Why to include the Choice of Law Clause?

If the parties do not agree on a Choice of Law Clause, any dispute about the contract will start by research of the applicable law. According to Article 33 paragraph 1 of the CEAC Hamburg Arbitration Rules the arbitral tribunal will apply the rules of law which it determines to be appropriate. As a result, the parties are free to leave the decision of the applicable law to the arbitral tribunal.

However, it makes sense to have a clear joint mind on the applicable law and/or the applicable rules of law. For that purpose, it does make sense for the parties to agree already at the negotiation process of the contract on the applicable law and/or rules of law.

The Choice of Law Clause proposed as "Model Choice of Law Clause" contains both, the freedom to agree on a certain national law as well as the option to agree on a neutral set of rules.

Model Choice of Law Clause

"The Arbitration Tribunal shall apply the law or rules of law designated by the parties as applicable to the substance of the dispute. The parties may wish to consider the use of this model clause with the following option by marking one of the following boxes:

The contract shall be governed by

O  a) the law of the jurisdiction of _______________ [country to be supplemented], or

O  b) the United Nations Convention on Contracts for the International Sale of Goods of 1980 (CISG) without regard to any national reservation, supplemented for matters which are not governed by the CISG, by the UNIDROIT Principles of International Commercial Contracts and these supplemented by the otherwise applicable national law, or

O  c) the UNIDROIT Principles of International Commercial Contracts supplemented by the otherwise applicable law.

In the absence of any such agreement, the Arbitration Tribunal shall apply the rules of law which it determines to be appropriate."

 

These coices are optional. In practice, it is often helpful if such choices are made. See the Comments on the options.

Download the CEAC Choice of Law Clause:

English Version:        Word              PDF     
German Version:       Word              PDF 
Chinese Version:       Word              PDF