Abstract: Compared with international civil litigation, international commercial arbitration is more complicated, and the parties have a broader space in legal choice. However, this has also caused the conflict between the parties' freedom and mandatory law, which is reflected in the second paragraph of Article 126 of China's Contract Law. On the basis of analyzing the complexity of international commercial arbitration, this paper discusses the application of domestic law in arbitration, aiming at realizing its real value.

Keywords: contract law, substantive law, international commercial arbitration procedure

First, the complexity of the application of international commercial arbitration law

The legal application of international civil litigation is relatively simple, that is, the applicable substantive law is determined according to the conflict norms of the forum. In international commercial arbitration, the parties can choose procedural law, conflict law and substantive law independently, which leads to the complexity of its application. An international commercial arbitration case usually faces the application of the law of arbitration agreement, arbitration procedure and arbitration substantive law.

In the trial of arbitration cases, the applicable laws can be the laws of the same country or different countries, and the legislative provisions applicable to international commercial arbitration are also very scattered, which makes the legal application of international commercial arbitration more complicated and changeable than that of international civil litigation.

Second, the main differences between the application of substantive law in international civil litigation and international commercial arbitration

From a legal point of view, there are obvious differences between litigation and arbitration in jurisdiction, application of law, recognition and enforcement of judgments or awards, among which the difference of application of law lies in the following aspects:

1, the legal carriers for regulating the applicable law are different.

In international civil litigation, the applicable law is stipulated by the private international laws of various countries, while in international commercial arbitration, the applicable law is usually stipulated by the arbitration law or the arbitration rules of arbitration institutions.

2. The legal principles for determining the applicable law are different.

The principles of determining the applicable law of litigation in various countries are basically the same, usually with autonomy of the will as the main factor, supplemented by the closest connection. However, the application of substantive law in international commercial arbitration is extremely complicated. The main situation includes determining the applicable law according to the principle of party autonomy or conflict of laws norms, applying domestic substantive law, applying international law and other non-domestic law rules.

In addition, this paper focuses on the application of non-legal standards. In some specific cases, non-legal standards will be used as the basis for arbitration, which also reflects the essential attribute of the party autonomy arbitration system.

(1) contract terms

In some contract disputes, the arbitration tribunal does not consider the substantive law applicable to the dispute, but judges the dispute according to the specific terms of the contract agreed by the parties. Some important international conventions, such as Article 33 of the Arbitration Rules of the United Nations Commission on International Trade Law, and the arbitration legislation of some countries have similar provisions.

(2) Fairness and goodwill

In the practice of international commercial arbitration, the arbitral tribunal, authorized by both parties, believes that the application of legal rules may lead to injustice, and can make an award that is binding on both parties according to the principles of fairness and good faith. This arbitration method is also recognized by many international conventions, domestic legislation and international permanent arbitration rules.

3. Different application of the principle of party autonomy.

Both international civil litigation and commercial arbitration regard the principle of party autonomy as the basic standard for determining substantive law, but the scope of application of this principle is different from the law chosen according to this principle.

In international civil litigation, the principle of autonomy of will only applies to the field of contractual debts, and the law chosen by the parties according to the principle of autonomy of will is usually a specific domestic law. However, in international commercial arbitration, a more independent method to solve disputes, the principle of autonomy of will has a broader application space, and the law chosen by the parties is far beyond the scope of substantive law and conflict law. This choice is not limited to a specific domestic law system, but can also be extended to non-domestic law systems. Even as mentioned above, it is possible to apply non-legal standards such as contract terms and the principle of fairness and good faith.

3. On whether the second paragraph of Article 126 of the Contract Law must be applied to international commercial arbitration.

On the basis of understanding the complexity of the application of international commercial arbitration law and the difference between it and international civil procedure law, this paper continues to discuss whether the second paragraph of Article 126 of China's Contract Law must be applied to international commercial arbitration. This article stipulates that the laws of China shall apply to Sino-foreign joint venture contracts, Sino-foreign cooperative venture contracts and Sino-foreign cooperative exploration and development contracts. Some scholars believe that this clause is applicable to international commercial arbitration on the grounds that it is a mandatory provision of China law. However, based on the above discussion, the author thinks that this clause must be applied compulsorily in international civil litigation, but whether international commercial arbitration must also be applied is worth discussing below.

1. Does this clause necessarily apply to international commercial arbitration?

The main reason for claiming that this clause is applicable to international commercial arbitration is that it belongs to the mandatory law of China. However, the author believes that it is uncertain whether mandatory rules must be applied in arbitration. As we all know, arbitration institutions and courts have different sources of jurisdiction. The jurisdiction of the arbitration institution comes from the agreement between the parties rather than the law, and the arbitrator is mainly responsible for the parties and international commercial transactions rather than the domestic law of any country. Therefore, this provision does not necessarily apply to commercial arbitration. Moreover, for the sake of fairness and rationality, there are many precedents in the practice of international commercial arbitration in which arbitral tribunals bypass mandatory rules and apply more reasonable legal rules.

2. The application of this clause violates the development trend of contemporary international commercial arbitration.

With the internationalization of commercial arbitration in China, the compulsory application of China law to three types of contracts in international commercial arbitration also goes against the development trend of contemporary international commercial arbitration system.

In practice, it has been generally recognized that the application of substantive law in international commercial arbitration is not limited by the laws of the arbitration place, and in international commercial arbitration, the original intention of the parties to choose this method is not subject to too many legal constraints. However, the application of substantive law directly determines the fate of the parties in solving all aspects of the three types of contract disputes. If there is no difference between the application of substantive law in international commercial arbitration and that in international civil litigation, then the difference between arbitration and litigation is not obvious here. Therefore, the compulsory application of the second paragraph of Article 126 of the Contract Law in international commercial arbitration does not conform to the nature of the arbitration system and the original intention of the parties.

References:

[1] Zhu's Application of Law in International Commercial Arbitration, published by Law Press in April 1999.

[2] Han Jian, Theory and Practice of Modern International Commercial Arbitration Law, Law Press, 2000.

[3] Gao Fei, On the Legal Application of Arbitration Cases, Arbitration and Legal Communication, February 1998, p. 27.

[4] Zhao Xiuwen's Law on International Commercial Arbitration (2nd Edition), published by Renmin University of China Press in May 2008.

[5] Du Xinli International Civil Litigation and Commercial Arbitration, published by China University of Political Science and Law Press in March 2009.