1.     Introduction

With the expansion in the international commerce, there were issues which were emerged out of such exchanges; arbitration is then considered to be the most favored technique which was used in settling international commercial disputes. It is basically defined as “an alternative dispute resolution method of resolving disputes between private parties arising out of commercial transactions which are generally conducted across national boundaries that allow the parties to avoid litigation in national courts.”  However this study is woven around how the choice of law and place of arbitration will have a fundamental impact on the determination of the parties’ rights. And the paradigm of this study is basically an empirical one which is done using secondary data such as books, articles and magazines. In this study the significance of choice of law and seat of arbitration regarding international commercial arbitration will be discussed.

1.1  Party autonomy in International Commercial Arbitration

It should be noted that arbitration agreement is the basis or the foundation of the each and every arbitration proceedings. Generally the agreement possesses clauses which are generated to refer disputes which may be arising in future. Parties to the agreement possess freedom to execute the agreement as per their own discretion and this is known as the principle of party autonomy. It is an obvious fact that the parties must agree as per the types or the forms of the arbitration, the strategy or the procedure which should be followed by the arbitral institution, place of arbitration and the administering law, and so forth. The parties are additionally allowed to pick the arbitrators, the place of arbitration, the dialect to be utilized and everything which is connected so as to resolve the dispute arouse. The Nigerian Supreme Court depicted the standard of party autonomy on account of “MV Lupex v Nigeria Overseas Chartering and Shipping Ltd” held that an arbitration clause is a composed accommodation concurred by the parties to the agreement however it must be translated by its dialect and in the light of the conditions in which it is made. Along these lines, the parties have full freedom to go into arbitration agreement to suit their motivations .Furthermore there are two types of arbitration as institutional and ad hoc arbitration it is differentiated on the basis of the clause, if the parties have proposed a separate arbitral institution to administer and solve their dispute it is called as institutional arbitration. And if the parties have proposed their own set of rules to govern and administer the dispute it is called as ad hoc arbitration. There are several kinds of laws connected to international arbitration such as international conventions and national laws, both substantive and procedural.

1.2 Legal Framework related to International Commercial Arbitration

In relation to arbitration there are several legal frameworks enacted internationally. The first such international convention is “Geneva Protocol on Arbitration clauses, 1923”.it provides the basic framework to make arbitration agreements and arbitration clauses which are enforceable internationally. Further it ensures the awards made pursuant to arbitration agreement would be enforced in the territory other than the state in which they were made. Since 1923 protocol was considered to be inadequate, “Geneva Convention on the execution of Foreign Arbitrated Awards, 1927’ was introduced. Moreover for the purpose to govern international commercial arbitration international chamber of commerce have promoted a new treaty, which was taken up by the Unite Nations economic and social council and later named as “convention on the Recognition and Enforcement of Foreign Arbitral Awards at New York in 1958”. This is generally known as New York Convention. Further in June 1985, “Model Law on International Commercial Arbitration” has been enacted by the “United Nations Commission on International Trade Law” (UNCITRAL). Individual states posses’ freedom to incorporate this model law into their domestic legislation since it is not binding. Many parties select model law as a part of their agreement so as to govern their arbitration procedure.

2.     Choice of law in International Commercial Arbitration

It should be noted that there are complexities in the interaction of laws since in international commercial arbitration more than one system of rules are involved. There are laws which govern the arbitration agreement (lex arbitri) and the law which governs the substantive matters related to the dispute itself (substantive law).

2.1 Procedural law or lex arbitri

The law which basically governs the arbitration is considered to be the lex arbitri. It consist the rules which conduct supportive measures which assist the arbitration procedure interim measures and so forth. The procedural law that will apply relies upon the place, or ‘seat’, of the mediation. And the procedural law decides to what degree the domestic courts will be associated with the procedure, for instance: any formalities to be consented to; the degree to which the arbitration assention rejects court purview; how much party autonomy and discretion possess with the parties in choosing the arbitral system and also the enforceability of the award. The domestic court’s intervention relies upon the efficacy and nature of the courts in that specific locale. Moreover Arbitration Act of 1996 accommodated the procedural law that will apply in England and Wales. This makes a general obligation on the arbitration tribunal to: act decently and unbiased; provide each party a sensible chance to put its case and manage that of its adversary; embrace appropriate strategies; evade unnecessary delay or cost.

Other resembling facts of the arbitration, such as evidence of witnesses, limitation period and disclosure are influenced by procedural law which is incorporated.  If there is a set of institutional rules enacted the effect of the procedural law at the seat of the arbitration might be greatly lessened. However it is an obvious fact that it is fundamental in selection of the laws in determination of the parties’ rights for an effective arbitration procedure.

