Application of the Modern Lex Mercatoria in International Commercial Arbitration: Pros and Cons

Sometimes contracting parties or arbitrators decide that a contract is not to be governed by a national law but by transnational rules or principles. This occurs where the parties expressly designate transnational rules to govern or, in the absence of a designation, where arbitrators called upon to resolve a dispute, and with authority to do so, decide that transnational rules apply. In such cases the contract is subject to an international standard which is different to the domestic rules of a single nation state. The transnational rules or principles selected may differ in formulation from case to case. Sometimes the lex mercatoria is applied. Application of the lex mercatoria, especially in international commercial arbitration, is the subject of some controversy. This article deals with the question: “What are the advantages and disadvantages when applying the rules of modern Lex Mercatoria in International Commercial Arbitration?” . In the scope of this article, the author introduces opinions and arguments of different legal scholars of different countries. The author would like to briefly introduce the conception of the modern Lex Mercatoria, party autonomy in choosing Lex Mercatoria to govern their contract as well as arbitration. The main focus lies on pointing out the pros and cons of its application in international commercial arbitration and shortly estimating the tendency of parties to choose the modern Lex Mercatoria regulating the arbitration process.