Applicable Law

Applicable law in UAE

What is Applicable Law is?

Applicable Law

When questions of procedure are settled, the principal task of any arbitral tribunal is to establish the material facts of the dispute. It does this by examining the agreement between the parties, by considering other relevant documents (including correspondences, minutes of meetings and so on), and by hearing witnesses if necessary. The arbitral tribunal then builds its award on this foundation of facts, making its decision either on the basis of what is considered to be fair and reasonable or, mostly on the basis of law. For determination of the dispute, the arbitral tribunal may not need to go further than the confines of the agreement that is originally made between parties, if the established relevant facts do not require so. These agreements, particularly in international commerce, will generally be pretty detailed.

For example;

The construction contracts consist of many hundreds of pages including detailed drawings, plans and specifications. Such details make the agreement obviously clear to understand what the parties intended, what duties and responsibilities they each assumed and, as a result which of the parties is to be hold liable for any failure of fulfilment. It is supported by a system of law that is also known as “the Governing law”, “the Applicable law” or “the Proper law” of the contract.

These various terms all denote the particular system of law that governs the interpretation and validity of the contract, the rights and obligations of the parties, the mode of performance and the consequence of breaches of the contract. “Accordingly, it is not enough to know what agreement the parties have made: it is also essential to know which law is applicable to that agreement. In a purely domestic contract, the applicable law will usually be that of the country concerned.

If a Syrian Business man purchases a Villa in Dubai, UAE, then the UAE law will be the applicable law of the Sales Purchase Agreement. However where the contract is in respect of an international transaction, the position is much complicated. There may then be two or more different national systems of law capable of qualifying as the proper law of the contract.

The logical consequence is that there is no need to apply conflict rules to determine the applicable law. Under most sources of arbitration law, the arbitral tribunal is obliged to apply the law chosen by the parties.

Choice of Law in International Commercial Arbitration

One perk of international arbitration is the possibility to avoid choice-of-law complexities that inevitably arise in an international dispute, although choice of law in international commercial arbitration can pose an issue.

Choice of law in international commercial arbitration refers to the process of selecting the law that will govern the dispute between the parties. When parties from different countries enter into a contract, there is often a question of which country’s law will apply to the contract.

In international commercial arbitration, the parties have the freedom to choose the law that will govern their dispute. This is typically done through an arbitration clause in the contract that specifies the law that will apply to the dispute.

The choice of law is important because it determines the rights and obligations of the parties under the contract. It also affects the interpretation and enforcement of the contract, including issues such as damages and remedies.

When choosing the governing law, parties should consider factors such as the nature of the contract, the parties’ locations, and the applicable legal principles. It is important to choose a law that is suitable for the specific dispute and that will be recognized and enforced by courts in the relevant jurisdictions.

In cases where the parties have not specified a choice of law in the contract, the arbitrator may apply the law of the country with the closest connection to the dispute. This is known as the lex loci arbitri or the law of the seat of arbitration.

Overall, the choice of law in international commercial arbitration is an important consideration for parties entering into contracts. By selecting the appropriate law, parties can ensure that their rights and obligations under the contract are clear and enforceable.

There are four different choice-of-law issues in international arbitration that arise:

·         one: Determination of the substantive law applicable to the merits of the case

·         Determination of the substantive law applicable to the arbitration agreement

·         Determination of the procedural law applicable to the arbitral proceedings

·         The conflict of law rules applicable to determine each of the above-mentioned laws.

Difficulties arise when one or more of the four laws is different.

Examples of Applicable Law in a sentence

The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.

Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

It is the express intent of the parties hereto that the Borrower not pay and the Lenders not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Borrower under Applicable Law.

Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law.