Pathological Arbitration Clauses and the Conflict of Laws
This article considers the problems related to pathological arbitration clauses within the framework of international arbitration. After examining a series of typical examples of pathological arbitration clauses and acknowledging that the effectiveness of a pathological arbitration clause must be assessed in light of the rules applicable to it, the author considers how to determine such rules in the absence of a specific choice of law clause applicable to the arbitration agreement. Various approaches that have been followed by national courts and arbitral tribunals in the search for the law governing arbitration clauses are considered. The author focuses on two approaches: (i) a conflict of law-based approach, whereby the law applicable to the arbitration clause is determined by reference to the conflict of law rules of the lex fori; and (ii) a substantive rule method, whereby the rules governing the construction of pathological arbitration clauses are determined independently from any national system of law (including the conflict of law rules of the lex fori), through the direct application of general principles and usages of international trade. The author concludes that the latter approach is to be preferred because it is more consistent with the characteristics and features of international arbitration. The last part of the article shows how, in day-to-day practice, the application of the substantive rule method can be employed to cure pathological arbitration clauses so as to give effect to the parties' intention to refer their disputes to arbitration.
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