Answer ... In accordance with the principle of party autonomy, arbitral tribunals generally defer to the parties’ choice of the substantive law to be used in resolving disputes, if such a choice has been designated (See UNCITRAL Model Law, Art 28(1), Commercial Arbitration Act (RSC, 1985, c 17 (2nd Supp), Ch 5 Sch 1, Art 28(1). See also domestic arbitration statutes, including Arbitration Act, 1991, SO 1991, c 17, s 32(1); Arbitration Act, SNB c A-10.1, s 32(1); Arbitration Act, RSA 1991, c A-43.1, s 32(1); Arbitration Act, SM 1997, c 4 (CCSM c A120), s 32(1); Commercial Arbitration Act, SNS 1999, c 5, s 35(1); and Arbitration Act, 1992, SS 1992, A-24.1, s 33(1)).
Parties may address choice of law in a pre-dispute agreement or once the dispute has arisen via a submission agreement or terms of reference for the arbitrator (E Gaillard and J Savage, eds, Fouchard, Gaillard, Goldman on International Commercial Arbitration (The Hague: Kluwer Law International, 1999), at p790).
Answer ... Per provincial domestic legislation, an arbitral tribunal generally defers to the parties’ choice of the substantive law to be used in resolving the dispute, if such a choice has been designated. However, the parties’ choice may be circumscribed by reasons of public policy, by the effect of mandatory rules in a relevant jurisdiction or if the choice was designed to evade mandatory provisions of the legal system with the closest connection to the subject matter of the dispute (H Yu, “Choice of Laws for Arbitrators: Two Steps or Three” (2001), 4(5) Int ALR 152, at pp157-8; N Voser, “Mandatory Rules of Law as a Limitation on the Law Applicable in International Commercial Arbitration”, (1996), 7 Am Rev Int'l Arb 319).
Consistent with the UNCITRAL Model Law (UNCITRAL Model Law, Article 28(2)), domestic legislation in most provinces provides that if no rules of law are designated by the parties, in deciding a dispute a tribunal should apply the rules of the law it considers appropriate. British Columbia’s International Commercial Arbitration Act (RSBC 1996, c 233, s 28(3)) is more liberal, allowing the tribunal to apply the rules of law it considers to be “appropriate given all the circumstances surrounding the dispute”. In determining what rules are appropriate, tribunals in modern disputes have engaged in various approaches, including the cumulative approach, jurisdiction theory, the proper law of the contract and the international conflict of laws system. These approaches represent a departure from the traditional method, in which tribunals applied the conflict of laws rules of the jurisdiction in which the arbitration occurred (G Herrmann, “The British Columbia Enactment of the UNCITRAL Model Law”, in RK Paterson and BJ Thompson, eds, UNCITRAL Arbitration Model in Canada: Canadian International Commercial Arbitration Legislation (Toronto: Carswell, 1987), at p72).