To what extent should arbitrators respect domestic case law? The German experience regarding the Law on Standard Terms

Abstract

International arbitrators are often confronted with the question of whether they should follow the case law of domestic courts of the jurisdiction whose law applies to the contract before them. The answer to that question will certainly depend on the nature of that legal system, eg whether it belongs to the civil law or the common law. This article explains that arbitrators dealing with contracts governed by German law must not necessarily follow the case law of the German courts because this case law has only a de facto , not a de jure precedential effect. Like German courts, arbitrators may deviate even from long-standing case law of the highest German court if they are convinced that the decision was wrong, or that the result reached by the higher court does not conform to the needs of international business.