Governing Law of Arbitration Agreement

The governing law of an arbitration agreement is a crucial aspect that needs to be considered before entering into such an agreement. In essence, the governing law determines the legal framework that will be applied, the jurisdiction of the courts, and the enforceability of the arbitration award.

The governing law of an arbitration agreement can be determined by the parties in the agreement. Typically, parties will select the law of the country where the arbitration will be conducted as the governing law. However, parties can also choose the law of another country, or even a body of international law, such as the United Nations Commission on International Trade Law (UNCITRAL) Model Law.

The selection of governing law is an important decision as it will determine the legal framework that will be applied to the arbitration proceedings. For example, if parties choose the law of the country where the arbitration will be conducted, then the courts of that country will have jurisdiction over any issues related to the arbitration. This can be beneficial for parties who want to have assurance that their arbitration award will be enforceable in the country where they do business.

On the other hand, if parties choose the law of another country, they need to consider the potential challenges they may face in enforcing their award in their home country. Therefore, it is important to understand the laws and regulations of the country where the arbitration will be conducted to ensure that the governing law is mutually beneficial to both parties.

In addition to the selection of governing law, parties also need to consider other factors such as the qualifications of the arbitrator, the rules of the arbitration institution, and the scope of the arbitration agreement. These factors will also have a significant impact on the success of the arbitration proceedings.

In conclusion, the governing law of an arbitration agreement is a crucial aspect that needs to be carefully considered before entering into such an agreement. Parties need to ensure that the governing law is mutually beneficial to both parties and that the selection of governing law does not impede the enforceability of the arbitration award. By taking these factors into consideration, parties can ensure that their arbitration proceedings are successful and that their interests are protected.