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11 J. Int'l Arb. 57 (1994)
Choice of Law and "Foreign" Mandatory Rules in International Arbitration

handle is hein.kluwer/jia0011 and id is 55 raw text is: Choice of Law and Foreign Mandatory Rules in International Arbitration Daniel HOCHSTRASSER * I. INTRODUCTION A question that has been the subject of numerous articles and comments by Swiss and non-Swiss authors and decisions by different courts and arbitral tribunals, but has not yet found a definitive answer, is whether an arbitral tribunal has the duty or the power to apply mandatory rules or public policy of a law other than the one that is applicable to the dispute before the tribunal. The problem specifically arises in cases where the parties had agreed on a choice- of-law clause in favour of one particular national law and where public mandatory rules of a legal system other than the one chosen by the parties (thus foreign mandatory rules) are seeking to be applied to the dispute of the parties, and are indeed invoked by one of the parties or known to the arbitral tribunal. The issue is whether the choice of law made by the parties limits the arbitral tribunal with respect to the applicable law to such provisions which are part of the legal system designated by the parties as the lex contractus. Two hypothetical examples may demonstrate the importance of this decision for the outcome of a dispute: (i) Two parties from member countries of the European Community (EC) enter into a joint venture which, by its underlying terms, violates the antitrust provision, Article 85, of the Treaty of Rome. The parties include in their agreement a choice of law in favour of Swiss law. When a dispute arises with respect to the performance of the agreement, the defending party invokes the invalidity of the agreement under EC law. Does the arbitral tribunal in Switzerland dealing with the dispute have to apply or take into account Article 85 (leading to invalidity of the agreement), or is it bound by the choice of law made by the parties, when Swiss law would uphold the agreement? (ii) One party sells computer parts to another party; the sales contract contains a choice of Swiss law. Between the closing of the contract and the delivery of the computer parts, the home country of the selling party enacts a law prohibiting all exports of high technology goods to the purchasing party's home country. When the buyer sues for breach of contract, should the arbitral tribunal take into account the export restrictions, and what would be the consequences? Since the discussion about this question is far from having reached a unanimous * LL.M.; Associate, Bir & Karrer, Zurich, Switzerland. Copyright 0 2007 by Kluwer Law International. All rights reserved. No claim asserted to original government works.

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