Chapter 4 discusses applicable laws and rules as well as various concepts in international arbitration such as delocalization, territoriality, lex arbitri and lex mercatoria. The chapter considers various choice of law issues that arise when parties fail to chose the governing law of the contract or of the arbitration clause or if they do not choose the seat of the arbitration.. Although the arbitrator has a duty to apply the proper law, the application of the laws and rules of an arbitration is a complex process. Arbitrators have broad discretion, which is, however, limited in number of ways such as by mandatory laws, party autonomy, international principles, best practices, and by the duty to try to render an enforceable award. In the book, the author includes insights from a number of international arbitrators and counsel, who tell firsthand about their own experiences of arbitration and their views of best practices. Throughout the book, the principles of arbitration are supported and explained by the practice, providing a concrete approach to this important means of resolving disputes.

The field of international arbitration has proven to be fertile in theoretical debates. This entry will identify and analyse three major debates on the theory of international arbitration, starting at different points in the past with their underlying concepts continuing to overlap to this date.

First, various authors have sought to explore the nature of arbitration – whether it is a jurisdictional phenomenon, akin to court proceedings, or a creature of contract, where the agreement of the parties would be of paramount importance.

The second debate focused on whether international arbitration has a strictly local existence or whether it is “delocalised,” allowing the arbitrator to factor in legal systems other than that of the “seat.”

This debate, in turn, led to a third debate on whether there is an arbitral legal order, independent of any individual jurisdiction taken in isolation but interacting as such with State legal orders.

The entry shows that an awareness of these debates is essential to understanding international arbitration not only as a field of practice, but also as raising key questions of a theoretical and philosophical nature.

What is the relationship between the global economy and international law? In this chapter, we examine instruments that reflect the liberalism that has prevailed in international trading relations for the last half-century.  The resulting instruments include the articles of the World Trade Organization, the World Intellectual Property Organization, and the Trade-Related Aspects of Intellectual Property Agreement. We also highlight anti-corruption instruments and various non-governmental organizations that also share the goals and processes of international liberalism.   The middle section examines attempts to combat the various and increasingly sophisticated forms of corruption in international business transactions, especially the explosion of difficult-to-combat cyber fraud.  The latter part of the chapter notes a growing trend towards economic nationalist goals, and anti-competitive behavior among state and business elites.

This chapter provides an overview of the third period in the modern history of international commercial arbitration. This period, which started in the 1950s, is the Age of Autonomy. It has been marked by at least three types of autonomy. The first is the autonomy of the mercatocracy, a distinct class of professionals who, having devoted an increasing amount of time and attention to international commercial arbitration, see themselves as experts in international arbitration. A second (and related) type of autonomy is that of the field as a whole. Lawyers, scholars, and professors who had hitherto considered international arbitration as a subcategory of civil procedure or international law started viewing the discipline as a full-fledged field of practice and research. The third kind of autonomy is that of the law expounded by these experts and academics through such concepts as lex mercatoria and the arbitral legal order, which can be seen as attempts to give arbitration a theoretical foundation and explain its development as a system of law in its own right.

In the late 1950s and early 1960s, the idea that a system of international commercial law was gradually replacing domestic laws in the sphere of international transactions began to interest a group of European scholars. Using a bygone expression, they called this phenomenon lex mercatoria, or “law merchant.” The exploration of lex mercatoria also coincided with the emergence of a full-fledged school of thought – what could be described as the French school of international arbitration. As this chapter shows, this was a time of intense renewal, which carried great appeal and led to bold, cutting-edge research. At the same time, vacillating between renewal and anxiety, many scholars strongly disagreed with the existence of lex mercatoria and voiced their disagreement. The first section of this chapter sketches the intellectual history of lex mercatoria; the second investigates its relationship with a nascent school of thought in international arbitration; and the third looks at the quarrels over lex mercatoria that marked the movement from renewal to anxiety.

This chapter provides an overview of each of the book’s chapters and summarizes a key objective of the book, which was to identify three broad phases or periods in the modern history of international commercial arbitration: the Age of Aspirations, the Age of Institutionalization, and the Age of Autonomy. It also asks whether we are entering a new age in the modern history of international commercial arbitration – an Age of Disruption, where the tension between the mercatocracy and the State is exacerbated by unfamiliar circumstances that could threaten the integrity of the arbitration system as a whole. These circumstances include such phenomena as the rise of nationalism, the reemergence of protectionism, and broader fears about globalization. It points to what Judge Crawford described as a “risk of erosion in the current political climate,” and asks whether this “erosion” could signal a shift from the Age of Autonomy to the Age of Disruption.

