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Mme Anastasia Simonova

Paralegal - Egorov, Puginsky Afanasiev & Partners

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Applicable Law to the Proceeding

I. Definition

1.

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

II. Scope of lex arbitri

2.

Lex arbitri was scholarly divided into its internal and external aspects.2

3.

The internal lex arbitri governs the conduct of the proceedings, including but not limited to:

4.

The external lex arbitri regulates issues concerning supervision and control over the proceedings by the local courts,6 such as:

5.

The law governing the procedure can include the parties’ agreement, arbitration rules referred to explicitly or implicitly by the parties and national and international rules of the place of arbitration.11

III. Principle

A. In the presence of parties' choice

6.

Arbitral tribunals must follow the law chosen by the parties12 or the award might face annulment.13 Additional rules might be applied, notably to fill gaps in the law chosen by the parties.14 Tribunals may then refer to the parties’ “implicit choice”15 and “relevant rules of international arbitration.”16

B. In the absence of parties' choice

7.

If parties do not agree on the applicable law to the proceedings, it may be determined by the arbitral tribunal.17

IV. Determination of lex arbitri

A. Proceedings under the ICSID convention

8.

One of the unique features of the ICSID arbitration is its autonomous nature. The ICSID system is self-contained,18 which means the impossibility of intervention by any outside bodies. The ICSID Convention governs various aspects of both internal lex arbitri (such as the procedure for submission of the request for arbitration19 and constitution of the tribunal)20 and external lex arbitri (such as the annulment of the award21 and recognition and enforcement of the award).22

9.

The ICSID Convention and Arbitration Rules create their own lex arbitri subject to the provisions of international law.23 National courts have no power to obtain evidence, to order provisional measures or to review ICSID awards.24 This approach has been recognized in a range of cases.25 However, domestic courts subject to EU law were hesitant to follow this reasoning.26

10.

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.27

11.

Therefore, if the proceedings are held under the ICSID Convention the law applicable to the procedure will be the ICSID Convention, ICSID Arbitration Rules and public international law.28 The municipal law will not be applicable.29

B. Non-ICSID convention proceedings

12.

In non-ICSID cases, the arbitration rules will only determine questions of internal lex arbitri. The external lex arbitri can be partially governed by the procedural rules chosen by the parties but is mostly subject to the mandatory rules of the law of the seat of arbitration30 to ensure the enforceability of the arbitration award.31

13.

There has been 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.32 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.

14.

For this reason, the place of arbitration needs to be chosen very carefully, taking into account all the relevant factors.33 Local courts may be competent to rule on the arbitrators’ jurisdiction34 and to review the award.35 This approach also applies to cases subject to ICSID Additional Facility rules.36

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