Source: Arbitration International, Vol. 2 No. 3 (1986), pp.

241 - 260

The UNCITRAL Model Law - Lex Facit Arbitrum

In 1967, Dr Mann's article Lex Facit Arbitrum was published in ‘International

Arbitration Liber Amicorum for Martin Domke’. This article raised fundamental points of
principle which had not then been much discussed. It coined the phrase lex arbitri; and its
influence has been widely felt, particularly in England and the common law countries of the
British Commonwealth. Dr Mann has recently restated his points of principle in strong
opposition to the UNCITRAL Model Law in ‘Private Arbitration and Public Policy’ (1985)
CJQ 257; and he there invoked views expressed by Sir Michael Kerr in his 1984 Alexander
Lecture on the UNCITRAL Model Law. Much has happened since 1967; but the
conclusions stated by Dr Mann almost 20 years ago remain relevant and important at a time
when many countries are studying the Model Law with a view to its implementation in
domestic legislation. The article has become difficult to find with the passage of time; and it
has never been reprinted in full. We reprint it here for the benefit of all students of the
Model Law and those committees of experts in many countries now considering the Model
Law for enactment into their system of law. Many may not agree with Dr Mann's
conclusions applied to the Model Law; but his points require an answer as much today as in
1967. The Note Editors.

Few aspects of legal history have had so memorable and exciting a development as the
doctrine of the supremacy of the law. The subjection of the King or, as we would put it in
modern terms, of the Executive to the law was not accepted before the 13th century, when
Bracton rejected the Roman doctrine according to which rex legibus solutus est, and
proclaimed that lex facit principem.(1) It took many more centuries for the principle to be
established in practice. That the legislature itself is subject to law, namely the fundamental
law and, more particularly, the constitutional law is an achievement of the final decades of
the 18th century. The trail blazed by the American and French revolutions has today
produced a situation in which the United Kingdom is almost the only State in the Western
world where Parliament is said to be omnipotent and in fact "241"legislates in a manner
which occasionally might offend the written Constitutions of enlightened countries. The
Judiciary's duty to apply the law has always and everywhere been plain; if recently certain
doubts have arisen(2) in regard to the binding quality of statute law they contemplate wholly
exceptional circumstances which for present purposes may be ignored.
It is against this background that one notices with a little astonishment the uncertainties
which, after a historical development extending over some two thousand years, continue to
surround the problem of the supremacy of the law in the field of arbitration.(3) From time to
time and in one country after another there appear those who advocate the freedom of
arbitrators from the shackles of the law. In so far as the municipal law of commercial
arbitration is concerned, the subject is in many countries covered by an enormous literature,
(4) although in modern times not all of it is being remembered.(5)
In the course of the last decade or so, however, a further refinement of the arbitrator's
alleged freedom from the law has come to the fore. This is to the effect that at any rate
within the realm of international commercial arbitration the arbitrator is not or should not
be, subject to law, but is, or should be, free to derive his decision, not from any municipal
system of law, but from what the arbitrator believes to be custom or usage, good sense,
fairness, justice, aequitas or, as it is sometimes wrongly put, ‘equity’.(6) The autonomy of
the parties, so it is said, may produce a contract without law,(7) a contract subject toun droit
anational,(8) so that arbitrators are not called upon to apply any fixed rules of a specific
system of law, but may have resort to a law of their own creation. Professor Goldman has
lent his authority to a statement of special clarity: ‘toute recherche d'un système de
rattachement correspondant à la nature de l'arbitrage international débouche sur l'inéluctable
nécessité d'un système autonome, et non national’.(9) In effect this is also the view of a
Greek scholar, Professor Fragistas, who seems to have been the first to suggest that the
parties may ‘détacher l'arbitrage de tout ordre juridique et lui donner un caractère
supranational’.(10) He presses his doctrine "242"even so far as to make the somewhat
extreme proposal of submitting an international arbitration to public international law:(11)
l'arbitrage supranational doit done être un arbitrage international, c'est-à-dire un arbitrage
qui échappe à l'emprise de tout droit national pour être soumis directement au droit
international.
This, according to the learned author, in practice means the right and duty to decide ex bono
et aequo (sic).(12) Such a method of approach is said to characterise, in particular,
arbitrations under the rules of the International Chamber of Commerce:(13)
dans ces cas les parties n'entendent pas se soumettre à un arbitrage régi par le droit d'un État
déterminé; au contraire les parties ont l'impression de soumettre leur litige à un arbitrage qui
se trouve au-dessus de tout ordre étatique.
It is proposed to enquire into the soundness of such theories in the sphere of private
arbitrations. Where disputes between States or international persons are submitted to
arbitration under public international law, wholly distinct considerations arise; such
arbitrations which would include those of the type represented by the Mixed Arbitral
Tribunals set up after the first world war(14) are, therefore, outside the scope of the present
study. Arbitrations between States and private persons, on the other hand, are necessarily
founded on private, as opposed to public international law, though a given system of private
law may perhaps permit the parties to select public international law as the proper law of
their contract.(15) For this reason, among others,(16) such arbitrations "243"may in certain
cases involve special and unusual features. This makes it preferable likewise to eliminate
them from the following discussion.
The latter is intended as an inquiry into principles. It does not aim at presenting a collection
or a complete review of statutory provisions, judicial practice or academic doctrine on a
comparative basis. The purpose is to make a broad survey of the field and show that
arbitration, like any other institution of municipal law, requires a firm legal basis which can
only be found in the recognition and implementation of the idea of lex facit arbitrum.

II

Although, where international aspects of some kind arise, it is not uncommon and, on the
whole, harmless to speak, somewhat colloquially, of international arbitration, the phrase is a
misnomer. In the legal sense no international commercial arbitration exists. Just as,
notwithstanding its notoriously misleading name, every system of private international law
is a system of national law, every arbitration is a national arbitration, that is to say, subject
to a specific system of national law.(17) It may well be that in some countries arbitrations
displaying an international character of some sort are governed by special rules, though they
may be common to those in other States. Thus, the Geneva Convention on International
Commercial Arbitration of 1961 applies to ‘litiges nés ou à naître d'opérations de commerce
international entre personnes physiques ou morales, ayant au moment de la conclusion de la
convention, leur résidence habituelle ou leur siège dans des Etats contractants différents’.
(18) Yet even such an arbitration is a national arbitration. The Geneva Convention of 1961
applies only by reason of the fact that the State controlling the arbitration has become a
Party to it. In other words, the fact that the Convention applies and that in the limited sense
of its Art. I(I) (a) the arbitration is an international one, does not by any means deprive the
arbitration as a whole of its strictly and necessarily national character, or prejudice the
supremacy of the municipal law applicable to it.
Numerous attempts have been made in recent years to define an ‘international commercial
arbitration’. They have failed to produce any clear formula, nor is it certain whether an
effective formula, if it were to be found, would constitute a useful contribution rather than a
sterile exercise. Monsieur Fouchard, for example, starts by giving the impression that he
intends to make the extravagant suggestion that an international commercial arbitration
would be ‘un arbitration détaché de tous les cadres étatiques, soumis à tous égards à des
normes et à des autorités véritablement internationales’,(19) but he then seems to resile from
it.(20) Similarly, Professor Goldman leaves it obscure whether he really wishes to maintain
his no less fanciful initial intimation that an international commercial arbitration ‘serait ainsi
celui don't la procédure échappe – ou peut échapper, si la convention des parties est
suffisamment explicite – à l'application d'une loi étatique’.(21) However this may be, all
these "244"attempts, let it be repeated, are profitless. No one has ever or anywhere been able
to point to any provision or legal principle which would permit individuals to act outside the
confines of a system of municipal law; even the idea of the autonomy of the parties exists
only by virtue of a given system of municipal law and in different systems may have
different characteristics and effects. Similarly, every arbitration is necessarily subject to the
law of a given State. No private person has the right or the power to act on any level other
than that of municipal law. Every right or power a private person enjoys is inexorably
conferred by or derived from a system of municipal law which may conveniently and in
accordance with tradition be called the lex fori, though it would be more exact (but also less
familiar) to speak of the lex arbitri or, in French, la loi de l'arbitrage.

