On Application Of The Law Of International Commercial Arbitration Agreement

Of the two approaches towards the application of the law in international commercial arbitration agreement-holism theory and segmentation theory, the overwhelming majority of scholars prefer the latter, which categorizes the application in terms of contracting capacity of the party, formal requirements of the agreement, subject matter arbitrability and etc. Informed and encouraged by this school of thought, the current study attempts a fourfold systematic investigation of the international commercial arbitration agreement.With a theoretical elaboration and situational analysis combined approach, the study makes both extensive and in-depth comparison and contrast of the relevant rules and regulations enacted by different countries. In the current study, we take advantage of the typical and the latest examples to make our argument more convincing.First, in terms of the application of law in contracting capacity of the party, the lack of broad international consensus on the settlement rules leaves many disputes settled largely by resorting to the individual countries'laws. Specifically, in the case of the natural person, most countries'international private laws advocate the settlement of disputes by lex personalis. If the lex personalis have no contracting capacity, the lex loci actus is then applicable. The civil law system and common law system co-exist in practical use in this regard. In the case of legal person, most countries adopted lex personalis, i.e. the national or local laws of the legal person's residency. In the case of the public legal person in particular, a great divergence exists in the application of law in contracting capacity, and new experiments were attempted in some European countries in legislation and precedents.Second, in terms of formal requirements of the agreement, different countries vary in their understanding and requirements of the agreement forms. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards provides an obligatory standard. However, it has two somewhat conflicting arguments of the highest standards and the lowest standards and a misunderstanding of more favorable right provision in dealing with the relationship between the international convention and domestic laws. UNCITRAL Model Law on International Commercial Arbitration comes to aid by providing a standardized framework of international commercial arbitration and produced a far-reaching effect. An innovative attempt is made by Britain and Germany to down-regulate the rules concerning the agreement forms, which conforms to the current international trend of arbitration.Third, in terms of the subject matter arbitrability, the vague definition made by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and European Convention constitutes a source of constant controversies and arguments. In practice, the courts largely apply the domestic law with only a few exceptions. The legislation and practice of each country all take a gradually broadening approach towards the arbitrability of certain special commercial disputes, such as anti-trust disputes, IPR disputes and securities disputes.Forth, in terms of the proper law, there are mainly three practices in use. One is the traditional choice of law method. Another is France's substance rules method. Still another is traditional choice of law method and substance rules method combined approach adopted by Switzerland. The choice of law method is the primary method to decide the application of law in arbitration agreement, which is facing an ever-increasing challenge with the development of the arbitration practice and internet-based arbitration. The substance rules method provides a new perspective for the application of law in arbitration by abandoning the traditional choice of law methods and avoiding the uncertainties that are inherent in the traditional method. The Swiss approach, by combining the traditional choice of law with the substance rule method, corrects the conflicting rules and employs the immediate applicable methods to determine the proper law, to ensure the effectiveness of the arbitration agreement, which conform to the current trend and help to consolidate the role of arbitration in settling the international economic and trade disputes.Finally , base on the fourfold analysis of application of law in international commercial arbitration agreement and current status quo in China, The paper then concludes with tentative suggestions of legislative details in application of law in arbitration agreement in China.