The Lex Mercatoria in Practice: The Experience of the Iran-United States Claims Tribunal

Abstract

INTERNATIONAL COMMERCIAL arbitration is one of the main engines powering the development of principles and rules of transnational commercial law, also known as lex mercatoria .1 This is especially so now that decisions of international arbitral tribunals, which are among the primary sources of the lex mercatoria , are becoming increasingly available to the public.2 This article will show that the Iran-United States Claims Tribunal, by consistently applying principles of commercial law in many of its decisions, has contributed significantly to the stabilization and development of a multitude of principles and rules of the lex mercatoria . It will also show, through the experience of the Tribunal, that rules of transnational commercial law ‘can fulfil satisfactorily, in practice, the function of a proper law’3 in international commercial arbitration. Section II gives a brief overview of the genesis of the Iran-United States Claims Tribunal, the types of commercial claims it hears, and the law it applies in deciding them. Section III reviews the Tribunal's jurisprudence relating to a few selected principles of the lex mercatoria to illustrate the Tribunal's contribution to the development of those principles. The starting point for my research is the list of rules, principles, and standards of the lex mercatoria that have been developed by the Center for Transnational Law (CENTRAL) at Munster University in Germany (‘CENTRAL-List’).4 The Iran-United States Claims Tribunal (‘Tribunal’), which one commentator has described as ‘the most significant arbitral body in history’,5 was established on 19 January 1981 as part of an agreement intended to resolve an acute political crisis between the governments of the Islamic Republic of Iran and the United States of America.6 On 4 November 1979, some nine months after the success of the Islamic Revolution in Iran, militant Iranian students stormed the United …