III

Which is the lex fori that necessarily governs every arbitration, even if it involves

international aspects such as a dispute between parties residing in different countries?
The question is not always put in this way. Very frequently, though a little illogically, the
consequences of the determination of the lex fori or, in other words, the matters governed by
it are discussed in preference to the more basic question of the identity of the lex fori itself.
Yet, broadly, two views have emerged. In most countries it seems to be accepted, or at least
assumed, that the loi de l'arbitrage is the law of the country in which the tribunal has its
seat.(22) This is in accordance with the weighty Resolution proposed by Professor Sauser-
Hall and accepted by a distinguished Commission of the Institut de Droit International in
1952.(23) The other view, advocated by many writers, is to the effect that the lex fori is
identical with the law chosen by the parties and thus determined by their autonomous act.
It would clearly be open to any given country to adopt either of these solutions or any other
solution. Indeed, the question can only be answered from the point of view of a given
country. It is, therefore, impossible to say that a particular practice is wrong. It may not
prevail in a specific country, but may have been adopted elsewhere. Since express
provisions are very unusual, all one can do is to suggest what the law should be and what, in
those countries where express provisions are missing, it is likely to be.
The lex arbitri cannot be the law of any country other than that of the arbitration tribunal's
seat.(24) No act of the parties can have any legal effect except as the result of "245"the
sanction given to it by a legal system.(25) Hence, it is unavoidable to ascertain such system
before the act of the parties can be upheld. When we say in the conflict of laws: ‘contracts
are governed by the law chosen by the parties’, we do so, and can do so, only by reason of
the fact that the rule is part of the law of a specific legal system. Similarly, the statement:
‘arbitrations are subject to the law chosen by the parties as the lex fori’ cannot have any
validity in the absence of a legal rule to this effect. On the other hand, arbitrators are
inevitably subject to the legislative jurisdiction of the country in which the tribunal
functions. Whatever the intentions of the parties may be, the legislative and judicial
authorities of the seat control the tribunal's existence, composition and activities. It is
primarily the law of the seat that decides whether and on what conditions arbitration is
permitted at all. No country other than that of the seat has such complete and effective
control over the arbitration tribunal. Certainly the State where the arbitrator resides or of
which he is a national has no comparable degree of control. If there is a single arbitrator, it
is true, the jurisdiction of his home State may to some extent assert itself, but where there
are several arbitrators belonging to different countries, or where after the commencement of
the arbitration questions arise for decision, it becomes obvious that there is only one single
State qualified to create the lex arbitri. Finally, it would be intolerable if the country of the
seat could not override whatever arrangements the parties may have made. The local
sovereign does not yield to them except as a result of freedoms granted by himself.
Perhaps the lex fori so determined allows the law chosen by the parties to operate. This
would be a choice-of-law produced, not by the parties alone, but by the lex fori. There is a
pronounced similarity between the national judge and the arbitrator in that both of them are
subject to the local sovereign. If, in contrast to the national judge, the arbitrator is in many
respects, but by no means with uniformity, allowed and even ordered by municipal
legislators to accept the commands of the parties, this is because, and to the extent that, the
local sovereign so provides.
This is also the answer to certain scholars who argue that arbitration has a character entirely
different from judicial proceedings, that arbitration ‘ne met en aucune manière en jeu le
service public de la justice ... et ne manifeste ni n'exerce la souveraineé’ and that for these
reasons it cannot be ‘assimilé au fonctionnement du service public de la justice dans l'Etat
où il est géographiquement localisé’.(26) Is not every activity occurring on the territory of a
State necessarily subject to its jurisdiction? Is it not for such State to say whether and in
what manner arbitrators are assimilated to judges and, like them, subject to the law? Various
States may give various answers to the questions, but that each of them has the right to, and
does, answer it according to its own discretion cannot be doubted.
The same answer must also be given to those who suggest that the lex arbitri is constituted,
not by the law of the seat of the arbitration, but by the law to which, expressly or impliedly,
the parties have submitted their contract, ie, the proper law of "246"the contract.
(27) Notwithstanding its frequently unsatisfactory reasoning and style the most recent
contribution to the problem seems to defend such a thesis:(28) the arbitration tribunal is said
to be ‘naturalised’ where it has its seat in Savigny's sense and this is said to be the law to
which the parties ‘as creators are subject’. Accordingly, lex fori‘within the framework of
the loi d'arbitrage to which the parties as creators are subject is the law of the community in
the name of which the arbitrator makes his award, the lex contractus’. If it is intended to
refer to the proper law as the lex arbitri, the reasoning is faulty, as Professor Ehrenzweig
had no difficulty in showing.(29) Which is the law that enforces the parties’ choice of the
proper law of the contract? Surely, not the proper law of the contract itself. One cannot in
this field argue on the basis of apodictic generalisations. The argument must contemplate a
specific legal system. Suppose a contract, subject to English law, leads to an arbitration in
Zurich. Is it really suggested that the arbitrator is in every respect free from control by Swiss
legislation, but is subject to the Parliament in Westminster?

IV

Which is the seat whose law constitutes the lex fori binding upon arbitrators, the lex arbitri?
Frequently the seat is expressly determined by the parties: ‘Arbitration in London’; such a
choice is usually far from fortuitous, but made for good and well-understood reasons and
purposes.(30) The definition is no less clear if the parties merely refer to arbitration by a
particular trade association. The point is a little more difficult if the parties refrain from
mentioning any localising element and adopt, for example, the arbitration clause
recommended by the International Chamber of Commerce: ‘All disputes arising in
connection with the present contract shall be finally settled under the Rules of Conciliation
and Arbitration of the ICC by one or more arbitrators appointed in accordance with the
rules.’ In such a case the seat is determined only if and when the arbitrator or the umpire is
appointed: The parties choose such seat as may be the residence of the arbitrator or umpire
to be appointed,(31) for the implied intention is to this effect. The arbitrator's nationality is
unlikely to be material.
It may happen that, for instance, a Stockholm arbitrator, when called upon to arbitrate
between parties in Paris and Hamburg respectively, decides to hold the arbitration in Zurich.
Since the choice or appointment of an arbitrator in Stockholm "247"makes Sweden the seat
of the tribunal, either party may object to a change to Switzerland, but in the absence of
objection the original seat would become varied to a Swiss seat.
The existence of a seat does not mean that all hearings will necessarily have to be held in
the country of such seat. For the convenience of arbitrators or parties or for other reasons
hearings may be held in different places. Such a practice will not ordinarily involve a
change of the seat and, therefore, of the lex fori.
Where there is any doubt, an arbitrator or umpire should, in accordance with sound practice,
formally fix the seat once and for all.
It is thus clear that by their direct or indirect, express or implied choice of the seat the
parties at the same time choose the lex arbitri. In this sense the choice of the lex fori is, in
the last resort, determined by the autonomy of the parties rather than by law. There is
nothing unusual in this. If the parties agree upon the jurisdiction of the courts in a particular
country or if the plaintiff has the choice between two jurisdictions and brings his action in
one country rather than another the position is similar; ultimately the lex fori is derived from
the intention of the parties or one of them. Just as the submission to the sovereign of the
forum results in the application of his lex, so the determination of the arbitrator's seat
establishes the identity of the lex arbitri.

