UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Choice of law in international commercial arbitration Umaru, Juliet Lami 1984

Your browser doesn't seem to have a PDF viewer, please download the PDF to view this item.

Item Metadata

Download

Media
831-UBC_1984_A6_4 U43.pdf [ 5.88MB ]
Metadata
JSON: 831-1.0077668.json
JSON-LD: 831-1.0077668-ld.json
RDF/XML (Pretty): 831-1.0077668-rdf.xml
RDF/JSON: 831-1.0077668-rdf.json
Turtle: 831-1.0077668-turtle.txt
N-Triples: 831-1.0077668-rdf-ntriples.txt
Original Record: 831-1.0077668-source.json
Full Text
831-1.0077668-fulltext.txt
Citation
831-1.0077668.ris

Full Text

CHOICE OF LAW IN INTERNATIONAL COMMERCIAL ARBITRATION by JULIET LAMI UMARU LL.B. (Hons.), Ahmadu Bello University, 1980  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF LAWS in THE FACULTY OF GRADUATE STUDIES (Faculty of Law)  We accept this thesis as conforming to the required standard  THE UNIVERSITY OF BRITISH COLUMBIA August 1984  ©  Juliet Lami Umaru  In  presenting  requirements  this for  thesis  an  advanced  of  B r i t i s h Columbia,  it  freely  agree for  available  that  or  for  by h i s  understood  that  that  reference  for  may b e  or  her  shall  of  Date  DE-6  (3/81)  ^  QcA*W  the  and  study.  I  copying of  granted  by  the  not  be  further this  It  this  allowed without  Columbia  make  thesis  head of  representatives. publication of  the  University shall  |_  The U n i v e r s i t y o f B r i t i s h 1956 Main M a l l Vancouver, Canada V6T 1Y3  at  Library  permission.  Department  fulfilment of  the  extensive  copying or  f i n a n c i a l gain  degree  agree  purposes  department  for  I  permission  scholarly  in partial  my  is thesis my  written  ii  ABSTRACT  The problems faced by an arbitrator in determining which law to apply to the substance of the dispute before him are considerable. His problems are alleviated when he finds a contractual clause specifying an express choice of law; he therefore gives effect to the parties* choice of Taw. However, when parties fail to indicate in their contract a law to govern their disputes, an arbitrator, unlike a judge does not have national rules to guide him in determining this law. The problems faced by an arbitrator has been subject to extensive debates and many authors have advocated solutions to these problems which daily face the arbitrators. These discussions have centered around the issue whether an arbitrator should apply conflict of law rules, non-national rules or base his decision on an autonomous legal order, commonly referred to as the New Lex Mercatoria.  The proponents of the latter view argue  that arbitrators should not take into consideration any conflict of law rules or base their decisions on a national legal order. This concept of New Lex Mercatoria, appears to be gaining considerable support amongst arbitrators.  It is argued by the  supporters of this view that the principle of party autonomy, which is universally recognized by all trading nations, allows arbitrators to base their decisions on this non-national legal order.  iii  This thesis too is also directed to the study of the above mentioned issues. An analysis of the above mentioned views show that the New Lex Mercatoria is still vague and uncertain.  It will be argued that i t  is premature to advocate an autonomous legal order which is yet to be recognized by national legal systems. It is shown that party autonomy is greatly affected by protective legislation of the state and by issues of public policy. Therefore this thesis concludes that an arbitrator ought to refer to conflict of law rules in order to ensure enforceability of the arbitration award. While the present state of affairs is hardly conducive to international trade, an autonomous legal order requires the joint efforts of not only the business world but of national legal systems acting as international legislators.  iv  TABLE OF CONTENTS Page INTRODUCTION  1 PART I  I.  CHOICE OF LAW BY PARTIES A.  3  Party Autonomy under the Anglo-Canadian System  3  B.  Limitations  4  C.  Party Autonomy and the Law in the U.S  D. E. F.  10  Party Autonomy and the Courts in New York An Overview of Anglo-Canadian and New York Approach Scholarly views on Party Autonomy in International Commercial Arbitration  23  Arbitrators and Party Autonomy: Practice  26  11 22  PART II II.  WHERE PARTIES HAVE NOT CHOSEN A LAW  33  A.  Solutions Available to an Arbitrator  34  B.  Amiable Compositeur  56  Amiable Compositeur and the English Law  58  Amiable Compositeur and Canadian Law  63  Amiable Compositeur in the United States  64  V  Page PART III III. LEX MERCATORIA, THE NEW LAW OF INTERNATIONAL TRADE?  67  A.  A New Law Merchant - What is it?  69  B.  Basis of the Lex Mercatoria  69  C. D.  Sources of Lex Mercatoria The Position of Lex Mercatoria in International Commercial Arbitration ..  72  Has a New Lex Mercatoria Actually Emerged? . .  75  E.  73  CONCLUSION  83  FOOTNOTES  88  BIBLIOGRAPHY  115  A.  Books  ..  115  B.  Articles  116  C.  Cases  120  D.  Awards  122  vi  ACKNOWLEDGEMENT  I would like to thank Professors J. Blom, H. Adelman and R.K. Paterson for their many helpful suggestions which has considerably improved this work. I am also grateful to the Law Foundation of British Columbia for their financial support without which this study would not have been undertaken. I take this opportunity to extend my sincere thanks to all my friends, especially those at the Inter-varsity Christian Fellowship (I.V.C.F.) for their encouragement during the course of this work. I express my deep gratitude to Pieter Kos for proof-reading this work. Finally I wish to thank Tadesse and my family for their love and support.  - 1 -  INTRODUCTION International commercial arbitration [1] is regarded as the most suitable means for the settlement of disputes that arise out of international transactions.[2] The increased use of arbitration provisions in international commercial contracts has begun to produce a significant increase in arbitration cases pending world-wide.[3] This, however, is hardly surprising in view of the purported advantages of arbitration over litigation in settling international disputes.[4] Moreover, litigation in foreign courts frequently involves disadvantages such as unfamiliar procedures, hiring of local counsel and apprehension of discriminatory treatment by some courts.[5] Despite the progress made so far in international commercial arbitration, i t is still in its infancy and commentators have recently started to denounce the "Pitfalls in International Commercial Arbitration."[6] An issue which has attracted a lot of debate and comment is the question of the applicable law in international commercial arbitration. An international arbitrator when faced with the question of applicable law to a contractual dispute does not have a means of determining this law.  The national judge on the other hand will  decide this issue on the grounds of national choice of law rules.[8] How does an arbitrator then determine the applicable law in an existing dispute?  An arbitrator in deciding which law to apply to  the dispute may find a contractual clause specifying an express  - 2 choice of law by the parties. It is obvious however, that where no choice of law clause is stipulated by the parties, the rights, duties and obligations of the parties can only be determined on the basis of some measuring standard. Should an arbitrator determine what the governing law is by relying on the conflict of law rules of the national courts? or should he decide the case on the ground of a non-national system of law? These and other issues will be the subject of this thesis. The thesis therefore to be developed will look into the conflict aspects in international commercial arbitration. Part I of this study deals primarily with one aspect of the choice of law rules, the autonomy principle. It ascertains the limitations on party autonomy under the Anglo-Canadian [9] and American [10] systems. This section also demonstrates how arbitrators have interpreted the autonomy rule. Part II of this study analyses the methods by which arbitrators determine the applicable law, where parties have failed to make a choice. Part III deals with the concept of Lex Mercatoria.  - 3 PART I  I  Choice of Law by Parties The power of the parties to a transnational contract to  stipulate the law that will govern their transaction can be said to be widely recognized.[11] The concept of party autonomy [12] has been adopted in all major international conventions dealing with contracts [13] or arbitrations.[14] While the doctrine of party autonomy seems to be widely accepted, the limitations on the parties' rights are less defined and vary from country to country.  A.  Party Autonomy under the Anglo-Canadian System  There is no doubt that both English [15] and Canadian [16] legal systems subscribe to the autonomy principle and in particular the Vita Food Prods.  Inc. v. Unus Shipping Co. [17] has become the  touchstone for both English and Canadian law.  The defendant, in  this case a Nova Scotian company, agreed in Newfoundland to carry a cargo of herrings from Newfoundland to New York in a Nova Scotian ship. Bills of lading were signed in Newfoundland.  The  Newfoundland Carriage of Goods by Sea Act provided that the Hague rules applied and governed every contract of carriage from Newfoundland, and every bill of lading regarding such carriage had to contain a clause making the Hague Rules applicable.  In this case  the bills of lading contained the statement, "This contract shall be governed by English Law."  Both the Hague Rules and the bills of  lading however exempted the defendant from liability for negligence  _ 4 -  of the master. The ship ran aground and the goods were damaged. The plaintiff sued the defendant in Nova Scotia. The defendant pleaded that the bills of lading or Hague Rules exempted them from liability and also pleaded that the contract was governed by Newfoundland law.  Plaintiff alleged that the bills of lading were  illegal and void, since they did not contain a clause making the Hague Rules applicable as required by s. 3 of the Newfoundland Carriage of Goods by Sea Act. The Privy Council rejected the plaintiff's claim and held inter alia that failure to comply with s. 3 did not make the bills illegal by Newfoundland law and illegality by the lex loci contractus was ineffective. The Privy Council also held that the English law was the proper law of the contract.  The position of the law both in  England and Canada was clearly stated by Lord Wright in the Unus case when he said, "Where the English rule that intention is the test applies, and where there is an express statement by the parties of their intention to select the law of the contract, i t is difficult to see what qualifications are possible, provided the intention expressed is bona fide and legal (emphasis added) and provided there is no reason for avoiding the ^choice on the ground of public policy,"[18] (emphasis added).  B.  Limitations (i)  Bonafide and Legal  It is unclear what meaning is to be attached to the words "bona fide and legal."  While other judges have re-echoed the words of  Lord Wright there doesn't appear to be much discussion as to what the terms mean.[19] It has been argued by some commentators that  - 5 the requirement of legality begs the question.[20] Another writer is of the view that legality "may mean no more than that the choice must be in accordance with the conflicts rule of the forum".[21] McLeod is of the view that for the parties' choice to be bona fide and legal their right must be exercised for a proper purpose. There must be sound commercial financial or practical reasons justifying the express choice of law.[22] It has also been suggested that a choice of law (whether local or foreign) is not bona fide where i t is made with the intention of evading provisions of the law which would have applied in the absence of a choice.[23] Such was the decision in the Australian case of Golden Acres Ltd. v. Queensland Estates Pty. Ltd. [24] A Hong Kong company carrying on business in Queensland, Australia, entered into a contract with the defendant, a Queensland company, providing for a commission to be paid to the plaintiff for the sale of land in Queensland. The prospective purchasers of the land were resident in Hong Kong. The agreement provided that "for all purposes arising under the agreement, it shall be deemed to be entered into the colony of Hong Kong". The court concluded that an express choice of law in favour of the law of Hong Kong was not bona fide as i t was specifically intended to avoid the Queensland statutory requirement that all contracts of this type made with real estate agents not licensed by the state of Queensland were illegal.[25] While i t may be true that parties will sometimes try to evade mandatory provisions of the law of the country to which the  - 6 transaction is closely connected, such choice may be for reasons other than evasion.  Where parties to a contract however choose a  law which has some factual connection with the transaction, the parties should not be regarded as evading the mandatory provisions of the law of the place which is substantially connected with the contract simply because i t excludes certain requirements of that law.  The terms of the contract are generally the best indication  of the parties' intentions. However, where the parties' choice has no connection whatsoever with the law of the country chosen except for the choice of law clause and such clause contravenes the mandatory laws of the country with which the contract is substantially connected,[26] this may no doubt be evidence of evasion. (ii)  Public Policy  Among the oldest [27] and most strongly established principles of private international law is the public policy principle. The express choice of law by the parties is of course limited in Britain [28] and Canada [29] by the principle that the forum may refuse to apply the stipulated law on the ground that i t infringes the forum's stringent public policy. The principle was stated by Fry J. in a case Rousillon v. Rousillon [30] when he said "It has been insisted that, even i f the contract was void by the law of England as against public policy, yet inasmuch as the contract was made in France, i t must be good here, because the law of France knows no such principle as that by which unreasonable contracts in the restraint of trade are held to be void in this country. It appears to me, however, plain on general principles that this court will not enforce a contract against the public policy of this country, wherever i t may be made."[31]  - 1 While there is a general agreement that a choice of law is subject to the requirement of public policy, the limits to this public policy exclusion are unclear and there are few reported cases on this issue.  It might therefore be difficult to assess how this  exception to the autonomy rule works in practice. It however appears that public policy in international contracts has a narrower meaning than that accorded purely domestic contracts. A commentator said that not every rule of law which belongs to the "ordre public interne" is necessary part of the "ordre public externe or international ."[32] Courts are known to have given effect to contracts governed by foreign law when such contracts were void according to the principles of the forum's domestic law.[33] There are few situations where English or Canadian law will invalidate a claim based on foreign law on the ground of public poli cy. Prebble [34] categorised the situations when the English courts would refuse to give effect to foreign law, under the following heads: (i) Where the fundamental conceptions of English justice are disregarded.[35] (ii)  Where the English conceptions of morality are infringed.[36]  (iii)  Where a transaction prejudices the interests of the United Kingdom or its good relations with foreign powers.[37]  (iv) Where a foreign law or status offends the English conception of liberty and freedom of action.[38]  -  8  -  The above mentioned categories are of course not exhaustive. Any particular foreign law will have to be examined in the context of the case at bar to determine i f i t will produce a result which is unacceptable.  If i t does, i t will not be applied.[39]  The position of the Canadian law was succinctly expressed by Martin C.J.S. in Canadian Acceptance Corp. v. Matte,[40] where he stated that authorities demonstrated that the public policy rule had a limited application. He observed that the types of contracts to which the rule had been applied were those concerning matters such as restraint of trade, champerty, interference with criminal prosecution and collusion for the purposes of obtaining a divorce. The same view was recently adopted by Medhurst J. in Greenshields Inc. v. Johnson.[41] Against this background, i t should therefore not be regarded as an exaggeration to state that in Canada and Britain, the concept of public policy in international contracts has little or no effect on the doctrine of party autonomy. The law in Canada and Britain as can be deduced from various commentators,[42] stated briefly, is that an express choice of law by the parties, even one that is unwholly connected with the contract, will be given effect to by the courts, provided i t is bona fide and legal and i t does not attempt to evade the mandatory provisions of the law with which the contract has its closest and most real connection. This certainty is however marred in England by comments from some English judges who do not ascribe to such unlimited freedom of choice for the parties. Upjoin J. stated obiter in Re Helbert Wagg & Co. Ltd. [43]  "The court will not necessarily regard" an express  - 9 choice of law "as being the governing consideration where a system of law is chosen which has no real or substantial connection with the contract looked upon as a whole."[44] Denning L.J. said too in Boissevain v.  Weil,[45] "notwithstanding what was said in Vita  Foods Products v. Unus Shipping Co. I do not believe that parties are free to stipulate by what law the validity of their contract is to be determined. The intention is only one of the factors to be taken into account."[46] These comments by the courts do not in this writer's opinion state the true position of the law in England. These comments were not only made obiter but recent decisions of the House of Lords have reiterated the principle in the Unus case.[47] While doubts have been cast on the position of the law in England the law in Canada appears to be clearer. Although courts in Canada have regularly given effect to the express choice of law clause without an involved discussion of the rule,[48] they have continuously reiterated the principle in the Vita case and a scholarly authority on Canadian law states, "It appears that in Canada the parties are free to select any system of law applicable to their contract even i f i t is totally unconnected with the transaction apart from the choice of law clause.  Their choice is  not restricted to the system of law of any of the jurisdiction with which the transaction is factually connected."[49]  - 10 -  C.  Party Autonomy and the Law in the U.S.  It is common for American conflict scholars to refer to the choice of law rules in the contract area as the most complex and confused area of choice of law problem.[50] This however is hardly surprising since American courts have grappled more with this problem and have evolved more conflict law methods than any other country. The determination of the law by parties to govern their contractual rights and obligations is one of the important problems that has generated a lot of comment from leading writers.[51] Since it will be impossible to undertake a detailed analysis of the various American jurisdictions and of the conflict of law methods applied by the courts, this study shall examine how the courts in New York have dealt with the question of party autonomy in the state. It will however be proper before looking into the principle of party autonomy in New York to briefly take a look at a few provisions in the Second Restatement. It is worth special attention because as an embodiment of American law [52] the Second Restatement is a "convenient organizing point for a discussion of the American Law."[53] The Second Restatement adopts the autonomy principle in section 187(2). It states, "The Law of the state chosen by the parties to govern their contractual rights and duties will be applied even if the particular issue is one which the parties could not have resolved by an explicit provision in their contract directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction, and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of  - 11 a state which has a materially greater interest than the chosen state in the determination of the particular issue, and which under the rule of s. 188(4) would be the state of the applicable law in the absence of an effective choice of law by the parties." The terms of s. 187(2) clearly shows that parties' discretion to select the law to govern their contracts is not unlimited.  This  section contains built in limitations upon party autonomy. There must be substantial or otherwise reasonable basis for the parties' choice and this law must not be contrary to the fundamental policy of the law that would be applicable in the absence of a choice of law clause. (i)  Party Autonomy and the Courts in New York  While there is a clear articulation of the principle of party autonomy under the Second Restatement on the conflict of law rules, a review of some New York cases [54] show a morass of confusion and uncertainty in this area of the law. Whether a court upholds a choice of law when stipulated as being valid and effective depends on the test applied by the courts in determining which jurisdiction law applies.  New York courts have  not stuck to one rule or criteria but have combined acceptance of about three different rules. (1) A grouping of contacts or the interest analysis test; (2) the rule of applying the law of jurisdiction chosen i f the transaction bears a reasonable relationship to that jurisdiction (otherwise known as the common law rule; (3) The rule of validation in cases of agreement which are allegedly usurious.[55] This study shall further limit itself to the examination of party autonomy under the reasonable relation test.  - 1 2 -  (ii)  Reasonable Relation Test and Party Autonomy.  A number of cases [56] have in recent times followed the rule that a provision setting forth the choice of law in a contract will be followed as long as the transaction bears a reaonsable relation to the law chosen and is not against public policy. In Gambar Enterprises, Inc. v. Kelly Services, Inc. [57] the Appellate Division upheld a governing law clause in a service contract stipulating Michigan law, and stated inter alia, "Jurisdiction whose law the parties to a contract intended to apply must bear reasonable relation to the agreement ...  and the enforcement of the provision  applying a foreign rule of law must not violate a fundamental public policy of New York."[58] The court found a reasonable relation to Michigan because the contract was accepted in Michigan, performance of the contract was partly to be performed in Michigan. Several federal district courts sitting in New York and applying New York conflict rules have also applied the reasonable relation test. In B.M. Heede Inc. v. West India Machinery and Supply Co.,[59] a case involving a breach of contract by a New York company against a Puerto Rican company, the court upheld the choice of law stipulated by the parties: The court stated, "The parties may stipulate in the contract the law to be applied in determining questions of validity (or at least, closely related subjects) and interpretation, where the law chosen has some reasonable relationship with the contract and where the fundamental public policy of the forum is not vitiated ... the New York State Court decisions require no different result."[60] )  The court found a reasonable relationship with the contract because plaintiff's principal place of business was in New York and  -  1 3  -  the agreement was partly executed in New York and partially to be performed there. One is however led to ask what meaning should be given to the words, "reasonable relation to the contract". While a clear statement of the courts' stance cannot be found, an examination of the cases reveal that contact with a jurisdiction is necessary before a choice of law is given effect.[61] In Levey v. Saphier,[62] the court gave effect to a stipulation of New York law in an option and voting agreement among shareholders and former shareholders of a Delaware corporation. The court found the contacts with New York to be "substantial". By requiring a nexus with a particular jurisdiction, the courts however appear to give a narrow interpretation to the term 'reasonable relation'.  This, however, is seen as undesirable by  some commentators. Tuchler comments, "In some cases the parties to an essentially international arrangement might wish to bargain in relation to the rules of law of an otherwise unrelated state. ... It would seem quite proper to give this kind of 'relationship' the label 'reasonable' if the relationship was established in a fair and proper manner by parties in equivalent bargaining position..."[63] Professor Reese [64] has also expressed doubts as to the usefulness of restricting the parties' choice to laws which have some connection with the contract. He would require that there be some reaonable basis for making the decision. It may be inferred from some recent cases that New York courts will give a liberal interpretation to the term 'reasonable relation' to include the term 'reasonable basis'.  In a case Joy v. Heidrick  - 14 and Struggles Inc. [65] the court cited Second Restatement s. 187(2) as representing New York law and held that Illinois law had no "substantial relationship to or reasonable basis for" the parties' choice.[66] In Weight Watchers of Quebec Ltd. v. Weight Watchers International Inc.,[67] the judge in a footnote stated, "The court will honor a choice-of-1aw rule consented to by the parties where there is a reasonable basis for the choice or that the chosen state has some relation to the agreement."[68] In the case of Reger v. National Association of Bedding Manufacturers Group Insurance,[69] the plaintiff, a widow of the insured decedent and beneficiary of a terminated group life insurance policy sued the group policy sponsors for negligence. The policy was governed by Illinois law.  