Answer ... There is no specific rule on how to determine the law of the arbitration agreement. The preferred approach is to apply the conflict of laws rules of the forum. In Italy, save for international conventions that might be in force, reference must be made in this regard to Law 218 of 31 May 1995.
As a consequence, generally speaking, the law applicable to a contract is that chosen by the parties. Although the arbitration agreement is separable from the contract in which it is included (see Article 808 of the Code of Civil Procedure (CCP)), the law applicable to the arbitration agreement must be that which the parties have chosen as applicable to the contract.
According to conflict of laws rules, the parties are also entitled to apply different laws to different portions of the agreement. It is therefore possible that the arbitration agreement may be subject to a specific law which is not the substantive law governing the contract.
If no choice of law has been made at all, the law of the arbitration agreement will be determined according to further criteria set out in the conflict of laws rules.
Answer ... According to Article 822 of the CCP, arbitrators must decide applying rules of law, unless the parties have agreed that they will decide ex aequo et bono.
The parties are entitled to choose the substantive law applicable to the dispute or may empower the arbitrators to rule thereon. Where the parties have chosen the applicable law, the arbitral tribunal must follow the parties’ agreement.
Since the CCP was amended in 2006, it no longer specifies how the arbitral tribunal will determine the substantive law to be applied to the dispute; however, the prevailing view is that they should do so by applying conflict of laws provisions.