The law of the arbitration tribunal's seat initially governs the whole of the tribunal's life and
work. In particular, it governs the validity of the submission, the creation and composition
of the tribunal, the rules of the conflict of laws to be followed by it, its procedure, the
making and publication of its award. This does not mean that the lex arbitri will invariably
be applied to all these matters as well as to others that may fall to be considered. On the
contrary, most legal systems, when called upon to function as lex fori of arbitrations, allow
much room for the application of the rules of other legal systems. The scope of such
reference, however, is in principle determined by the lex arbitri from which any enquiry
must start and to which it will revert at many points. Once more it should be emphasised
that it is impossible to proceed from or aim at generalisations: each legal system has its
special features, and, therefore, variations in the control of the lex arbitri are inevitable. At
no point it is possible or, as will be suggested in a later section, desirable, to leave the firm
ground of a specific legal system and to have resort to some ‘droit anational’ or some ‘loi
d'autonomie’.
The reasons which require the adoption of these views, and the implications of opposing
theories, can most usefully be tested by glancing at some of their respective consequences in
two spheres of application.(32)"248"

1.  As regards the procedure to be observed by arbitrators, the statutory-provisions and the
judicial practice of the principal countries display a noteworthy tendency to allow the parties
or the arbitrators to define the rules of procedure governing the arbitration. A problem of
formulation which arises in this connection should not be overrated: There are those who
render the procedure subject to the lex arbitriexcept in so far as this allows the parties or
arbitrators to control it. According to others, parties and arbitrators enjoy freedom of
regulation except in so far as the lex arbitri intervenes. The former method is followed by
Art. 1009 of the French Code de Procédure Civile, according to which ‘les parties et les
arbitres suivront, dans la procédure, les délais et les formes établis pour les tribunaux, si les
parties n'en sont autrement convenues’. The Geneva Protocol of 1923 prefers the latter
method:(33) ‘The arbitral procedure ... shall be governed by the will of the parties and by
the law of the country in whose territory the arbitration takes place.’ The Geneva
Convention of 1961 which in this respect as in so many others is wholly inappropriately
formulated cannot mean anything different when it provides(34) that the parties have ‘la
faculté ... de fixer les règles de procédure à suivre par les arbitres’; is it conceivable that in
the face of the prohibition contained in s. 1035 of the German Code of Civil Procedure the
parties should be at liberty to confer upon arbitrators sitting in Germany the right to examine
parties and witnesses on oath?(35)

However this may be, the existence and the measure of the freedom of regulating the
arbitral procedure is determined by the lex arbitri. It is, therefore, both more accurate and
more convenient to take it as the starting point. If the arbitration takes place, for instance, in
Germany, one turns to German law as the lex arbitri and, more particularly, to the Code of
Civil Procedure and finds that, subject to certain exceptions, the parties, alternatively the
arbitrators, regulate the procedure at their discretion.(36) Or, to take another example,(37) if
a German and a Swiss agree upon arbitration at Geneva subject to German law of
procedure, the primary question(38) is whether and to what extent Swiss law permits a
reference to German procedural rules; if, in principle, the answer is in the affirmative, then,
and then only, the further question(39) may arise whether German law allows a German
arbitration to be held outside Germany.

Where the lex arbitri allows the parties to regulate the procedure, they can employ several
methods. They can establish their own rules. Or they adopt the rules sponsored by a trade
association or an institution. Or they may refer to the procedure prevailing "249"in a
particular country; an example of this last-mentioned case is supplied by a recent French
decision relating to an arbitration ‘à Paris suivant la juridiction anglaise seule admise’.
(40) In all such cases the procedural rules adopted by the parties become part of the lex
arbitri, so that this will be called upon to answer any residual question of construction that
may arise. For this reason the effect of adopting a foreign country's procedure may well be
very limited: an arbitration in Paris in accordance with English law may very well exclude a
right of appeal existing under French, but denied by English law, yet it clearly cannot be
intended to follow in every respect the Arbitration Act 1950; in so far, for instance, as this
makes arbitrators subject to the supervision by English courts, it could not operate in
France, nor would it be intended by the parties to do so.

It should, however, be made clear that the fact of the contract being subject to a defined
legal system as its proper law does not mean that the procedure applicable in the event of an
arbitration is necessarily subject to the same law.(41) A question of construction, to be
decided in each case by the lex arbitri, arises. Perhaps it is permitted to venture the general
suggestion that in the absence of very special circumstances the usual choice of law clause
(such as the clause ‘this contract, its validity, effect and interpretation shall be subject to
English law’) should be held to extend only to the proper law of the contract, but not to
comprise procedure. Certainly, the choice of an arbitration forum implies a choice of law,
(42) but it does not follow that the choice of law implies a choice of procedure. Two
different things are involved and the thesis(43) ‘que l'arbitrage ne saurait se déployer de
façon cohérente dans les relations internationales sans être soumis à la même loi dans ses
différents actes et stades successifs’ is entirely unproven and proclaims a policy of reform
and unification which only a legislator can adopt, the wisdom of which is open to argument
and which at present is illusory.

Finally, in procedural matters the control of the lex arbitri is compulsory (though it may
itself allow a certain freedom of choice to the parties) and does not merely arise from a
rebuttable presumption. The contrary was asserted in a thoughtful article by Mezger:(44)
We therefore think that the parties should be free to choose the law governing the arbitration
procedure in the same way as, in international contract law, they are at liberty to choose the
proper law of the contract. We admit, however, and even emphasise, that there is a strong
presumption that the choice of the place of arbitration by the parties or by a third party
named in the arbitration agreement ... or even by the arbitrator, implies subjection to the
local procedural law of the place selected.
Why only a ‘strong presumption’? Where is its legal basis? What is meant by the suggestion
that the parties ‘should’ be free to choose the procedure? The truth of the "250"matter is that
in law the lex arbitrigoverns the procedure and that if largely, though by no means
universally or uniformly, the parties may choose other rules of procedure, the existence and
the measure of the choice is determined by the lex arbitri only.

What, with far too little reference to a specific country, has been suggested here as the
appropriate method of solving the procedural problem is probably in accordance with the
law and practice of most countries and almost certainly express the English approach.
English law on the matter is not illuminated by judicial authority. It can however, be
submitted with confidence that, on the one hand, an arbitration having its seat in England is
always and necessarily governed by English rules of procedure, including the Arbitration
Act 1950; that, on the other hand, the procedure of an arbitration in another country will be
held by an English court to be subject to the lex arbitri as defined above; and that the
Arbitration Act 1950 will not govern an arbitration outside England even if it should have
been expressly adopted in the contract of the parties, for not only is the statute territorial in
scope and therefore lacking the intent to apply extraterritorially, but its provisions with their
frequent references to the English High Court are also likely to be repugnant to the foreign
law.

2.  Just as the judge has to apply the private international law of the forum, so the arbitrator
has to apply the private international law of the arbitration tribunal's seat, the lex arbitri.
(45),(46) Any other solution would involve the conclusion that it is open to the arbitrator to
disregard the law. Once it is accepted that he must follow a system of the conflict of laws, it
becomes obvious that he has no alternative but to adopt that of the lex arbitri and that, if he
did not do so, his award would suffer from an error of law which may endanger its validity
and enforceability. Suppose a contract between an English and an Italian firm does not
contain a choice of law clause, but provides for arbitration under the auspices of the
International Chamber of Commerce which appoints a German arbitrator. He has to find the
proper law of the contract, because the buyer's right of rescission, so it is assumed, exists by
English law, but is lost under Italian law. To ascertain the proper law the arbitrator plainly
cannot proceed otherwise than by application of German conflict rules. No other system can
help. And it is not difficult to think of peculiar effects of German private international law
which have no counterpart in other legal systems.(47) Or suppose that in the course of an
arbitration the question arises whether a contract is valid in point of form, whether a tort has
been "251"committed, whether a corporation is dissolved, whether title to certain property
the subject matter of a contract of sale has passed. In such a case it may have to be decided
whether the rule locus regil actum applies in its compulsory or its optional version; whether
a tort is subject to the lex loci delicti or the law of the parties’ common social environment
or some similar test; whether a corporation and its status is subject to the law of the ‘siège’
or to the law of incorporation; whether the passing of movable property is governed by
the lex situs or the proper law of the contract of sale. There is no other system than the lex
arbitri that could provide an answer to such and similar questions, many of which could be
formulated. If, as is almost generally admitted, the arbitrator is bound to observe the ordre
public of the lex arbitri, it would be both illogical and unrealistic to suggest that he is
entitled to disregard other rules of that legal system's private international law.