The insurance terminated when  the employer went out of business and the insured decedent (plaintiff's deceased husband) was not informed of his right to convert the group life insurance into individual life insurance and therefore failed to do so. Despite the fact that the insured decedent and the plaintiff were New York residents, the employer of the insured which had sponsored the group insurance for its employeees was located in New York, and the certificate of insurance was delivered to the insured in New York, the court held that Illinois law applied. The court citing s. 187 in support of its decision said, "However, as noted in comment f to section 187 of the Second Restatement on the conflicts of laws: "The parties to a multistate contract may have a reasonable basis for choosing a state with which the contract has no  - 15 -  substantial relationship"" [70] and i t concluded that the parties' choice had a reasonable basis to support the application of Illinois law, since it will serve the desirable objective "to achieve uniform and juridical symmetry".[71] (iii)  Public Policy  Before looking into the concept of public policy in New York, it is important to note that in the U.S.A., statutory laws [72] have developed which are closely related to, but not actually part of public policy.  One such statutory law, the Securities Exchange Act  of 1934 was a premise of the decision by the U.S. Supreme Court in Scherk v. Alberto-Culver Co'. [73] In this case, action was brought by Alberto-Culver Company, an American corporation and purchaser of European business entities, against a German citizen, Scherk, as seller of the business entities, to recover damages and other relief based on the claim that the purchaser had defrauded, in violation of the Securities Exchange Act, in connection with representations concerning trade marks which were transfered as part of the sale. Scherk however moved the court for stay of proceedings pending arbitration in Paris. The U.S. District Court for northern Illinois refused to stay arbitration.  The order was affirmed by the U.S.  Court of Appeals for the Seventh Circuit (Note: Both courts relied on an earlier case Wi Ik'o v. Swan, 346 U.S.  427 (1953) where the  Supreme Court held that an arbitration clause to which the 1934 Securities Exchange Act was exclusively applicable was invalid. (Parties were U.S. citizens.) The Supreme Court reversed the judgment of the Court of Appeals. The Supreme Court distinguished the Wilko case from Scherk's case.  It was the opinion of the Court  - 16 that while the agreement in Wilko involved parties in the U.S., Alberto- Culver's contract "was a truly international agreement" and therefore such a contract involves considerations and policies different from that in Wilko. The court further pointed out that invalidation of the arbitration agreement would reflect a "parochial concept that all disputes must be resolved under our laws and ... we cannot have trade and commerce in world markets and international waters exclusively on our terms, [and] governed by our laws."[74] Scherk's case clearly shows that securities issues which would be non-arbitrable in a domestic context will nevertheless be arbitrable if such an issue arose in international arbitration. The United States Court of Appeals for the First Circuit has recently decided that the decision in Scherk's case does not apply to anti-trust issues.[75] In this case Soler Chrysler-Plymouth (Soler), a Puerto Rican corporation, became a Chrysler-Mitsubishi dealer in 1979 when i t entered into a "Distributor Agreement" with Chrysler International S.A. (Chrysler). Soler also entered into a separate "Sales Procedure Agreement" with Chrysler and Mitsubishi Motors Corporation (Mitsubishi).[76]  The sales procedure agreement contained an  arbitration clause providing that "all disputes, controversies or differences which may arise between Mitsubishi and Soler out of certain portions of the agreement would be "settled by arbitration in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association.""[77]  -  17  -  In 1981 Soler failed to meet minimal sales commitments and desired therefore to sell some of the vehicles outside of its territory by shipping them to South and Central America and to the United States.  Mitsubishi denied Soler the permission to do so and  as Soler"s inventory increased, Mitsubishi witheld shipment of additional vehicles, storing them in Japan. Soler disclaimed responsibility for the stored vehicles and Mitsubishi brought suit, alleging breach of several provisions of the sales procedure agreement. Pursuant to this agreement, Mitsubishi petitioned for an order to compel arbitration. Soler denied the allegations and counterclaimed, alleging violations of the Sherman Anti-trust Act and the Puerto Rico Anti-trust and Unfair Competition Statute.[78] The District Court ordered the parties to arbitration. Soler appealed. On appeal the Court ruled that Soler's trans-shipment allegation fell within the scope of the arbitration clause but, however, held that anti-trust issues could not be arbitrated. The court observed that federal courts generally do not subject anti-trust issues in contract disputes between United States citizens to arbitration. The Court gave four reasons for this stance.  First, anti-trust law is so important to the functioning of  a free economy that its enforcement is delegated by statute to private parties as well as the government. Second, i t is likely too that contracts generating antitrust claims are contracts of adhesion, and forum selection by such contracts is undesirable. Third, antitrust issues often involve extremely complex legal doctrine and economic data, the analysis of which is anathema to the qualities of expediency, simplicity, resort to basic concepts of  - 18 -  equity and common sense, and minimal requirements of written rationale which are the strengths of arbitration.  Finally,  decisions regarding the regulation of business are viewed as inappropriate for delegation to arbitrators chosen from the business community not only of the United States, but also of foreign states having no experience with or exposure to the United States law or values in the antitrust area.  The Court also held that this  decision is compatible with the convention on the recognition and enforcement of foreign arbitral awards and does not conflict with the Supreme Court's ruling in Scherk v. Alberto-Culver Co. The Court distinguished the case in point with Scherk"s case. It stated inter alia that the public policy basis of the securities laws are designed primarily to protect a fairly small "special interest" group of investors in a particular security, whereas antitrust violations could "affect hundreds of thousands - perhaps millions of people and inflict staggering economic damage." The Mitsubishi case therefore represents an expansion to the use of the public policy exception in international trade. The limitation of public policy is clearly too a rule in New York. In Compania de Inversiones Internacionales v. Industri Hypotekshanken, Finland A / B . [ 7 9 ] , the plaintiff, an Argentinian corporation, had purchased bonds of defendant Finnish bank. This bond purchase agreement contained a clause stipulating that payment was to be made in gold coin of the U.S.A. The Court held that this agreement violated the public policy of New York since there was a joint resolution of Congress which nullified such clauses.  - 19 A commentator [80] observed that although the public policy limitation of the governing clause has frequently been mentioned, there are only a few cases which actually denied enforcement of a contract which was subject to a foreign law on the basis that the contract violated a strong New York policy. A thorough perusal of the foregoing would indicate that in New York, the courts under the common-law rule recognize the autonomy principle so long as the parties" choice of law bears a reasonable relation to the transaction and does not violate the public policy of New York.[81] Despite the fact that the autonomy doctrine seems settled and decisive both in theory and practice under the common law conflict rule, recent decisions of the courts seem to cast doubt not only on the continued application of the common law rule but also on the autonomy doctrine. These decisions led one critic, R. Bauerfeld, to comment, "The courts" reluctancy to give determinative weight for a choice-of-law clause is especially apparent in New York where the courts do not even purport to follow the autonomy rule."[82]  He further on states, "Choice-of-law clauses simply are  not followed by the courts. New York courts are candid in this respect."[83] Does Bauerfeld"s statement reflect the true position of New York law? I shall attempt to answer this question by reviewing a number of these controversial cases. Haag v. Barnes [84] involved the question whether New York or Illinois law should be applied to determine the validity of an agreement for the support of an illegitimate child. Judge Fuld (as he then was) stated,  -  20 -  "The traditional view was that the law governing a contract is to be determined by the intention of the parties [citations omitted]. The more modern view is that "the courts, instead of regarding as conclusive the parties" intention or the place of making or performance, lay emphasis rather upon the law of the place, "which has the most significant, contacts with the matter in dispute" .... But, even i f the parties" intention and the place of the making of the contract are not given decisive effect, they are nevertheless to be given heavy weight in determining which jurisdiction "has the most significant contacts with the matter in dispute"".[85] The import of this remark was left unclear, since i t would appear that some consideration too was given to the intention of the parties, for the court stated, "Whichever of those views [that is the traditional and modern view] one applies in the case, however, the answer is the same, namely that Illinois law applies."[86] Subsequent decisions seem to echo the opinion of Judge Fuld.  In the  case of La Beach v. Beatrice Foods Co. [87] an action was brought by Lloyd La Beach against his former employer, Beatrice Foods Company and G. Amachree, a Nigerian attorney.  The complaint alleges that  the defendants wrongfully coerced La Beach into giving up his controlling interest in Express Dairy Ltd., a Nigerian Company. His contract of employment provided that i t was to be "construed and governed by the laws of the State of Illinois, regardless of the fact that the performance of [La Beach"s] duties [was to] take place principally in Nigeria." The question before the court was whether Illinois or Nigerian law should govern the contract. The Court held, "A number of New York cases have held that where the parties to a contract have included a choice of law provision, effect is to be given to their choice as long  - 21 as there is a reasonable relation between the transaction and the jurisdiction whose law was chosen [citations omitted]. The New York Court of Appeals has suggested, however, that this doctrine need not be strictly followed. Instead, i t has held that while parties" choice of law is to be given considerable weight, the law of the jurisdiction with the "most significant contracts" is to be applied."[88] [citing Haag v. Barnes]  L  In another case, Southern International Sales Co., Inc. v. Potter & Brumfield [89] the Court stated as follows:  r  "There are, as defendant notes, a number of New York cases that hold the parties" choice of law to control where their contract has a reasonable relation to the jurisdiction whose law they choose But this begins rather than ends inquiry. There is also authority from the New York Court of Appeals suggesting that the parties" intention and stipulation as to the law governing their contract is but one factor, albeit a weighty one, in deciding the ultimate question - namely, which jurisdiction has the most significant contacts with the matter at issue."[90] [citing Haag v. Barnes] A conclusion that may be drawn from a review of these cases is that, while parties could choose a law to govern their contractual obligations, this choice is only upheld i f i t is the law of the jurisdiction with the most significant contact. The reasonableness of the choice is not the determining factor. No clear-cut direction however can be deduced from these cases that purportedly followed the decision in Haag v. Barnes.  While in  Potter's case the parties" intention was regarded as one of the factors to be taken into consideration and therefore not conclusive, in La Beach"s case, the court i t would appear regarded the reasonable relation test as the general rule but which can be deviated from under certain circumstances. It is this writer's view that although there is a bewildering inconsistency of judicial decisions,[91] the New York courts do  - 22 generally recognize the autonomy rule under the common law conflict rule.[92] It cannot be doubted that Mr. Bauerfeld has the force of a number of authorities to back up his opinion. New York cases  Yet a review of other  [93] overwhelmingly show that party autonomy is  recognized subject to the reasonable relation test and public policy considerations. Another reason which could counter Mr. Bauerfeld's assertion is the fact that New York has enacted the Uniform Commercial Code,[94] and this code specifically upholds the party autonomy rule.[95] If we are to agree with Mr. Bauerfeld, we are in essence saying that New York has two conflicting laws, one upholding the principle of party autonomy, while the other does not recognize i t .  This is not  only absurd but unlikely.  D.  An Overview of Anglo Canadian and New York Approach  An overview of the discussion above would suggest that there is a marked difference between the Anglo-Canadian conflict of law rules and the common law conflict rule of New York. From a review of both Canadian and English cases stated above, i t seems true to say that under both legal systems, the parties' choices are upheld and are also unfettered by the substantial relation test. be true under the common law rule in New York.  The same may not  In reality, this  difference may not be great and may be narrowed down substantially. This depends on how the courts in New York interpret the term 'reasonable relation'.  If this term is deemed to include the term  'reasonable basis', parties could therefore chose the law of a  - 23 country which would be unconnected to either of the parties. While the position in Canada and Britain is clear, the position of the law in New York is clouded with uncertainty. It is generally accepted, however, that there should be a reasonable relationship between the law chosen and the transaction and the choice should not be against the public policy of the forum. The limitations therefore on the autonomy principle in England and Canada would appear to be relatively mild when compared to New York law. Having established the fact that party autonomy is qualified under the various legal systems by their conflict of law rules, i t will be interesting to examine the views of a number of commentators on party autonomy and the application of conflict rules by arbitrators in international commercial disputes. This however is not merely theoretical but could be of practical importance since the enforcement of an award may depend on the conduct of the arbitral proceedings. The question which has been the subject of debate is, should the arbitrator give effect to the parties" choice per se, or should he check the validity of the parties" choice against the conflict of law rules of a state. conflict of law rules should he refer?  If so, to which  The solutions suggested by  various commentators is the subject of the following section.  E.  Scholarly Views on Party Autonomy in International Commercial Arbitration  A solution to the arbitrators* dilemma was suggested by Professor F.A. Mann in an article "Lex facit Arbitrum" [96]. Professor Mann stated,  -  24  -  "No act of the parties have any legal effect except as the result of the sanction given to i t by a legal system. Hence, i t is unavoidable to ascertain such system before the act of the parties can be upheld ... Whatever the intentions of the parties may be, the legislative and judicial authorities of the seat control the tribunals existence, composition and activities."[97] He therefore concludes that just as the judge has to apply the private international law of the forum, so also the arbitrator has to apply the private international law of the arbitration tribunal seat which he calls the "Lex arbitri."[98]  The first task therefore  for an arbitrator according to Mr. Mann would be to test the validity of an express choice of law by the parties by the law of the seat of arbitration. Mann recognizes the autonomy of the parties to the extent that i t accords with the provisions of the lex fori so that if the conflict rules of the lex fori points to another law as the proper law, the arbitrator must disregard the parties" choice.[99] Wetter [100] also appears to agree with Mann that party autonomy is limited by national or territorial considerations.  He  does not agree with the view that the autonomy principle has "a generative force of its own".  He takes a more flexible position  than Mann. He is of the view that in international arbitration, the laws of at least two jurisdictions are relevant, the forum state and the seat of eventual enforcement of the award. He also observes that the laws of the following jurisdictions may play a role: the laws of the jurisdiction where a stay may be sought, the jurisdiction whose procedural law is to govern (if different from that of the forum designated by the parties), and the jurisdiction whose substantive law is to govern the contract.  - 25 In contrast, Lew [101] argues that there is neither need or justification for the parties" choice of law to conform with the conflict of law rules of a national system. The arbitrator he points out owes no duty or allegiance to any state or national law but only to the parties and to international trade in general, the arbitrator should therefore give effect to the choice per se. He also observes that since the autonomy principle is recognized in most jurisdictions, i t will be superfluous for the arbitrators to further consider the law to apply to the dispute for this will also negate the intentions of the parties. Party autonomy he further argues should be considered as a distinct legal order, a "transnational conflict of law rule" for he said, "with no national conflict of laws sytems and no forum law on which to fall back, on what basis should the arbitrators determine the rights, obligations and duties of the parties* presumably on the basis of some nonnational conflict of laws system. What could be more non-national than the will of the parties."[102] Jean Robert argued in the same vein when he said, "It is first of all proper to leave the parties the full right to choose the applicable law. In our view, i t would be a mistake to make such autonomy subject to its admission by some rules connecting i t to some other law. The contractual character dominates arbitration to such an extent, especially international [arbitration], that the autonomous law has to be considered as being the superior rule of this institution which can only be limited by public policy. Thus, in order that i t be otherwise, the international public policy of the law of arbitration must prohibit the parties from expressing their choice of the basic law applicable to them. To our knowledge, however, no such prohibition exists in any legal system normally applicable. Consequently one should consider that the liberty of the parties to express their choice constitutes the first and foremost rule."[103]  - 26 -  While the view expressed by Mann appears to be very restrictive, Lew on the other hand takes a very liberal stance. Mann"s view is based on the premise that a single system must give binding effect to the choice of law by the parties. This, according to Mann is the law of the seat. While parties" rights i t is agreed may be limited by the law of the seat or lex arbitri, i t is difficult today to regard an international arbitral process as nothing more but a purely domestic process.[104] To equate the role of an arbitrator with that of a judge appears artificial and highly contestable.[105]  The objection to Mr Mann"s thesis is that he  fails to recognize the objective difference between a national court and an arbitral tribunal. Lew on the other hand fails to separate a vision of what is to be from the present day realities.  It may be that arbitral practice  has run ahead of the evolution in legislation.  To be effective an  arbitral award may require a national court to enforce i t and enforcement may depend on some national considerations or requirements.  F.  Arbitrators and Party Autonomy: Practice  We have seen from the above treatment of the party autonomy principle that i t is generally recognized that there are limitations to this principle.  This section of the study will try to ascertain  the weight accorded choice of law clauses by arbitrators in their decisions. The principle of party autonomy takes a greater perspective in arbitrations in the sense that an arbitrator"s authority to act is derived from the parties.  - 27 -  An analysis of how the arbitrators act in practice will be attempted from a review of a number of arbitral awards.[106] While any conclusion that will be drawn from this analysis may be far from complete, since very few awards have so far been reported, it will however give us an insight into arbitral practice. In an I.C.C. arbitration [107] that took place in Switzerland, the arbitrator rejected Swiss law which was the proper law according to Swiss private international law rules and applied the law chosen by the parties. applicable.  He stated, "In the present case, Swiss law would be  However, on several occasions, the parties have invoked  the law of Yugoslavia  It would therefore not be acceptable to  apply Swiss law if the parties themselves want the law of Yugoslavia applied."[108] In another case [109] a dispute arose from the failure by a Pakistani bank to execute a guarantee in favour of an Indian company. The arbitrator held inter alia "The Bank Guarantee expressly provided for the application of Indian law. Since the parties have made an express choice, it is irrelevant to examine authorities or doctrinal writings on the question of tacit or implied intention, or of the power of the court to infer a selections of law, or what facts and incidents of the case should be examined and taken into account in order to decide with which legal system the contract is 'most substantially connected'. The arbitrator has no power to substitute his own choice to that of the parties, as soon as there exists an expressed clear and unambiguous choice. ...."[110] In a dispute between a Swedish manufacturer and a Phillipine buyer the arbitrator observed, "In clause 13 of the contract of January 26, 1963 the parties agreed that disputes arising from the contract should be dealt with according to Swedish law.  As from the  - 28 legal point of view, there is no objection to such an agreement, the arbitrator is bound to apply Swedish law."[Ill] An interesting decision was reached in an ad hoc [112] arbitration held in Paris. This arbitration arose out of a dispute concerning a concession contract between a Belgium company, S.A. Mines Mineraux et Metaux (MMM), the world exclusive distributor for the products of company E and an English company, Mechema.  MMM  granted part of this exclusive distributorship for the United Kingdom and Ireland to Mechema. The concession contract contained an arbitration clause empowering the arbitrators to decide as Amiables Compositeurs. On the question of the applicable law, the arbitrators stated, "Lacking any serious indication as to the intention of the parties to apply a specific law, the only element worth considering would be the objective localization of the contract in view of the characteristic performance, the criterion which is most generally acknowledged - in this case, England - whereas English law does not allow amiable composition. However, i t appears that the parties have clearly expressed as their intention, that they have indeed sought to give the amiable composition an extremely comprehensive meaning and sought to help possible litigations escape from any national law."[113] A similar decision was arrived at in an ad hoc arbitration that took place in Netherlands concerning an agency agreement. The arbitrators stated inter alia, "Arbitrators refrain from pronouncing themselves on whether Belgian or Norwegian law is applicable on the contract between the parties. The contract itself stipulates that arbitrators are to decide in equity and in conformity with international standards. Arbitrators will do so."[114]  - 29 -  The party autonomy principle was given effect per se, in a dispute involving a licence agreement between a Swiss and a French corporation. The arbitrators held, "This decision on the substance [of the dispute] must be reached in accordance with the Swiss law which the parties have agreed to make applicable by Article XVI of the licence contract concluded between them."[115] There are however, other awards where the choice of law by the parties was upheld because they were in accordance with the conflict rules of a national system. In one I.C.C. arbitration [116] held in Switzerland, the parties expressly agreed that Swiss law is to be applied to their case. The arbitrator stated inter alia, "If a concrete rule of conflict rules has to be applied, the law in force at the seat of the arbitral tribunal must be followed." He therefore upheld the choice of the law by the parties since it was in accordance with the Swiss rule of private international law which required that every choice of law should be justified by a reasonable interest. He observed, "in the present case, it should be taken into account that the parties come from countries which have different social systems and the matters of the contact were destined for a country of the third world. They have avoided the conflicts which were likely to arise under these circumstances, by stipulating the application of Swiss law. As the seat of the arbitral tribunal is stipulated in Switzerland, the choice is justified by a lawful interest. Under these conditions, the application, of Swiss law does not counter any objection."[117] In a dispute concerning an agency agreement between a German and an Austrian party, the arbitrator in upholding the parties' choice of law justified his stance in the following words,  - 30 -  "First of a l l , it has to be borne in mind that the dominant opinion in Germany, Austria and Switzerland recognizes the rights of the parties to choose the applicable law. We are not governed here with determining the simple hypothetical will of the parties as they have clearly expressed their will before the tribunal if not at the time of concluding the contract."[118] A review of the arbitral awards noted above reveals a distinct pattern.  It seems an arbitrator will invariably uphold the parties'  choice of law and that the most important consideration for him is the intention of the parties expressly and Unambiguously indicated. This attitude of the arbitrator is hardly surprising.  