CHOICE OF LAW

Dr Vikrant Sopan Yadav

ISBN: 9781685861551

CONTENTS Chapter 1 International Commercial Arbitration: Basic Concepts ...............................................................................1 Lex Mercatoria (Usages) ...........................................18 Juristic Writings .........................................................19 Treaties and Conventions ...........................................19 Domestic laws ............................................................20 Judicial Pronouncements ...........................................20 Rules of Arbitration ...................................................20 The UNCITRAL statutes ...........................................21 Arbitral Awards/Precedents .......................................22

CHAPTER 2 JURISPRUDENCE OF INTERNATIONAL COMMERCIAL ARBITRATION AND CHOICE OF LAW ............24 The Jurisdictional Theory ..............................................24 The Contractual Theory .................................................28 The Hybrid Theory ........................................................30 The Autonomous (sui juris) Theory ..............................33 The Concession Theory .................................................36 Theories on Choice of Law/ Applicable Law in International Arbitration ................................................37 The Conflict of Law Theory ......................................38 The Party Autonomy Theory .....................................39 The Lex Mercatoria Theory .......................................39 I

The Intention Theory .................................................40

CHAPTER 3: CHOICE OF LAW AND LEX ARBITRI ...................42 Conflict of Laws ............................................................42 The Party Autonomy ......................................................43 Party Autonomy and Choice of Law as a Conflict Rule 46 Significance of Conflict of Law .....................................47 Party Autonomy and Freedom of Choice of Law ..........48

CHAPTER 4. CHOICE OF PROCEDURAL LAW ........................52 Laws Applicable to the Arbitration Procedure/ Curial Law ................................................................................52 Lex Fori/ Law of the forum .......................................54 Choice of Procedural Law by Arbitrators ......................62

CHAPTER 5. CHOICE OF SUBSTANTIVE LAW BY THE PARTIES ..............................................................................66 The Law Governing Arbitration Agreement..................67 The Law Governing the Substance ................................72 The Implied or Tacit Choice of Law by the Parties .......77 Choice of Substantive Law by Arbitrator/ Tribunal ......79 The Principles to be observed by the Arbitrator/ Tribunal in Determining the Applicable Substantive Law ...........80 Lex Situs Arbitri/ the Territorial Principle .................81 II

Choice-of-Law Rules having a Meaningful/ Close Connection .................................................................92 Choice-of-Law Rules that Arbitral Tribunal Considers Appropriate ..............................................................102 Lex Mercatoria/ General Principles of International Law ..........................................................................107 Neutral Law .............................................................111 Other Principles of Choice of Law by the Arbitrator..................................................................112

CHAPTER 6. LIMITATIONS ON CHOICE OF LAW .................121 Mandatory Laws (LOIS DE POLICE) .........................121 Determination of the Applicable Mandatory Rules .....126 Application of foreign mandatory law .........................130 Commonly Applied Mandatory Rules .........................131 Some of the most commonly recognised and applied principles of mandatory law are as follows; ................131 Force Majeure (Vis Major) ......................................131 Public Policy ............................................................132 Principle of Equality ................................................146 Principles of Natural Justice ....................................147 Written Arbitration Agreement ................................154 The Exchange of Statements of Claim and Reply between the Parties ..................................................155 Waiver of Party Autonomy ......................................156 III

Judicial Rejection of Choice of Law ........................157 Theory of the Incompleteness of Chosen Law ........157 ANNEXURE 1 .....................................................................163 DRAFT ARBITRATION AGREEMENT ...................................163 ANNEXURE 3 .....................................................................167 DRAFT NOTICE TO PARTIES ..............................................167

IV

TABLE OF CASES

Cases (CA Paris, 6 May 1988) Aastha Broadcasting Network Ltd. v. Thaicom Public Co. Ltd., FAO(OS) 411 of 2011 AB Gotaverken v. General Nat'l Maritime Transp. Co., Cases Nos.F9224 and Ö 1243-78 Algerian shipowner v. French shipyard, 12 J J.D.I. 1059 (J 994) American Eagle Airlines v. Air Line Pilots, 343 F.3d 401

Pg. Nos. 81 49 83 70 33

Amin Rasheed Shipping Corpn v. Kuwait Insurance Co [1984] I AC 50, [1983] 2 All ER 884, [1983J3WLR 241 (HL). Ashapura Mine-Chem Ltd. v. Gujarat Mineral Development Corporation, (2015) 8 SCC 193, Para 30.

