In cross-border cases, arbitrators may be faced with the difficulty of making decisions according to substantive laws which are unfamiliar to them. A question then arises as to whether it is up to the parties to submit the content of the applicable material law, or whether the arbitral tribunal may decide on points of law raised by its own members.
While pleading the law is entirely up to the parties in common law traditions, in civil law jurisdictions the principle of Iura novit curia (or “the court knows the law”) is recognised. This means that there is a difference on how common-law and civil-law trained counsel perceive the jurisdiction of the arbitral tribunal to decide based on certain points of law.
Although the question remains contentious to an extent, there seems to be no legally binding objection against allowing arbitrators to ascertain and apply substantive law on their own initiative, as long as due process and the right to be heard are ensured and any surprise decisions are avoided.
The question of whether pleadings delimit the jurisdiction of the tribunal remains however of importance, as losing parties may be tempted of using it as grounds to challenging the award.
At BODENHEIMER HERZBERG, our team members are trained in a diversity of legal backgrounds. Covering both common law and civil law jurisdictions, we are able to provide legal advice that takes into account all aspects of a dispute, as well as able to provide different perspectives on particular points of law.
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