Perhaps the strongest support for the inevitability of the above view is provided by the
alternative theories which have been put forward.

Thus, the suggestion has been made that the conflict of rules of the legal system which is the
proper law of the contract should be applicable to all questions that arise in the course of an
arbitration.(48) This would seem to mean that if arbitrators sitting at Zurich to decide a
dispute between a French and an Italian firm which arises from a contract governed by
English law would have to apply English conflict rules: the status of a corporation, for
instance, would be governed by the law of incorporation, while, so we assume, Swiss,
French and Italian law would apply the law of the siège. Why this should be so or should be
preferable to the application of Swiss conflict rules is difficult to understand. The analogy
drawn from the effect of a contractual submission to the jurisdiction of a particular
court(49) is false: although in such a case the choice of the forum involves the choice of the
conflict rules of the forum, the counterpart of the forum is the seat of the arbitration tribunal,
not the proper law of the contract.

The alleged necessity for submitting arbitration to a single legal system,(50) is a myth,
because the suggested method fails to produce such a result. Moreover, the parties’
reference to the proper law is, and is intended to be, a reference to substantive law; it does
not comprise the conflict rules of the proper law, with the well-known result, for instance,
that renvoi rules do not apply.(51) So the autonomy of the parties cannot be invoked to
justify the application of the proper law's conflict rules. The discussion, it appears, is
bedevilled by the illusion that the questions of private international law arising in the course
of an arbitration necessarily and exclusively relate to the contract and that, therefore, all is
achieved by pointing to the autonomy of the parties and their "252"power to determine the
proper law. It is, however, a mistake to assume that no question outside the field of contracts
is likely to be considered by arbitrators. Once this is appreciated, there will be no reason
why the conflict rules of the proper law should be preferred to those of the lex arbitri. Even
within the limited field of the conflict of laws relating to contracts, the first task of
identifying the proper law cannot be discharged except by the conflict rules of thelex arbitri.
The conflict rules of the proper law cannot afford guidance so long as this has not been
ascertained, if arbitrators sitting in Zurich have to ascertain the proper law of the contract
between a French and Italian firm, they can only do this by applying Swiss conflict rules.

Another view which has recently been suggested (though to a large extent it seems to have
been anticipated by Professor Martin Wolff(52)), is equally unacceptable. If one takes
Monsieur Fouchard as a guide,(53) he starts by explaining that there are two categories of
questions which he submits to ‘la loi nationale compétente’ – curiously enough without
clarifying its identity; these are matters affecting ‘la politique économique’ as well as
questions of capacity, prescription, rate of interest and other undefined matters belonging to
‘un système juridique national complètement élaboré.’(54) In regard to the rest, equally
undefined though it may be, the arbitrator has ‘entière liberté de choisir la règle de conflit
qu'il estime la plus appropriée à l'espèce ou aux nécessités du commerce international’.
Professor Goldman goes even further.(55) He advocates(56) ‘un droit international privé de
l'arbitrage international, spécifique à cette institution et indépendant des droits nationaux’.
The learned author discusses some of the problems which fall to be considered, such as
classification, fraude à la loi and so forth, but the length to which he is prepared to go is
most impressively demonstrated by what he says about ordre public:(57)
Dès lors, en effet, que l'arbitre international n'est pas juridiquement lié à un Etat déterminé –
qui'il n'existe pas pour lui, nous l'avons dit, de ‘for’, autre que géographique – il semble qu'il
n'ait à tenir compte ni de l'ordre public de l'Etat où il siège, ni de tel autre Etat. Seul se
poserait pour lui le problème d'un ‘ordre public réellement international’; transposée dans
l'arbitrage international, l'exception d'ordre public n'aurait jamais pour effet d'exclure une loi
étrangère parce que contraire aux principes fondamentaux d'une inexistante loi du for, mais
pourrait en revanche faire obstacle à l'application de toute loi étatique – y compris la loi du
pays où l'arbitre siège – parce qu'elle serait contraire à des principes fondamentaux
universellement admis par la communauté des nations.
Such theories have no basis in the existing law. A given legal system may allow arbitrators
freedom from law and thus relieve them also of the duty to apply conflict rules: a
French amiable compositeur sitting in France and called upon to decide a dispute between
an English and Italian firm arising under a French contract may, under "253"French law, be
entitled to disregard private international law. It is the law that confers such a right. Where
the law fails to grant it, no arbitrator can lawfully arrogate it to himself.(58)

Once again, these submissions are likely to conform to English law, though no judicial
decision directly supports them.(59) In England, as will appear below, arbitrators are to a
large extent subject to the control of the courts in so far as the application of the law is
concerned. English rules of the conflict of laws are part of English law and therefore their
application is subject to judicial control to the same extent as English municipal law.

VI

This, then leads to the question whether there are any circumstances in which an arbitrator is
permitted to decide according to his own standards of fairness rather than according to law.
Is this a question of procedure governed by the lex arbitri or a question relating to the
interpretation and effect of the arbitration clause and therefore governed by the proper law
of the contract? A contract subject to English law may direct arbitration in France
‘according to principles of equity and fairness’. Such a clause may be void under English
law. Would it nevertheless be effective in France on the ground that a procedural question is
involved?
Once again, the answer can only be given from the point of view of a specific legal system.
Not all legal systems may arrive at the same conclusion. In principle, however, it would
seem that the point is procedural in character. The reason is not the purely superficial one
that in many countries the matter is dealt with in the Code of Civil Procedure and that even
in England it arises under the Arbitration Act, 1950, which may be said to be a piece of
procedural legislation. It is more persuasive that what the clause aims at regulating is the
manner in which arbitrators are to approach the case and its decision, or the kind of attitude
they should adopt towards the conduct of the case. This is procedure rather than substance.
A further argument is to be derived from the fact that, if the problem were one of substance,
the French arbitrator, in the above example, would have to hold the clause invalid, although
in England it would be treated as procedural and therefore subject to the law of France
where, ex hypothesi, it is valid. Conversely, if the arbitrator was sitting in England and the
contract was subject to French law, an English court would almost certainly apply the lex
fori, It follows that a procedural classification is likely to produce greater similarity of
results.

