Mohammed Zaheeruddin
Arbitration is a consensual method of resolving dispute between the parties and it shall be conducted according to the procedure determined by the parties to the dispute. In this regard an international commercial contract is expected to provide the details of seat of arbitration, language of arbitration, law applicable to the main contract (substantive law), arbitration rules (procedural law) and law applicable to the arbitration clause. In order to determine the validity of arbitration agreement, it is important to know the applicable law or rules to the arbitration agreement. Where the parties have made no choice of law for arbitration clause the controversy before the various forums was which law governs the parties’ arbitration agreement. The study concludes that the courts have applied substantive law of the contract and the law of the seat of arbitration, basing on parties’ express choice, implied choice and the system of law with which the arbitration agreement has the closest and most real connection. It is recommended that every arbitration agreement must be accompanied by a choice-of-law clause, specifying the substantive law applicable to the parties’ underlying contract, related disputes and arbitration agreement.