Contractual  provisions are looked upon by arbitrators as more or less 'sacred' and the need for certainty and predictability is strongly felt by the business communities.[119] This attitude however appears to be in contradistinction with that of a judge of a municipal court dealing with an 'international' case. He may have to ascertain that the chosen law is not capricious but reasonably related or subtantially connected with the contract, and also not against public policy of the forum. It is important that the concept of party autonomy is given a broad interpretation by national legal systems in order to enhance predictability which is necessary in an international contract.  The requirements of substantial connection,  or words to like effect, between the chosen law and the transaction ought not to affect the parties' choice as long as there is a factual connection between the chosen law and the transaction, and this law does not try to evade mandatory laws of the country to which the contract is substantially connected. On the other hand while there is a need for arbitrators to uphold the parties' choice of law, it is important that they do not  - 31 give effect to a choice of law clause which is capricious, for this could be a device formulated by unscrupulous businessmen trying to evade mandatory provisions of the law.  Public policy considerations  too should be given a very narrow interpretation.  It is unfortunate  that this concept is of such an uncertain nature.  This defense is  usually explained in words similar to the following, "A law will not be upheld i f i t violates the forum state's most basic notions of morality and justice."  These words are so unspecific in nature  and offer l i t t l e practical guidance to either a judge or an arbitrator.  It is unfortunate too that no specific guidelines to  its interpretation have been provided by any of the international conventions. Because of its uncertain nature, a number of countries have enacted laws which, though would not fall within this definition, are considered as important statutes embodying national policies. The antitrust laws and security regulations are examples. It is encouraging that some courts have given liberal interpretations to these statutes. The U.S. Supreme Court, for instance, has held that the Securities Exchange Act, a statute embodying important national policies would not apply to a purely international contract.[120] Such an approach however may not be taken by other national courts. While the concept of public policy itself does not appear to be an effective limitation on the principle of party autonomy, what is to be feared is the development of these national statutory laws. There is a need to remedy the conceptual and pragmatic shortcoming caused by the interpretation of public policy. The present state of affairs requires a more analytical evaluation of the defense of  - 32 public policy. It is this writer's view that guidelines should be drafted to aid both the judges and arbitrators in defining this concept.  - 33 PART II  II.  Where Parties Have Not Chosen a Law  Stipulating a choice of law in an arbitration agreement is usually a means for achieving the orderliness and predictability essential to any international business transactional] But oftentimes, parties fail either for reasons of convenience or mistake to include such an important clause. Where parties fail to do so, the task falls on the arbitrator to ascertain the law intended by the parties to govern their rights and obligations. This task is not an easy one. The arbitrator, unlike a judge dealing with a transnational dispute usually encounters problems which are rarely faced by a judge. A judge of a national court would rarely encounter problems of conflict of laws with respect to the procedural law to be applied by him to a dispute. A national court would normally apply its rules of procedure to the case. This is not the case with an arbitrator. For him the question of applicable law will arise with respect to procedure.[2] The determination of this law is very important because of the following considerations: whether the arbitrator is relieved from the observances of rules of law [for instance where the arbitrators are given the power to act as amiables compositeurs by the parties], questions of the nationality of the arbitral award, the law applicable to the substance of the case, and the law applicable to the arbitral agreement. That these matters should be determined by procedural law has been strongly advocated.[3]  - 34 -  The judge of a national court faces little problem with respect to the law to be applied by him to the substance of the case.  The  judge solves this problem by resorting to its domestic rules of conflict of laws. The problem faced by an arbitrator was succinctly expressed by one arbitrator in a dispute involving a Federal German corporation and a Yugoslavian state trading corporation.  He said,  "There are no rules of conflicts of laws in force that would indicate to an arbitrator of a third country, without any link with regard to the law existing between the parties, according to the private international law of what country he has to determine the law applicable to the substance [of the dispute]. There is furthermore no criterion susceptible of weighing the balance in the favour of either German private international law or that of Yugoslavia, criticisms and the results would always have the appearances of an arbitrary preference...".[4] > Another problem of conflict of laws usually encountered by an arbitrator concerns question of his competence to hear the case. For the judge however, reference is made by him to his national law.[5] Therefore, with no criteria to guide the arbitrator in determining which conflict rules to apply to the problems enumerated above, theory and practice have given varied solutions. These solutions shall be the theme of discussion in the following section.  A.  Solutions Available to An Arbitrator (i)  The arbitrator's country of origin or residence.  An arbitrator i t is maintained should have recourse to the rules of conflicts of his country of origin or residence because these are the rules with which he is most familiar. By choosing an  -  arbitrator, the parties  35  -  have indirectly chosen the conflict rules  of his legal system, or are presumed at least to have consented to his applying them.[6] This argument as LaLive himself points out is hardly serious.[7] Klein [8] also rightly argues that i f one views the intention of the parties as the most important consideration, i t would be inappropriate to refer to the law of the arbitrator's country of origin or domicile in the absence of more precise indications.[9] It is also crucial to add that oftentimes parties fail to appoint an arbitrator and a choice is therefore made by an appointing authority, which may be an individual or an organization.  One is  led to ask, why should the conflict rules of an arbitrator whom the parties did not choose be imposed upon them? How is i t possible to argue that the parties have implicitly agreed to be bound by the conflict rules of the arbitrator? It has also been argued that since the advantage claimed by this theory is that the arbitrator has the best knowledge of his personal law, his substantive personal law should be applied and not his conflict of law rules.[10] While this connecting factor may have as its advantage its simplicity, i t is too rigid and impractical. (ii)  The country the jurisdiction of whose courts is ousted by submission to arbitration.  This theory was first promulgated by a renowned Italian scholar, Dionisio Anzilotti, when arbitration was still in its infancy.[11] The idea that the arbitrator should apply the conflict rules of the country whose courts would have had jurisdiction is  - 36 based on the fact that if arbitration is to oust the jurisdiction of a national court, its validity and effects can only be evaluated i f regard is made to the law that the court would have applied i f the dispute had been submitted to it.[12] This solution is circular. An arbitrator must at first resort to a conflict of law rules in order to know which country would have had jurisdiction.  There is  then a vicious circle.[13] This theory too proceeds on the assumption that only one country has jurisdiction to try a particular case. However, this is usually not the case in an international dispute where two or more courts could have jurisdiction over the same subject matter. (iii)  The rules of conflict of the country of exequatur.  It has been suggested that an arbitrator should apply the conflict rules of the state where the award will be enforced.[14] No doubt such a criterion ensures the enforcement of the award. While this may be a practical solution to the arbitrators' dilemma, this method is hardly satisfactory.[15]  It is usually difficult to  determine with any degree of certainty the place of eventual enforcement.[16] It may also happen that the award is to be enforced in more than one country.[17]  (iv) Conflict of law rules chosen by the parties. Where parties have expressly chosen the conflict of law rules to apply to their contract, the arbitrator should give effect to their choice.  This choice of conflict rules manifests the intention  of the parties. An express choice of conflict rules by the parties  - 37 is rather unusual and i t is no wonder that only one arbitration award has been found in which the parties have made such a choice.[18] In a dispute between an Italian and Belgian party [19] the parties entrusted the arbitrator with the task of determining the law applicable to the dispute on the basis "of the rules of French law governing conflict of law in matters of international private law".  Furthermore, the contract signed between the parties  stiplated that "the arbitrator shall decide, seeking to bring into agreement the rules of Belgian law and of Italian law which govern this matter". The question of the applicable law was however resolved on this latter provision. The choice of a system of conflict rules no doubt frees the arbitrator from the task of selecting the conflict of law rule to apply. However, parties noted LaLive and Lew [20] should expend their energies on choosing the substantive law to govern their contractual relationship rather than selecting a conflict of law system. This mode is not only cumbersome, states Lew, but i t is also haphazard. Parties, before choosing a law, will make themselves familiar with the relevant provisions of that law and will also give thought to the implications arising therefrom. [Lew however rightly notes that this research is usually not undertaken in practice]. He notes that where parties wish to choose a system of conflict rules, they will not only have to research into the various laws which they would like to apply to their contracts, but would also have to determine which conflict methods points to the law they wish to govern their  - 38 disputes.  This, he maintains, is difficult and can be haphazard in  view of the fact that conflict rules are uncertain or ambiguous.[21] (v) The conflict rules of the seat of arbitration. The thesis that the arbitrator should resort to the conflict rules of the seat of arbitration was given authority by Sauser Hall as rapporteur of the Institute of International Law.[22] This solution simply stated is that the arbitrator like the judge must apply the conflict rules of the seat. This view found support among other commentators like Mezger [23] and Mann [24]. Mann strongly stated that where the parties fail to indicate a choice of law, the arbitrators cannot proceed with the case otherwise than by application of the law of the seat, the lex arbitri.[25] The advantages of this theory are predictability and simplicity. is respected.  Besides, i t is maintained that the will of the parties The parties in choosing the seat are deemed to have  indirectly selected the applicable conflict of law rules. This conflict of law rule has been applied by some arbitrators for finding the applicable law.  In an ad hoc arbitration [26] in  Sweden concerning a dispute for the sale of a motor vessel "Mare Liberum" by a Dutch company to Swedish buyers, the arbitration tribunal had to decide whether the contract was governed by Dutch or Swedish Law, as the contract did not contain an express choice of law.  The arbitrators reasoned that notwithstanding the fact that  the vessel was registered in Holland and the sellers were domiciled in Holland, the fact that there is a clause calling for arbitration  - 39 in Sweden is an indication that the question of applicable law must be decided according to Swedish conflict of law rules. In yet another arbitration held in Paris, involving a Swiss and a Spanish party, the arbitrator stated, "The agreement between the parties does not state the law which must be declared applicable in this case. Therefore, i t is first of all important to determine the national law with respect to which the contract will have to be examined within the framework of the validity of its arbitration clause. To this effect, the arbitration tribunal has ruled, from the outset, that the "lex fori" is French law. According to French private international law, the legal order applicable to the contracts is determined... ." Finally in a case between an Italian and a German, a three man arbitration panel sitting in Switzerland held, "Where concrete rules of conflict of laws have to be observed, i t is advisable to apply the standards of the legal system valid at the place where the tribunal sits.  In the present case, i t is thus on the basis of the  rules and the practice of Swiss private international law that decisions have to be taken."[28] This criterion however has been subject to many criticism. This standpoint has been criticised by a number of" commentators on the ground that this method is divorced from reality and facts of international practice.[29] One of the criticisms levied against this method is that the selection of a seat of arbitration might be merely fortuitous. Parties may select a venue because i t is socially or geographically convenient. This does not indicate in any way a desire by the parties that the conflict of law rules of that country should govern the arbitration. An illustration will drive this point home.  - 40 Assume an agreement was entered into by a Chinese and a Canadian. The parties desiring to choose a neutral forum select Sweden as the seat of arbitration. The argument therefore of the critics of this method is that there is no logical justification for the arbitrator to determine the applicable law by resorting to the Swedish conflict of law rules since i t cannot be assumed that the parties knew or had any desire to be so bound by these rules.[30"  What also constitutes  a seat under certain situations is left unclear by proponents of this theory.  If, for instance, the parties do not specifically  provide for a venue but adopt the arbitration clause recommended by any of the arbitral institutions, for example, the I.C.C. or the American Arbitration Association (A.A.A.), would the seat of arbitration be presumed to be the headquarters of the I.C.C. (Paris), or New York in the case of A.A.A.? The 1957 and 1959 Resolution of the Institute of International did not touch on this point. Mann, too, i t would appear, has not clearly defined the seat' in this respect. c  In his article, "Lex  Facit Arbitrum", he indicated that in such a situation the seat is determined only when the arbitrator or umpire is appointed.  The  residence of such an arbitrator becomes the seat of arbitration, for that is the implied intention of the parties.[31]  In another  article [32] he however stated that where the seat is not expressly chosen, "It may be impliedly selected in that the parties define the institution under whose auspices the arbitration is held (London Metal Exchange, American Arbitration Association, and so forth)."[33]  - 41 The first view expressed by Mann can only be workable where there is a sole arbitrator.  If there are three arbitrators, which  usually is the case in international commercial disputes, how then do we determine the seat?  It can easily be argued that the  residence of the president or chairman would be the seat of arbitration.  However, i t is not uncommon for arbitrators to resign  their appointments during the pendency of an arbitration. Where the president resigns his appointment and is replaced by another arbitrator, resident in a different country, does the seat of arbitration therefore change? Going by Mann's analysis, our answer ought to be in the affirmative. Although Mann points out in the course of his discussion that a seat of arbitration usually remains constant,[34] this viewpoint does not adequately answer the question posed above, for i f the determining factor is the residence of the arbitrator, no other conclusion than the one expressed above can be arrived at. His latter view is also contestable.  It cannot be said that  the desire of the parties to submit their dispute to the I.C.C. necessarily indicate that the parties have impliedly chosen Paris as the seat of arbitration.  It would appear that under the I.C.C. the  seat of arbitration is not determined by virtue of the fact that the parties submit to arbitration under its auspices but is determined subsequently by the court.[35]  This viewpoint finds support in  Article 12 of the I.C.C. rules which states, "The place of arbitration shall be fixed by the court, unless agreed upon by the parties."  Let us for the sake of argument assume that Mann had not  contemplated an 'international' organization such as the I.C.C. when  -  42  -  he made his statement but rather a 'national' organization such as the A.A.A. and the London Court of Arbitration (L.C.A.).  Even so,  the same argument still holds. Arbitration under the auspices of the A.A.A. or the L.C.A. should not imply that the parties desired the conflict rules of New York or England to govern their disputes. The mere fact therefore that an arbitration is taking place within a country does not mean that the arbitrator has to determine the law by applying the conflict rules of the seat. The country wherein an arbitration is held may not even regard an arbitration having no connection with the country as subject to its law, save for the locale. The weakness of this thesis can be seen in a recent arbitration initiated under the auspices of the I.C.C. Gotaverken Arendal A.B., a Swedish shipbuilder, brought an action against Libyan General National Maritime Transport Company on account of the refusal of the latter to pay the balance of the sales price for the construction of three tankers. An award was rendered in favour of Gotaverken. Gotaverken then sought to enforce the award in Sweden but this was challenged by Libyan Maritime Co. on the grounds that  Q an application was before the court in France to set aside the award. Libyan Maritime Co. argued that under French Law the fact that an application for setting aside was before the court caused the award to be suspended and the enforcement in Sweden could not be granted.  The court rejected this argument and upheld the award.  The Court of Appeals in Paris also declined to take jurisdiction to hear the challenge on the ground that the arbitration between Gotaverken and Libyan Maritime Co. had an international character and the mere fact that the arbitration took place in Paris did not  - 43 make i t a French award. Moreover, the arbitration had no links whatsoever with the French legal system. The court therefore stated that the place of arbitration chosen in the interest of geographical neutrality may not "be considered an implicit expression of the parties' intent to subject themselves even subsidiarily to the Loi procedurale francaise"[36].  This case  clearly shows that the mere fact that an arbitration takes place within a territory does not presuppose that an arbitrator is bound by the conflict of law rules of the lex fori or seat of arbitration, nor is the choice of a seat an implicit intention of the parties to be bound by the conflict rules of the seat. The advantages of this criterion therefore appear to be illusory and the test is definitely not conducive to modern international trade practices. (vi) The conflict of law rules deemed appropriate. The only reasonable solution to the arbitrator's problem, states a commentator, is for the arbitrator to determine the applicable law by choosing the conflict of law rules he "deems appropriate"[37]. This, too, is the solution provided by the European Convention on International Commercial Arbitration [38] and a number of arbitral institutions.[39] This interesting approach has been adopted in several arbitral awards. In an I.C.C. arbitration [40], the arbitrators in considering the law to be applied to the substance of the dispute stated, "In conformity with the terms of reference the arbitrators have to determine the proper law by the rules of conflict which they deem appropriate." The arbitrators considered Belgian law to be the  - 44 proper law of the contract in view of the fact that the contract is most closely connected with Belgian law.  Moreover i t was pointed  out by the arbitrators that this law also accords with the prevalent view that a guarantee is governed by the law of the guarantor. Similarly in a dispute between Austrian and Swiss parties [41] concerning an agency contract to be performed in Austria, the arbitrator had three options open to him: the law of the place where the principal has his permanent place of business, the law of the place where the agent has his permanent place of business, or the place where the agency was to take pi ace.[42] The arbitrator, however, regarded the latter option as the appropriate choice of law rule.  The arbitrator said, "As concerns the question brought up by the parties, of the applicable law, the following should be observed: i t is today a legal concept widely admitted that the legal relations between principal and his agent are submitted to the laws of the country where the agent exercises his activities. It thus follows, i t is the law of the territory conceded, this seems logical from the sole fact that the centre of gravity of the legal relations are situated there [in the place] where the agent operates."  This approach, although flexible, leaves a lot of questions unanswered. The phrase, "rule of conflicts deem appropriate", is unclear. What would be the basis on which the conflict of law rules could be determined? Would i t be on the basis of the subject matter or geographical connections with the case?[43] Should these conflict rules, states Fouchard, be borrowed from a system of national conflict rules or can an arbitrator directly spell out these rules without a direct reference to a national law.[44]  - 45 This problem, highlighted by Phillipe Fouchard, surfaced recently in the case of Norsolor S.A. v. Pabalk Ticaret Limited Sirket.[45] The case centered on the interpretation of Article 13(3) of the I.C.C. rules which provides that in the absence of any indication by the parties as to the applicable law, the arbitrators should apply the rule of conflict which he deems appropriate. In this case a French company, Norsolor S.A. previously Ugilor, entered into a contract of agency with the Turkish Company, Pabalk Ticaret Limited Sirket, under which the product acrylomitrite was delivered by Ugilor to the Turkish company, Aska, for the transformation of this base product in Turkey. Difficulties arose between Ugilor and Aska, and a dispute arose between Pabalk and Ugilor as to the payment of commission to the former, as well as a claim for breach of contract which Ugilor repudiated. Pabalk made a request to the I.C.C. in accordance with the arbitration clause in the contract. Vienna was chosen as the seat of arbitration, but the parties neither indicated the law to be applied to their dispute, nor did they give the arbitrators the power to act as amiables compositeurs.  The arbitators were  therefore left with the task of determining the law by the rule of conflict they deemed appropriate. The arbitrators, rather than choose either Turkish or French law, decided to apply the International Lex Mercatoria. The arbitrators stated that one of the principles on which the choice is based is that of good faith which must exist in the formation and performance of contract; and the accent put on good faith is furthermore one of the dominant  - 46 tendencies to be found in the convergence of substantive national laws. An award was made which found in favour of Pabalk for the amounts set out in the following four points: 1.  3,965.97 French francs, U.S. $12,429.65 and U.S. $1,320.02 with interest at the rate of 6% due under the contract;  2.  22,650 f f . payable in respect of partial non-performance of a contract of sale;  3.  800,000 ff. as damages for wrongful termination of the contract;  4.  Each party to bear its own cost.  Pabalk lodged the award with the tribunal de grande instance in Paris which granted an order of exequatur. Norsolor however lodged its oppositon to this order on the ground that the arbitrators had gone beyond the term of reference and had acted in fact as amiable compositeurs since they had applied the principle of good faith which led to the application of lex mercatoria by the arbitrators. Furthermore they argued that the arbitrators acted in equity in making the award of 800,000 f f . which they stated was very difficult to quantify. The court rejected this contention and held instead that the arbitrators had applied the law designated by the rules of conflict which they considered appropriate, namely, the general principles of obligations applicable in international commercial transactions. The court also maintained that the arbitrators had calculated the damages not in accordance with equity but in accordance with the general principles of the law of usage in international commerce.  - 47 Norsolor brought an action in Vienna for the annulment of the award. The case came before the Vienna Handelsgericht.  Norsolor  complained that the arbitral tribunal had decided in equity and not in accordance with any particular system of law.  The award was  therefore invalid under Section 595 of the Vienna Civil Code of procedure. This court considered the four points on which the award was made. It considered that points I and II were determined by the tribunal as a matter of interpretation of the contract. With regard to point III, the court held that the tribunal had discussed the issue of the substantive law to be applied and had made its decision in accordance with the lex mercatoria. On appeal, the Oberlandesgericht affirmed the findings of the court below on points I and II, but annulled points III and IV of the award on the ground that the arbitral tribunal had exceeded its jurisdiction under s. 595(5) on the ground that the arbitrators had not determined the national law to be applied by reference to the rules of conflict as required by Article 13(3) of the I.C.C. Rules, but instead based their decision on the lex mercatoria.  