INTRODUCTION

A growing want for efficient international dispute resolution and also the complexity of international litigation by state courts led the international trade community to show to various dispute settlement ways as arbitration to settle their international disputes. The term ‘commercial’ embraces matter arising from all relationships that are of a commercial character, whether the written agreement or not.

Private law of nations stretches over a large range of topics including the likes of family law, the law of property, dispute resolution, the law of insolvency, consumer law, judicial cooperation and commercial law. All of these laws for correct implementation need recognition or creation of such rights which may be made enforceable in courts by the private parties without necessitating a resort to governmental intervention and approval.

In the modern private law of nations of most of the countries, the foremost daunting question has been whether a similar law should apply to the formation of the contract also like the effect of the contract. it has been increasingly advocated that to all aspects of the formation of the contract also on the effect of the contract the proper law of the contract should be applied. Over a period of time, several attempts are made to develop a uniform system of law applicable to all international commercial contracts but a similar has failed to render any substantial result.

The primary attempt was made in 1939 by Institute of international law, Rome leading to the preparation of a Draft concerning the contracts for the sale and purchase of the movable property. Further attempts were made within the Hague Conferences which took place over the period of time but these international agreements touch the problem only on the fringe, and therefore the solution to the problem of conflict of laws in commercial contracts must be found by private law of nations of every individual country.

INTERNATIONAL JURISDICTION

The jurisdiction of state courts to adjudicate transnational commercial disputes becomes relevant when a contract or dispute has a world dimension. With the rise within the no. of companies to hold out activities across international borders, the number of international commercial relationships is also growing at large. Cultural, social, and commercial exchanges between private individuals or corporations from different corners of the world are intensifying. This also results in international legal disputes in civil and commercial matters. the standard method to settle international disputes is by litigating in national courts. one among the primary queries raised in an international court proceeding is: that court has jurisdiction to adjudicate the dispute?

The regulation of international jurisdiction of state courts has, remarkably, not kept up with the legal consequences of the increasing number of international disputes. The regulation of traditional adjudication by state courts over international disputes is still national law based. Apart from the few successful regional uniform regulations of international jurisdiction, individual states determine the scope of their judicial powers according to their own rules of jurisdiction. States have different approaches to regulating international jurisdiction.

In deciding the jurisdiction of a competent court is a complex process. Firstly, the competent court can, in line with its own conflict of law rules, determine the law applicable to the case, or apply the lex fori, except in cases wherever the parties have agreed upon the applicable law by means of a choice of law agreement.

The outcome of a dispute is therefore strongly dependent on which court has jurisdiction over the case. Variations in procedural law, varied from one forum to a different, also influences the result of international court legal proceeding. Finally, once the court has rendered judgement, the jurisdiction of the court that has given the judgement plays a major role when its recognition and enforcement is sought in another country by one among the parties.

CIVIL LAW vs. COMMON LAW

One of the principal differences is that courts of Anglo-American tradition have appreciable discretion in deciding their competency over an international dispute, whereas Continental European countries have restricted or closed sets of jurisdiction rules leaving the courts with very little discretion. There are roughly 150 countries that have what is often described as primarily civil law systems, whereas there are regarding 80 common law countries. In civil law countries, judges are usually described as “investigators”. In Common Law systems, judicial opinions take precedence over different forms of laws, including legislation.

The civil law tradition generally applies a strict separation between the jurisdictional question and the question of applicable law. Contrastingly, other legal systems favour the lex fori rule, in which case the jurisdictional question is inseparably mingled with the applicable law question, and asserting jurisdiction to a particular forum automatically means applying the law of the court to the dispute. Several examples show that questions of applicable law sometimes interfere with the jurisdictional question and that in order to determine the competent court the applicable law to the dispute becomes relevant. Under common law, for instance, the English courts are, under specific circumstances, competent when English law governs the contract.

The civil law tradition generally applies the principle of jura novit curia the court is supposed to know the law, including foreign law. Therefore, the court seized is expected to examine, investigate and apply foreign law when raised by a party and sometimes at its own motion. This stands in contrast to the common law tradition where courts have a more passive role in the application of foreign substantive law. The status of foreign law is considered a fact to be raised, pleaded and proved by the parties during proceedings. With this, we can see that the relevance of international jurisdiction varies as to the different attitudes towards the application of conflict of law rules.