28

Associate Builders v. Delhi Development Authority, 2014 (4) ARBLR 307

98

Atecs Mannesmann GmbH v. Rodrimar S/A Transportes Equipamentos Industriais e Armazéns Gerais, SEC 3.035 (2009) Atiabari Tea Company Ltd. v. State of Assam AIR 1961 SC 232.

96

Award in ICC Case No. 6281 Award in ICC Case No. 7071 BCB Holdings Limited and the Belize Bank Limited v. The Attorney General of Belize, [2013] CCJ 5 (AJ)

68 66 96

Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH., 585 F.2d 39 (3rd Cir. 1978)

107

BGS SGS Soma JV v. NHPC Ltd. 2019 (6) ARB LR 393(SC)

39

V

104

6

Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2016) 4 SCC 126 : (2016) 2 SCC (Civ) 580

32, 38, 92

Bharat Heavy Electricals v. C.N. Garg, (2000) 3 Arb. L.R. 674.

92

BKMI Industrieanlagen GmbH, Siemens AG v. Dutco Construction Co. (Private) Limited XVIII YCA 140, (1993) BLC & Ors v BLB & Anr [2014] 4 SLR 79 BP Exploration Company (Libya) Limited v. Government of the Libyan Arab Republic Buyer (France) v. Supplier (The Netherlands), Case No. 3938 Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., (2017) 2 SCC 228 Ciments Français v. OAO Holding Company Siberian Cement, No. VAS-17458/11 Compagnie Tunisienne de Navigation S.A. v. Compagnie d'Armement Maritime. SA. [1970] 3 All E.R. 71 (1970); [1971] A.C 572. D.C. Saxena v. State of Haryana, AIR 1987 SC 1463

99

Dubai Islamic Bank PJSC v. Paymentech Merchant Services Inc., (2001) [2001] CLC 173 Eitzen Bulk A.S. v. Ashapura Minechem Ltd., AIR 2011 Guj 13

41

Eitzen Bulk A/S v. Ashapura Minechem Limited & Anr. (2016) SCC online SC 523 Elisa María Mostaza Claro v. Centro Móvil Milenium SL, Case C-168/05, [2006] ECR I-10421

40, 57

Fateh Chand Himmatlal v. State of Maharashtra AIR 1977 SC 1825. France v. US, ICC Case No. 5946, XVI YCA 96, (1991)

6

VI

102 73 80 50 96 54

100

36, 47, 49

96

96

Gas Authority of India Ltd. v. Spie Capag, AIR 1994 Del. 75.

10

Gater Assets Ltd. v. Nak Naftogaz Ukrainiy, High Court of Justice, England and Wales, [2008] EWHC 237, [2008] 1 CLC 141 Goldtron Ltd. v. Media Most B.V., 28 Year Book Commercial Arbitration. P-814 (2003) GRD Minproc Limited v. Shanghai Feilun Industrial Co., [2008] Min Si Ta Zi No. 48 Hamlyn and Co. V. Talisker distillery , [ 1894] , A.C 202 Hollandia, [1982] 1 All E.R. 1076, 1080 ICC Case No. 2136 Indu Ramchandra Bharwani v. UOI (1988) 4 SCC 1 Iran v. Westinghouse, ICC Case No. 7375, 11(12) (1996).

97

James Miller & Partners Ltd v. Whitworth Street Estates (Manchester) Ltd [1970] AC 593, [1970] 1 All ER 796, [1970] 2 WLR 728

28

Karaha Bodas Company, L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara and P.T. PLN (Persero), Alberta Court of Queen’s Bench, Canada, 2007 ABQB 616

97

Kwik Hoo Tong Handel Maatsohappij v. James Finlay and Co. [1927] A.C. 604

60

L W Infrastructure Pte Ltd v. Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 Liberian Eastern Timber Corporation (LETCO) v Government of the Republic of Liberia, ICSID Case No. ARB/83/2 Loucks v. Standard Oil Co., (1981) 4 W.W.R. 65 Louis Dreyfus S.A.S. v. Holding Tusculum B.V., Superior Court of Quebec, Canada, 12 December 2008, 2008 QCCS 5903