However,  the non-application of the rules of conflict, the court stated, did not constitute an infringement of any mandatory rule of law under section 595(6). On further appeal to the supreme court, this court resolved the decision of the court of first instance on grounds III and IV. The decisions of the French court and the court of appeal in Austria are interesting, for they indicate the different interpretations that can be given to the phrase "deem appropriate". Article 1496 of the new French rules on international  - 48 arbitration of 12 May 1981 [46] appears to be clearer than the solution provided by Kopelmenas and adopted in the various conventions and arbitral rules, for i t provides that the arbitrator shall decide the dispute according to the rules of law chosen by the parties; in the absence of such a choice he shall decide according to the rules he deems appropriate.  Professor P. Fouchard in an  article [47] correctly states that the term "rules of law" is a wider expression and may include common rules of both national laws present, the general principles of law, international law (particularly where a state is involved), the usages of international trade, and rules (including lex mercatoria). (vii)  Application of cumulative conflict of law rules.  Arbitrators have determined the applicable law by means of a cumulation of conflict of law rules. This is a process by which arbitrators, rather than appling a single connecting factor, (for instance, the seat of arbitration in determining the applicable law), would look to all the systems that have any contact with the dispute to see i f they point to the same solution. The arbitrator in this case grounds his decision on this common conflict rule. Such an approach was taken by an arbitrator in a dispute involving a French company and a German individual.[48] In this case the French company and the German jointly purchased shares in a German corporation.  The German defaulted in providing his contribution.  The arbitrators were asked to annul the contract and to give effect to a penalty clause in the contract. The level of the penalty however depended on whether or not the defendant was a merchant. The arbitrators held that both German and French international law  - 49 pointed to the law of the place of execution as determining the question in point.  They therefore held that Saar law, (i.e. German  law) applied. A clear application of this approach can be seen in an arbitration held in Switzerland involving a West German and a Greek party.[49] The arbitrator held "In order to decide as to the substance whether the claim is justified, the law applicable to the substance of the dispute should first be determined. As the contract of the parties does not give any indication in this respect we should first find out where to find the rules of conflict which decide this question. The answer to the question is much facilitated by the fact that the principles of private international law, as they are developed under German law and Greek law (as well as under Swiss law), lead to the same result." This criterion, Derain [50] observes, has its advantages and disadvantages. An obvious advantage is the fact that the award will be recognized in any country where i t might be enforced.  The  effectiveness of this criterion however is limited only to situations where the countries connected to the dispute have similar conflict of law rules.  It is also to be observed that since the  arbitrator has to decide which countries are connected with the dispute, the discretion of the arbitrator comes into play and the conflict rules deemed applicable may differ from arbitrators to arbitrators. (viii)  Application of international conflict of law rules.  If arbitrators have to apply conflict of law rules, states Goldman,[51] at the very least they ought to apply international conflict of law rules.  - 50 Fouchard [52] too agrees that i t is not impossible to establish international conflict of law rules. Furthermore, he maintains that there is a trend towards this practice or in any case a co-ordination of national systems. This method presupposes a comparison of several bodies of private international law from which an arbitrator can choose a general set of rules.[53] Arbitrators have sometimes found i t unnecessary to determine the applicable law by resorting to particular conflict of law rules. They have resorted to the international conflict of law rules instead. In a number of awards reported, the arbitrators based their decisions on general principles of conflict rules.  In an I.C.C.  arbitration [54] concerning the recovery of a risk exposure bank guarantee [55], the arbitrators stated inter alia, "In its reminder the defendant expresses the opinion that in the absence of any explicit clause in the text of the Risk Exposure Bank Guarantee, the guarantee is governed by the generally accepted rules of conflict of law with regard to legal acts, according to which one had to look for the legal system to which the act is the most closely related. In this case the undertaking has been underwritten in Belgium by a Belgian Bank to be eventually performed in Belgium. ... Therefore the arbitrators consider that the applicable law proposed by the defendant is one that actually prevails with regard to the general rules of conflict of law and that in the present case there is no element which could justify the choice of another solution." In another dispute involving a breach of contract, a Swiss arbitrator compared the Swiss system with other private international law systems and subsequently based his decisions on some general accepted principles of conflict of laws.[56]  - 51 Finally in one I.C.C. arbitration the arbitrators referred to the common rules of conflict.[57] Nevertheless, arbitrators have sometimes determined the applicable law by directly applying a substantive law without having recourse to any conflict of laws system. There is also apparent in this method a process of denationalization of the arbitral process, (ix) The place where the contract was concluded. The law of the place where the contract was concluded has been applied by aritrators as the law governing the contractual obligations of the parties. In a dispute [58] between French exporters and Dutch importers concerning the payment of some outstanding amount, the arbitrators held, "Taking note that in the absence of the parties having expressed their intention, i t falls [to the arbitrator] to make a preference for the law of the place where the contract has been formed." Similarly in a dispute which arose between parties from Netherlands and France concerning the construction of a ship in Netherlands, the arbitrator applied French law since the contract was concluded in Paris.[59] This connecting factor is very unsatisfactory and criticism of this method abounds in legal literature. A very common criticism is that i t is difficult to determine where a contract is deemed to have been concluded. That the Restatement Conflict of Laws (1934) devoted twenty sections to this subject attests to this difficulty. Furthermore, the making of any particular contract may be  - 52 fortuitous. This could result in the fact that the parties would be governed by a law which was not even contemplated by them, (x) The closest connection test. Another criterion used by arbitrators to find the applicable law is what is called the closest connection test or proper law [60] and referred to in the American jurisdictions as the centre of gravity test.[61] In an I.C.C. arbitration [62] held in Zurich concerning a licensing agreement between a Japanese corporation and a Swiss corporation, J.G. Castel sitting as sole arbitrator stated, "In the absence of an express choice, the law applicable to a contract having an international character is the law of the country with which i t has the closest territorial connection.  In this case, i t  is Switzerland, because i t was the country where the plaintiff and the defendant had to perform their contractual obligation." Similarly, a Belgian arbitrator seized of an agency contract,[63] detemined the applicable law on the basis of the closest connection criteria.  He stated "...German law must receive  application by reason that the center of gravity of the contract (signed in Cologne and in Paris) and its place of execution are found in the F.G.R." This criterion too has not passed unchallenged.  It is  definitely more flexible than the method discussed above, since i t allows an objective determination of the applicable law by the arbitrator. There is however a real danger that the arbitrators engage in a process of counting contacts rather than evaluating them qualitatively.[64] A problem is also bound to arise where the  - 53 contract is closely connected with two legal systems. The intention of the parties may under such a situation be difficult to ascertain. The relevance of this criterion may be limited to situations where the factors weigh heavily on one side.[65] (xi) Application of general accepted principles of law Some arbitrators, in a bid to solve the problem of the applicable law, have had recourse to the general principles of law. In one I.C.C. arbitration which arose out of a dispute between an Indian and Pakistani corporation, Professor LaLive was faced with conflicting choice of law provisions and had to decide which should be relied on to interpret a clause in the contract.  He stated,  "In my view, i t is not useful to ... decide on the question of the law applicable, ... for the reason that, simply, the general principles of intepretation of contract should be applied as well as the rules of common sense, which are common to the principal legal systems of civilised countries, and specially to the English common law and to the legal systems of India and Pakistan."[66] A similar situation arose in an I.C.C. arbitration [62] concerning a breach of a licence and exclusive sales agreement between an Italian claimant and Spanish respondent. The arbitrator stated inter alia that since the general principles of Italian and Spanish law are practically identical, the question of the validity on the rescinded contract "can therefore be resolved without a preliminary decision on the applicable law." As this section reveals, there is no single method to which arbitrators have resorted in determining the applicable law. Commentators too are not agreed as to the appropriate criteria to be employed by the arbitrators.  - 54 Some arbitrators, as we saw earlier, have used single connecting factors to determine the applicable law.  Others had gone  to the other end of the spectrum by applying 'international conflict rules.  1  A few applied a substantive law without having recourse to any conflict of laws system. Resorting to a single connecting factor, like the seat of arbitration may at times be impractical.  The law of the place of  contracting does not afford us with any better solution as the determination of this place is difficult and uncertain.  The choice  of law deemed appropriate by the arbitrator does not promote foreseeability. There is a need for certainty and foreseeability not only at the time a contract is concluded but also at the time when parties resort to arbitration. Despite the shortcoming of resorting to the conflict rules of the seat of arbitration or the law of the place of contracting i t may be stated that these methods at least have the advantage of predictability or foreseeability. Having recourse to the conflict rules which he deems appropriate offers no guideline whatsoever to the arbitrator. Most arbitrators, being businessmen, would require more guidance in resolving legal issues.  Fluidity and flexibility no doubt is important in the  development and progress of international trade but allowing the arbitator to choose any conflict of law rules he deems appropriate allows him too much discretion which may be dangerous. The application of international conflict rules may have been the most appropriate solution to the arbitrators' dilemma but as already pointed out there is a great diversity in the conflict of  - 55 law rules of the different legal systems. Very few principles are of common application.  This diversity can be attested to by the  several attempts made so far towards the unification of the rules of private international law.[68] Having examined the various solutions available to the arbitrator, i t is this writer's view that the most reasonable criterion for determining the applicable law is for the arbitrator to resort to the rule of law commonly called the proper law of the contract.  Here the arbitrator applies the law of the country with  which the contract has its closest connection. This criterion enables the arbitrator to objectively determine the intention of the parties.  It is highly probable that, where  factors weigh heavily towards a particular jurisdiction, the parties may have intended the law of that place to govern their contract. A fear earlier expressed is that the applicable law might be difficult to determine where the facts are closely connected with two legal systems. It is submitted however that the arbitrator is likely to solve this difficulty, i f he meaningfully weighs the factors in the contract and also examines the purposes behind the competing rules of law.[69] This particular criterion has also gained considerable support in a number of countries.[70] It also appears to reflect the present trend of the private international law of contracts.[71] The closest connection test has been adhered to by the American Restatement (Second) of the Conflict of Laws, 1977, [27] by the Austrian Federal Act on Private International Law of June 15, 1978, by the E.E.C. Convention on the Law Applicable to Contractual Obligations, 1980 [73], and a number of national courts.  - 56 The problem faced by the arbitrator has not gone unnoticed. The I.C.C. commission on law and commercial practices has set up a Working Group with the task of drafting guidelines which would be used by arbitrators in determining the applicable law in case of failure by the parties to make an express choice of law.[74] Early in 1980, the guidelines proposed by this group were submitted to the I.C.C. National Committees for comment. This group, in conformity with the recent trend of the private international law of contract, provided in Article 2(1) [75] of the draft recommendation on the law applicable to international contracts that the arbitrator should determine the applicable law by choosing the law with which the contract has its most significant connection. Article Two also lists some connecting factors which should be taken into consideration by the arbitrator when determining this law. This undertaking by the I.C.C. is praiseworthy especially in view of the problems now faced by an international arbitrator. When the Working Group completes its task, these guidelines will go a long way in easing the dilemma of the international arbitrator.  B.  Amiable Compositeur A situation which is not uncommon in international commercial  arbitration is that parties may not stipulate a law in their agreement but would authorise an arbitrator to adjudicate disputes ex aequo et bono, as amiable compositeur.[76] The institution of amiables compositeurs, though still subject to a number of uncertainties [77], can be defined simply as an institution where an arbitrator is free to base his decision  - 57 on considerations other than strict legal principles but subject to any imperative rules and rules of public policy.[78] Therefore, the right of an amiable compositeur to depart from the established procedure and from the rules of law is no way an obligation but a mere faculty.  Occasionally, i t does happen that the clauses which  purport to confer such^authority on the arbitrator may be stipulated by such provisions as "the arbitrator shall be entitled to decide according to equity and good conscience and shall not be obliged to follow the strict rules of law" or simply "the arbitrator shall be entitled to act as amiable compositeur." This concept of amiable compositeur has been given effect in all the major international conventions and in some arbitral rules.[79] Article 33(2) of the UNCITRAL rules states, "The arbitral tribunal shall decide as amiable compositeur or ex aequo et bono only i f the parties have expressly authorized the arbitral tribunal to do so and i f the law applicable to the arbitral procedure permits such arbitration."  A practical application of  this concept can be seen in an ad hoc arbitral"on award of November 3, 1977 concession contract.[80] The arbitrators in that case, in the exercise of their power as amiable compositeur decided the dispute on the grounds of lex mercatoria. In another ad hoc arbitration of 17th February, 1971 [81], arbitrators, deciding as "amiable compositeurs" annulled a contract by which the total issued capital of a company was bought for a price exceeding five times the value of the shares estimated by the accountant. This price was obviously based on the intention to run a casino on the premises rented by the company. After a few months  - 58 the casino had to be closed. The risks, according to the arbitrators, were not sufficiently indicated by the sellers to the buyer and the excessive price, in disproportion to the actual value of the shares, justified dissolution of the contract, since the real purpose of the transaction could not be met.  The sellers argued  that, according to law, a disproportion to the "lustum pretium" cannot lead to a recission of the contract. This argument was rejected by the arbitrators.  They maintained that they were not  obliged to decide according to rules of law but rather according to equity. Despite the fact that the institution of amiable compositeur has been recognized by major international conventions and some arbitral institutions, this institution has not had an equal success with national legal systems. I shall in the following subsections examine the concept of amiable compositeur under three legal systems, the English, Canadian, and American legal systems. Amiable Compositeur and the English Law The Institution of Amiable compositeur has not only been ignored by the English legal system but very few English cases [82] touch on this matter, and there has virtually been no academic discussion.[83] This is not surprising because until recently [84] the English law gave the courts supervisory jurisdiction over arbitration proceedings, under what was termed the 'special case" procedure.[85] Thus arbitrators could be compelled under this procedure by either the parties or an English court to refer to the court for advice and decision on any question of law arising from the proceedings.  - 59 Prior to the amendment of the Arbitration Act in 1979, the position of the English law with respect to the concept of amiable compositeur can be seen in a number of cases. In Orion Cia, Espanolo de sequros v. Belfort Maats,[86] a case concerning a reinsurance treaty, a clause in the treaty referred to arbitration and i t provided inter alia, "... the arbitrators and umpire are relieved from following the strict rules of the law.  They shall  settle any dispute under this agreement according to an equitable rather than a strictly legal interpretation of its own terms and their decision shall be final and not subject to appeal." An award was made in favour of Orion, and Belfort Maats brought a motion to set aside the award on the ground of misconduct. Mr. Justice Megaw was of the view that such a clause was invalid and of no effect. Megaw J. held inter alia, "...Arbitrators must in general apply a fixed and recognizable system of law which primarily and normally would be the law of England, and they cannot be allowed to apply some different criterion such as the view of the individual arbitrator or umpire an abstract justice or equitable principles, which of course, does not mean "equity" in the legal sense of the word at all The essence of the matter as I see i t , is that, so long as the courts of this country have a statutory supervisory jurisdiction over arbitrators in England, i t must remain a firm principle of law governing arbitrations, that that which is in English law, a question of law, shall remain in all respects and for all purposes a question of law; and i t cannot be turned into something other than a question of law by any agreement of the parties in their agreement to arbitrate otherwise."[87] _I_n Eagle Star Insurance Co. Ltd. v. Yuval Insurance Co. Ltd.,[88] a reinsurance treaty contained an arbitration clause which provided inter alia, " i f any question or dispute shall arise ... the same shall ... be referred to ... arbitration ... The arbitrators  - 60 and umpire s h a l l not be bound by the s t r i c t  r u l e s of law but s h a l l  s e t t l e any d i f f e r e n c e r e f e r r e d t o them a c c o r d i n g t o an e q u i t a b l e r a t h e r than a s t r i c t l y agreement.  l e g a l i n t e p r e t a t i o n of the p r o v i s i o n s of  this  ..."  E a g l e , i g n o r i n g the a r b i t r a t i o n c l a u s e , s t a r t e d  court  p r o c e e d i n g s and Yuval a p p l i e d f o r a s t a y of p r o c e e d i n g s . r e f u s e d a s t a y and gave judgment f o r E a g l e .  The  court  On a p p e a l , one of the  i s s u e s t a c k l e d by t h e Court of Appeal was the a r b i t r a t i o n c l a u s e . Lord D e n n i n g , i n the course of the judgment made r e f e r e n c e t o M r . J u s t i c e Megaw's d e c i s i o n i n t h e O r i o n c a s e .  He s t a t e d ,  "I cannot accept t h a t v i e w . I do not b e l i e v e t h a t the presence of such a c l a u s e makes t h e whole c o n t r a c t v o i d or a n u l l i t y . I t i s p e r f e c t l y good c o n t r a c t . If there i s a n y t h i n g wrong w i t h the p r o v i s i o n , i t can only be on the ground t h a t i t i s c o n t r a r y t o p u b l i c p o l i c y f o r the p a r t i e s t o so a g r e e . I must say t h a t I cannot see a n y t h i n g i n p u b l i c p o l i c y t o make t h i s c l a u s e v o i d . On the c o n t r a r y the c l a u s e seems t o me e n t i r e l y r e a s o n a b l e . I t does not oust the j u r i s d i c t i o n of the c o u r t s . I t only ousts t e c h n i c a l i t i e s and s t r i c t c o n s t r u c t i o n s . That i s what e q u i t y d i d i n the o l d d a y s . And i t i s what a r b i t r a t o r s can p r o p e r l y do today under such a c l a u s e as this."[89] T h i s case c l e a r l y show the p o s i t i o n of the E n g l i s h law p r i o r 1979.  It  expresses the view t h a t t h e r e i s a s t r o n g  to  distinction  between d i s r e g a r d i n g the s t r i c t and t e c h n i c a l r u l e s of law and d i s r e g a r d i n g r u l e s of law per s e .  In t h i s a l s o l i e s t h e  between an amiable compositeur and an ' o r d i n a r y ' amiable c o m p o s i t e u r , i f he t h i n k s i t  distinction  arbitrator.  An  f a i r , w i l l depart from t h e  r u l e s of law i n d e c i d i n g the c a s e . [ 9 0 ]  An ' o r d i n a r y '  arbitrator  cannot depart from t h e r u l e s of l a w ; he may only depart from the s t r i c t n e s s e s of the  law.[91]  - 61 However, fundamental changes were introduced by the New Arbitration Act of 1979.  The Act abolished the special case  procedure [92] and made provisions for appeals to be made by parties under special conditions to the high court.[93] Another important change in this new act is that parties to an international arbitration may exclude, subject to certain restrictions, judicial review of the award completely.[94] An interesting question which might arise in this respect is whether parties to an international commercial arbitration can empower an arbitrator to act as an amiable compositeur by also providing an exclusion agreement in their contract?  Can we therefore say that  the provisions in the new Arbitration Act have brought a fundamental change to the institution of amiable compositeur under the English law? No precise answer can be given to the above question, since no English case directly touching on this matter is available. Nevertheless, I shall attempt to give an answer to this question. It should be stated from the onset that the Arbitration Act of 1979 has to be read together with the Arbitration Act of 1950.[95] The new act still retains s. 23 of the 1950 Act which allows the setting aside of an award where the arbitrator has misconducted himself.  If  the court interprets section 3 of the new act as not relieving the arbitrator of his duty to apply rules of law, any award decided ex aequo et bono will be set aside on the ground of misconduct. It is however this writer's view that an exclusory clause will not relieve an arbitrator of the duty placed on him to apply rules of law.  An indirect authority for this proposition is a statement  of Lord Diplock in a recent English case, B.T.B. Tioxide Limited v.  - 62 Pioneer Shipping Ltd. and Armada Marine S.A. (The Nema).[96] He states, "...in weighing the rival merits of finality and meticulous legal accuracy there are, in my view, several indications in the Act [1979] itself of a parliamentary intention to give effect to the turn of the tide in favour of finality in arbitral awards (particularly in non-domestic arbitrations...) at any rate where this does not involve exposing arbitrators to a temptation to depart from "settled principles of law".[97] (emphasis added) The statement that arbitrators should not be tempted to depart from "settled principles of law" is an indication, albeit indirectly, that the arbitrator may still be required to apply rules of law in reaching his decision.  It is plausible to argue that these words  may mean no more than that the arbitrator should apply imperative rules and rules of public policy in reaching his decision. The first view however appears to be given an added force by Sir Mustill and S. Boyd, for they stated,  . 1  "...It must be considered whether the 1979 Act, by abolishing the two existing mandatory methods of judicial review and creating another, which is subject in some instances to exclusion by consent, has carried away the previous obligation to comply with the law, thereby giving the arbitrator a power to bind the parties by his own ideas of what appears just. It is, we suggest, quite clear that the enactment of the legislation cannot in itself have had this effect. No trace of change can be seen in the words of the Act, or in those preliminary works which are publicly available. Moreover, quite apart from what the legislation may or may not have intended, a release of the arbitrator from his duty to follow the law is not a necessary implication from the change in the law relating to judicial control over arbitrations."