Determining the applicable law is an important step in an arbitration proceeding. It is a complex issue arbitral tribunals have to deal with in investor-State disputes in which many legal rules can interconnect, whether international and/or domestic, on the same or several stages of the procedure.
In its broadest sense, the term “applicable law” could include one or more of the following questions:
The applicable law can be a set of legal instruments comprised of three types of legal rules:
In addition to Competence-Competence, certain general principles of international adjudication can affect the tribunal’s exercise of its powers to decide on the applicable law:
On one hand, narrow jurisdiction ratione materiae clauses limit the subject matter of arbitration exclusively to alleged violations of the constitutive instruments and directly instruct tribunals on the primary rules to apply.
On the other hand, broad jurisdiction ratione materiae clauses in constitutive instruments, in contrast, commonly allow tribunals to decide “all” or “any” disputes relating to these instruments.26
Selection by the parties of the applicable law, and its subsequent application (and possible misapplication) by tribunals, has three notable consequences in practice.
Atanasova, D., Applicable Law Provisions in Investment Treaties: Forever Midnight Clauses?, Journal of International Dispute Settlement, 2019, pp. 396-422.
Bartels, L., Jurisdiction and Applicable Law Clauses: Where Does a Tribunal Find the Principal Norms Applicable to the Case before It, in Broude, T. and Shany, Y. (eds.), Multi-Sourced Equivalent Norms in International Law, 2011, pp. 112-141.
Besson, S. and D’Aspremont, J. (eds.), The Oxford Handbook of the Sources of International Law, 2018.
Ferrari, F.and Cordero-Moss, F. (ed.), Iura Novit Curia, in International Arbitration, 2018.
Sabahi, B., Rubins, N. and Wallace, D., Jr, Investor-State Arbitration, 2nd ed., 2019.
Tomka, P., Article 38 du Statut de la CIJ : Incomplet, in Ascensio, H. (ed.), Dictionnaire des idées reçues en droit international, 2017, pp. 39-42.
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