VII

A broad survey of the principal legal systems seems to indicate that the
arbitrator's "254"subjection to or freedom from the law has mainly been solved in
two(60) different ways. Some countries allow the arbitrator freedom from the law if the
parties expressly so provide. Others subject the arbitrator to law even in the face of an
express clause purporting to exempt him.
The first group is represented by France where Art. 1019 of the Code de Procédure Civile
provides(*) This provision which has found its way into the law of many other
countries(61) means in the first place that in the normal case arbitrators are strictly bound to
apply the law, both jus cogens and jus dispositivum.(62) Where, on the other hand, there is
an express clause d'amiable composition and where, therefore, arbitrators are entitled
(though not bound) to have resort to ‘l’équité’, their power is not unlimited, for ‘les arbitres
ne pourront pas passer outre aux règles impératives du droit et qui s'imposent en toutes
circonstances’.(63) To put it differently, they can only ‘passer outre aux règles de droit
supplétives.(64) The distinction is not altogether clear; in particular, there does not seem to
be any judicial practice establishing whether rules of private international law are ‘règles
impératives’ or ‘règles de droit supplétives’.
Germany probably belongs to the same group. In the first place, it is clear that an agreement
or a submission authorising arbitrators to disregard jus cogens would be void and an award
would be liable to be set aside.(65) Secondly, if arbitrators decide according to their own
standards of fairness without being authorised to do so, the award is liable to be set aside.
(66) On the other hand, it seems to be generally accepted that, within the realm of jus
dispositivum, arbitrators may be expressly authorised to decide according to their own
standards of fairness rather than according to law.(67) Only the question whether and in
what circumstances such freedom may be implied, is open to much doubt. There are
conflicting decisions rendered by Courts of Appeal(68) and the only decision of the
Supreme Court(69) uses very cautious language: the plaintiff and the "255"defendant had
been parties to an arbitration in Berlin. The award was in the defendant's favour. The
plaintiff then brought an action for damages in the courts on the ground that allegedly the
defendant had obtained the award by fraud. In order to succeed the plaintiff had to prove
that, had there been no fraud, the award would have been in his favour. He attempted to
establish this by submitting that the arbitrators had been entitled and bound to decide
according to German law, that this meant ‘equity’ and that on this basis, irrespective of the
legal position, he would necessarily have succeeded. The Supreme Court dealt with this
argument in so guarded a fashion as to leave it entirely open whether arbitrators may decide
otherwise than according to law:
... it may be true that arbitrators may to a certain extent be dispensed from the application of
the law objectively existing according to statute and that in this connection room may more
or less be allowed to free decisions. However, that the parties reached agreement on this
point and that the decision of their dispute by the arbitrators was to be reached according to
German law and with special regard to commercial conceptions and equitable principles,
does not follow from the arbitration agreement.
The Supreme Court did not refer to the fact that the point touched upon by it had given rise
to a celebrated clash of opinion among German scholars, which continues to this day. In
1918 a paper by Professor Oertmann proclaimed the subjection of arbitrators to the law.
(70) He had much academic support, though he was opposed by many practitioners. In
particular, he had the support of Professor Arthur Nussbaum whose views are entitled to
great weight, because, on the one hand, he was one of the outstanding advocates of
arbitration as an institution and, on the other hand, on the very point in issue he had in a
previous publication taken the opposite attitude; he justified his final condemnation of
arbitral discretion as follows:(71)
The arbitration clause is to be treated primarily as a waiver of the guarantees inherent in
judicial proceedings, and to put a liberal interpretation upon the waiver so that the parties
also dispense with the protection of substantive law would, particularly in periods of grave
changes in moral standards, fail to conform either to the presumptive intention of the parties
or to the general interests of the administration of justice.
Today most authors seem to think that an implied exemption from the duty to decide
according to law should be possible.(72) Some of them even incline to the view that the
mere appointment of laymen as arbitrators implies such exemption, but this would surely
amount to a distortion of the parties’ intentions. The absence of judicial material renders a
pragmatic approach difficult. As a matter of legal technique, the utmost caution is indicated
before in a given case the parties are actually held to have agreed upon such freedom:
freedom from law presupposes express exemption. That "256"freedom is excluded in those
numerous cases in which parties submit their contract to a specific proper law deserves
emphasis, for it is a circumstance to which, surprisingly, learned commentators hardly ever
allude, but which clearly precludes arbitrators from deciding otherwise than in accordance
with the chosen legal system.
In England, on the other hand, the law may be said to be well established. While the clause
‘This arrangement is not entered into ... as a legal agreement’ precludes the document from
being a binding contract,(73) the clause ‘The Arbitrators ... are relieved from all judicial
formalities and may abstain from following the strict rules of law. They shall settle any
dispute ... according to an equitable rather than a strictly legal interpretation of its
terms’(74) is invalid. Accordingly, it does not affect the duty of arbitrators to decide in
conformity with the law,(75) or the right of the courts to supervise(76) the correct
application of the law in all cases in which it is not a specific legal question that is referred
to arbitration(77) and in which the point of law is a substantial one.(78) The reason for the
invalidity lies in the fact that in England the courts have a supervisory jurisdiction over
questions of law arising in the course of an arbitration, that this jurisdiction cannot under
any circumstances be ousted or waived and that, consequently, arbitrators have to apply the
laws of England. As Megaw J said in the leading case:(79)
The essence of the matter, as I see it, is that so long as the courts of this country have a
statutory supervisory jurisdiction over arbitrators in England, it must remain a firm principle
of the law governing arbitrations that that which is in English law a question of law, shall
remain in all respects and for all purposes a question of law; and it cannot be turned into
something other than a question of law by any agreement of the parties in their agreement to
arbitrate or otherwise.
It is not without interest to observe that in Scotland where Continental influence is in many
respects so clearly discernible the law seems to be very similar to England. An important,
though little-known, decision employs such clear and forceful language that it merits the
attention of students everywhere:(80)
When it is said that an arbiter in Scotland is the final judge both of fact and law, it is not
implied that he is entitled either to make the facts as he would like them to be, or to make
the "257"law what he thinks it ought to be. Like any other judge, he must take the facts as
they are presented to him, and the law as it is. Otherwise he would act, not as the parties’
judge, but as their oracle; his function would be not judicial but arbitrary; and his award
would be given, not according to the principles of justice, but according to the caprice of
personal preferences. Like other judges of more highly specialised qualifications and
experience, he may err both in interpreting the evidence before him and in applying the law
to the facts which he thinks are proved; and, he being the final judge on the subject-matter
of the submission, any such errors and misunderstandings into which he may innocently fall
cannot be corrected. But that is all that is meant by saying that he is the final judge of fact
and law. If it could be proved that, in arriving at his award, an arbiter had invented the facts
to suit some view of his own, or had fashioned the law to suit his own ideas, then, however,
innocent in itself might be the eccentricity which had seduced him into such a travesty of
judicial conduct, his behaviour would naturally imply that justice had not been done; he
would be guilty of that which Lord Watson in Adams v. Great North of Scotland Railway
Co described as misconduct; and his award would be reduced.
The distinctions between the two systems which have been discussed give rise to the final
question whether, as a matter of legal policy, the expressly or impliedly
permitted(81) freedom of the arbitrator to disregard the law should be upheld. It is an old