[98] In view of the aforementioned authorities i t would be correct  to say that English law still does not recognize the institution of amiable compositeur. The current position of the law is still that expressed by Lord Denning in Eagle State Insurance Co.  [99]  - 63 -  To conclude I w i l l  borrow from the words of another commentator  who s t a t e d , "He.would be a bold draftsman who i n c l u d e d an ex aequo et bono c l a u s e i n a c o n t r a c t s t i p u l a t i n g E n g l i s h  arbitration".[100]  Amiable Compositeur and Canadian Law. [101] As i n B r i t a i n , t h e r e appears t o be v i r t u a l l y academic d i s c u s s i o n i n Canada on t h i s s u b j e c t .  no i n d e p t h  Academic d i s c u s s i o n  on t h i s p o i n t [ 1 0 2 ] may be c o n s i d e r e d unnecessary s i n c e Canadian law does not r e c o g n i z e the i n s t i t u t i o n of amiable c o m p o s i t e u r .  The  a r b i t r a t o r i n Canada must apply r u l e s of s u b t a n t i v e law t o cases submitted to him.[103]  So c r u c i a l i s t h i s task t h a t any e r r o r  of  e i t h e r law or f a c t on the f a c e of t h e award renders the award void.[104]  In a d d i t i o n , the p a r t i e s or the c o u r t c o u l d d i r e c t  the  a r b i t r a t o r t o s t a t e i n the form of a s p e c i a l case any q u e s t i o n  of  law f o r the o p i n i o n of the c o u r t . [ 1 0 5 ]  to  A provision purporting  prevent a p a r t y from e x e r c i s i n g t h i s r i g h t i s v o i d as t h i s regarded as an attempt t o oust the j u r i s d i c t i o n of the  is  court.[106]  While a r b i t r a t o r s are r e q u i r e d under Canadian Law t o  render  t h e i r d e c i s i o n s i n accordance w i t h l e g a l p r i n c i p l e s , they are however not bound by the s t r i c t N. Grimsby the c o u r t  r u l e s of l a w . [ 1 0 7 ]  In Re Walker v .  stated,  " A r b i t r a t o r s , t r a d i t i o n a l l y have been a l l o w e d c o n s i d e r a b l y more leeway as t o the procedure and as t o the conduct of the p r o c e e d i n g s than has been the case i n t h e o r d i n a r y c i v i l s u i t i n l i t i g a t i o n . T h i s by no means e n t i t l e s an a r b i t r a t o r t o d i s r e g a r d o r d i n a r y and c l e a r l y e n u n c i a t e d j u d i c i a l p r i n c i p l e s , nor does i t permit him non j u d i c i a l or b i a s e d c o n d u c t . " [ 1 0 8 ]  - 64 -  The position of the law in Canada with regards to the institution of amiable compositeur appears to be similar to that of Britain.[109] This law briefly stated i s that an arbitrator i s required to decide a dispute in accordance with established principles of law, so that any error on the face of the award renders i t unenforceable. While Canadian Taw appears strongly to oppose the concept of amiable compositeur, i t is very doubtful i f this law i s actually effective. An arbitrator, although required to apply principles of law, can dispense with evidentiary matters and probably other questions of procedure.  The question then is,how possible i s i t for courts to  identify an error on the face of an award?  We may also recall that  arbitrators are not required to give reasons for their awards. Whether an arbitrator has decided in accordance with the law or not w i l l be d i f f i c u l t to discern.  Amiable Compositeur in the United States (U.S.) [110] The leading American author on arbitration stated that an arbitrator in the United States is not bound to apply substantive law in deciding issues before him unless commanded to do so by the terms of the arbitration agreement.[Ill]  The phrase "amiable  compositeur" is not typically used in American practice although a similar concept to this institution does exist.[112] In Lentine et a l . v. Fundaro,[113] the Court of Appeals of New York stated that arbitrators are not bound by principles of  - 65 substantive law or rules of evidence, without a provision to the contrary in the arbitration agreements. Similarly there was a case [114] on appeal before the Supreme Court of Alaska concerning an arbitral award rendered in a dispute which arose out of a construction agreement. The court held inter alia, "The general rule in both statutory and common law arbitration is that arbitrators need not follow otherwise applicable law when deciding issues properly before them, unless they are commanded to do so by the terms of the arbitration agreement."[115] Authority on this point abounds in other decided cases.[116] An overview of the authorities cited above shows that in the U.S.A. a concept similar to the amiable compositeur exists, even though not called by that name. An arbitrator in the U.S.A. may base his decision on considerations other than strict legal principles and he is required to observe fundamental rules of public policy.[117] While the Canadian, English,and American legal systems do not recognize the concept of amiable compositeur, this institution has been recognized in a number of countries, amongst which are France, Netherlands and Belgium.[118] Article 1497 of the New Code on Civil Procedure in France indicates that arbitrators will act as amiables compositeurs when the parties so agree. Similarly Article 636 of the Dutch Code of Civil Procedure provides the like effect. Arbitrators in these countries could depart from rules of law and base their decision on equity. There is without doubt a marked difference between the position of the law in Britain and Canada on  - 66 -  the one hand and the law in France, Belgium, Netherlands, and the U.S.A. on the other hand. However, this difference may be blurred at times in practice.  Although English and Canadian arbitrators are  bound to apply the law in reaching their decisions, they are not required to give reasons for their awards.[119] Where no reasons are given by the arbitrators i t would be very difficult to determine i f they applied rules of substantive law or decided on principles of justice and equity; since every arbitrator, whether deciding according to the rules of law or acording to the principles of justice or equity, strives to arrive at an equitable solution. There does not appear to be any difference in the laws of the countries that recognize the institution of amicable compositeur and the law in the U.S.A. An amiable compositeur may decide disputes in accordance with the principles of justice and equity. The same is true also of an arbitrator in the U.S.A. Both are also compelled to observe fundamental rules and public policy. Therefore one wonders if any difference exists in essence between an arbitrator deciding as an amiable compositeur and an arbitrator in the U.S.A. deciding on principles of justice and equity. merely a question of terminology?  Is the difference legal or  - 67 PART III.  III.  Lex Mercatoria, the New Law of International Trade?  The preceding section has shown us the difficulties experienced by arbitrators in attempting to solve the question of the applicable law in transnational commercial disputes. The idea of a unified substantive law taking over from conflicts law has therefore been advocated by a number of commentators.[1] An arbitrator under this situation not only does not take into consideration any conflict rules but also does not apply any national law.[2] He grounds his decision on an extra legal order.  This legal order is called the  New Lex Mercatoria or the Law of the Merchants. What is this New Lex Mercatoria?  In order to fully understand  this concept, i t is necessary to refer back to its origin in the middle ages. , Lex Mercatoria or the Old Lex Mercatoria, as i t is often referred to, was a special law developed by the merchant class in Italian cities and the special courts of the markets and fairs. This law subsequently spread out from these cities to other parts of Europe, and to North America. This law had special characteristics. It was a transnational law [3] and was distinct from the local or municipal law. It had as its principal source, mercantile customs; and i t was administered by merchants. The procedure was informal and speedy; and equity was stressed as the overriding principle.[4] While this law may be termed a 'universal law', i t was not transnational in the sense that a uniform law applied in all the different countries. This universality was threatened at times by  - 68 the differences in local customs, trade and adjudicative values. Local merchant judges were sometimes unduly influenced by local customs because of their familiarity with them. Variations also appeared in procedures, rules, and attitudes among merchant courts. As a result of these inconsistencies, the Great Fairs of Champagne for instance developed their own distinctive usages and customs, which diverged from practices maintained elsewhere.[5] Therefore, the most fundamental concepts of the law merchant were not always applied with consistency within different merchant courts. Thus the universality of the law merchant gave way at times to principles of law peculiar to domestic courts and legal systems.  The vast  majority of the decisions reached, however, were still in touch with the practices of merchants themselves.[6] But starting from the 18th century, this 'universal law was 1  incorporated into the various national legal systems and therefore ceased to exist as a separate law administered by merchants. This incorporation was carried out largely on the continent of Europe by statutes and in England i t was accomplished by the courts, mainly by two chief justices, Sir John Holt and Lord Mansfield. As this transnational law came to be supplemented either by state enacted uniform laws or precedent, i t became divorced from the experiences of the merchant class.[7] This trend was to change again. The 20th century has seen the revitalisation of the concept of Lex Mercatoria by the international community of merchants engaged in trasnational commercial trade. Goldstajn described this situation when he said, "Notwithstanding the legal systems of the world, a new law merchant is rapidly  - 69 -  d e v e l o p i n g i n t h e w o r l d of i n t e r n a t i o n a l t r a d e .  It  i s time t h a t  r e c o g n i t i o n be g i v e n t o the e x i s t e n c e of an autonomous commercial law t h a t has grown independent of the n a t i o n a l systems of  law."[8]  What i s t h i s new Lex M e r c a t o r i a t h a t has developed? What i s t h e b a s i s on which i t e x i s t s ? What are i t s sources and what i s  its  p o s i t i o n i n i n t e r n a t i o n a l commercial a r b i t r a t i o n ?  Unfortunately  t h e s e q u e s t i o n s cannot be answered w i t h c e r t a i n t y ,  s i n c e the law i s  still  A.  unclear in legal  literature.  The New Law Merchant:  What i s  it?  S u p p o r t e r s of the New Lex M e r c a t o r i a a l l agree t h a t i t  i s an  autonomous commercial law which i s independent of the n a t i o n a l system. stated,  S c h m i t t h o f f a p t l y d e s c r i b e d the New Lex M e r c a t o r i a when he "The New Law Merchant i s i n t h e nature of an 'autonomous'  law and, as s u c h , i t without  legal  attempts t o p r o v i d e  i t s own l e g a l  regulation  r e f e r e n c e t o , and independent o f , any m u n i c i p a l system of  law."[9] T h i s New Lex M e r c a t o r i a i s however d i f f e r e n t from the medieval one.  W h i l e the o l d one was haphazard and u n p l a n n e d , and developed  from customs i n t o l a w , the New Lex M e r c a t o r i a i s a d e l i b e r a t e c r e a t i o n of f o r m u l a t i n g t r a d e a g e n c i e s or a s s o c i a t i o n s and international  B.  organizations.[10]  B a s i s of t h e Lex M e r c a t o r i a The q u e s t i o n t h e r e f o r e a r i s e s , what i s the b a s i s on which t h i s  'independent l a w ' i s founded? legal  and s o c i o l o g i c a l  grounds.  T h i s law appears t o be based on both  - 70 (i)  Legal  basis  The Lex M e r c a t o r i a , w r i t e s S c h m i t t h o f f ,  i s based on the  p r i n c i p l e s of freedom of c o n t r a c t and p a c t a sunt S e r v a n d a . notes t h a t , as most c o u n t r i e s  He a l s o  r e c o g n i z e t h e s e p r i n c i p l e s , none of  them o b j e c t s t o t h e attempts of the p a r t i e s t o choose a law which outside a national (ii)  system of  Sociological  r e f e r s t o the proponents  law.  law.[11]  basis  P r o f e s s o r M. B o n e l l  justify  is  [12] observes t h a t the " a u t o n o m i s t s " , as he of Lex M e r c a t o r i a , u s u a l l y attempt  t h e i r s t a n c e on s o c i o l o g i c a l or i n s t i t u t i o n a l  to  concept  of  They have made attempts t o show how any group or body  sufficiently  o r g a n i z e d , w i t h a view t o p u r s u i n g a common i n t e r e s t ,  constitutes a legal order, and general  c a p a b l e of p r o d u c i n g i t s own  r u l e s which are v a l i d and b i n d i n g .  Bonell  objective therefore  observes t h a t commentators l i k e Goldman, b a s i n g themselves on general t h e o r e t i c a l  p r e m i s e s , have a f f i r m e d t h a t the  b u s i n e s s community i s a genuine p r i v a t e from and independent of the d i f f e r e n t  international  states.[13]  international order  distinct  Other  commentators [ 1 4 ] have not gone as f a r as Goldman i n r e g a r d i n g general  b u s i n e s s community as a d i s t i n c t  s t a t e d t h a t at l e a s t c e r t a i n p r o f e s s i o n a l "Societe Internationale  c a t e g o r i e s such as t h e  des Vendeurs et de a c h e t e u r s , " market  p r o d u c t s or raw m a t e r i a l s , t r a n s p o r t  credits)  the  l e g a l order but they have  s e c t o r s such as t h e s i l k t r a d e , markets d e a l i n g w i t h  and banking b u s i n e s s  these  (especially  Maritime)  ( i n p a r t i c u l a r w i t h regard t o  amount t o genuine p r i v a t e  international  from and independent of the d i f f e r e n t  states.  agricultural sectors,  documentary  orders  distinct  - 71 - . It is their view that the governing bodies of these professional or commodity associations, composed of well qualified personnel, constitute what is usually described by sociologists as the "governing class" or "social government". It is further argued, that, when these groups formulate usages or customs or even revise existing ones, they are performing a legislative function. Although these customs and usages may be considered as optional, since in theory the various practitioners may accept or reject them, in practice the usages and customs are imposed upon the latter, as a refusal to adopt these rules would involve their being excluded from the organized sector or market in question. These commodity associations or professional bodies set up arbitration tribunals to which their members may or sometimes resort for the settlement of their disputes.  The arbitrators in these  cases regularly apply the rules, usages, and customs of these organizations.  At times they combine them with other rules and  practice followed in the same professional sectors even though they have not yet been codified. The'argument runs that these rules, usages, and customs are not lacking in sanctions. will be assured by arbitration.[16]  Their application  Moreover i t is stated that the  most effective sanction towards contract compliance in most transactions is the necessity for the trader to preserve his reputation for reliability and business morality.[17] Honnold notes that any assumption that trade depends on legal sanctions will be quickly dislodged by working with a foreign trader, "for trade does move in vast quantity and under circumstances where legal sanctions are unnecessary or unworkable."[18]  - 72 C.  Sources of Lex Mercatoria International trade law or lex mercatoria is derived from the  following sources: mercantile customs and usages, international legislation and general principles of law. (i)  Mercantile Customs  Mercantile commercial customs are made up of commercial practices, usages or standard regulations which have been formulated by international agencies such as the I.C.C, the U.N. Economic Commission for Europe and other International Trade Associations. Notable examples of these formulated commercial customs are the incoterms 1980, the uniform customs and practice for Documentary Credits [19] (1974 revision). (ii)  International legislation  International legislation [20] is enacted by. two methods, the adoption by states of a multilateral international convention and the formulation of a uniform model code. Illustrations of international legislation are the  Hague rules relating to the Bills of  Lading, as amended by the Brussels Protocol of 1968; Convention of International Sales of Goods 1966, revised in 1980; The Convention on the Carriage of Goods by Sea 1968; Uniform law for Bills of Exchange and Promissory Notes 1930; Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, and European Convention on International Commercial Arbitration 1961.[21] However, i t may be asked, what is the position of the Lex Mercatoria in international commercial arbitration? Unfortunately, this important question can hardly be answered with certainty since the majority of arbitral awards remain unpublished.  The views of a  - 73 number of commentators and the decisions of some arbitrators could provide us with a partial answer.  D.  The Position of the New Lex Mercatoria in International Commercial Arbitration. The Lex Mercatoria has been described by a commentator as the  Lex Fori of arbitration and therefore to be equated to a municipal lex contractus.  Furthermore, he noted that as a national judge  faced with a dispute without any foreign element applies national law, so an arbitrator dealing with an international contract should apply the Lex Mercatoria.[22] This concept of New Lex Mercatoria is apparently recognized in international commercial arbitration. Several awards have been settled on the basis of lex mercatoria. In an ad hoc arbitration [23] held in Paris between a Belgian company, S.A. Mines, Mineraux et Metaux (M.M.M.) and the English company Mechema concerning a concession contract, the parties did not choose any law to govern their contract. However, they had a clause in their contract providing that the arbitrators decide as amiables compositeurs. An issue which arose in the course of proceedings was the question whether a letter by Mechema to M.M.M., asking him i f i t s t i l l agreed to arbitration, had given M.M.M. the option to request a decision according to the rules of law. M.M.M. had interpreted the letter as such and had exercised this option. The arbitrators in deciding this question had to establish whether the provision concerning amiables compositeurs in the contract should still be complied with.  The arbitrators noted that  although under English law amiable compositeur cannot effectively  - 74 -  t a k e p l a c e , and under B e l g i a n law i t s v a l i d i t y  i s dependent on the  c o n f i r m a t i o n p r e s c r i b e d i n A r t i c l e 1700 of t h e Code J u d i c i a r e , which c o n f i r m a t i o n i s l a c k i n g i n t h i s c a s e , s i n c e French law (the p l a c e where a r b i t r a t i o n took p l a c e ) a c c e p t s t h e concept of amiable c o m p o s i t e u r and t h i s e x c l u d e s an o b l i g a t o r y  a p p l i c a t i o n of e i t h e r  B e l g i a n or E n g l i s h l a w , they would a b i d e by t h e Lex M e r c a t o r i a i n the e x e r c i s e of t h e i r power as amiable c o m p o s i t e u r s . In another a r b i t r a t i o n , [ 2 4 ] a d i s p u t e arose between a French e n t e r p r i s e and a Y u g o s l a v i a n s u b - c o n t r a c t o r c o n c e r n i n g a p r o j e c t the U . S . S . R .  f o r a soviet p r i n c i p a l .  The a r b i t r a t o r s h e l d  in  inter  alia, " C o n s i d e r i n g t h a t t h e a r b i t r a t o r , i n an i n t e r n a t i o n a l a r b i t r a t i o n governed by t h e I . C . C . R u l e s , f o r t h e d e c i s i o n on t h e a p p l i c a b l e s u b s t a n t i v e law i n t h e absence of an agreement by t h e p a r t i e s ' s h a l l apply the law d e s i g n a t e d as t h e proper law by t h e r u l e of c o n f l i c t which he deems a p p r o p r i a t e ' . . . C o n s i d e r i n g t h a t i n t h i s f i e l d t h e most r e c e n t and a u t h o r i t a t i v e d o c t r i n e as w e l l as t h e j u r i s p r u d e n c e of a r b i t r a t o r s e s p e c i a l l y t h a t of t h e I . C . C . acknowledge.that, i n determining the substantive law, a r b i t r a t o r s may a v o i d t h e r u l e s of c o n f l i c t of t h e forum . . . i n p r a c t i c e , one of t h e methods used by i n t e r n a t i o n a l a r b i t r a t o r s i s t h a t of t h e ' d i r e c t a p p r o a c h ' ( v o i e d i r e c t e ) , e i t h e r by t h e d i r e c t d e t e r m i n a t i o n of an a p p l i c a b l e n a t i o n a l law chosen i n view of t h e c i r c u m s t a n c e s of the c o n t r a c t and of t h e d i s p u t e , or by b a s i n g themselves u n i q u e l y on t h e c o n t r a c t and t h e general and common l e g a l p r i n c i p l e s ; " t h a t t h e a r b i t r a l t r i b u n a l , upon c a r e f u l c o n s i d e r a t i o n , holds t h a t t h i s l a t t e r p r i n c i p l e , t h a t i s , t h e a p p l i c a t i o n of t h e 'Lex M e r c a t o r i a , ' s h o u l d be used h e r e . . . ."[25] F i n a l l y i n a n o t h e r d i s p u t e which a r o s e between a Japanese s e l l e r and a Lebanese b u y e r , t h e c o n t r a c t was s i l e n t on t h e applicable law.  The a r b i t r a t o r s  stated,  "The p a r t i e s have not reached an agreement on a law which they a s s e r t , i n t h e s i l e n c e of the c o n t r a c t , be a p p l i e d t o r e g u l a t e the d i f f i c u l t y of performance which has a r i s e n out  - 75 of the contract ... but on the contrary, they requested the application of their national law. The contract had to be executed in three different countries. The fixing, for its application, of a particular law would present some difficulties. The parties have however manifestly agreed to refer to the general principles and to the usages of International commerce in the case in question."[26] There are several other reported awards where arbitrators have based their decisions entirely on the Lex Mercatoria or more often called the "Usages du commerce International." Some arbitrators therefore appear to recognize the fact that the Lex Mercatoria may amount to a complete or self-sufficient legal order.  The question  then is: Has a a new Lex Mercatoria actually emerged? This shall be the subject of the following subsection.  E.  Has a New Lex Mercatoria actually emerged? As noted, various commentators [27] have answered this question  in the affirmative, and international commercial arbitration has given effect to this new legal order.[28] The existence of this new legal order has been disputed by a number of commentators. Mustill and Boyd have stated: "With all deference to those who support i t [Lex Mercatoria], we find this idea hard to accept. Indeed, we doubt whether a Lex Mercatoria even exists, in the sense of an international commercial law divorced from any state law: or, at least, that i t exists in any sense useful for the solving of commercial disputes."[29] This appears also to be the opinion of Professor G.S. Wetter.[30] Another commentator only sees a Lex Mercatoria coming into existence only as far as i t is made by states jointly or individually. therefore states,  "The term Lex Mercatoria must be rejected,  He  - 76 -  however,  if  it  i s t o be understood i n the sense t h a t the  national  b u s i n e s s community e s t a b l i s h e s i t s own l e g a l  which e x c l u d e s the i n t e r v e n t i o n of It  i s my aim t h e r e f o r e  inter-  regulation  states."[31]  i n t h i s s e c t i o n t o look i n t o  the  a s s e r t i o n s of the Lex M e r c a t o r i s t e s and see i f they are j u s t i f i e d . To begin w i t h ,  one can quote from Mann,  "No one has ever or  anywhere been a b l e t o p o i n t t o any p r o v i s i o n or l e g a l  principle  which c o u l d p e r m i t i n d i v i d u a l s t o a c t o u t s i d e the c o n f i n e s of a system of m u n i c i p a l It  law."[32]  i s t h e r e f o r e d i f f i c u l t t o comprehend the f a c t t h a t the new  law of i n t e r n a t i o n a l t r a d e can e x i s t o u t s i d e m u n i c i p a l law e s p e c i a l l y i n view of the f a c t t h a t important  f o r e i g n t r a d e c o n s t i t u t e s an  p a r t of the economic p o l i c i e s of s o v e r e i g n s t a t e s .  Whether Lex M e r c a t o r i a does e x i s t as a new l e g a l on one important  c o n s i d e r a t i o n , that  M e r c a t o r i a by the n a t i o n a l r e c o g n i z e d body. with t h i s view.  legal  It  i s , the r e c o g n i t i o n of  Lex  systems or an i n t e r n a t i o n a l l y  Some s u p p o r t e r s of Lex M e r c a t o r i a appear t o C l i v e Schmitthoff  the c h a r a c t e r of i n t e r n a t i o n a l trade law.  o r d e r depends  states,  or s u p r a n a t i o n a l  a c q u i r e s i t s autonomous  of cases from d i f f e r e n t  Lagen,  i s wrong t o law t o  Do n a t i o n a l  international  legal  systems  i n an examination of a number  j u r i s d i c t i o n s , came t o the c o n c l u s i o n t h a t  c o u r t s are s o l i d l y opposed t o Lex M e r c a t o r i a . [ 3 4 ] t o the present d a y ,  attribute  c h a r a c t e r by l e a v e and  l i c e n s e of a l l n a t i o n a l s o v e r e i g n s . " [ 3 3 ] r e c o g n i z e the Lex M e r c a t o r i a ?  "It  agree  He s t a t e s ,  t h e r e has been no s o f t e n i n g i n the  "Even  rigid  adherence of the r e g u l a r c o u r t s t o the p r i n c i p l e e n u n c i a t e d i n Serbian l o a n s . " [ 3 5 ]  [ T h i s p r i n c i p l e i s based on the assumption  that  - 77 any contract which is not a contract between states in their capacity as subjects of international law is based on the municipal law of some country.]  Professor Klein similarly notes that Lex  Mercatoria is far from being universally accepted.  He observes,  too, that i t is firmly opposed by the socialist countries.[36]  We  may also recall in the previous chapter that the English and Canadian legal systems have rejected the idea of a supranational law. However, i t might be asked whether the recognition of the Lex Mercatoria by the states is a necessary preconditon for the existence of the Lex Mercatoria? The answer may well depend on an individual's stance on the subject matter.  If, as i t is argued, arbitration is the substratum  on which Lex Mercatoria is built,[37] would i t not be plausible to further argue that Lex Mercatoria could in practice exist as a separate legal order even though not formally recognized by the states? It has repeatedly been observed by proponents of arbitration that awards are usually complied with by disputants without any challenge.  