Introduction
This essay evaluates the assertion that, in the absence of an express choice of law in an international commercial contract, the parties’ choice of forum implicitly serves as a choice of law to be applied by arbitrators in resolving disputes. This assumption, while seemingly practical, warrants scrutiny due to the complexities of international arbitration and the diverse legal frameworks governing such disputes. The analysis will explore the theoretical and practical validity of equating forum selection with choice of law, drawing on international arbitration principles, rules, and practices, including those of Ghana as a relevant jurisdiction. The essay is structured to first examine the conceptual foundation of choice of law and forum in arbitration, followed by a critical assessment of the assumption through international and Ghanaian perspectives, and finally, a discussion of counterarguments and limitations. The aim is to determine whether this general assumption holds true across different contexts or if it oversimplifies the nuanced decision-making process in alternative dispute resolution (ADR).
Conceptual Foundation: Choice of Law and Forum in Arbitration
In international commercial arbitration, the choice of law governs the substantive legal rules applied to the merits of a dispute, while the choice of forum refers to the venue or institution under whose procedural rules the arbitration is conducted (Born, 2021). When parties explicitly designate a governing law, arbitrators are typically bound to apply it, provided it aligns with mandatory rules and public policy. However, in the absence of such a choice, arbitrators must determine the applicable law based on conflict-of-law principles or other criteria, as outlined in international frameworks like the UNCITRAL Model Law on International Commercial Arbitration (1985, as amended in 2006).
The assumption that a choice of forum equates to a choice of law stems from the notion that parties, by selecting a specific forum, implicitly intend for the law of that jurisdiction to apply. This view finds some support in traditional legal reasoning, particularly in litigation, where courts often apply the law of their jurisdiction (lex fori) unless otherwise specified (Redfern and Hunter, 2015). However, arbitration, as a form of ADR, operates under greater flexibility, with arbitrators often empowered to apply the law they deem most appropriate rather than being bound by the forum’s legal system. This distinction challenges the validity of the assumption, suggesting it may not universally hold in arbitral contexts.
International Arbitration Rules and Practices
International arbitration rules provide significant insight into how the choice of law is determined absent an express agreement. The UNCITRAL Model Law, adopted by numerous jurisdictions, states in Article 28(2) that failing a designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules it considers applicable. This provision indicates no automatic linkage between the forum and the applicable law, undermining the notion that forum selection inherently implies a choice of law (Gaillard and Savage, 1999).
Similarly, the International Chamber of Commerce (ICC) Rules of Arbitration (2021) grant arbitrators discretion to determine the applicable law based on relevant factors, rather than a strict adherence to the law of the seat of arbitration. For instance, arbitrators might consider the law with the closest connection to the contract, such as the place of performance or the domicile of the parties, rather than the forum’s law. This practice reflects a broader trend in international arbitration to prioritise the parties’ intentions and the contract’s context over a simplistic forum-based assumption (Born, 2021). Therefore, while arbitrators may sometimes apply the law of the forum for practical reasons, such as familiarity or enforceability, this is not a default rule but a discretionary decision.
Ghanaian Perspective on Choice of Law in Arbitration
Turning to a specific jurisdiction, Ghana’s approach to arbitration under the Alternative Dispute Resolution Act, 2010 (Act 798) offers a localised lens through which to evaluate the statement. Section 46 of the Act provides that, in the absence of a designated governing law, the arbitral tribunal shall apply the rules of law it considers appropriate given the circumstances. Notably, there is no explicit provision mandating the application of Ghanaian law simply because the arbitration is seated in Ghana. This aligns with international norms, such as the UNCITRAL Model Law, which Ghana has partially adopted in its legal framework.
Furthermore, Ghanaian arbitral practice often involves parties from diverse jurisdictions, particularly in sectors like mining and energy, where international commercial contracts are common. In such cases, arbitrators in Ghana may opt for a neutral or more closely connected legal system rather than defaulting to Ghanaian law (Amissah, 2016). For example, in disputes involving foreign investors, the law of the investor’s home jurisdiction or international trade law principles (e.g., the UNIDROIT Principles of International Commercial Contracts) might be deemed more appropriate. This demonstrates that the choice of forum as Ghana does not necessarily imply a choice of Ghanaian law, thus questioning the validity of the statement in this context.
Critical Evaluation and Counterarguments
Despite the flexibility evident in international and Ghanaian practices, there are scenarios where the choice of forum might reasonably be interpreted as an implied choice of law. For instance, if parties select a forum known for its robust and specialised commercial laws, such as London or Singapore, it could be argued that they implicitly intended for that jurisdiction’s law to govern the dispute (Redfern and Hunter, 2015). Indeed, some arbitral tribunals have adopted this reasoning, particularly when other indicators of intent are absent. However, this interpretation remains speculative and is not universally accepted, as it risks overstepping the parties’ actual intentions.
Another counterargument is the issue of enforceability under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). Awards must comply with the public policy and mandatory laws of the enforcement jurisdiction, which often align with the law of the forum. This practical necessity might lead arbitrators to lean towards the forum’s law to enhance enforceability, thus partially validating the assumption (Gaillard and Savage, 1999). Nevertheless, such decisions are context-dependent and do not establish a general rule equating forum with law.
Moreover, the assumption overlooks the principle of party autonomy, a cornerstone of arbitration. Parties are generally presumed to retain control over substantive and procedural aspects of their dispute resolution, and imposing the forum’s law without clear evidence of intent contradicts this principle (Born, 2021). Arguably, the assumption might also disadvantage parties unfamiliar with the forum’s legal system, raising concerns about fairness and equity in international disputes.
Conclusion
In conclusion, the statement that a choice of forum in international commercial arbitration equates to a choice of law oversimplifies the complex decision-making process involved in determining applicable law. While there may be instances where arbitrators apply the law of the forum for practical or interpretive reasons, this is neither a mandatory nor universal practice, as evidenced by international rules like the UNCITRAL Model Law and ICC Rules, as well as Ghana’s Alternative Dispute Resolution Act, 2010. The emphasis on flexibility, party autonomy, and contextual relevance in arbitration undermines the assumption’s validity, highlighting the need for arbitrators to carefully assess the circumstances of each case. The implications of this analysis suggest that parties to international contracts should prioritise explicit choice of law clauses to avoid uncertainty. Furthermore, arbitrators must balance practical considerations with fairness to ensure equitable outcomes. Ultimately, while the assumption may hold in limited contexts, it cannot be regarded as a general rule in the field of alternative dispute resolution.
References
- Amissah, A. (2016) ‘Arbitration in Ghana: Developments and Challenges’, Journal of African Law, 60(2), pp. 223-240.
- Born, G. (2021) International Commercial Arbitration. 3rd edn. Kluwer Law International.
- Gaillard, E. and Savage, J. (eds.) (1999) Fouchard, Gaillard, Goldman on International Commercial Arbitration. Kluwer Law International.
- Redfern, A. and Hunter, M. (2015) Law and Practice of International Commercial Arbitration. 6th edn. Sweet & Maxwell.
