The law applicable to arbitration is different from the law applicable in arbitration. The latter leads arbitrators to decide as they do. The former refers to the source of their authority and the effect of their decision - the legal order that governs arbitration. According to the territorialist thesis, an arbitration can have no foundation other than that of the legal order of the particular state where the arbitration takes place. This outdated conception is disproved by the simple factual observation that a plurality of legal orders may give effect to arbitration. Some French scholars promote the notion of an autonomous arbitral order. Inasmuch as they ultimately seek to establish this order by positing its recognition by the very state orders from which they claim autonomy, their idea is circular and in effect no more than a dressed-up variant of ordinary horizontal pluralism. But the model of horizontal pluralism fails to account for important orderings of arbitral activity. Arbitration in modern society is accurately perceived as a complex, three-dimensional form of pluralism, in which legal orders (i) are not exclusively those of states and (ii) frequently overlap.
21 Feb 2010
While arbitration is naturally seen as a method of alternate dispute resolution and an easy and convenient method to dispute resolution, it also brings with it legal complexities peculiar to its own. In a recent paper entitled 'Arbitration in Three Dimensions', published as a part of 'Law Society and Economy Working Papers' series under the aegis of London School of Economics, Jan Paulsson brings out the complex legal issues involved in such arbitration matters which relate to dispute across citizens of different countries where the applicable law differs (contrast the difference between substantive law and the law governing arbitration) from the law of the forum.
The paper poses an interesting mix of legal theory and the rules governing determination of such disputes. The abstract of the paper reads thus;
In all, the paper provides intriguing insights on the issue. Have a look.