problem to the solution of which a novel contribution probably cannot be made.
Nevertheless, it is suggested that the answer should be an emphatic No.
Those scholars who take the opposite view tend to found it upon considerations such as
these:(82)
par l'arbitrage, les parties à un litige commercial international cherchent à éviter les
embûches de juridictions et de lois, mais aussi à obtenir un règlement conforme à leurs
aspirations communes et adapté aux besoins du commerce international
Even if these could be proved to be the objects of the parties – and there is no evidence of
any kind except that after almost thirty-five years of experience as a practising lawyer the
present writer is bound to reject such assertions as wholly unfounded – and even if they
were to merit protection, why is it that they cannot be achieved by application of the law?
‘What is wrong with our system of law, with our legal education and our entire life-work
that [arbitrators] can carry out their work not only without law, but can indeed regard
themselves as better off without the assistance which the law might afford them; and how is
it possible that eminent lawyers can support them in this belief?’(83)
The only argument that can be made in favour of the arbitrator's freedom from legal rules is
a somewhat paradoxical one, for in essence it rests on the inability of arbitrators to apply the
law, and it thus leads to the condemnation of arbitration as an instrument of international
commerce. It can best be explained by reference to a recent arbitration of a type which is by
no means unusual. Under a contract governed by Dutch law and providing for arbitration in
Geneva, the Swedish buyer, represented by Swedish lawyers, appointed a member of the
Dutch Bar as arbitrator, while the Dutch seller "258"instructed New Orleans lawyers and
appointed as arbitrator a member of the Boston Bar trained in the common law of the
Anglo-American world. An international organisation appointed a Scottish lawyer as
umpire. No member of the tribunal, no representative of the parties had any knowledge of
Geneva procedure. Two members of the tribunal and the representatives of one of the
parties were without knowledge of Dutch law. One member of the tribunal and the seller's
lawyers were without knowledge of the French language. Is there in such circumstances any
point in advocating observance of Dutch law and Generva procedure and in denying to the
tribunal the right to decide ex aequo et bono? An answer in the negative would override the
terms of the contract providing for the application of Dutch law and must, therefore, be
rejected. An answer in the affirmative would expose the tribunal to the danger of
misapplying the law. To support the arbitrator's freedom by reference to the threatened
disregard of the terms of the contract or the law is an unhelpful argument. Yet it does
confirm the impression that arbitration is in many cases an unsatisfactory process. This is a
point, however, which is outside the scope of the present observations. It must suffice to
remind the reader of Arthur Nussbaum who, for good reason, spoke of the ‘congenital
infirmities’ which characterise commercial arbitration and are ‘particularly perceptible in
the international area’.(84)
It is submitted that the law is always to be preferred to the arbitrator's discretion. There may
be very exceptional cases where the law produces results that are unfair; if so, there is no
reason why those who have chosen arbitration should enjoy a privilege which others who
are subject to the jurisdiction of the courts are not allowed. But how do arbitrators know that
the law renders the result unfair? There may be very good and important reasons which
become apparent only to the trained mind after exhaustive investigation and which in fact
justify the alleged unfairness of the result. Moreover, a result, supported by the law, albeit
an unfair law, is much more satisfactory than a result supported merely by the discretion of
the person who happens to be an arbitrator but may have no insight into the problem at all.
How do we, how do arbitrators, know that their decision, based on their standards of
fairness, is not much unfairer than the law? Absolute perfection not being attainable, it is
infinitely more dangerous to allow discretion to arbitrators than to compel parties to accept
the law, its relative certainty, its authority and, above all, its non-discriminatory character.
The law is rarely an instrument of oppression. Arbitration, forced upon the weak by the
strong and conducted according to home-made standards of fairness, is liable to lead to
grave abuse. The point was most persuasively put by Bankes LJ sitting in ‘that historic
Court of Appeal’(85) which included Scrutton and Atkin LJJ:(86)
Among commercial men, what are commonly called commercial arbitrations are
undoubtedly and deservedly popular. That they will continue their present popularity I
entertain no doubt, so long as the law retains sufficient hold over them to prevent and
redress any injustice on the part of the arbitrator, and to secure that the law that is
administered by an arbitrator is in substance the law of the land and not some homemade
law of the particular arbitrator or the particular association. To release real and effective
control over commercial "259"arbitrations is to allow the arbitrator or Arbitration Tribunal
to be a law unto himself, or themselves, to give him or them a free hand to decide according
to law or not according to law as he or they think fit; in other words to be outside the law.
It is, perhaps, not without use to raise some specific questions. Suppose a legal system
allows the buyer six years, as the English law does, to pursue his claim against the seller for
breach of warranty. Suppose another system, such as the German,(87) allows the buyer only
six months. Which is fairer? Should arbitrators be allowed to pronounce upon such a
question? Suppose in the first case the arbitrator regards it as fairer to disallow claims after,
say, three years. Is there any objective standard to support such a conclusion? Will the buyer
consider it fairer? Suppose the arbitrator favours twelve years. What will the seller say?
Suppose under the terms of the contract the seller has in advance waived any period of
limitation, but under both English(88) and German(89) law such waiver is void. How could
any arbitrator be allowed to override legal policy and hold the parties to their (void)
bargain?
Such and similar questions, it is hoped, will give food for thought to those lawyers who, far
too readily, participate in the movement for the ‘liberation’ of arbitrators from the law.
Perhaps they will come to acknowledge that the movement is dangerous and far from
progressive. It is no answer that, if the parties make an agreement to eliminate the operation
of the law, there is no need for protecting them against their own folly. The law never takes
so shortsighted a view: in numerous cases it invalidates a contract, because it does not think
it proper that the parties should be able to do something unwise, though not necessarily
illegal. This is particularly so where there is a danger of abuse in cases in which one party is
more powerful than the other. Nor is it an answer to draw attention to the lack of judicial
control over arbitrators, which characterises the law of some countries. We are concerned
with arbitral attitudes. The problem of control is a different and very difficult one, which has
nowhere been satisfactorily solved, some countries exercising far too little, others, like
England, exercising probably too close a control over the legal aspects of arbitration. It may
well be that the problem of the arbitrator's discretion is not the only one requiring further
consideration. But it is the only one with which the present discussion is concerned and it is
not solved by pointing to other, perhaps equally pressing problems.
Not long ago a New York attorney wrote as follows about an arbitration which was then
proceeding in New York under the auspices of the American Arbitration Association:
... decision or award or lack of award by the chosen panel of arbitrators is intended to be a
‘Solomon-like ruling’ which would eliminate the necessity of consideration of points of law.
Further ... the writer has always felt that in arbitration the best thing that can be expected is
exactly what the word ‘arbitration’ means, namely, the arbitrators take the position of both
sides and come to an in-between figure which as often as not is a fairly reasonable figure,
since most of the arbitrators are old-time business men who know the vicissitudes and
problems of business operations."260"
If such were the true view of arbitration, it would go even beyond the idea underlying the
institution of an amiable compositeur in the French sense, for he can function only as the
result of an express appointment. In truth, the attitude summarised by the New York lawyer
is liable, and almost bound, to produce a dangerous lack of certainty and predictability,
arbitrariness and injustice, grievance and dissatisfaction.(90) Lawyers have the duty to
combat it. Under the leadership of Martin Domke the American Arbitration Association
will, it is hoped, disown and eradicate it.

