from January 1, 1988 until December 31, 1997 http://www.jus.uio.no/lm/icc.conciliation.arbitration.rules.1988/doc.html. 2 UNCITRAL Arbitration Rules (1976 version) http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules/arb-rules.pdf. 3 Rules of Procedure of the inter-American Arbitration Commission ( 1988) as amended in 2002 Article 35 1. The arbitral tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law determined bv the conflict of laws rules that it considers applicable. [..'.] 3. In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. https://www.law.cornell.edu/cfr/text/22/part-194/appendix-A. 4 article 42(1).
