UNDERSTANDING THE INTERFACE BETWEEN PARTY AUTONOMY AND MANDATORY RULES IN INTERNATIONAL COMMERCIAL ARBITRATIONS

Abstract

Party autonomy has always been recognised by arbitrators as one of the cardinal principles of international commercial arbitration. It is by virtue of this principle that contracting parties can choose the substantive law that will govern the contract. However, a perusal of the prevailing arbitral practice as practiced across varied arbitral institutions in the world indicates the presence of one of the recurring themes in international commercial arbitration i.e. the friction between party autonomy and the application of mandatory rules to arbitration proceedings. In international arbitrations, arbitrators are usually faced with the complex question of whether or not to apply mandatory rules of public law which were not opted for by the contracting parties. The complexity of the above question is further heightened by the mere fact that neither the conventions governing international arbitrations nor national arbitration laws have conclusively answered the question. The abovementioned conflict assumes pivotal importance when viewed from the perspective of an arbitrator who has an implicit duty to balance the interest of the parties with the need to apply mandatory rules which are relevant to the dispute, always keeping in mind the need to issue an enforceable award. Through this article the author attempts to highlight the contrast between the positions of international arbitrator with those of national judges in the context of application of mandatory rules. The author will also examine the impact of international public policy (which is considered a mandatory rule of international legal order in itself) upon the application of mandatory rules to the merits of a dispute.