1   See, in particular, F. Schulz, ‘Bracton on Kingship’, English Historical Review 55 (1945)

136.
2   Mainly in Germany under the impact of the abuse of legislation by National-Socialism.
But even in Germany it has never been suggested or held that a Judge is entitled to disregard
legislation where it does not violate natural law or the Constitution.
3   For a survey in the English language see, for instance, the particularly learned and
valuable article by E. J. Cohn, Commercial Arbitration and the Rules of Law, IV (1941)
University of Toronto L.J. 1. See also Cohn, ‘The Unification of the Law of Commercial
Arbitration’, Transactions of the Grotius Society 24 (1939) 1.
4   See, in particular, René David, ‘Rapport sur l'Arbitrage Conventionnel en Droit
Privé’, Etude de Droit Comparé (1932).
5   The contributions to Schmitthoff (ed), The Sources of the Law of International
Trade (1964), are remarkably eclectic in their references to earlier work. Philippe
Fouchard, L’ Arbitrage Commercial International (1965) only in rare cases considers work
that appeared before 1939.
6   This expression is used by Domke in Sanders, International Commercial Arbitration I,
205, where he says that American arbitrators generally ‘decide on equity principles and in
justice’. It would be a frightening state of affairs if this were true. See below p. 174, sqq.
The expression is wrong, because in the Anglo-American legal system ‘equity’ denotes a
specific branch of the law.
7   Professor Tallon, in Schmitthoff (ed), above note 5, at p. 157.
8   Fouchard, above note 5, pp. 401 sqq.
9   ‘Les Conflits de Lois dans l'Arbitrage International de Droit Privé’, Recueil des
Cours 109 (1963 II) 351, at p. 380.
10   Rev. Crit. 1960, 1, at p. 14.
11   At p. 15.
12   At pp. 17, 18.
13   At p. 17. It should be pointed out in the present connection that the parties’ ‘impression’
or their desire to ‘s’élever au-dessus du tout ordre étatique déterminé et faire trancher leurs
litiges éventuels dans une procédure vraiment internationale’ (Klein, Annuaire Suisse de
Droit International 1963, 41, at p. 52) is surely in law irrelevant; there are many things that
parties desire but that the legislator does not think fit to grant them and that may in fact be
undesirable. Fragistas and Klein l.c. also disclose a most disturbing feature of arbitration
under the auspices of the International Chamber of Commerce. In most of these cases, so
they state, the parties have ‘l'impression de soumettre leurs litiges à un arbitrage qui se
trouve au-dessus de tout ordre étatique’. If this is so it is surely the duty of the International
Chamber of Commerce to do all it can to eliminate any illusions.
14   On these tribunals see, in particular, Lipstein, Transactions of the Grotius Society, 27
(1942) 142; 29 (1944) 51 and the literature referred to by him, especially
Gutzwiller, Internationales Jahrbuch für Schiedsgerichtswesen III (1931) 128 and, more
recently, Gentinetta, ‘Was ist Lex Fori Privater Internationale Schiedsgerichte?’
in Zeitschrift für Schweizerisches Recht 84 (1965) 139, 142, sqq.
15   This suggestion was put forward by Mann, ‘The Law Governing State Contracts’,
in British Year Book of International Law 1944, 11; 1959, 34, also (in German) in Jus et
Lex (Festschrift für Max Gutzwiller, Basel 1959), p. 465. It has given rise to a substantial
literature and also, unfortunately, to much confusion. This is an additional reason for
disregarding it in the present context. It should perhaps be mentioned specifically that
nothing suggested in those two contributions supports what Fragistas has put forward in
regard to ‘arbitrage supranational’ (above note 11), or justifies Klein (above note 13) at pp.
53, 54 in treating the views of Professor Fragistas about arbitration as an aspect of the
present writer's views on State contracts. It should be noted that in Orion Cia. Espanola de
Seguros v. Belfort Maats., (1962) 2 Ll.L.R. 257, at p. 264 Megaw J also thought it possible
that where a sovereign State was a party to a contract the legal relations ‘should be decided
by the arbitral tribunal. .. perhaps on the basis of principles of public international law’.
16   These include procedural problems on which see some of the material collected by
Suratgar, The Columbia Journal of International Law, 3 (1965) 152.
17   In this sense, in particular, Lorenz, Archiv für die civilistische Praxis 1957 (1958/59)
265, at p. 269; Gentinetta (above note 14) p. 172, Niederer, Einführung in die Allgemeinen
Lehren des Internationalen Privatrechts (1954) p. 110 wrongly treats private arbitration
tribunals as international tribunals.
18   Art. I (1) (a).
19   Above note 5, at p. 23.
20   Pp.23–27.
21   Above note 9, at p. 359.
22   For clear statements to this effect see, for instance, Nussbaum, Deutsches
Internationales Privatrecht (1932) pp. 468, 469, or Schnitzer, Handbuch des
Internationalen Privatrechts (4th ed, 1958) p. 884, also Tallon in Schmitthoff (above note
5) pp. 159, 160 and Ionasco and Nestor, ibid, pp. 185–187. This view is frequently said to
be based upon ‘la notion du caractère juridictionnel de l'arbitrage’: in this sense Balladore
Pallieri, 51 (1935 I) Recueil des Cours 291, at p. 340 or Klein, Considérations sur
l'arbitrage en Droit International Privé (1955), among others. But it does not rest upon any
such conceptualist argument at all. It rests on highly practical considerations, as will be
shown in the text.
23   Annuaire (1952) I, 469 sqq., the Draft Resolution is at p. 593; the members of the
Commission are mentioned at p. 469, note 1.
24   The present discussion is of a general character. For more specific reasoning see below
section V.
25   This elementary and obvious fact is frequently overlooked. It is sometimes said or
assumed that autonomy of the parties and freedom of contract exist as a result of a law of
nature and do not depend on recognition and definition by a given legal system. This is, of
course, untenable. The differences between the various legal systems prove the contrary. For
a fundamental discussion see Flume, Das Rechtsgeschäft (1965) pp. 14 sqq.
26   Goldman, above note 9, pp. 373, 374.
27   This was apparently first suggested by Professor Balladore Pallieri (above note 22) at p.
340. In more recent times one of the principal protagonists of this view which, however, he
qualifies in many respects, has been Klein (above note 22) and also Fragistas (above note
10) at pp. 8 and 9. It is a wholly impracticable doctrine, because it neglects the primary
question of the law which decides whether the contract is subject to the one or the other
legal system – a question which in different countries is liable to meet with different
answers. The summary of a lecture given by Professor Batiffol in Revue de l'Arbitrage
1957, 110 may suggest that he belongs to this school of thought, but is too cursory to permit
firm conclusions.
28   Gentinetta (above note 14), pp. 173, 175.
29   Zeitschrift für Schweizerisches Recht 84 (1965) 361.
30   The assertion to the opposite effect by Kopelmanas, 61 (1961) Col. L.R. 384, at p. 398
is wrong and unproven. The seat determines the language of the arbitration.
31   Cf. Schnitzer (above note 22) p. 882 with reference to Swiss decisions.
32   Another problem is that of the admissibility and enforceability of arbitration agreements
made in foreign jurisdictions. It is a problem of classification to be answered by the lex
fori or rather by the lex arbitri whether this is a procedural matter and therefore governed by
the lex arbitri or relates to substantial validity and is therefore subject to the proper law of
the contract. The former solution prevails in Switzerland (Schnitzer, above note 22, at p.
878 with references), Quebec (Natara Sales Ltd v. National Gypsium Co, (1964) S.C.R. 144
or (1963) 2 Lloyds L.R. 499), and in New York: see Note on Commercial Arbitration and
the Conflict of Laws, 56 (1956) Col. L.R. 904 and, in particular, Meacham v. Jamestown F.
& C.R.E. 211 N.Y. 346, 105 N.E. 653 (1914); although the law was altered by statute,
Cardozo J's dictum ‘arbitration relates to remedies and the law that governs remedies is the
law of the forum’ continues to be interesting. The latter view is followed in England, France
and many other countries. The problem cannot be solved except within the framework of a
given legal system.
33   Paragraph 2 (1).
34   Art. IV (1) (b) (iii).
35   Cf. Mezger, Rabels Z 29 (1965) 231, at pp. 275, 276; also Goldman (above note 9) p.
434. The German Supreme Court (rightly) held that where a dispute between a German and
a Swedish firm was decided by a Swedish arbitrator appointed by drawing lots, the
residence of the arbitrator was lex arbitri and determined the procedure: 3 October 1956,
BGHZ 21, 365. At p. 370 the Supreme Court stated that the proper law of the contract had
no bearing upon the problem of procedure. For the view that the law of the seat supplies the
procedure see also E. J. Cohn, Int. Comp. L. Q. 14 (1965) 132, 151 sqq.
36   S. 1034 (2) of the Code of Civil Procedure.
