Reza Beheshti, ‘The absence of choice of law in commercial contracts: problems and solutions’

In a commercial contract with an arbitration clause, the parties may fail to determine any applicable law, in which case the arbitral tribunal is expected to identify the rules applicable to the merits of the dispute. A modern approach suggests that localizing legal issues originated from an international contract is inappropriate and that the tribunal should conduct an assessment to identify international or non-national rules or practices appropriate to the issues at hand. This approach, which grants the tribunal maximum freedom in choosing the applicable law with no reference to any choice-of-law rules, is adopted in a few institutional rules such as the Article 21(1) of the ICC Rules. This article seeks to introduce an evaluative framework informing the tribunal’s methodical task in identifying the most suitable legal regimes. The evaluative framework seeks to assess the relationship of legal doctrines to commercial considerations and expectations regarded by businesses. A significant issue that befalls the arbitrators is that of pleading, proving, and measuring monetary damages. Yet, damages have remained an issue that is inaccurately dealt with by arbitral tribunals. This article aims to examine the principles governing damages available to an innocent commercial party under significant legal regimes widely applied in international commercial arbitration in an attempt to offer guidance on which legal regime has provided the most appropriate set of principles reflecting the essential needs and interests of commercial parties.

Reza Beheshti, The absence of choice of law in commercial contracts: problems and solutions, Uniform Law Review, Published: 22 August 2019.

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