It has become common to speak of international “commercial” arbitration, but there is no clear concept of what is meant by “commercial”. As early as the 1923 Protocol on Arbitration Clauses, Contracting States recognized the validity of an arbitration clause “by which the parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such contract relating to commercial matters or to any other matter capable of settlement by arbitration, … .” The Protocol then went on to say that “Each Contracting State reserves the right to limit the obligation mentioned above to contracts which are considered as commercial under its national law.” The actions of the several States that used the opportunity to limit the application of the Protocol to contracts which are considered as commercial under its national law were carried forward to the 1927 Convention for the Execution of Foreign Arbitral Awards, since only arbitration agreements subject to the Protocol were covered by the Convention. The 1958 New York Convention essentially repeated the provision originally found in the 1923 Protocol.
The New York Convention is not by itself limited to arbitration in respect of commercial disputes. The limitation applies only if a State makes the necessary declaration, and only 44 of the current 135 Contracting States have done so. However, in those 44 States the application of the Convention is dependent on what is considered as commercial under the national law. This is a potentially serious problem for anyone wishing to invoke the Convention in one of those States. In some legal systems the word “commercial” is a technical term of great legal significance. In other legal systems the word has no particular legal connotation. In spite of those differences, reference to the national law does not seem to have become the problem for application of the New York Convention that it might.
Cite this article:
Rachi Singh, Viplav Baranwal. Choice of Law in International Commercial Arbitration. Int. J. Rev. & Res. Social Sci. 2(1): Jan. – Mar. 2014; Page 85-87.