102

VII

96 96 54 84 87 100 61

78

86 97

Methanex Motunui Ltd v. Spellman, [2004] 1 NZLR 95 Modi Entertainment Network and Another v WSG Cricket PTE. Ltd. [2003] 4 SCC 341

3, 5

Mulheim Pipe Coatings GMBH v. Welspun Fintrade Ltd and Anr. (2014) 2 AIR Bom R 196

36, 47

N V Vukaan v. A/S Ludwig Mowinckels Rederi [1938] 2 All E.R. 152

60

National Highways Authority of India v. Sheladia Associates, ILR (2009) Supp.(Delhi723. 5). National Thermal Power Corp. v. Singer Co., (1992) 3 S.C.C. 51 National Thermal Power Corp. v. Singer Company, AIR 1993 SC 998; (1992) 3 S.C.C. 51

76

Norsolor v. Pabalk, 1983 REV. ARB. 519 (1983) Offshore International SA v. Banco Central SA [1976] 3 All ER 748, [1977] 1 WLR 399 Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd, AIR 2003 SC 2629

76 64

Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd. AIR 2003 SC 2629. Orient Middle East Lines Ltd. v. Brace Transport Corp. of Monrovia AIR 1986 Guj 62 Paice & Anr v. MJ Harding (t/a MJ Harding Contractors), [2015] EWHC 661 (TCC)

92

Parfums Stem France v. CFFD, 1991 REV. ARB. 673 (CA Paris, Apr. 19, 1991) PASL Wind Solutions Private Limited v. GE Power Conversion, SLP (CIVIL) NO.3936 OF 2021 Power Curber International Ltd v. National Bank of Kuwait [1981] 3 All ER 607, [1981] 1 WLR 1233 Prima Paint Corp. v. Flood and Conklin Mfg. Co., 388 U.S. 395 (1967)

81

VIII

77

47 28, 36, 49, 91

97

6 105

63, 77 64 48

PSA Sical Terminals Pvt. Ltd. v. Board of Trustees of V.O. Chidambaranar Port Trust Tuticorin (LL 2021 SC 329)

98

R. M. Investment Trading Co. v. Boeing Co. AIR 1994 SC 1136

6

Rabindra N Maitra v. Life Insurance Corpn of India AIR 1964 Cal 141 Reliance Industries Limited and Anr. v. Union of India, (2014) 7 SCC 603 Renusagar Power Co. Ltd. v. General Electric Co., (1994) 2 Arb LR 405

64

Sapphire International Petroleums Ltd. v. National Iranian Oil Co., 35 INT'L L. REP. 136, 169 (1967)

2, 41

Sasan Power Limited v. North American Coal Corporation India Private Limited, CIVIL APPEAL NO. 8299 OF 2016

56

Saudi Arabia v. Arabian American Oil Company ( Aramco), (1963) 27 I.L.R. 117 Saudi Arabia v. Arabian American Oil Company (Aramco), August 23, 1958 Scherk v. Alberto-Culver Co (1974) 417 US 506

46, 107

Schonenberger Systemtechnik GmbH v. S.A. Yens, 1993 REV. ARB. 685 Sempra Energy International v Argentine Republic, ICSID Case No. ARB/0/16 Smart Systems Technologies Inc. v. Domotique Secant Inc., Court of Appeal of Quebec, Canada, 11 March 2008, XXXIII Y.B. Com. Arb. 464 (2008) SNF SAS v. Cytec Industries B.V., Court of Appeal of Paris, 23 March 2006 Société Excelsior Film TV v. Société UGC-PH, 9517.285, Court of Cassation, France, 24 March 1998

IX

57 97

44 41, 50, 83 74 78 97

96 97

Soh Beng Tee & Co Pte Ltd v. Fairmount Development Pte Ltd, [2007] 3 SLR (R) 86, [2007] SGCA 28

101

Sohan Lal Gupta (Dead) thr. L.Rs. and Ors. v. Asha Devi Gupta and Ors., (2003) 7 SCC 492, Para No. 21, 22