It could therefore be argued that as long as arbitral  awards grounded on Lex Mercatoria are complied with, the question of formal recognition by the states becomes unimportant.  International  arbitrators, as we have noted earlier, recognize the existence of Lex Mercatoria as an autonomous legal order. However, to adopt this stance would only be masking the problem. While arbitral awards are usually complied with, there will always be a party who would not comply with the award, despite threat of sanctions to be imposed on  - 78 him by the 'merchant association' or 'community'. Under such a situation recourse to a national legal system becomes necessary. Where the losing party is not prepared to accept the award,that award grounded on Lex Mercatoria may not stand up to the test of judicial review. Therefore, i t is this writer's view that one should hesitate to speak of a New Lex Mercatoria at present. I think the Lex Mercatoristes are putting the cart before the horse. Arbitration which is regarded as the substratum of this legal order is still under state control.  Legal sanction still  remains the most effective machinery for enforcing abitral awards. The existence of a new legal system also requires acceptance by all trading states. Arbitral practice without doubt appears to have given recognition to this supranational legal concept as an autonomous legal system. Arbitral practice in this respect is unimportant since i t does not provide us with an authoritative interpretation of the position of Lex Mercatoria under municipal law.  In the absence  of approval of this legal order by states, arbitral case law is merely an extra-legal phenomenon. While Lex Mercatoria may not be regarded as an autonomous legal system, i t cannot be denied that there certainly has developed a body of rules and practice which have a special character in international commercial transactions. Evidence of this abounds in practice. The Hague's rules relating to the Bills of Lading of 1924 and amended by the Brussels Protocol of 1968, the various codes of practice, and standard clauses or contracts are testimony to this fact.  - 79 It is proper to ask if these could displace the application of municipal law.  In other words, are these sets of rules or customs  and practices self-sufficient or complete enough to deal with most of the problems in international commerce? There are varied views on this issue. Klein says that there are so many questions which cannot be answered by these extralegal rules.[38] Goldman on the other hand regards Lex Mercatoria as a sufficient legal order and actually equates it to the Municipal Lex Contractus and therefore regulated only by the Municipal public policy.[39" Pieter Sanders appears to hold the same opinion as Professor Goldman, for he said,  "In my opinion denationalisation of the decision in international commercial arbitration is to a large extent possible. This also corresponds with the practice of international commercial arbitration. In many cases the arbitrators do not decide at all which law is applicable as there was no need to do so. The award is simply based on the terms of the contract and customs of the trade concerned."[40] An objective answer to this question can only be given by examining the sources of the Lex Mercatoria. These sources have been noted as international conventions, customs and usages, and general principles of law.  We shall look at each of these sources  separately. International conventions generally have not been successful. There are few conventions and fewer s t i l l have been ratified.  One  commentator was of the view that, because of the time it takes a convention to come into being, the vigorous development of case law can be expected to produce better effects more rapidly.[41] If we turn our attention to usages and customs of trade, they too will solve only a portion of the problems encountered in  - 80 -  international business. Customs and usages are usually recognized after they have been widely accepted by the merchant class, and these take a considerable length of time to become an authoritative source of law. International commercial transactions too, have become more complex in recent times. After the Second World War, new forms of international commercial transactions such as joint undertakings, foreign capital investments, patents, know-how purchase, etc., came into being.[42] While usages and customs in the traditional sale of goods may be regarded as common place, i t is doubtful whether there are any widely accepted customs and practices dealing with the new types of contracts that have emerged. The same argument runs with respect to the general principles of law. There are, in the first instance, very few principles that have universal application.  Notable examples are the principle of  pacta sunt servanda and rebus sic stantibus. Even these, Mustill Mustill and Boyd noted, are not enough to solve any but the simplest problem. They stated, [giving as example the wide divergence between Anglo-saxon and continental laws on the concept of force majeure] "As soon as one tries to make the principles [pacta sunt servanda, and rebus sic stantibus] more particular, i t is seen that there is no unanimity as to the way in which they should be applied."[43] An examination of the sources of Lex Mercatoria shows that i t l  1  cannot even be regarded as a selfsufficient body of rules. A leading exponent of this theory has recently admitted that Lex  - 81 M e r c a t o r i a cannot c l a i m t o be a complete and autonomous system of law and t h a t c o n s e q u e n t l y  the e x i s t e n c e of t h e Lex M e r c a t o r i a cannot-  e l i m i n a t e the need f o r a c h o i c e of law c l a u s e i n an i n t e r n a t i o n a l contract.[44]  S c h m i t t h o f f ' s statement would seem t o agree w i t h  of Henri B a t i f f o r when he s t a t e d t h a t t o t h i s day, only laws are c o n s t i t u t e d i n systems s u f f i c i e n t l y problem of l a w . [ 4 5 ]  It  statement i s b a s i c a l l y  is this writer's  that  national  complete t o answer each  view t h a t Henri  Batiffor's  correct.  I see the r o l e of t h e s e r u l e s or customs and usages as a secondary source of m a t e r i a l which would a i d both the c o u r t s and the arbitral  tribunals,  as the case may be, i n r e a c h i n g a d e c i s i o n  consistent with international  t r a d e or p r a c t i c e .  Professor  S c h m n i t t o f f i s r i g h t i n s a y i n g t h a t p a r t i e s do s t i l l c h o i c e of law c l a u s e i n t h e i r agreement.  require a  These bodies of  rules,  p r a c t i c e s , and customs c o u l d be regarded as the b a s i s or the framework on which a law of i n t e r n a t i o n a l  trade could  develop.  D e s p i t e the f l a w s i n the Lex M e r c a t o r i s t e s ' t h e o r y , i t  is  t h a t t h e r e i s a c o n t i n u o u s t r e n d by t h e b u s i n e s s w o r l d , away from the r e s t r i c t i o n s international  of n a t i o n a l  evident  " t o move  law t o a u n i v e r s a l ,  concept of the law of i n t e r n a t i o n a l t r a d e . " [ 4 6 ]  This  t r e n d can be seen i n the i n c r e a s e d a c t i v i t i e s of f o r m u l a t i n g agencies.  The r e c e n t U . N . Convention on C o n t r a c t s f o r  International point.  S a l e of Goods, prepared by UNCITRAL, i s a case i n  T h i s t r e n d however i s not s u r p r i s i n g .  the n a t i o n a l  the  The vast d i v e r s i t y  l e g a l systems i s a f a c t o r u n f a v o u r a b l e t o t h e  of an i n t e r n a t i o n a l  market.  The n a t i o n a l l e g a l system i s  inadequate t o deal w i t h t h e problems of i n t e r n a t i o n a l  in  existence usually  commerce.  - 82 Statutes are usually more difficult to change and as a result they are more difficult to adjust to the needs of international trade.[47] A writer notes, "a court's construction of a mercantile contract continues to embody the understanding of merchants of a later day when the practice of merchants has changed."[48] The inadequacy of municipal law to deal with problems in international trade appears to be universally recognized.  To this  end, customs and usages of traders are usually admissible in courts in international commercial disputes.[49]  Some trading nations have  even gone further by enacting rules which are in line with the practice of international trade. The Uniform Commercial Code of the U.S.A. and Czechoslovak International Trade Code are examples.[50] Some of these attempts are sometimes still inappropriate to deal with the needs of international business.  There is therefore a  need to reconcile national law to development in international trade.  Batiffol rightly notes, "It is reasonable to believe that  i t is not the business of law to set up a static system which is rigid in certain matters against a liberty which could easily turn to anarchy in others. What is needed is a synthesis and continuity."[51] Enderlein puts i t clearly when he stated, "the way out of this difficulty must be seen in creating a legal regulation meeting the requirements of the specific nature of international economic relations and adequate for the relations to be regulated, while at the same time ensuring that all states concerned carry out this task jointly."[52] This task however will not be an easy one,  - 83 "Profound difficulties [will] arise in establishing the parameters of an all-encompassing modern law merchant. National systems of law remain jealous of their jurisdiction over world trade law and [will] hesitate to lose such business to foreign systems. Mercantile customs are often difficult to unify within a single international system of commercial law. Trade practices differ from industry to industry. Legal rules vary from legal systems to legal systems, while business convention is seldom stable in the face of international economic and social instability. Moreover, dissimilarities in approach among legislators, administators, judges and merchants are capable of complicating this movement towards the 'harmonization' of international trade law."[53] Inspite of these difficulties, i t is important that there is a compromise between national attitude and international commerce. Failure to do so, warns Rene David, would perpetuate the situation of intolerable anarchy into which society and international law have fallen.  Lawyers and legislators "will expound fossilized theories  while international commerce will have found the solution to its problems elsewhere. Their only consolation will be to tell themselves that the new development does not partake of the nature of law."[54]  CONCLUSION  This study could be said to have dealt simply with the principle of party autonomy. This principle as Denis TalIon pointed out is applied in the law of international trade in two different ways, the traditional way and the revolutionary way.[l]  - 84 Party autonomy in the traditional way means that, although parties have a discretion to choose the proper law governing their contract, this discretion is subject to a number of limitations. Party autonomy in its revolutionary form assigns to this principle a value in itself.  It is independent of any support in  national legal systems, and therefore self-regulatory. The application of this principle as we saw has been given a very broad interpretation in international commercial arbitration. The arbitrators invariably gave effect to a choice of law clause when stipulated by the parties. Where parties failed to include a choice of law clause in their contracts, the awards showed that there was no one single conflict of law rule to which the arbitrators resorted to. Varied formulas were applied by them. These methods ranged from an application of national conflict of law rules to international conflict rules. Because of this confused state of affairs, some commentators prefer that the arbitrators abandon the problems of conflict rules by basing their decisions on an autonomous legal order, the new Lex Mercatoria.  The basis for  this autonomous legal order is traced to the doctrine of party autonomy. It is argued that since municipal legal systems recognize this doctrine, parties can regulate their contractual arrangements in a fashion designed to make i t independent of any municipal  law.  This law can only find concrete application to the extent that contractual autonomy is complemented by an arbitral agreement. It is argued by this writer that party autonomy does not exist in this unlimited way.  National courts, as already pointed out, do  not recognize such party autonomy which is pushed to the extremes.  - 85 -  The Lex Mercatoria cannot therefore exist as an autonomous law without the joint recognition of national legal systems. It was pointed out by this writer that while there are norms or customs and practices of merchants which have grown out of international commercial practice, i t is, to borrow the words of Denis Tall on, "premature ...  to conceive of a contract governed by a complete  system of international norms - standard form of contract, customs, and, possibly, common general principles - and self-sufficient, with no necessity for recourse to a supplemental national law."[2] Schmitthoff, one of the fore-runners of the Lex Mercatoria, has also admitted its inadequacy. He noted, "In the present state of affairs, I would consider a normal international commercial contract as defectively drafted i f i t did not contain a choice of law clause and also a jurisdiction or arbitration clause."[3]  Since  Lex  Mercatoria cannot be deemed to exist at present, the dilemma of the arbitrator in determining the applicable law still remains. It may be recalled that this writer (in part two of this study) opted in favour of the law of the place which is significantly connected to the transaction as the most reasonable criterion to be employed by the arbitrator in determining the applicable law.  This, moreover,  appears to reflect the modern trend of private international law of contract.  This writer's view should not be regarded as a rejection  of the concept of Lex Mercatoria per se, but rather to point out that the vigour with which the arguments for the existence of Lex Mercatoria have been presented does not appear to be in tune with a few basic facts, especially in view of the fact that national  - 86 courts, whose blessings must be acquired to give legal backing to this concept are strongly opposed to i t . However, there is a need for joint action by the states, acting with other formulating agencies.  States must duly exercise their  role as international legislators in order to exert direct influence upon the creation of the Lex Mercatoria. Although the joint creation of a new Lex Mercatoria is not an easy task, and the experience acquired so far in the field of unification and in the ratification and adoption of conventions has not been encouraging, i t is this writer's view that the future will present a different picture. There is at present an increased coordination and cooperation among formulating agencies.  The setting up of UNCITRAL  has made a major breakthrough in international trade. Countries with different social and economic policies and at different stages of development are all represented in this body and i t is likely that, with the increased activity of UNCITRAL in the field of international commercial transaction, the goal of the business community will be realised.  Schmitthoff writes,  "If the Unidroit project on the Code of International Trade Law, and the I.C.C. scheme on trade usages are joined together with the United Nations Convention on Contracts for the International Sale of Goods, the I.C.C. Uniform Customs and Practice on Documentary Credits and the Uniform Rules for Collections, the United Nations Hamburg Rules on the Carriage of Goods by Sea, and the UNCITRAL Arbitration Rules, the basis of a world code on international trade is already laid. What has to be done, is to weld together these disjoined pieces of unification into a logical, integrated work and to supplement i t by unifications which are still extant, such as the proposed uniform law on international bills of exchange and promissory notes, the regulation of the international contracts of forwarding and warehousing and other relevant topics. The task of unifying the various measure of uniform law will fall to UNCITRAL. When - and not i f -  - 87 this task is accomplished, our time will have what i t needs: a transnational code of international trade law of  world-wi de application.[4]"  Is this an idle dream? If so, international commercial arbitration will continue to be fraught with the problems of choice of law.  - 88 FOOTNOTES PART I 1.  "International Commercial Arbitration may be defined as an agreement between two parties to a transnational commercial transaction to submit differences arising between them out of that transaction to the decision of a third party and to abide by that decision." See Evans and Ellis, "International Commercial Arbitration: A Comparison of Legal Regimes" (1973) 8 Texas Int'l L.J. 17.  2.  Smedresman, "Conflict of Laws in International Commercial Arbitration: A Survey of Recent Developments" (1977) 7 Cal. W. Int'l L.J. 263. Chun Pyo Jhong, "The Settlement of Disputes Arising from International Trade and Investment" (1969-71) 1-2 LAWASIA, p. 21. Yaeger, "International Commercial Disputes: The Alternative of Arbitration (1976-78) 1-3 N.C.J. Int'l L. & Comm. Reg. 142. Croff, "The Applicable Law in an International Commercial Arbitration: Is It Still a Conflict of Laws Problem?" (1982) 16 Int'l Law. 613.  3.  The increasing use of arbitration can be seen from the caseload of a number of arbitral institutions. Between July 1972 and July 1975, 458 disputes from 74 countries were submitted to the I.C.C. Court of arbitration. In the five years from 1977 to 1981, the average number of cases was 199. By comparison, for the three year period from 1962 to 1965, the average was 64 cases per year. The total number of cases pending as of May 1982 was 567. By July 1976, 2,978 requests for arbitration had been filed with the I.C.C. from the time i t adopted its first rule in 1922. By April 29, 1982, in less than six years, the figure had risen to 4,402. By comparison, only a handful of international cases come before other arbitration institutions. There has, however, been an increase in the number of cases submitted to them. The American Arbitration Association estimates that about 120 International cases are lodged with i t in a given year; the figure was 50 in 1974. In mid-1982, the London Court of Arbitration had 56 international cases pending. Totaling the number of cases handled by these arbitrral institutions cannot present a true picture of the extent to which commercial arbitration clauses are being utilized, since only a handful of these cases come before arbitration and others are sometimes withdrawn before an award is made.  /  - 89 Statistics about ad-hoc arbitration are lacking completely and the frequency of its use cannot be ascertained. See Paulsson, "The Contemporary Role of I.C.C. Arbitration in Resolving International Business Disputes" in Droit et pratique du Commerce International, International Trade Law and Practice, 323 at pp. 324-325 (editions scientifiques Internationales Publications, 1983). Thompson, "Procedure Under the Rules of the I.C.C," in Schmitthoff (ed.), 3 International Commercial Arbitration, collected Papers, Part 2 at 2 (1980). Fowler et al., "A Survey of Arbitral Forums: Their Significance and Procedure" (1980) 5 N.C.J. Int'l L. 219 at 226. The advantages of arbitration over litigation are said to be speed, less expense, procedure is flexible and informal and therefore more conducive to the continuance of business relations. It is also considered preferable because disputes involving complicated financial and technical matters are generally more suitable for the determination by financial and technical experts than by the Judiciary. It is also private. These advantages however have been exaggerated. The cost of arbitration is known to be substantially higher than that of litigation especially in institutional arbitral proceedings where the expenses include the administrative fees charged by such institutions, even the advantage of speed may be illusory especially i f one party is intent on dragging its feet. The most probable factor leading to arbitration is that i t is perceived by parties in an international agreement as the only available means to settle their differences, since there could be no competent court acceptable to both parties. International arbitration therefore f i l l s the vacuum left by the lack of an international judicial system for the solution of disputes between private parties. See Chun Pyo Jhong, op. cit supra note 2, p. 21. Vickers, "Why arbitrate," in materials prepared for the Continuing Legal Education, April 22 and 23, 1982 Vancouver, p. 33. Sanders, "Trends in International Commercial Arbitration," (1975) 11 Recueil des cours, 213 at 216. Orsini, How to Resolve that Dispute: Commercial Arbitration in Ontario and in Canada," 39 (1979). Redfern, "Arbitration: Myth and Reality" (1976) 4 Int'l. Bus. Law. p. 450 ff. Smedresman, op. cit supra note 2, 263.  - 90 6.  Higgins, Brown & Roach, "Pitfalls in International Commerical Arbitration," (1980) 35 Bus. Law. 1035.  7.  See Sauser-Hall, "L'arbitrage en droit international prive," (1952) 44-11 Ann. Inst. dr. Int'l. 469; 47-11 Ann. Inst. dr. Int'l 394; 48-11 Ann. Inst. dr. Int'l 264. Goldman, "Les conf1 its de Lois dans 1-arbitrage International de droit prive," (1963-111) 109 Rec. des cours 349. Haardt, "Choice of Law Clauses in Arbitration Agreements," in Essays on the Law of International Trade, 215, Hague-Zagreb Colloquium, (Asser Institute, The Hague, 1976). Determan, "The Law in Arbitration," (1981) 94 Nov. 6 L.A. Daily J. 9. Mann, "Lex Facit Arbitrum," in Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke, 157 (The Hague, 1967). Lew, Applicable Law in International Commercial Arbitration: A Study in Decided Arbitration Awards. (Oceana Pub. Inc., New York 1978). LaLive, Les regies de conflit de lois^appliquees au fond du litige Par l'arbitre International siegeant en Suisse," (1976) Rev. Arb. 155.  8.  See Croff, op. cit supra note 2, at 613. See also Lew, op. cit supra note 7, para. 4 at 2.  9.  This study will deal only with the common law provinces of Canada en bloc.  10.  Only the New York law shall be dealt with. New York law is chosen for the simple reason that New York is the leading international commercial centre, it's courts are likely to have the heaviest volume of cases involving foreign parties and therefore the most experienced in the conflict of laws area.  11.  Canada, (2 Caste!, Canadian Conflict of Laws, 532 (1975). United States Jurisdictions (The American Law Institute, The American Restatement (Second) Conflict of Laws, s. 187(2) (1971)). United Kingdom (2 Dicey and Morris, The Conflict of Laws, 10th ed., 753 (1980))T South Africa (Spiro, The Conflict of Laws, 150 (1973)).  - 91 Greece, Civil Code (1940) art. 25 Japan, International Private Law art. 7. Eastern socialist countries too recognize the principle of Party Autonomy. See TalIon, "The Law Applied by Arbitration Tribunals-11," in Schmitthoff (ed.), The Sources of the Law of International Trade, 154 at 155 (Stevens, London, 1964). See also Reczei, "The Autonomy of contracting Parties in International Trade Relations in I UNIDROIT: New Directions in International Trade Law 55 at 67 (New York 1977). 12.  General discussions on Party autonomy may be found in, James, "Effects of the Autonomy of the Parties on Conflict of Laws," (1959) 36 Chi-Kent L. Rev. 34. Levin, "Party Autonomy: Choice of Law Clauses in Commercial Contracts," (1957-58) 45 Geo. L. J. 260. Pounds, "Party Autonomy-Past and Present," (1970) 12 S.T.L.J. 214.  13.  See S. 2, The Hague Convention on the Law Applicable to International Sale of Goods 1955. Reproduced in, "Register of Texts Conventions and Other Instruments Concerning International Trade Law." U.N. (E. 71.V3) (1971) Vol. 1 at 5. 1980 E.E.C. Convention on the Law Applicable to Contractual Obligations Section 3. Reproduced in Volume 11 Delaume "Transnational Contracts," Appendix 1, Booklet A, (New York, 1983).  14.  U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, provides in Article V (1) (a) that the recognition and enforcement of a foreign arbitration award may be refused i f the arbitration "agreement is not valid under the law to which the parties have subjected i t . " U.N. Doc. E/Conf. 26/8/Rev.l-10 June 1958. Article VII of the 1961 European Convention on International Commercial Arbitration states "the parties shall be free to determine, by agreement, the law to be applied by the arbitrators to the substance of the dispute". 484 U.N.T.S. 364. See also Article 42 Investment Disputes States. Reproduced Appendix II Booklet  of the Convention on the Settlement of between States and Nationals of other in 4 Delaume, "Transnational Contracts," Bl (New York 1981).  - 92 15.  Dicey and Morris, The Conflict of Laws, 10th ed., pp. 753-54 (Sweet and Maxwell, London 1980). ~~ Chershire and North, Private International Law, 10th ed., 199 (Butterworth, London 1979).  16.  See 2 Castel, Canadian Conflict of Laws 532 (Butterworth, Toronto 1975). McLeod, The Conflict Laws 474 (Carswell Legal Publications, Calgary 1983).  17.  (1939) A.C. 277.  18.  Ibid., at 290.  19.  See for instance Locke J. in Nike Infomatic Systems Ltd. v. Avac Systems Ltd. et al. (1980) 10b D.L.R. (3d) 4bb at 459 (B.C.S.C.). and MedhurstJ. in Greenshields Inc. v. Johnston et al., (1981) 119 D.L.R. (3d) 714 at 720 (Alta. Q.B.).  20.  Morris and Chershire (1940) 56 L.Q.R. 320 pp. 335-6. Falconbridge, Essays on the Conflict of Laws, 413 (Toronto 1954). ~~  21.  Thomson, "A different Approach to Choice of Law in Contract" (1980) 43 M.L.R. 650 at 659.  22.  Op. cit supra note 16, p. 478.  23.  Dicey and Morris, op. cit supra note 15, p. 755. See also Castel op. cit supra note 16 p. 537.  24.  [1969] Qd.R. 378 (S.C.).  25.  Contrast however, with Nike Infomatic Systems Ltd. op. cit note 19. This case concerned an agreement by which a British Columbia company granted a franchise to an Alberta company to lease and service the British Columbia firm's audio visual equipment in Alberta. The law of British Columbia was expressly stated to be the governing law. The contract however was void by Alberta law as i t had not complied with registration and prospectus requirements imposed by the Franchises Act of Alberta and was to be performed in Alberta. The B.C. Court however upheld the choice of the parties. See also Greenshields Inc. v. Johnson et al. op. cit supra note 18.  - 93 26.  See Dicey and Morris op. c i t supra note 15, p. 755 and also Castel, op. cit supra note 16, at 537.  27.  