Conflict of Laws Issues in International Arbitration: Practice and Trends

Abstract

THE PARTIES to an international contract sometimes fail to reach an agreement as to the substantive law applicable to any dispute that may arise during the course of their contractual relationship. This phenomenon is noticed more often than not in the context of state contracts, especially natural resource investment agreements between a state and a foreign private party.1 Sometimes the disagreement between the parties occurs owing to their conflicting interests. As a distinguished jurist has aptly put it:2 While the host State is primarily interested in subjecting foreign investments to its national legal system because it wishes to retain the fullest legislative freedom in pursuance of its national economic policies, the foreign investor is primarily interested in excluding the application of the law of the host State because he fears that the host State may use its sovereign legislative power to change the legal environment to the detriment...