Answer ... The parties are generally free to choose any law to govern their arbitration agreement. However, some aspects of an arbitration agreement might not be completely covered by the parties’ choice of law. For instance, capacity is typically determined according to the personal law of the party in question.

If the arbitration is seated in Serbia, the arbitration agreement will also be subject to the mandatory rules of the Arbitration Act (Article 2(3)).

In practice, parties will rarely choose an applicable law specifically for the arbitration agreement. In most cases, such choice is implied through the choice of law for the main contract (assuming that the arbitration agreement is made in the form of an arbitration clause).

If the parties have not chosen a law applicable to the arbitration agreement, it might be concluded that the law of the seat of arbitration should apply. This conclusion follows from the Arbitration Act’s general provisions, which provide that the act applies by default to arbitrations seated in Serbia. The same conclusion also follows implicitly from the rules on the setting aside, recognition and enforcement of arbitration awards, which prescribe that:

• a domestic award will be set aside if the arbitration agreement is not valid under Serbian law (ie, the law of the seat of arbitration (Article 58(1)(1))); and
• a foreign award will not be recognised and enforced in Serbia if the arbitration agreement is not valid under the law of the place where the award was made (ie, under the law of the seat of arbitration (eg, see Article 66(1)(1) of the Arbitration Act).

Answer ... Yes, the tribunal will uphold the parties’ agreement as to the substantive law of the dispute. In that case, renvoi is explicitly excluded, unless the parties agree otherwise (Article 50(2)).

If the parties have not designated the applicable law or legal rules, the arbitral tribunal shall determine such law or rules on the basis of appropriate conflict of laws provisions. The arbitral tribunal shall always take into account the terms of the agreement and customary rules (Articles 50(3) and (4)). Furthermore, if the parties expressly agree, the arbitral tribunal may render a decision ex aequo et bono (Article 49(2)).

The Arbitration Act regulates the question of applicable law only in case of international arbitration (Article 50).