The effect of mandatory rules of public law on choice of law in international commercial arbitration

The general principle of party autonomy gives contracting parties authority to select the substantive law of their contract. In the international arbitration conventions and national arbitration laws, arbitrators encounter the important unanswered question of whether to apply or consider relevant mandatory rules of public law not chosen by the contracting parties. An arbitrator who intends to apply the mandatory rules of public law deals with three problems: 1) party perception that mandatory rules of public law unnecessarily interfere with formation and performance of international contracts; 2) disagreements between the underlying public policy and the contracting parties' will; and 3) enforceability of the arbitration award. In this article, the author defines the concept of mandatory rules of public law, discusses arbitrators' practical application of mandatory rules of public law, examines international arbitrators' discretion in applying the mandatory rules of Public Law, and finally attempts to answer the question of whether arbitrators should apply mandatory rules of relevant national laws.