The general principle of public policy appears in Roman Law as the prohibition of derogations from public law by way of contract. The concept of public policy can be seen in the writings of Savigny and Story. Although neither Savigny nor Story made express reference to the term "Public Policy" the notion they expounded was clearly that of public policy. Anglo-Saxon use of the Public Policy concept can be traced in municipal law to the 15th century and in conflicts to the 18th century. See generally Dolinger, "World Public Policy: Real International Public Policy in the Conflicts of Laws," (1982), 17 Texas Int'l L.J. p. 167 et seq.  28.  See Dicey and Morris, op. cit note 15, p. 802. Chershire and North, op. cit supra note 15, p. 224.  29.  Falconbridge op. cit supra note 20, 386-388. Castel, op. cit supra note 16, 550. McLeod, op. cit supra note 16, p. 500 et seq.  30.  (1880) 14 Ch. D. 351.  31.  Ibid., 369.  32.  Lloyd, "Public Policy," (1953) p. 79 et seq. cited in Dicey and Morris op. cit supra note 15, p. 804.  33.  Shrichand v. Lacon (1906) 22 T.L.R. 245. Saxbly v. Fulton (1909) 2 K.B. 208 (C.A.) In the later case, the court of appeal held that money lent for gambling in a country where gambling was legal was recoverable notwithstanding that the English gaming laws would have made such a loan unrecoverable in a domestic case.  34.  Prebble, Choice of Law to Determine the Validity and Effect of Contracts'!" A comparison of the English and American Approaches to the Conflict of Laws, pp. 69-70 (Michigan 1972).  35.  See Kaufman v. Gerson [1904] 1 K.B. 591 [contract obtained by coercion was held unenforceable].  36.  Robinson v. Bland (1760) 2 Burr. 1077, 1084.  - 94 37.  Foster v. Driscoll (1929) 1 K.B. 470. [Agreement to import liquor into the United States, a friendly country in time of prohibiton, is unenforceable].  38.  Somerset v. Stewart (1722) Lofft. 1.  39.  See Kahn-Freund, "Reflections on Public Policy in the English Conflict of Laws," (1953) 39 Grotius Society 39 at 57.  40.  (1957) 9 D.L.R. (2d) 304 (Sask. C.A.).  41.  Greenshields Inc. op. cit supra note 19, at 721. Other Canadian cases which dealt with the question of Public Policy are National Surety Co. v. Larsen [1929] 4 D.L.R. 918 (B.C.C.A.)., Block Bros. Realty Ltd. v. Mollard [1981] 4 W.W.R. 65 (B.C.C.A.).  42.  Dicey and Morris op. cit supra note 15, at 755.  43.  [1956] Ch. 322.  44.  Ibid., at 341.  45.  [1949] 1 K.B. 482 (C.A.).  4 6  •  47.  Ibid., at 491. See also Lord Denning M.R. in The Fehmarn L1958J 1 W.L.R. 159, at 162, where he said "I do not regard the choice of law in the contract as decisive, I prefer to look to see with what country is the dispute most closely connected", but contrast Denning M.R. in Tzortzis v. Monark Line A/B [1968] 1 W.L.R. 406, 411 (C.A.). "It is clear that i f there is an express clause in a contract providing what the proper law is to be, that is conclusive in the absence of some public policy to the contrary". See James Miller & Partners v. Whitworth Street Estates (Manchester) [1970J A.C. 583 at 603 (H.C.). See Cie Tunisienne de Navigation S.A. v. Cie d'Armement Maritime S.A. (L19/1J A.C. 572 at 603 where Lord Diplock said: "English Law accords to the parties to a contract a wide liberty to choose both the proper law and the curial law which is to be applicable to it...the English Courts will give effect to their choice unless i t is contrary to public policy to do so."  48.  See op. cit supra note 19. See also Drew Brown Ltd. v. Orient Trade [19/4] S.C.R. 1286.  49.  Castel, op. cit supra note 16, at 536. See also McLeod, op. cit supra note 16, at 475 and 482.  50.  Weintraub, op. cit supra note 12, p. 399.  The  - 95 Oliver, "Standardization of Choice of Law Rules for International Contracts: Should There Be a New Beginning" (1959) 53 AM. J. Int'l L. 385. 51.  James, op. cit supra note 12; Levin, op. cit supra note 12; Weintraub, op. citsupra note 12; Pounds, op. cit supra note 12; Vaughter, Choice of Law for International Contracts: An American Critique," (1966) 2 Texas Int'l L. F. 227.  52.  Prebble, op. cit supra note 34, at 140.  53.  Blom "Choice of Law Methods in the Private International Law of Contract," (1979) Can. Y.B. of Int'l L. 206 at 207.  54.  These cases will be referred to when appropriate in the context of the discussion.  55.  See generally, Gruson, "Governing Law clauses in Commercial Agreements - New York's Approach," (1979/80) 18 Colum. J. Transn'l Law p. 323 at 327 et seq.  56.  A.S. Rampell, Inc. v. Hyster Co., 165 N.Y.S. 2d 475 (1957). Kahn v. Great-West Life Assurance Co. 307 N.Y.S. 2d 238 (1970).  See Sears, Roebuck & Co. v. Enco Associates 370 N.Y.S. 2d. 338 at 348 liy/b). Where the court stated, " i t has been held that where the contract provides that the law of another state is to apply that law will be applied so long as the contract has a reasonable relation to i t " . Levey v. Saphier, 370 N.Y.S. 2d 808 (1975). 57.  418 N.Y.S. 2d 818 (1979).  58.  Ibid., at 822.  59.  272 F. Supp. 236 (S.D.N.Y. 1967).  60.  Ibid., at 241. See also Fleischmann Distilling Corp. v. Distillers Co. Ltd.  395 F. Supp. 221 (S.D.N.Y. 1975).  In Skandia America Reinsurance Corp. v. Schenck, 441 F. Supp. 715 (1977) the Court stated obiter dictum, "New York courts will uphold choice of law clauses in insurance contracts provided that the law chosen bears a reasonable relationship to the transaction and violates no substantial state policy." at 723.  - 96 Nakhleh v. Chemical Construction Corp., 359 F. Supp. 357 (S.D.N.Y. 1973). 61.  See Fleischmann Distilling Corp. ibid. See Boyd v. Curran, 166 F. Supp. 193, at 196 (S.D.N.Y. 1958) where the court stated that choice of law clauses will be given effect i f there are pertinent contacts with New York. See also B.M. Heede Inc. op. cit supra note 59. Gambar Enterprises Inc. op. cit supra note 57.  62.  Op. cit supra note 56.  63.  Tuchler, "Boundaries to Party Autonomy in the U.C.C.: A Radical View," (1966/67) 11 St. Louis U.LJ. p. 180 at pp. 198-99. Note however, that although Tuchler was commenting on the language of s. 1-105 of the U.C.C., i t is this writer's view that the same argument can be put forward on the common law position, since the first sentence in the code and the common law rule are couched in similar terms. Section 1-105(1) of the New York Uniform Commercial Code (U.C.C.) states "When a transaction bears a reasonable relation to this state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties." See McKinney 1964 (supp. 1979-80).  64.  Reese, "The power of the parties to choose the law govern'ng their contracts," (1960) Am. Society Int'l L. Proc. 54.  65.  403 N.Y.S. 2d 613 (1977) (Civil Court of the City of New York, N.Y. County).  66.  Ibid., at 615.  67.  398 F. supp. 1047 (E.D.N.Y. 1975).  68.  Ibid., at 1051 N. 17.  69.  372 N.Y.S. 2d 97 (1975) (S.C. Westchester County).  70.  Ibid., 116-117.  71.  Ibid., 117.  72.  e.g. Securities regulations and Antitrust Laws.  - 97 73.  94 S. Ct. 2449 (1974).  74.  Ibid., at 2457 citing Burger C.J. in M/S Bremen v. Zapata Off-shore Corp. 92 S. Ct. 1907 at 1913 (1972).  75.  Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth Inc.,  723 F. 2d 155 (1st  cir. 1983).  76.  Mitsubishi Motors Corporation (Mitsubishi) is a joint venture between Chrysler and Mitsubishi Heavy Industries, inc., 723 F. 2d at 157.  77.  723 F. 2d at 157.  78.  Soler's counterclaim under the Sherman Antitrust Act alleged that Mitsubishi and Chrysler had unlawfully divided markets for their vehicles and that pursuant to such agreement, Mitsubishi had refused to permit trans-shipment of vehicles to North, Central and South America. It also alleged that Mitsubishi had illegally attempted to drive Soler out of business. 723 F. 2d at 157.  79.  269 N.Y. 22 (1935). Dougherty v. Equitable Life Assurance Society, 193 N.E. 897, 903 (1934).  _  Reger y. Nat. Ass'n of Bedding Manufacturers, op. cit supra, note 69, 166. 80.  M. Gruson, op. cit supra note 55, at 375, citing Compania de Inversiones Internacionales' case ibid., and F.A. Strauss v. Canadian Pacific Railway Co., 254 N.Y. 407 (1930).  81.  One writer comments, "To the extent that such choice [of laws by the parties] is recognized at all, i t is almost uniformly qualified by a requirement of substantial contractual connection with the stipulated law ... Invocation of the public policy of the forum is a frequent deterrent to party autonomy..." Note: "Conflict of Laws: Party Autonomy in Contracts," (1957) 57 Colum. L.R. 553 at 566. Gruson also said, "Today the reasonable relationship requirement is clearly a rule of New York Law" op. cit supra note 55, at 352.  82.  R.J. Bauerfeld, "Effectiveness of choice-of-law clauses in Contract Conflicts of Law: Party Autonomy or Objective Determination?" (1982) 82 Colum. L.R. 1659 at 1670.  83.  Ibid., at 1673.  - 98 -  84.  216 N . Y . S . 2d 65 ( 1 9 6 1 ) .  85.  Ibid.,  86.  Ibid. N.B. T h i s d e c i s i o n was c r i t i c i s e d by P r o f e s s o r W . L . M . Reese i n an a r t i c l e " C h i e f Judge F u l d and Choice of L a w , " (1971) 71 Colum. L . R . 548 at 5 5 1 - 5 5 2 .  87.  461 F. supp. 152 ( 1 9 7 8 ) .  88.  Ibid.,  at-68-69.  155 - 1 5 6 .  I t i s t o be noted t h a t w h i l e t h e c o u r t s i n La Beach and The Haag case each a p p l i e d the law s t i p u l a t e d i n t h e c o n t r a c t , they n e v e r t h e l e s s e x p l i c i t l y r e f u s e d t o g i v e e f f e c t t o the c h o i c e of law c l a u s e and a r r i v e d at t h e i r d e c i s i o n s on o t h e r r e a s o n s . B a u e r f e l d sees the c o u r t s ' a t t i t u d e as an " i n t e n t on s e r v i n g n o t i c e t h a t they would not f o l l o w c h o i c e - o f - l a w c l a u s e s " o p . c i t . supra note 8 2 , at 1672. 89.  410 F. supp. 1339 ( S . D . N . Y . ,  1976).  90.  Ibid.,  91.  See e . g .  92.  See G r u s o n ' s comment, s u p r a , note 8 1 .  93.  See e . g . A . S . Rampell I n c . ; Kahn; Sears Roebuck & C o . ; v. S a p h i e r ; o p . c i t supra note 5 6 .  94.  N.Y.U. C C .  95.  Ibid.,  96.  "Lex f a c i t A r b i t r u m , " i n Sanders ( e d . ) , I n t e r n a t i o n a l . A r b i t r a t i o n : L i b e r Amicorum f o r M a r t i n Domke, 157 ( N i j h o f f , The Hague 1 9 6 7 ) .  97.  I b i d . , 161.  98.  Ibid.  at 1 3 4 1 . La Beach op. c i t supra note 8 7 .  Levey  (McKinney 1964).  s. 1-105(1).  99.  Same views were r e - e c h o e d by Mann i n a recent a r t i c l e " S c h i e d s r i c h t e r und R e c h t " i n F e s t s c h r i f t f u r Werner Flume, p. 593 at 595 et s e q . ( 1 9 7 8 ) .  100.  W e t t e r , "The Legal Framework of I n t e r n a t i o n a l A r b i t r a l T r i b u n a l s - F i v e T e n t a t i v e M a r k i n g s , " i n Hans Smit et a l . ( e d . ) , I n t e r n a t i o n a l C o n t r a c t s 271 at 272-273 (Matthew Bender, New York 1 9 8 1 ) .  - 99 101. Lew, op. cit supra note 7, paras. 97-102. 102. Ibid., para. 100. 103. Robert, Arbitrage: civil et commercial en droit interne et International Prive~, Para. 354. 4th ed. (Dalloz, Paris 1967) quoted from Lew, op. cit supra note 7, Para. 106 p. 84. 104. Mr. Mann stated, "It is not uncommon and on the whole, harmless to speak, somewhat colloquially, of international arbitration, the phrase is a misnomer. In the legal sense no international commercial arbitration exists ... every arbitration is a national arbitration, that is to say, subject to a specific system of national law", op. cit supra note 96, at 159. 105. See Lord Diplock in Bremer Vulkan v. South India Shipping Corporation (1981) 2 b.L.R. 141, wnere ne stated that there are considerable differences between the position of a judge and an arbitrator. 106. Reference is made mostly to I.C.C. awards since the bulk of International Commercial arbitrations are conducted by the I.C.C. court of arbitration. 107. I.C.C. award No. 893, Doc. No. 410/330 March 10, 1955. The extract of the award is reported in Lew, op. cit supra note 7, para 106 pp. 88-89. 108. Ibid., 89. 109. I.C.C. award No. 1512, 1971. Extract of award is reported in (1976) 1 Y.B. Comm. Arb. 128. 110. Ibid., at 130. 111. I.C.C. award No. 1315 Doc. No. 410/1316, 13 October, 1965. Extract of the award is reported in Lew, op. cit supra note 7, para. 106 p. 88. 112. Ad hoc Award of 3 November, 1977. Extract of award is reported in (1982) 7 Y.B. Comm. Arb. Part II p. 77. 113. Ibid., at 79. 114. Ad hoc Award of 23 July, 1981. Extract of award reported in (1983) 8 Y.B. Comm. Arb. Part II 89 at 91. 115. I.C.C. Award No. 1103, Doc. No. 410/774, 28 September, 1960. Extract of award reported in Lew, op. cit supra note 7, para. 106. 116. I.C.C. award No. 1598, 1971. Reported in (1978) 7 Y.B. Comm. Arb. 216.  - 100 117.  Ibid.  118.  I.C.C. award No. 1255, Doc. No. 410/1185 13 March 1964. Reported in Lew, supra note 7 Para. 116 pp. 98-99.  119.  Sanders, op. cit supra note 4, at pp. 241-242.  120.  See Scherk's case op. cit supra note 73.  Part II 1.  Iwasaki, "Effective Use of Model Arbitration Clauses in International Contracts," in Schmitthoff (ed.), International Commercial Arbitration, Collected Papers, Part III 160 (1974-80). Mcclelland, "International Arbitration, A Practical Guide for the Effective Use of the System for Litigation of Transnational Disputes," (1978) 12 Int'l Law 83 at 94. Glossner, "International Commercial Arbitration: Some Practical Aspects," in Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke, 95 (The Hague 1967).  2.  Mezger, "The Arbitrator and Private International Law, in Domke (ed.), International Trade Arbitration, 229 at 232 (1958).  3.  Ibid.  4. I.C.C. Award, No. 1455 Doc. No. 410/1561 20 September 1967. Extract of award reported in Lew, Applicable Law in International Commercial Arbitration: A Study in DTecided Arbitration Awards, (New York 1978). 5.  Mezger, op. cit supra note 2, at 234.  6. La Live, "Les Regies de conflit de Lois Appliquees au Fond du Litige par l'arbitre International Siegeant en Suisse," (1976) Rev. Arb. 155 at 160. 7.  Ibid.  8.  Klein, "The Law to be Applied by the Arbitrators to the Substance of the Dispute," in Schultz (et al. eds.), The Art of Arbitration: Essays on International Arbitration, Liber Amicorum Pieter Sanders, 189 (Kluwer Law & Taxation Pub., 1982).  9.  Ibid., 191.  - 101 10.  Croff, "The Applicable Law in an International Commercial Arbitration: Is i t still a Conflict of Laws Problem?" (1982) 16 Int'l. L. 613 at 628.  11.  Anzilotti, Rivista Di Diritto Internationale 467 (1906) cited from LaLive, op. cit. supra note 6 at 16.  12.  Klein, op. cit supra note 8, at 191.  13.  LaLive, op. cit supra note 6, at 161; Croff, op. cit supra note 10, 1 at 624.  14.  LaLive, ibid.  15.  LaLive op. cit supra note 6, at 162.  16.  Ibid.  17.  Croff, Op. cit supra note 10, at 628.  18.  Lew, Applicable Law in International Commercial Arbitration: A study in Decided Arbitration Awards, para 211 (Oceana Publications Inc., 19/8).  19.  I.C.C. Award made in case No. 2272. Extracts reported in (1977) 2 Y.B. Comm. Arb. 151.  20.  LaLive, op. cit. supra note 6, at 162; Lew, op. cit supra note 18, para 210 at 232.  21.  See Lew ibid., para 210 at 233.  22.  (1957-11) Ann. Inst. dr. Int'l, 394 f f .  23.  Mezger, op. cit supra note 5, at 239.  24.  Mann, "Lex Facit Arbitrum," in Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke 157 at 165 (The Hague 1967).  25.  Ibid., 167.  26.  Ad hoc arbitration, July 1966. Extracts reported in (1976) 1 Y.B. Comm. Arb. 141.  27.  I.C.C. Award No. 1913, Doc. No. 410/2073 15 December 1971. Extracts of award, reported by Lew op. cit supra note 18, Para. 242 at 268-269.  28.  I.C.C. Award, No. 1592, Doc. No. 410/1914, 18 November 1970. Extracts reported in Lew op. cit supra note 18, Para. 240.  - 102 N.B. Other awards on this subject are to be found in Lew para. 265 passim and Yearbook of Commercial Arbitration. 29.  See Lew, op. cit supra note 18, para 228 at 248; Fouchard, "L'Arbitrage Commercial International," at 360 (Dalloz-Paris 1965); Goldman, "Les Conf 1 its de Lois dans Varbitrage International de droit Prive'," (1963-111) 109 Rec. des Cours 351 at 413.  30.  Fouchard, ibid., para. 551. Lew, op. cit supra note 18, para 233 at 254.  31.  op. cit supra note 24, at 163.  32.  Mann, "English Procedural Law and Foreign Arbitrations," (1969) 18 I.C.L.Q. 997.  33.  Ibid., at 1000.  34.  Mann, op. cit supra note 24, at 163.  35.  It is important to point out that the I.C.C. Court is not a court in the ordinary sense of the word, i t does not decide cases and parties never appear before the court. It has the general responsibility of ensuring the smooth functioning of all I.C.C. arbitration, although i t has other specific functions allotted to i t . See Paulsson, "The Contemporary Role of I.C.C. Arbitration in Resolving International Business Disputes," in Droit et Practique du Commerce International, 323 at 328 (E.S.I. Publications, 1983. See also Stevenson, Jr. "Why I.C.C. Arbitration," (1980) 14 J. Int'l L. & Econ. 381 at pp. 389-390.  36.  Extract of case in Jan Paulsson, "Arbitration Unbound: Award Detached from the Law of its Country of Origin" in Schmitthoff (ed.), International Commercial Arbitration, collected Papers, part 1, p. 1 at 7 ff (New York, 1982).  37.  Kopelmenas, "Quelques ProbTemes Recents de Varbitrage commercial International," (1957) Revue Trimestrale De Droit Commercial 985. "...devant la difficult!, voire 1'impossible de fixer des regies Internationales de conflit. ...La Seule solution raisonnable du probleme consisterant a laiser a l'arbitre le soin de determiner, ...La Loi^applicable selon la regie de conflit qu'il jugera appropriee a Tespece."  38.  See Art. VII of the European Convention on International Commercial Arbitration, 1961.  - 103 -  39.  See Articles 33 (1) and 13(3) of the UNCITRAL and I.C.C. Rules' respectively.  40.  I.C.C. Award No. 953, 18 January, 1956. (1978) 3 Y.B. Comm. Arb. 214.  41.  I.C.C. Award No. 1449, Doc. No. 410/1583, 8 November 1967. Extract of award reported in Lew, op. cit supra note 18 para 265.  42.  See Lew ibid.  43.  Cf. Lew, op. cit supra note 18, para 254.  44.  Fouchard, op. cit supra note 29, para 563 at 384.  45.  Extracts of case reported in Notes: "The Lex Mercatoria in Paris and Vienna", (1983) 17 J.W.T. Law. 358 f f .  46.  The English translation of the 1981 Decree is produced in (1982) 7 Y.B. Comm. Arb. 271.  47.  Fouchard, "L arbitrage International en France apres le decret du 12 Mai 1981", J. du dr. Int. (1982), No. 2 p. 374.  48.  I.C.C. award, No. 986, Doc. No. 410/461 13 March 1957 Extracts reported in Lew, op. cit supra note 18, para. 288.  49.  I.C.C. award No. 953, Doc. No. 410/385 18 January, 1956 Extract in Lew Para 289.  50.  Derains, "L'application cummulative par l'arbitre des Systemes de conflit de Lois Interesses au litige," (1972) Rev. Arb. 99 at 121.  Extracts reported in  1  *  51.  Goldman, op. cjt supra note 29, at 413.  52.  Fouchard, op. cit supra note 29, para 564.  53.  This argument is similar to the concept advocated by Hoff and Von Mehren. It is their view that rather than select an appropriate municipal law to govern a multi-state dispute, a special rule should be developed to accommodate views of all concerned jurisdictions. This proposition therefore advocates the development of substantive rules which would take into consideration conflicting rules and then compromise the difference. Cf. Hoff, "Adjustment of Conflicting Rights: A suggested Substitute for the Method of Choice-of-Law" (1952) 38 Va. L. Rev. 745 at 747;  - 104 Cf. Von Mehren, "Special Substantive Rules for Multistate Problems: Their Role and Significance in Contemporary Choice of Law Methodology", (1974/75) 88 Harv. L.R. 347. 54.  I.C.C. award No. 2172, Doc. 410/2384 1974. Extracts reported in Lew, op. cit supra note 18, para. 304 at 376.  55.  I.C.C. Award No. 3316, 23 October 1979. Extracts reported in (1982) 7 Y.B. Comm. Arb. 160.  56.  I.C.C. award, 1959. Extracts reported by Fouchard, op. cit supra note 29, at 389.  57.  I.C.C. arbitration award No. 1776 1970. Extracts reported in Sanders, "Trends in International Commercial Arbitration," (1975) 11 Rec. des Cours, 213 at 259.  58.  I.C.C. Award, No. 1621, Doc. No. 410/2022, 22 September 1972. Extracts, reported in Lew, op. cit supra note 18, para. 307.  59.  I.C.C. Award No 1472, 1968. Extracts reported in Sanders, op. cit supra note 57, 252.  60.  For a definition of the concept of the proper law see Dicey and Morris, The Conflict of Laws, 10th ed., Rule 146 (Sweet and Maxwel1, London 1980).  61.  See Leflar, American Conflicts Law, 3rd. ed., 308 (The Bobbs-Merril1 Company, Inc., 1977).  62.  I.C.C. Award No 2114, 29 December 1972. Extracts of Award reported in (1980) 5 Y.B. Comm. Arb. 186 at 189.  63.  I.C.C. Award, No. 1532, Doc. No. 410/2069, 15 Dec. 1971. Extract reported in Lew op. cit supra note 18, para. 265 p. 303.  64.  Cf. Leflar, op. cit supra note 61, at 309.  65.  Cf. Polonsky, "Arbitration of International Contracts," (1971) J.B.L. 1 at 8.  66.  I.C.C. Award No 2172, Doc. 410/2384 1974. Extracts reported in Lew, op. cit. supra note 18, para 304 at 376.  67.  I.C.C. Award, No. 1990, 1972. Extracts reported in (1978) Y. B. & Comm. Arb. pp. 217-218.  68.  There is no need to enumerate all the attempts made at unifying the conflict of law rules. Suffice i t to say that the Hague Conference which was first convened in 1893 and has as it's objective the unification of the rules of private International Law has made several attempts toward this goal. One such attempt is the Hague Convention on the Law Applicable  - 105 to International Sales of Goods of 15th June 1955. This Convention has yielded little results. So far, very few countries have adopted i t . A convention which can be deemed to be successful in unifying the rules of private international law is the European Communities' Convention on the Law Applicable to Contractual Obligations of 1980. This convention codified a set of choice of law rules in contract to govern the relationship of contracting parties within the E.E.C. nations. 69.  Such was the approach taken by the arbitrators in a dispute . involving a Lebanese firm and a western European car manufacturer. In this case a Lebanese firm,and the Western European car manufacturer concluded a contract under which the Lebanese firm was to act as distributor for the European firm in Lebanon. The contract stipulated that the claimant would not only sell the cars but would also provide after-sales service and maintain a stock of spare parts for this purpose, the distributor was to construct a garage and storeroom. Having failed to do so, the manufacturer terminated the contract in accordance with the terms of their contract. The Lebanese distributor thereafter started arbitration proceedings against the car manufacturer. The arbitrators in a bid to determine the applicable law analysed the economic aspects of the contractual operation. The arbitrators considered that if the contract had had as sole object the sale of cars, the law of the Western European car manufacturer would have been applicable, since the contract was negotiated in that country, the respondents (Western European Car Manufacturer) had signed the contract in their country, after i t had been signed by the buyer in Beirut. Moreover, the delivery by virtue of Art. 7 of the contract was deemed to have been effected at the place of shipment [a harbour within the Western Europeans' Country]. The arbitrators, however, found that the contract had a broader object, namely the distribution of the products of the respondents in Lebanon. Although, the claimant bore the risk of poor sales, as his remuneration was the difference between purchase and sales price, he nevertheless had assumed a whole series of obligations to ensure the distribution of the respondents' production in Lebanon. The sale was therefore only one element of an entire operation which had its economic and legal performance in Lebanon. It was also significant that the dispute between the parties arose out of the performance of the claimant in Lebanon. The arbitrators therefore applied Lebanese law.  70.  e.g. England, Canada.  71.  See Ole Lando, "Conflicts-of-Law Rules for Arbitrators," Festschrift fuer Konrad Zweigert, 1981, 157 at 160.  - 106 72.  See s. 187(2).  73.  Art. 4(1).  74.  Ole Lando has devoted an entire article on this working group and the preliminary set of rules drafted by them, op. cit supra note 71, 157 f f .  75.  Draft provisions of Guidelines produced, in Ole Landa, supra note 71 at 174 f f .  76.  For a detailed treatment of the concept of amiable compositeur see Simont "Amiables Compositeurs and their Reasoning" in 2 International Commercial Arbitration, Collected Papers 109 f f (1974-80). See also R. Marx, "Amiable Compositeur" (1942) 2 Arb. J. 211 et seq.  77.  Simont ibid., at 126.  78.  Simont, supra note 76, at 124.  79.  See Article VII (2) of the 1961 European Convention on International Commercial Arbitration; Article 13(4) of the I.C.C. rules; Article 39 of the Arbitration Rules of the E.C.E. 1966.  80.  Ad hoc Award of 3 November, 1977. Extracts of award is reported in (1982) 7 Y.B. Comm. Arb. Part II p. 77.  81.  Extract reported in (1976) 1 Y.B. Comm & Arb. 136.  82.  See Orion Compania Espanola De Sequros v. Belfort Maats (1962) 2 Lloyd's L.R. 2b/. Radio Publicity Universal Ltd. v. Compagnie Luxembourgeoise L1936J 2 All E.R. Ill (Ch.). Eagle Star v. Yuval (1978) 1 Lloyd's L.R. 357.  83.  Two English authors who have gone into any considerable discussion on this matter are Russell and Mann. Other authors like C.J. Cohn made only passing remarks. See Russell, On the Law of Arbitration 186-187 (London, 1970 18th ed.). Mann op. c i t supra note 6; Cohn, "The Rules of Arbitration of the International Chambers of Commerce" (1965) 14 1 C.L.Q. 132 at 156.  - 107 84.  A new Arbitration Act was enacted by the parliament in 1979. This Act abolished certain provisions in the 1950 Arbitration Act of the United Kingdom.  85.  See s. 21 of the 1950 Arbitration Act.  86.  Op. c i t supra note 82.  87.  Ibid., at 264.  88.  Op. c i t supra note 82.  89.  Ibid., 362.  90.  Simont op. cit supra note 76, at 118.  91.  See Lord Denning in Eagle Star v. Yuval, op. cit supra, note 82, at 362 and Scrutton L.J, in Czarnikow v. Roth, Schmidt & Co. (1922) 2 K.B. 478.  92.  S. 1(1) 1979 Arbitration Act.  93.  S. 1(2) - (6).  94.  S. 3.  95.  The New Act did not abolish the 1950 Act but only sought to amend i t by abolishing certain provisions.  96.  (1981) 2 Lloyds L.R. at 239.  97.  Ibid., 245.  98.  Cf. Mustill & Boyd op. cit supra note 77, at 612.  99.  Ibid.  100.  Prebble, Choice of Law to Determine the Validity and Effect of Contracts" A Comparison of the English and American Approach"?? to the Conflict of Laws, at 200.  101.  The Common-Law Provinces alone will be treated and the laws in force in the nine Common-Law Provinces and territories are all very similar following closely the English Arbitration Act of 1889, although there are numerous minor variations.  102.  The concept was touched by Davidson, in "Dispute Settlement in Commerical Law Matters," (1982-83) 7 Can. Bus. L.J. 197.  