2.2 Substantive Law in International Commercial Arbitration

In establishing the material facts of the dispute the agreement which was established between the parties plays a prominent role. As stated above, parties have freedom to choose the law which will be applicable to their agreement. In practical sense most of the parties tend to choose an autonomous system of law. Since the parties possess reasonable confidence regarding the legal position in their country they tend to choose their own national laws however there many factors which should be considered in choosing laws. For instance a domestic law which provides permission to free flow of goods and services is obviously not the best option to govern commercial contracts and disputes which occur through them. Arbitral institutes such as ICC depicts that parties should add a ‘choice of law clause’ to their agreement.

London Court of International Arbitration (LCIA) rules convey that:

“[t]he Arbitral Tribunal shall decide the parties’ dispute in accordance with the law(s) or rules of law chosen by the parties as applicable to the merits of their dispute. If and to the extent that the Arbitral Tribunal determines that the parties have made no such choice, the Arbitral Tribunal shall apply the law(s) or rules of law which it considers appropriate.”

Furthermore it is clear that party’s selection of both procedural and substantive law affects to the determination of the rights of the parties regarding the international commercial arbitration.

3.     Seat of arbitration in International Commercial Arbitration

One of the significant factors which should be considered in international commercial arbitration is the seat or the place of arbitration. This is confused with the venue of arbitration. Article 18 of the ICC rules conveys the difference of these.

Seat of arbitration is basically ‘the juridical seat of arbitration’. New York convention depicts that it is the ‘law of the country where the arbitration take place’. Generally there are few factors which should be noted in selecting a seat of arbitration. Since supervisory role of the arbitration is mostly played by the national courts, parties should consider “arbitration friendly” jurisdictions since there is court intervention in disputes regarding appointment of arbitrators, interlocutory injunctions etc. Recognition and enforcement of arbitral award is another factor to be considered. In New York convention it is stated that it is necessary to make sure that the country of the seat of arbitration is a party to the convention. Non legal factors such as quality, venue, efficacy, safety and availability of specialized lawyers and translators should also be considered.

 Further ICC rules permits the parties to held hearings other than the place of arbitration for their own benefits. Even Model law and LCIA possess such provisions. Furthermore there are instances where the arbitration tribunal ot courts has taken the law of seat of arbitration so as to govern the arbitration agreement. For instance in the case of C v D, held that the arbitration agreement should conducted by law of seat “which usually coincides with place with which the agreement to arbitrate has the ‘closest and most real connection’”. In 2016 it is demonstrated that out of 106 cases enrolled in 2016, 96 had their seat in Paris, 65 in London and 54 in Geneva. The best three spots picked by the parties for the seat were Belize City, New York, Zurich, Singapore and Madrid.

However it is clear that the selection of the place by parties to hold the international commercial arbitration have an impact on their rights.

4.     Conclusion

With the increase of international commerce and trade, the arbitration procedure has become popular among the commercial parties. In contract agreement, generally there is a choice of law clause apart from the arbitration clause, which an arbitrator would not limit the application. Since the chosen law of the parties affects the agreement to arbitrate and the hearing procedure, parties must be accurate in choosing the law. The best method is to choose two different laws and consider how each of the two systems would affect in the dispute resolution. With all these facts it is obvious that in selecting a seat it is necessary to focus on questions such as how the selected arbitration seat’s national law operates and whether they are amicable and friendly in arbitration, what are the presumable sorts of disputes that may occur, what are, and where are, the assets which a party would wish to uphold their award against and in what capacity can a gathering take measures to shield its benefits from an award against it. This study clearly depicts the importance of choice of law and seat of arbitration in the procedure of arbitration.

References:

• Aceris Law LLC, ‘The Seat of Arbitration in International Commercial Arbitration’ [2017] () <https://www.acerislaw.com/seat-arbitration-international-commercial-arbitration/> accessed 10 september 2018
• [C v D [2003] ] 10 71 (SCM)
• Georgetown University Law Library, ‘International Commercial Arbitration Research Guide’ ( n.d.) <https://guides.ll.georgetown.edu/InternationalCommercialArbitration> accessed 05 SEPTEMBER 2018
• ‘International arbitration: substantive, procedural and mandatory rules’ [2011] () <https://www.out-law.com/en/topics/projects–construction/international-arbitration/international-arbitration-substantive-procedural-and-mandatory-rules/> accessed 10 september 2018
• International Chamber of Commerce rules 2017 s Article 12 ()()
• London Court of Interntional Arbitration Rules 2014 s Article 16
• New York Convention 1958 s Article V ((1)d
• REDFERN & HUNTER., LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 
• Sunday A. Fagbemi, ‘THE DOCTRINE OF PARTY AUTONOMY IN INTERNATIONAL COMMERCIAL ARBITRATION: MYTH OR REALITY?’ [n.d.] () <https://www.ajol.info/index.php/jsdlp/article/viewFile/128033/117583> accessed 03 SEPTEMBER 2018