Law applicable to the procedure or lex arbitri can be defined as a body of rules governing the arbitration procedure.¹

Lex arbitri can be divided into internal and external.²

The internal lex arbitri governs the conduct of the proceedings, including a range of questions such as the appointment of the arbitration tribunal, the conduct of the proceedings, procedural rights of the parties and arbitrators and evidence. This is commonly determined by a set of arbitration rules adopted by parties to the arbitration.

On the other hand, the external lex arbitri regulates issues concerning supervision and control over the proceedings, such as the scope of intervention of local courts and the arbitrability of the dispute.³ This is commonly determined by the national law of the seat of the arbitration.

In investment arbitration, the internal lex arbitri is governed by the ICSID Arbitration Rules, UNICITRAL Rules or another set of rules, subject to the particular provision in the relevant treaty and the choice of the parties. In ICSID arbitration cases, the ICSID Convention governs various aspects of both internal lex arbitri (such as the procedure for submission of the request for arbitration and constitution of the tribunal) and external lex arbitri (such as annulment of the award and recognition and enforcement of the award). In non-ICSID cases, the procedural rules will determine only the questions of internal lex arbitri.

One of the unique features of the ICSID arbitration is its autonomous nature. The ICSID system is self-contained, which means the impossibility of intervention by any outside bodies. The ICSID Convention and Arbitration Rules create their own lex arbitri subject to the provisions of international law.⁴ National courts have no power to obtain evidence, to order provisional measures or to review ICSID awards.⁵ This approach has been recognized in a range of cases.⁶ For this reason, the place of proceedings does not have any practical legal implication, although it should be noted that parties are advised to choose a State that is a party to the ICSID Convention to ensure that the State is bound by the guarantees of autonomy.⁷

Therefore, if the proceedings are held under the ICSID Convention, the law applicable to the procedure will be the ICSID Convention and public international law.⁸ The municipal law will not be applicable.⁹

In the case of non-ICSID investment treaty arbitration, the procedure will be governed by the procedural rules chosen by the parties, subject to the mandatory rules of the law of the seat of arbitration.¹⁰

Earlier, there was a debate concerning whether the application of national law in relation to a dispute where one party is a sovereign State infringes the prerogatives of a State party.¹¹ The most common view is that such restrictions do not infringe upon the prerogatives of the State party, as long as such limitations are imposed by national legal regulation and operate within the framework of international law.

For this reason, the place of arbitration needs to be chosen very carefully, taking into account all the relevant factors. Local courts may be competent to rule on the arbitrators’ jurisdiction¹² and to review the award.¹³ For example, the provisions of lex arbitri may be analyzed to decide some crucial questions, such as, whether the doctrine of res judicata is applicable under the circumstances¹⁴ or what is the right time to raise judicial objections.¹⁵