104

Sulamerica cia Nacional De Seguros SA v. Enesa Engenharia S.A., (2012) EWCA Civ 638

49

Sumitomo v. ONGC Ltd., (1998) 1 S.C.C. 305

36, 47, 49 101

Suresh Chandra Nanhorya v. Rajendra Rajak, (2006)7 SCC 800

TDM Infrastructure Private Limited v. UE Development India Private Limited, (2008) 14 SCC 271

9, 92

Tzortzis v. Monark Line A/B [1968] 1 WLR 406 C.A. U.S. v. Canada 3 RIAA, 1906, 1950 Unijet S.A. v. International Business Relations Ltd 1989 Rev. Arb. 83 Union of India v. McDonnell Douglas [1993] 2 Lloyd’s Rep 48 United World v. Krasny Yakor, Case No. A4310716/02-27-10

54 16 81

Vita Food Products Inc v. Unus Shipping Co ltd [1939] AC 277, 11939] 1 All ER 513;

28

Vita Food Products v Unus Shipping Company, 15 [1939] AC 277 Westacre Investments Inc. v. Jugoimport-SPDR Holding Ltd. & others, Court of Appeal, England and Wales, [2000] 1 QB 288. Whitworth Street Estates (Manchester) Ltd. v. James Miller and Partners Ltd [1970] A.C 383

84

Woods Hardwick Ltd v. Chiltern Air Conditioning Ltd [2001] BLR 23

104

X

32 96

97

54

ABBREVIATIONS A.C. AAA ABBQ AIR All E.R. Am Rev Int Arb ARB. J. Arb. L.R. ASA BALCO BRIT. Y.B. INT’L L. Cal CCJ Co. CONTEMP. ASIA ARB. J. Corp. Del EEC EU EWCA Civ. EWHC FAO (OS) Finnish Y.B. Int’l L Foreign Inv. LJ.

Appeal Cases (UK) American Arbitration Association Alberta Court of Queen’s Bench, Canada All India Reporter All England Reporter The American Review of International Arbitration Arbitration Journal Arbitration Law Reporter The Swiss Arbitration Association Bharat Aluminium Company Ltd. British Year Book of International Law Calcutta Caribbean Court of Justice Company Contemporary Asia Arbitration Journal Corporation Delhi The European Economic Community European Union England and Wales Court of Appeal (Civil Division) England and Wales High Court First Appeal from Order (Original Suit) Finnish Yearbook of International Law Foreign Investment Law Journal

XI

Guj H.L. Cas. IBA ICA ICC ICLQ ICSID Id ILR INT'L L. REP.

IYB. Comm. Arb. J. Int. Arb.

J.D.I LCIA Lloyd’s Rep LQR Ltd. MIAMI L. REV. Nijhoff, ZDB-ID NZLR p./ pg. para QCCS Rev. Arb. Rutgers L. Rev. SC SCC SCC Rules

Gujarat House of Lords Cases International Bar Association International Commercial Arbitration International Chamber of Commerce The International & Comparative Law Quarterly International Centre for Settlement of Investment Disputes Ibid Indian Law Reporter International Law Reporter International Year Book Commercial Arbitration Journal of International Arbitration Journal de Droit International The London Court of International Arbitration Lloyd's Law Reports Law Quarterly Review Limited Miami Law Review Nijhoff international trade law series. Leiden New Zealand Law Reports Page Paragraph Superior Court of Quebec Revue de l’Arbitrage (FRA) Rutgers Law Review (USA) Supreme Court Supreme Court Cases Stockholm Chamber of. Commerce Arbitration Rules

XII

SGCA SLP SLR TEX. INT'L L.J. U.N. U.S. S.Ct. U.S.C. UK UNIDROIT UNCITRAL US/USA Vol. W.W.R. WLR Y.B. Comm. Arb. Yale L. J.

Singapore Court of Appeal Special Leave Petition Singapore Law Reports The Texas International Law Journal United Nations United States Supreme Court. United States Code United Kingdom International Institute for the Unification of Private Law The United Nations Commission on International Trade Law United States of America Volume Western Weekly Reports (CAN) Weekly Law Reports Yearbook Commercial Arbitration Yale Law Journal

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