On Issues Of Mandatory Law And Its Application In International Commercial Arbitration

Prevailing opinion in arbitration is that arbitration tribunal’sright is entitled by agreement of two parties and characteristic of suchright is autonomy of parties. The view in court that “mandatory lawprevails when the laws of other countries and districts, which are chosenby parties, are in conflict with it”, which is almost without dispute,is not applied in international commercial arbitration definitely.Theoretically, arbitrators are only subject to the law chosen by theparties and not bound by mandatory laws in other legal systems which arein conflict with the chosen law. However, practice of internationalcommercial arbitration doesn’t demonstrate this theory completely.Mandatory law in the country or district where the arbitration tribunalis located in, mandatory law in the country or district where the arbitralaward will be recognized and executed, etc, should be considered prudentlyduring the process of arbitration.In the first part, this thesis analyzes the nature of mandatory law，how to recognize mandatory law and classification of mandatory law.Mandatory law in terms of arbitration agreement, procedure and substantiality are influential and sometimes, mandatory law even decideswhether an arbitral award will be recognized and executed finally. So,it’s necessary to analyze nature of mandatory law, make it clear abouthow to distinguish mandatory regulations and how to classify mandatoryregulations. In the second part, this thesis analyzes mandatoryregulations chosen by the two parties in contract, mandatory regulationsin the country or district where the arbitration tribunal is located in,mandatory regulations in the country or district where the arbitral awardwill be recognized and executed, mandatory regulations in the country ordistrict where the contract will be executed, mandatory regulations inthe country or district which has close relationship with the two partiesand the public order; based on the previous analysis, the author’sopinions are brought. In the third part, this thesis discusses whetherthe arbitral award, which is annulled due to it is in conflict withmandatory law, could be recognized and executed. Mandatory law does notexist in form of an independent legal department, nor does it concentratein one legal document; in the whole legal system, mandatory regulationsare dispersed in various legal departments and documents. The fourth partof this thesis classifies and analyzes mandatory regulations in China’slegal system in terms of arbitration agreement, procedure andsubstantiality.Based on summarization and analysis regarding how to apply mandatorylaw (here refers to mandatory law of the country or district where thearbitration tribunal is located in) and how to apply mandatory law besidesmandatory law of the country or district where the arbitration tribunalis located in, especially mandatory law of the country or district wherethe arbitral award will be recognized and executed when arbitrationtribunals in our country judge international commercial arbitration cases,the author brings his opinion as following: when arbitration tribunals in our country judge international commercial arbitration cases, China’smandatory law (i.e. mandatory law of the country or district where thearbitration tribunal is located in) is not definitely necessary to beapplied; mandatory laws in other legal systems besides China’s mandatorylaw (i.e. mandatory law of the country or district where the arbitrationtribunal is located in), including mandatory law chosen by parties incontract and mandatory laws not chosen by parties in contract (mandatorylaw in some country or district, or mandatory regulations ininternationally unified substantive laws or regionally unifiedsubstantive laws), especially mandatory law in the country or districtwhere the arbitral award will be recognized and executed, for the reasonof balancing the relationship between execution of arbitral award and theprinciple of “respecting autonomy of parties”, the previous mandatorylaws should be considered respectively according to differentcircumstances.