37   It was put by Professor Klein, Annuaire Suisse de Droit International 1963, 41, at pp.
45, 46.
38   It is entirely disregarded by Professor Klein.
39   Professor Klein puts it into the forefront.
40   5 July 1955, Rev. Crit, 1956, 79 with note by Mezger. The court treated the clause as a
waiver of the right of appeal against the award under French law and investigated whether
an error of law appeared on the face of the award, ie, it proceeded as if it were an English
court. See, generally, Fouchard (above note 5) pp. 299 to 350 whose review of case law is
not always convincing.
41   In the same sense Cohn (above note 33) p. 150.
42   Dicey, Conflict of Law (7th ed, 1958) pp. 731, 732 with references.
43   Klein (above note 22) pp. 211, 212, and passim.
44   ‘The Arbitrator and Private International Law’, in Domke (ed), International Trade
Arbitration (New York, 1958) pp. 229 sqq. 236.
45   This is the traditional view which still commands wide acceptance. See, for instance,
Sauser-Hall (above note 23) pp. 571, 572; Mezger (above note 39) p. 239; Cohn (above note
33) pp. 161, 162. Raape, Internationales Privatrecht (5th ed, 1961) pp. 563, 564 whose
remarks on arbitration display a singular lack of precision seems to agree with the text in
regard to arbitration tribunals forming part of an institution. For other arbitrations he
recommends that the parties should select the conflict rules which their arbitrators should
apply! The remarkable aspect of Raape's discussion is that he expressly states that the
arbitrator legibus solutus est: p. 561. According to the Resolutions of the Conference on
Commercial Arbitration organised by the United Nations Economic Commission for Asia
and the Far East (International Legal Materials V (1966) 547, at p. 553) arbitrators should
‘in case the parties have not decided which law is applicable’ proceed ‘in accordance with
the rules of conflicts of law’. Which rules?
46   What is said in the text about the national judge is by way of analogy. It is not intended
to participate in the discussion of ‘la thèse juridictionelle’. See above note 22.
47   A very significant example is the operation of the doctrine of renvoi in the sphere of
contracts. See below note 51.
48   Balladore Pallieri (above note 22) pp. 354 sqq; Klein (above note 22) p. 247; Fragistas
(above note 10) p. 9. This is probably also the effect of Art. VII of the Geneva Convention
of 1961, though its text is again very obscure. Against this view Fouchard, pp. 363, 364 who
also criticises the view propounded in the text (pp. 364–367), particularly on the ground of
its ‘trop grande rigidité’ (p. 368), though he does not reject it altogether, for the conflict
rules of the seat ‘peuvent parfois être préférées’. A detailed explanation is missing.
49   In this sense Fragistas (above note 10).
50   Klein (above note 22) pp. 211, 212 and passim.
51   This is generally admitted except in Germany. On the German practice see
Mann, Juristenzeitung 1962, 6, at pp. 12–14.
52   Private International Law (2nd ed, 1950) section 88. Although the learned author's
system is much more complicated, its net effect seems to be that arbitrators should be both
bound and entitled to make their own search for the law with which the legal relationship in
essence is most closely connected.
53   Above note 5, pp. 351, 352.
54   Pp.378, 379.
55   Above note 9, pp. 380 sqq.
56   P. 414.
57   Pp.432,433.
58   Professor Goldman and M. Fouchard support their argument by copious references to
extracts from awards rendered in unknown countries by unidentified arbitrators in
circumstances which are left obscure. This is inadmissible and valueless evidence. It should
be obvious that the legality and propriety of such awards is not proved by their existence.
Unknown arbitrators have no power to make law. It is only if the arbitrator is known to be a
lawyer of standing that his award may have a certain persuasive authority.
59   See, however, certain dicta in the decision of Megaw J, above note 15.
60   Cohn (above note 3) pp. 3 sqq. has a third group of countries where even in the absence
of an express clause an arbitrator is presumed to be free to decide contrary to law. He says
that Scottish, German, Austrian, Norwegian, Polish, Danish and Japanese law proceeds on
these lines and that the common law of the United States as well as the statute law of many
States of the Union is to the same effect. It has not been possible completely to check this
statement. As concerns Germany, it is probably, as regards Scotland it is certainly,
inaccurate. See the text.
*   Les arbitres et tiers arbitres décideront d'après les règles du droit, à moins que le
compromis leur donne pouvoir de prononcer comme amiables compositeurs.
61   Particularly Belgium, Holland and South American countries.
62   Robert, Traité de l'Arbitrage Civil et Commercial (1961) No. 143.
63   Ibid; in the same sense Tallon (above note 7) p. 163.
64   Ibid.
65   See s. 134 of the Civil Code and s. 1041, subsection 1, paragraph 1 of the Code of Civil
Procedure. For a clear statement see Lorenz (above note 17) p. 277.
66   Stein-Jonas, note III, l, c. on s. 1041; Baumbach-Schwab, Schiedsgerichtsbarkeit (2nd
ed, 1960) p. 122.
67   Yet a provision that the arrangement between the parties should constitute only a
gentleman's agreement invalidates the contract: Flume, Das Rechtsgeschäft (1965) pp. 92
sqq., whom Erman-Hefermehl, note 1 before s. 145 follows. The decision of the Supreme
Court of 22 January 1964, Monatsschrift für Deutsches Recht 1964, 570 is almost
incomprehensible and probably wrong.
68   Court of Appeal at Celle, 14 July 1907, Zeitschrift für Zivilprozess 45, 220 (arbitrators
are bound by law); Bavarian Supreme Court, 20 October 1928, Juristische
Wochenschrift 1929, 866 (arbitrators are normally free from law).
69   19 November 1929, Juristische Wochenschrift 1930, 1862.
70   Zeitschrift für Zivilprozess 47, 105.
71   Juristische Wochenschrift 1926, 13.
72   According to the better view arbitrators must decide according to law, unless they are
exempted: Rosenberg, Lehrbuch des Zivilprozessrechts (9th ed, 1961) p. 875; Baumbach-
Schwab, above note 60. On the other hand, Stein-Jonas, note I.2 on s. 1034 suggests that
arbitrators are ordinarily free from the law. In Switzerland it is the law in all Cantons except
Aargau, Ticino and Valais that, except in the case of express exemption, arbitrators have to
apply the law (see Guldener in Sanders, International Arbitration I, 447); this is particularly
so in Zurich and Geneva, two centres of great significance to international arbitration.
73   Rose and Frank & Co v. Crompton Bros, (1925) A.C. 445; Appleson v. Littlewood Ltd,
(1939) 1 All E.R. 464.
74   Orion Cia. Espanola de Seguros v. Belfort Maats., (1962) 2 Ll. L.R. 257. In the same
sense Maritime Insurance Co v. Assekuranc Union von 1869, 52 (1935) Ll. L.R. 16.
75   This duty is most clearly established by the Court of Appeal in David Taylor & Son Ltd
v. Barnett Trading Co, (1953) 1 W. L. R. 562, but follows also from the decision of the
House of Lords in N. V. Vulcaan v. A/s Mowinckels, (1938) 2 All E.R. 152 where it was
held that the Statute of Limitation could be pleaded in arbitration proceedings.
76   By virtue of sections 21 and 23 of the Arbitration Act, 1950, which provide for a case to
be stated for the decision of the court and for the award which on its face is erroneous in law
to be set aside.
77   Where a specific question of law is referred to arbitration an award which on its face
discloses an error of law will not be set aside: Absalom Ltd v. Great Weston etc Village
Society, (1933) A.C. 592 and the authorities there referred to. But even in such cases the
intentional, as opposed to the inadvertent, disregard of the law may, apparently, result in the
award being set aside: Darlington Waggon Co v. Harding, (1891), 7 T. L. R. 106.
78   The powers of the court are discretionary and will not be exercised where the point is
insubstantial.
79   Above note 74, at p. 264.
80   Mitchell-Gill v. Buchan, (1921) S.C. 390, at p. 395 per Lord President Clyde.
81   The freedom which is only impliedly permitted constitutes an a fortiori case. But as
emphasised above, this is a field where the implication of terms should not be possible.
82   Fouchard (above note 5) p. 351.
83   Cohn (above note 3) pp. 1, 2.
84   56 (1942–1943) Harv. L. R. 219, at p. 239.
85   Expression of Megaw J in the case referred to above note 74, at p. 263.
86   Czarnikow v. Roth Schmidt & Co, (1922) 2 KB 478, at p. 484; see also Atkin L.J. (as he
then was) at p. 491.
87   S. 477 of the Civil Code.
88   In fact, it seems that such an agreement may validly be made: Preston &
Newsom, Limitation of Actions (3rd ed, 1953) pp. 32, 33.
89   S. 225 and s. 477 of the Civil Code.
90   In this connection it is worth noting the strong warning of Jean Robert against
an amiable compositeur if ‘la bonne foi et la sincérité’ are not assured: above note 62, Nos.
47, 143.
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