Skip main navigation

New offer! Get 30% off your first 2 months of Unlimited Monthly. Start your subscription for just £35.99 £24.99. New subscribers only T&Cs apply

Find out more

Law applicable to the substantive dispute

In this article we consider questions that parties may need to ask in order to choose the law applicable to that agreement.
© College of Law

It is a general principle that parties to an international commercial agreement can choose for themselves the law applicable to that agreement. This is sometimes referred to as the doctrine of party autonomy. The doctrine historically applied to the parties at the time of concluding the contract, but now extends (as a result of international instruments and rules) to the right of parties to choose the law as it is to be applied at the time of dispute. There are some restrictions on the broad party autonomy, relating to good faith, legality and public policy.

It is sensible that parties to an international commercial agreement make full, but appropriate, use of this permissive approach and include within the contract an express choice of law clause. Such a clause can be drafted in very straightforward terms, but may give rise to some difficult decisions that the parties may need to make, such as:

  1. Do the parties agree on a particular national law to govern a dispute under the contract?
  2. Do the parties seek application of the general principles of public international law
  3. Should concurrent/combined laws be used?
  4. Would the application of a transnational legal framework (such as the lex mercatoria) be appropriate?
  5. Is it a transaction where inclusion/exclusion of the provisions of the United Nations Convention on Contracts for the International sale of Goods needs to be considered
  6. Should the dispute simply be decided according to equity and good conscience?
© College of Law
This article is from the free online

International Arbitration: Frameworks and Drafting an Arbitration Agreement

Created by
FutureLearn - Learning For Life

Reach your personal and professional goals

Unlock access to hundreds of expert online courses and degrees from top universities and educators to gain accredited qualifications and professional CV-building certificates.

Join over 18 million learners to launch, switch or build upon your career, all at your own pace, across a wide range of topic areas.

Start Learning now