The emergence of the English state in the 16th and 17th centuries was underwritten by two rival legal vocabularies: royal prerogative and the common law. These opened the two avenues through which successive Tudor and Stuart rulers tried to integrate the landowning nobility and the merchant elites in support of the crown’s policies. Each vocabulary had its biases. Prerogative powers were articulated by civilians whose Roman law training made them almost automatic supporters of absolutism. Common lawyers, by contrast, stressed the inviolability of the rights of property against the extractions of the king. Both idioms had their view also on the law of nations. Civilians focused on diplomacy and the rules of war and peace while common lawyers understood property as a natural right to wage commerce across the world. Sometimes the vocabularies came together as a specific lex mercatoria. A series of legal cases in the 17th century juxtaposed sovereignty and property rights in a way that inspired Thomas Hobbes to produce his powerful theory of the commonwealth as a protection/obedience pact in which all property rights were dependent on the decision of the sovereign.

Arbitration is widely used in the international commercial arena. When contracting parties come from different countries, arbitration is often selected to adjust contractual disputes. One of the reasons for this preference has to do with the adoption in 1958 of the New York Convention, which effectively secures the enforcement of arbitral agreements and awards. Another reason is that arbitration enables the parties to create a neutral forum, detached from local courts, for transborder controversies to get adjudicated in an impartial manner. The argument that courts may be biased against ousiders raises interesting issues about the best ways to guarantee impartiality in a world where nationality seems to matter. International commercial arbitration also poses questions concerning the role of arbitrators in the lawmaking process. Are arbitrators generating a body of transnational law that is autonomous from democratically-enacted national legislation?

The notion of abuse of right as an autonomous principle of international law continues to exercise a facile appeal. Yet international economic arbitrations have failed to yield a lex mercatoria capable of providing comprehensive rules of decision; this is not where a coherent principle of abuse of rights will emerge. A different proposal is to establish abuse of rights as a general principle derived from international law itself (rather than by the distillation of general principles common to national laws). This too founders on the observation that acontextual abstractions do not yield meaningful criteria amenable to predictable application, and that in any event international disputes may, and have been, resolved in other ways. The modern international environment is abrim with concurrent rights that must be accommodated by negotiation or by properly enacted lex specialis without resorting to the provocative declaration of any of them to be abusive in its exercise.

The chapter considers, on the one hand, the ways in which international arbitration was a source of inspiration for Philip Jessup when he elaborated the notion of transnational law. On the other hand, it considers how the notion of transnational law constitutes a relevant tool for the analysis of international arbitration. The chapter relies in particular on the documents gathered in the Philip C. Jessup Collection at the Library of Congress, which include early drafts and preparatory works for the Storrs Lectures at Yale University. It examines three discrete stories that each illustrate one salient aspect of the notion of transnational law (norms, actors and processes) and its relevance for the analysis of international arbitration.

This chapter reflects on the diversity of usages of the notion of transnational law in legal scholarship. To do so, it focuses on the lex sportiva as a fruitful empirical field to study in concreto the use of the concept. Indeed, the regulation of international sports is nowadays often referred to as lex sportiva and deemed an example of transnational law. The first part of this chapter retraces how lex sportiva has been used as empirical evidence for a ‘pure’ theory of transnational law, a conception of transnational law as denationalized legal order of a transnational community. The second part will aim to show how lex sportiva can also be used to support an ‘impure’ theory of transnational law, which might better capture the messy process of transnational interactions between multiple levels, norms and institutions that characterizes much of contemporary legal practice.

The chapter introduces a collection of essays first presented at an international conference at the Transnational Law Institute, King’s College London. The authors engage Philip Jessup’s landmark study, “Transnational Law” (1956) and go well beyond that. Jessup’s book launched an analysis of the role that law plays for border-crossing human and institutional relations. But, the context in which Jessup wrote – as an international lawyer, an arbitrator and economic lawyer – is today one of global geopolitical change and domestic state transformation. Both render the interdisciplinary investigation into law’s role in a global context ever more crucial. “Transnational law” – as label, concept or methodology – occupies an important place in this undertaking, not as a marker of a new, self-standing doctrinal legal field, but as an opportunity to think about the foundations of law today in a volatile, deeply divided world. Transnational law becomes a methodological laboratory in which to study law’s relation to other forms of social ordering, its sources and norms, its actors and processes, its regulatory aspirations and democratic (and, other) infrastructures.