FORUM SELECTION AND FORUM SHOPPING

An international court proceeding is characterised by the very fact that, as a rule, and apart from situations where parties validly agreed on a dispute settlement clause, it is the complainant who chooses one forum over another by merely instituting proceedings. Many courts may be available to the complainant to start proceedings, either as a result of more than one jurisdictional regime asserts jurisdiction over the same case, or as a result of a unified jurisdictional regime provides for different jurisdiction rules. Forum choice by the applicant for the most favourable forum is termed as forum shopping.

The decisional harmony is considered to be the most important incentive for forum shopping in deciding the conflict of law rules. It is on the claimant to decide conflict of law rules determining the applicable law and will choose a forum applying the most favourable substantive law. While selecting the forum it is on the claimant to decide the availability of high damages awarded by the available forums, the level of procedural costs and cost liabilities, the existence of a jury trial and pre-trial discovery, potential delays for rendering judgements and therefore the accessibility of contingency fees.

PRINCIPLE OF PARTY AUTONOMY

The principle of party autonomy implies that parties aren’t solely free to agree on that law can govern their contract, however also on how their disputes are settled and by whom. Today, party autonomy plays a basic role in international dispute resolution. Parties to an international commercial agreement decide legal rules applicable to that agreement, and in the application of these rules the tribunal simply carries out their agreement. The liberty of parties to consensually execute an agreement is known is understood principle of party autonomy.

The principle provides a right for the parties to international commercial arbitration to decide on applicable substantive law and these laws once chosen shall govern the written agreement relationship of the parties. Limitations are there in the private law of nations in context to party autonomy to limit the independent selection of law and therefore protect the specific interest. It will either be the interest of parties or it may be the interest of different people or any community as an entire.

In case of commercial contracts, party autonomy plays a significant role as it promotes the internationalization of selection of law rules so sanctioning parties are able to opt for a neutral law that has no reference to their contract. to attain commercial convenience in an international contract, there is a requirement for flexibility within the choice of law rules. Party autonomy ensures that parties relish flexibility in their selection of law rules, such that they’ll satisfy their peculiar transactional needs by selecting the most effective applicable selection of law rule most suited to their transactions.

UNIFICATION OF INTERNATIONAL JURISDICTION RULES

Unification efforts in the field of private international law have mainly been focused on conflict of law rules, rather than on international jurisdiction rules. In the field of international commercial matters generally, and written agreement disputes in particular, very little unification of international jurisdiction has been achieved at a worldwide level.

International conventions are considered the principal source of the unification of private international law. As a rule, they are negotiated and drafted by state delegates and based on a political consensus among the participating states. The principal objection to this method of unification is the lack of flexibility to adapt to changes in a dynamic legal world.

The most important institution for the unification of private international law at a global level is the intergovernmental organization of The Hague Conference on Private International Law. Its purpose is to work for the progressive unification of the rules of private international law and to work for a world in which persons, as well as companies, can enjoy a high degree of legal security.

International law does not impose restrictions on the reach of national jurisdiction rules. In 1927, the Permanent Court of International Justice, the predecessor of the International Court of Justice, ruled in its sole decision on the jurisdiction that states can regulate jurisdiction as long as they do not interfere with the sovereignty of other states.  Based on the principle of territorial sovereignty, the Court argued that there’s no general prohibition to states to increase the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory.

DEVELOPMENT

International commercial Transactions between countries is a basic occurrence in today’s world as basic as the very act of sleeping and eating. As a choice of law rule, party autonomy would encourage international trade or commerce in 21st-century business persons who interact in trans-border trade are certain of their written agreement selections and would be encouraged to carry on business if they get to decide on laws governing their contracts. Such certainty and uniformity promotes trade and thus economic potency. However, issues like a contradiction to public policy resulting in gaining of few individuals at public expense and lack of uniformity in applying party autonomy as a principle have led to the principle being restricted and limited.

International commercial arbitration has taken the lead in international proceeding as the principal way to settle international disputes. Apart from the other alleged advantages of arbitration in comparison with court litigation, such as speed, confidentiality, efficiency and expertise, the increasing use of international arbitration is unmistakably due to the success of the New York Convention of 1958. This Convention facilitates the recognition of foreign arbitral awards and most significantly for present functions, stipulates validity needs for international arbitration agreements.

Another vital advantage of international arbitration over court proceedings is that by its very nature the latter is ‘coloured’ by cultural or political aspects of the national legal order, whereas in international arbitration parties agree on the procedural rules, as well as the language of the proceedings and therefore the composition of the arbitral court. Parties generally do not want to risk court proceedings in an unknown or distant court, or even in a suspected biased court.  Moreover, one of the parties will have an advantage over the other or even a ‘home court advantage’.