International Contracts Governing Law Arbitration Dispute Resolution Commercial Contracts

Introduction

Choice of governing law and dispute resolution are among the most critical decisions in international commercial contracting. This article examines the factors influencing these choices and the leading options available.

Governing Law Options

English Law

English law remains the most commonly chosen governing law for international contracts due to:

  • Well-developed and predictable common law system
  • Commercial court expertise
  • Flexible approach to contract interpretation
  • Absence of mandatory rules interfering with party autonomy

New York Law

New York law is preferred for US and cross-border transactions, particularly financial contracts.

  • Sophisticated commercial jurisprudence
  • Enforceability of contractual provisions
  • Availability of summary judgment
  • Expert judiciary in commercial matters

Swiss Law

Swiss law is often chosen for its neutrality and comprehensive civil code.

UNIDROIT Principles

The UNIDROIT Principles of International Commercial Contracts provide a neutral, non-national framework increasingly used as governing law or interpretive aid.

Dispute Resolution Mechanisms

International Arbitration

Leading arbitration institutions include:

  • ICC (Paris): Most established international arbitration institution
  • LCIA (London): Preferred for English law contracts
  • SIAC (Singapore): Leading Asian arbitration center
  • HKIAC (Hong Kong): Strong track record in Asia
  • UNCITRAL Rules: Flexible, ad hoc arbitration framework

Key Arbitration Advantages

  • Neutral forum
  • Enforceability under New York Convention (172 signatories)
  • Confidentiality
  • Specialist arbitrators
  • Finality (limited appeal rights)

Litigation

Courts may be preferred for:

  • Lower cost disputes
  • Presence of assets in jurisdiction
  • Need for interim relief
  • Multi-party disputes

Drafting Considerations

  • Express and unambiguous choice of law clause
  • Clear arbitration clause with institutional rules, seat, language, and number of arbitrators
  • Consideration of interim relief availability
  • Multi-tiered dispute resolution clauses (negotiation, mediation, arbitration)
  • Class action waivers in US contracts