103.  See Kos-Rabcewicz-Zubkowski, "National Reports: Canada", (1977) 2 Y.B. Comm. Arb. 16 at 22. Davidson, op. cit supra note 102, at 204.  - 108 Grand Trunk Railway Company of Canada v. Amable Coupal (1898) 28 S.C.R. 531. ; Bar Point Land Co. v. Chappus, (1922) 23 O.W.N. 130 (H/C). Beach-Hydro-Electric Power Commission of Ontario (1924) 4 D.L.R. 995. N.B. However, the position of the law is different in Quebec. Article 948 of the code of Civil Procedure provides that parties to a dispute may exempt the arbitrators from the rules of law, which are not of public policy, and may empower them to act ex aequo et bono or according to their concept of equity. 104.  See Kos-Rabcewicz-Zubkowski op. cit supra note 103, at 25. See also International Woodworkers of America v. Weldwood of Canada, (1970) 74 W.W.R. 568, 15 b.L.ft. (3d) 200 (B.C.C.A.).  105.  See Art. 21 of B.C. Arbitration Act. R.S.B.C. 1979. C. 18. N.B. Where i t may be necessary to refer to provisions in the Arbitration Acts, the provisions of B.C. Legislation will be stipulated as typical of the Common Law Legislations.  106. Cf. Beach Hydro-Electric Power op. cit supra note 103. 107. Jekyll v. Wade (1860) 8 Gr. 363 at 365. 108.  [1958] O.W.N. 269, at 270.  109. Despite the fact that major changes have been made in Britain under the 1979 Act, this hasn't affected the duty imposed on the arbitrator to decide according to the general principles of law. 110.  It is a misnomer to discuss the concept of amiable compositeur in the United States of America, since there is no "American Legal System" but distinct legal systems. It is however submitted that the law appears to be similar in most jurisdictions and therefore any conclusions which will be arrived at would be correct for most jurisdictions.  111. Domke, Commercial Arbitration, 25:01 (Rev'ed, 1984). 112. See Holtzmann, "United States of America: the American Arbitration Association", in Cohn (et al. eds.), Handbook of Institutional Arbitration in International Trade (NorthHolland Publishing Co., 1977). 113. 328 N.Y.S. 2d 418 (C.A. New York, 1972).  - 109 114.  University of Alaska v. Modern Construction Inc., Alaska. 522 p. 2d 1132. :  115.  Ibid., at 1140.  116.  See Re Reynolds Estate 20 S.E. 2d 348 at 349. Matter of Granite Worsted Mills [Cowen] 306, N.Y.S. 2d 934,  w:  Matter of Exercycle Corp. [Moratta] 214 N.Y.S. 2d 353, 357-358. Fudickar v. Guardian Mutual Life Ins. Co. 62 N.Y. 392, 399-400.  117.  Botein J. stated in Publishers' Association of N.Y. City v. Newspaper and Mail Deliverers' Union of N.Y. and Vicinity, 111 N.Y.S. 2d 725 at 731 (S.Ct.) "The rule that arbitrators need not follow legal principles as enunciated by the courts, in making their awards is subject to an exception where the award would require action contrary to a penal statute or where the performance would be contrary to public policy".  118.  See Derains, "France National Reports," (1982) 7 Y.B. Comm. Arb. 3 at 12. Sanders, "Netherlands National Reports," (1981) 6 Y.B. Comm. Arb. 60 at 75 (1981). Me. Lambert Matray, "Belgium National Reports" (1980) 5 Y.B. Comm. Arb. 1 at 18-19.  119.  See 1(6) of the 1979 Act of the United Kingdom. See Kos-Rabcewicz-Zubkowski op. cit supra note 103, at 22.  Part III 1.  See Goldstajn, "The New Law Merchant," (1961) J.B.L. 12. Schmitthoff, "International Business Law: A New Law Merchant," (1962 11 Curr. L. Soc. Prob. 129. Schmitthoff, "The Law of International Trade, its Growth, Formulation and Operation," in Schmitthoff (ed.), Sources of the Law of International Trade, 3 (Stevens, London 1964). Kopelmenas, "International Conventions and Standard Contracts as Means of Escaping from the Application of Municipal Law" in Schmitthoff (ed.), ibid., at 118.  - 110 Lew, Applicable Law in International Commercial Arbitration: A Study in Decided Arbitration Awards, para. 343 (Oceana Pub. Inc., New York 1978). Fragistas,^"Arbitrage etranger et arbitrage International en droit prive," (I960) Rev. Critique, 1. Sanders, "Trends in International Commercial Arbitration," (1975) 11 Rec-des cours 213 at 263. 2. Croff, "The Applicable Law in an International Commercial Arbitration: Is It Still a Conflict of Laws Problem?" 16 Int'l L. 613 at 634. 3. See Berman & Kaufman, "The Law of International Commercial Transactions (Lex Mercatoria)," (1978) 19 Harv. Int'l L.J. 211 at 226. 4. Ibid. 5. Trakman, The Law Merchant: The Evolution of Commercial Law at 18-19 (Colorado 1983). 6.  Ibid., at 20.  7. Schmitthoff, Commercial Law in a Changing Economic Climate at pp. 19-20 (London 1981). 8. Goldstajn, op. cit supra note 1, at 12. 9. Schmitthoff, op. cit supra note 1, at 44. 10. Schmitthoff, op. cit supra note 7, at 21. 11. Op. cit supra note 1, at 144-145. 12. Bonell, The Relevance of Courses of Dealing, Usages and Customs in the Interpretation of International Commercial Contracts" in 1 UNIDROIT: New Directions in International Trade Law, 107 (New York 1977). 13. Ibid., at 114. 14. Kahn, La Vente Commerciale Internationale (Paris, 1967) 6 et seq., 3bb et seq. Ishizaki, Le droit corporatif International de la vente des soies, (Paris 1928) 1 P. 4 et seq.' 330 et seq. Kopelmenas, "La codification des coutumes du commerce International dans le cadre des commissions Regionales des Nations^Unies," in Annuaire Francais de droit International (1955) p. 375 et seq.  - Ill -  Cesarini - Sforza, "11 dirtto dei privati" (Milan 1928) p. 96. All the aforementioned authorities are cited from Bonell supra note 12 at 114. 15.  Op. cit supra note 12, at 114.  16.  Generally see Bonell, op. cit supra note 12, at 114 f f .  17.  Ross observes that parties feel bound by the arbitration agreement and award. They will also face the many social and moral constraints which bind them to keep the "rules of the game". This he maintains is sufficient for international business. Cf. Ross, om ret ogretfaerdighed (1953) pp. 66 et seq. Cited from Lando, "Conflict-of-Law Rules for Arbitrators" in Bernstein (ed. ), Festschrift fuer Konrad Zweigert zum 70. Geburtstag, 157 at 171 (1981).  18.  Honnold, "The Influence of the Law of International Trade on the Development and Character of English and American Commerical Law" in Schmitthoff (ed.), The Sources of the Laws of International Trade, 70 at 76 (Stevens, London 1964).  19.  See Schmitthoff, op. cit supra note 7, at 23.  20.  Schmitthoff admits that the term 'international Legislation' is a misnomer since the power to create legal rules in a particular territory can only be exercised by or by authority of a national sovereign. Op. cit supra note 7, at 22.  21.  For a list of other conventions, see Schmitthoff, Export Trade, 6th ed. XXXIII et seq. (London 1980).  22.  Goldman, "Les Conflits de lois dans Tarbitrage International de droit prive," (1963-111) 109 Rec. des Cours 351 at 483. The same argument was re-echoed by him at the Basle conference of October 1980.  23.  Ad hoc award of 3 November 1977. Extract reported in (1982) 7 Y.B. Comm. Arb. 77.  24.  I.C.C. Award No. 3540 of 3 October 1980.  25.  Ibid., in (1982) 7 Y.B. Comm. Arb. 125 at pp. 127-129.  26.  I.C.C. Award No 1859, 1973. Extract reported by Derains, "Le Statut des Usages du Commerce International devant les jurisdictions arbitrales," (1973) Rev. Arb. 122, pp. 133-4. v  - 112 27.  See supra note 1.  28.  See supra notes 23ff.  29.  MustiH & Boyd, Commercial Arbitration, 611 (Butterworths, London 1982).  30.  Wetter, The International Arbitral Process: Public and  Private. 403-4 (1979).  31.  Enderlein, "The Law of International Trade: A New Task for National Legislators or a New "Lex Mercatoria"?" in 11 UNIDROIT: New Direction in International Trade Law. 447 at 451 (1977).  32.  Mann, "Lex Facit Arbitrum," in Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke, 157 at 160 (The Hague 1967).  33.  Op. cit supra note 7, at 22.  34.  Langen, Transnational Commercial Law, 12 (1973).  35.  Ibid., at 13.  36.  Klein, "The Law to be Applied by the Arbitrators to the Substance of the Dispute," in Schultz (et al. eds.), The Art of Arbitration: Essays on International Arbitration-Liber Amicorum Pieter Sanders, 189 at 196.  37.  Trakman, op. cit supra note 5, at 42.  38.  Klein, "De L'authorite de la loi les Rapports Commerciaux Internationaux in Internationales Recht und Wirtschaftsordnung, Festschrift fuer F.A. Mann 617 (1977).  39.  Op. cit supra note 22, at 483.  40.  Op. cit supra note 1, at 264.  41.  Cf. Langen, op. cit supra note 34, at 22.  42.  Reczei, "The Autonomy of the Contracting Parties in International Relations" in 1 UNIDROIT: New Directions in International Trade 55 (New York 1977).  43.  Op. cit supra note 29, at 612.  44.  Schmitthoff at the Basle conference of October 1980, cited from von Hecke, "Contracts Subject to International or Transnational Law" in Hans Smit et al. (ed.), International Contracts 25 at 37 (Matthew Bender, New York 1981).  - 113 45. Batiffol, "Pluralisme des Methodes en droit international prive" (1973) 11 Rec des cours 131 cited from Klein, op. cit supra, note 38 at 633. 46.  See Schmitthoff, op. cit supra note 7, at 21.  47. See generally, Goldstajn, "A New Law Merchant Reconsidered" in Fabricus (ed.), Law and International Trade at 174 ff. 48.  Honnold, op. cit supra note 18, at 80.  49.  See Kungling Jarnvagsstyrelsen v. Dexter and Carpenter, 299 F. 991 (S.D.N.Y. 1924). Dixon, Irmaos and Cia 19 v. Chase National Bank. 144 F. 2d 759 (2d cir. 1944). In these cases the court gave effect to the practices of merchants rather than the existing municipal law.  50. Goldstajn states, "There are few laws of a more recent date which strive to meet the needs of international trade to such extent as the Uniform Commercial Code of U.S.A. and Czechoslovak International Trade Code". Op. cit supra note 48 at 176. 51.  120 RDC, 1967-1 . p. 188, cited from Langen op. cit supra note 34, at 13.  52.  Op. cit supra note 31, at 448.  53. Op. cit supra note 5, at 42. 54.  David, "The Methods of Unification," (1968) A.J.C.L. 13 at 24.  Conclusion 1. Dennis Tallon, "The Law Applied by Arbitration Tribunals II," in Schmitthoff (ed.), The Sources of the Law of International Trade, 154 at 156 (1964). 2.  Ibid., at 156.  3.  Schmitthoff, "Nature and Evolution of the Transnational Law of Commercial Transactions: in The Transnational Law of International Commercial Transactions. (N. Horn and Schmitthoff, ed., 1982) 19 at 22.  - 114 Schmitthoff, Commercial Law in a Changing Economic Climate, : 30 (London 19"8Tn ' ~~  - 115 BIBLIOGRAPHY A.  BOOKS  Castel,  Canadian Conflict of Laws, (Butterworths, Toronto 1975)  Chershire and North, Private International Law, 10th ed., (Butterworths, London 1979) Dicey and Morris, The Conflict of Laws, 10th ed., (Sweet and Maxwell, London 1980) Domke,  Commercial Arbitration, (Rev'ed, 1984)  Falconbridge, Essays on the Conflicts of Laws, (Toronto 1954) Fouchard, L'arbitrage Commercial International, (Dalloz, Paris Langen,  Transnational Commercial Law, (1973)  Lew,  Applicable Law in International Commercial Arbitration: A Study in Decided Arbitration Awards, (Oceana Pub. Inc., Mew York 1978)  McLeod,  The Conflict of Laws, (Carswell Legal Pub., Calgary 1983)  Mustill and Boyd, Commercial Arbitration, (Butterworths, London 1982) Orsini,  How to Resolve that Dispute: Commercial Arbitration in untano ana in canaaa 119791 ' :  Prebble, Choice of Law to Determine the Validity and Effect of Contracts: A Comparison of the English and American Approaches to the Conflict of Laws, (Michigan 1972) Russel,  The Law of Arbitration, 18th ed., (London 1970)  Schmitthoff, Commercial Law in a Changing Economic Climate, (London -j 1 9 8 1  , Spiro,  Export Trade, 6th ed., (London 1980)  The Conflict of Laws (1973)  Trakman, The Law Merchant: The Evolution of Commercial Law, (Rothman & Co., Littleton, Colorado 1983) Wetter,  The International Arbitral Process: Public and Private, TT9791  - 116 B.  ARTICLES  Batiffol, "Pluralisme des Methodes en droit International prive," (1973) 11 Rec. des cours 131. Bauerfeld,  "Effectiveness of Choice-of-Law Clauses in Contract Conflicts of Law: Party Autonomy or Objective Determination?," (1982) 83 Colum. L. R. 1659.  Berman and Kaufman, "The Law of International Commercial Transactions (Lex Mercatoria)," (1978) 19 Harv. Int'l. L.J. 211. Bonell,  "The Relevance of Courses of Dealing, Usages and Customs in the Interpretation of International Commercial Contracts," in 1 UNIDROIT: New Directions in International Trade Law 109 (New York 1977).  Chun Pyo Jhong, "The Settlement of Disputes Arising from Internationa^ Trade and Investment," (1969-1971) 1-2 LAWASIA 21. Croff,  "The Applicable Law in an International Commercial Arbitration: Is i t Still a Conflict of Laws Problem?," (1982) 16 Int'l. L. 613.  David,  "The Methods of Unification," (1968) A.J.C.L. 13.  Davidson, "Dispute Settlement in Commercial Law Matters," (1982-83) 7 Can. Bus. L.J. 197. Derains,  -  "L'application cummulative par l'arbitre des systemes de conflit de Lois Intere'sse's au Litige," (1972) Rev. Arb. 99.  , "France National Reports," (1981) 6 Y.B. Comm. Arb. 60.  Determan, "The Law in Arbitration," (1981) 94. Nov. 6. L.A. Daily J. 9. Enderlein,  "The Law of International Trade: A New Task for National Legislators or a New Lex Mercatoria?" in 11 UNIDROIT: New Directions in International Trade Law, 447 (New York 19777:  Fowler et al., "A survey of Arbitral Forums: Their Significance and - Proce"dTjre"," (1980) 5 N.C.J. Int'l. L. Comm. Reg. 219. Fragistas,  "Arbitrage etranger et arbitrage International en droit prive," (1960) Rev. critique 1.  Glossner, "International Commercial Arbitration - Some Practical Aspects," in International Arbitration: Liber Amicorum for  - 117 Martin Domke, 95 (The Hague 1967) Goldman, "Les Conflits de Lois dans l'arbitrage International de droit prive," (1963-111) 109 Rec. des cours 351. Goldstajn, T  "The New Law Merchant," (1961) J.B.L. 12. "A New Law Merchant Reconsidered," in Fabricus (ed.), Law and International Trade: Festschrift Schmitthoff, 215  mm Gruson,  "Governing Law Clauses in Commercial Agreements - New York's Approach," (1979-80) 18 Colum. J. TransnM. L. 323.  Haardt,  "Choice of Law Clauses in Arbitration Agreements," in Essays on the Law of International Trade, 215, Hague-Zagreb Colloquium, (Asser Institute, The Hague, 1976)  Higgins et al., "Pitfalls in International Commercial Arbitration," (1980) 35 Bus. Law. 1035. Hoff,  "Adjustment of Conflicting Rights: A Suggested Substitute for the Method of Choice-of-Law," (1952) 38 Va. L. REv. 745.  Holtzmann, "United States of America: the American Arbitration Association," in Cohn (et al. eds.), Handbook of Institutional Arbitration in International Trade (North-Holland Publishing Co., 1977). Honnold,  "The Influence of the Law of International Trade on the Development and Character of English and American Commercial Law," in Schmitthoff (ed.), Sources of the Law of International Trade, 70 (Stevens, London 1964).  Iwasaki,  "Effective use of Model Arbitration Clauses in International Contracts," in Schmitthoff (ed.), International Commercial Arbitration, Collected Papers, Part III 160 (1974-80).—  James,  "Effects of the Autonomy of the Parties on Conflict of Laws," (1959) 36 Chi-Kent L. Rev. 34.  Kahn-Freund, "Reflections on Public Policy in the English Conflict of Laws," (1953) 39 Grotius Soc'y 39. Klein,  ,  "The Law to be Applied by the Arbitrators to the Substance of the Dispute," in Schultz (et al. eds.), The Art of Arbitration: Essays on International Arbitration Liber Amicorum Pieter Sanders, 189 iKluwer Law & Taxation Pub., TO "De L'autorite de la loi les Rapports Commerciaux  - 118 -  /  Internationaux," in Internationales Recht und Wirtschaftsordnung: Festschrift fur F.A. Mann 617 (1977). 1  1  Kopelmenas, "Quelques Problemes Recents de I'arbitrage commercial International," (1957) Rev. Trimestrale de droit Commercial 879. , "International Conventions and Standard Contracts as Means of Escaping from the Application of Municipal Law" in Schmitthoff (ed.), Sources of the Law of International Trade, 118 (Stevens, London 1964) Kos-Rabcewicz-Zubkowski, "National Reports: Canada," (1977) 2 Y.B. Comm. Arb. 16. Lando,  LaLive,  "Conf1ict-of-Law Rules for Arbitration," in Bernstein (ed.), Festschrift fur Konrad Zweigert zum 70 Geburtstag 157. "Les Regies de Conflit de lois Appliquees au fond du  11tige par l'arbitre international sie'geant en Suisse,"  (1976) Rev. Arb. 155.  Levin,  "Party Autonomy: Choice of Law Clauses in Commercial Contracts" (1957-58) 45 Geo. L.J. 260.  Mann,  "English Procedural Law and Foreign Arbitrations," (1969) 18 I.C.L. Q. 997.  ,  "Lex facit Arbitrum," in Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke, 157 (NijhotT, The Hague 1%/)  —-,  "Schiedsrichter und Recht," in Festschrift fur Werner Flume, 593 (1978)  Marx,  "Amiable Compositeur," (1942) 2 Arb. J. 211.  Matray,  "National Reports: Belgium," (1980) 5 Y.B. Comm. Arb. 1.  Mezger,  "The Arbitrator and Private International Law," in Domke, (ed), International Trade Arbitration, A Road to World-Wide Co-operation, 229 (New York, 1958)  Note:  "Conflict of Laws: Party Autonomy in Contracts," (1957) 57 Colum. L.R. 553.  Notes:  "The Lex Mercatoria in Paris and Vienna," (1983) 17 J.W.T.L. 358.  Oliver,  "Standardization of Choice of Law Rules for International Contracts - should there be a New Beginning?," (1959) 53 Am. J. Int'l. L. 385.  Paulsson, "The Contemporary Role of I.C.C. Arbitration in Resolving  - 119 International Business Disputes," in Droit et Practique du Commerce International, 323 (ESI Pub., 1983) Polonsky,  "Arbitration of International Contracts," (1971) J.B.L. 1.  Pounds,  "Party Autonomy - Past and Present," (1970) 12 S.T.L.J. 214.  Reczei,  "The Autonomy of the Contracting Parties in International Trade Relations," in 1 UNIDROIT: New Direction in International Trade Law 55 (New York 1977).  Reese,  "The Power of the Parties to Choose the Law Governing their Contract," (1960) Am. Soc'y Int'l L. Proc. 54.  Sanders,  "National Reports: Netherlands," (1981) 6 Y.B. Comm. Arb. 60.  t  "Trends in International Commercial Arbitration," (1975) 11 Rec. des cours, 213.  Sauser-Hall, "L'arbitrage en droit International prive," (1952) 44-1 Ann. Inst. dr. Int'l 469. "L'arbitrage en droit International prive," (1959) 47-11 Ann. Inst. dr. Int'l 264. t  Schmitthoff, "International Business Law: A New Law Merchant," (1962) 11 Curr. L. Soc. Prob. 129. , "The Law of International Trade, It's Growth, Formulation and Operation," in Schmitthoff (ed.), Sources of the Law of International Trade, 3 (Stevens, London  T W T  , "Nature and Evolution of the Transnational Law of Commercial Transactions," in Horn et al. (ed.), The Transnational Law of International Commercial Transactions 19 (The Netherlands 1982). Simont,  "Amiables Compositeurs and their Reasoning," in Schmitthoff (ed.), 2 International Commercial Arbitration collected Papers 109 (1974-80).  Smedresman, "Conflict of Laws in International Commercial Arbitration: A Survey of Recent Developments," (1977) 7 Cal. w. Int'l L. J. 263. Stevenson, "Why I.C.C. Arbitration," (1980) 14 J. Int'l L. & Econ. 381. Tallon,  "The Law Applied by Arbitration Tribunals-II," in Schmitthoff (ed.), The Sources of the Law of International  - 120 Trade, 154 (Stevens, London 1964). Thompson, "Procedure Under the Rules of the I.C.C," in Schmitthoff (ed.), 3 International Commercial Arbitration, Collected Papers, Part 2, I (1983) Thomson, "A different Approach to Choice of Law in Contract," (1980) 43 M.L.R. 650. Tuchler,  "Boundaries to Party Autonomy in the U.C.C: A Radical View," (1966/67) 11 St. L. U.L.J. 180.  Van Hecke, "Contracts Subject to International or Transnational Law," in Hans Smit et al. (eds.), International Contracts 25 (Matthew Bender, New York 1981)7" Vaughter,  "Choice of Law for International Contracts: An American Critique," (1966) 2 Texas Int'l. L. F. 227.  Vickers,  "Why Arbitrate?" in Commercial Arbitration: Materials prepared for the Continuing Legal Education, April 22 and 23, 1982, Vancouver, 33.  Von Mehren, "Special Substantive Rules for Multistate Problems: Their Role and Significance in Contemporary Choice of Law Methodology," (1974/75) 88 Harv. L. R. 347. Weintraub, "Choice of Law in Contracts," (1968) 54 Iowa L. Rev. 399. Wetter,  "The Legal Framework of International Arbitral Tribunals five Tentative Markings," in Hans Smit et al. (ed.), International Contracts 271 (Matthew Bender, New York  TWD Yaeger,  "International Commercial Disputes: The Alternative of Arbitration," (1976-78) 1 - 3 N.C.J. Int'l & Comm. Reg. 142. CASES  Block Bros. Realty Ltd. v. Mollard [1981] 4 W.W.R. 65 (B.C.C.A.) B.M. Heede Inc. v. West India Machinery and Supply Co. 272 f. Supp. 236 IS.D.N.Y. 19b/) [ Boissevain v. Weil [1949] 1 K.B. 482 (C.A.) B.T.B. Tioxide Limited v. Pioneer Shipping Ltd. and Armada Marine S.A.  (The Nema) (1981) 2 Lloyds L.R. 239.  Canadian Acceptance Corp. v. Matte (1957) 9 D.L.R. (2d) 304 (Sask. 7X1  - 121 Cie Tunisienne de Navigation S.A. v. Cie d'Armement Maritime S.A. L1977J A. C. 5 7 2 .  ;  Compania de Inversionnes Internationales v. Industri Hypotekshankeni, Finland A/B. 269 N.Y. 22, remittitur amended 269 N.Y. 602, (1935), cert, denied, 297 U.S. 705 (1936) Eagle Star Insurance Co. Ltd. v. Yuval Insurance Co. Ltd. (1962) 2 Lloyd's L.R. 257. Foster v. Driscoll (1929) 1 K.B. 470. Gambar Enterprises Inc. v. Kelly Services, Inc. 418 N.Y.S. 2d 818 TT979") — c  !  Golden Acres Ltd. v. Queensland Estates Pty. Ltd. [1969] Qd. R. 378  7xrn  Greenshields Inc. v. Johnson et al. (1981) 119 D.L.R. (3d) 714 (Alta. Q.B.) Re Helbert wagg & Co. Ltd. [1956] ch. 322. James Miller & Partners v. Whitworth Street Estates (Manchester) [197UJ A.C. 583 IH.L.J Joy v. Heidrick and Struggles Inc. 403 N.Y.S. 2d. 613 (1977) Kaufman v. Gerson [1904] 1 K.B. 591. La Beach v. Beatrice Foods Co. 461 F. Supp. 152 (1978) Lentine et al. v. Fundaro, 328 N.Y.S. 2d. 418 (1972) Levey v. Saphier, 370 N.Y.S. 2d. 808. Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth, Inc., 723 F*. 2d. 155 (1st Cir. 1983) National Surety Co. v. Larsen [1929] 4 D.L.R. 918 (B.C.C.A.) Nike Infomatic Systems Ltd. v. Avac Systems Ltd. et al. (1980) 105  D.L.R. (3d.) 455 (B.C.S.C.)  Orion Cia Espanola de Seguros v. Belfort Maats (1962) 2 Lloyd's L.R. 75T. Reger v. National Association of Bedding Manufactures Group Insurance 372 N.Y.S. 2d. 97 (1975) Robinson v. Bland (1760) 2 Burr. 1077.  - 122 Rousillon v. Rousillon (1880) 14 Ch. D. 351. Saxbly v. Fulton [1909] 2 K.B. 208 (C.A.) Scherk v. Alberto-Culver Co. 94 S. Ct. 2449 (1974) Sears Roebuck & Co. v. Enco Associates 370 N.Y.S. 2d 338 (1975) Skandia America Reinsurance Corp. v. Schenck, 441 F. Supp. 715 TT977J Southern International Sales Co. Inc. v. Potter & Brumfield 410 F. Supp. 1339 (S.b.N.Y. 1976) ; University of Alaska v. Modern Construction Inc., Alaska 522 p. 2d. TT3TT Vita Food Prods. Inc. v. Unus Shipping Co. (1939) A.C. 277. Re Walker v. N. Grimsby [1958] O.W.N. 269 (C.A.) Weight Watchers of Quebec Ltd. v. Weight Watchers International Inc., 398 F. Supp. 104'/ (E.D.N.Y. 1975) D.  AWARDS  Awards of the I.C.C. ICC Award No. 893, Doc. No. 410/330, 10 March, 1955. Extract of award reported by Lew, App!icable Law in International Commercial Arbitration, Para. 106 (New York 1978) ICC Award No. 953, Doc. No 410/385, 18 January 1956. Extract of award reported by Lew, App!icable Law in International Commercial Arbitration, Para. 289 (New York 1978) ICC Award No. 986, Doc. No. 410/461, 13 March 1957. Extract of award reported by Lew, Applicable Law in International Commercial Arbitration, P"ara. 288 (New York 1978) ICC Award No. 1103, Doc. No. 410/774, 28 September 1960. Extract of award reported by Lew, Applicable Law in International Commercial Arbitration, Para. 106 (New York 1978) ICC Award No. 1255, Doc. No. 410/1185, 13 March 1964. Extract of award reported by Lew, Applicable Law in International Commercial Arbitration, Para. 116 (New York 1978) ICC Award No. 1315, Doc. No. 410/1316, 13 October 1965. Extract of award reported by Lew, Applicable Law in International Commercial Arbitration, Para. 106 (New York 1978) ICC Award No. 1449, Doc. No. 410/1583, 8 November 1967. Extract of award reported by Lew, Applicable Law in  - 123 International Commercial Arbitration, Para. 265, (New York 1978) ICC Award No. .1455, Doc. No. 410/1561, 20 September 1967. Extract of award reported by Lew, Applicable Law in International Commercial Arbitration, Para. 235 (New York 1978) ICC Award No. 1472, 1968. Extract of award, reported by Sanders, "Trends in International Commercial Arbitration" (1975) 11 Rec. des Cours, 213 at 252. ICC Award No. 1512, 1971. Extract of award, reported in (1976) 1 Y.B. Comm. ARb. 128. ICC Award No. 1532, Doc. No. 410/2069, 15 December 1971. Extract of award, reported by Lew, Applicable Law in International Commercial Arbitration, Para 265 (New York 1978) ICC Award No. 1592, Doc. No. 410/1914, 18 November 1970. Extract of award, reported by Lew, Applicable Law in International Commercial Arbitration, Para 240 (New York 1978) ICC Award No. 1598, 1971. Extract of award, reported in (1978) 3 Y.B. Comm. Arb. 216. ICC Award No. 1621, Doc. No. 410/2022, 22 September 1972. Extract of award is reported by Lew, Applicable Law in International Commercial Arbitration, Para". 307 (New York 1978). ICC Award No. 1776, 1970. Extract of award reported by Sanders, "Trends in International Commercial Arbitration" (1975) 11 Rec. des Cours, 213 at 259. ICC Award No. 1859, 1973. Extract of award reported by Derains, "Le Statut des usages du commerce International devant les Jurisdictions arbitrales," [1937] Rev. Arb. 122, pp. 133-4. ICC Award No. 1913, Doc. No. 410/2073, 15 December 1971. Extract of award reported by Lew, Applicable Law in International Commercial Arbitration, Para. 242 (New York 1978) ICC Award No. 1959. Extract of award reported by Fouchard, L'Arbitrage Commercial International, at 389 (Dalloz-Paris 1965) ICC Award No. 1990, 1973 Extract of award reported in (1978) 3 Y.B. Comm. Arb. 217. ICC Award No. 2114, 29 December 1972. Extracts of award reported in (1980) 5 Y.B. Comm. Arb. 186. ICC Award No. 2172, Doc. 410/2384 1974. Extracts of award reported by Lew, Applicable Law in International Commercial Arbitration, Para 304 (New York 1978)  - 124 ICC Award No. 2272. Extracts reported in (1977) 2 Y.B. Comm. Arb. 151. ICC Award No. 3316, 23 October 1979. Extracts of award reported in (1982) 7 Y.B. Comm. Arb. 106. ICC Award No. 3540, 3 October 1980. Extracts of award reported in (1982) 7 Y.B. Comm. Arb. 125. Ad hoc awards Ad hoc arbitration, July 1966. Extracts of award, reported in (1976) 1 Y.B. Comm. Arb. 141. Ad hoc arbitration, 17 February 1971. Extracts of award, reported in (1976) 1 Y.B. Comm. Arb. 136. Ad hoc arbitration, 3 November 1977. Extracts of award reported in (1982) 7 Y.B. Comm. Arb. p. 77. Ad hoc arbitration, 23 July 1981. Extracts of award reported in (1983) 8 Y.B. Comm. Arb. 89.  

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
http://iiif.library.ubc.ca/presentation/dsp.831.1-0077668/manifest

Comment

Related Items