The absence of choice of law in commercial contracts: problems and solutions Reza Beheshti* Abstract In a commercial contract with an arbitration clause, the parties may fail to determine any applicable law, in which case the arbitral tribunal is expected to identify the rules ap- plicable to the merits of the dispute. A modern approach suggests that localizing legal issues originated from an international contract is inappropriate and that the tribunal should conduct an assessment to identify international or non-national rules or practices appropriate to the issues at hand. This approach, which grants the tribunal maximum freedom in choosing the applicable law with no reference to any choice-of-law rules, is adopted in a few institutional rules such as the Article 21(1) of the ICC Rules. This article seeks to introduce an evaluative framework informing the tribunal’s methodical task in identifying the most suitable legal regimes. The evaluative framework seeks to assess the relationship of legal doctrines to commercial considerations and expectations regarded by businesses. A significant issue that befalls the arbitrators is that of pleading, proving, and measuring monetary damages. Yet, damages have remained an issue that is inaccur- ately dealt with by arbitral tribunals. This article aims to examine the principles governing damages available to an innocent commercial party under significant legal regimes widely applied in international commercial arbitration in an attempt to offer guidance on which legal regime has provided the most appropriate set of principles reflecting the essential needs and interests of commercial parties. I. Introduction In a commercial contract with an arbitration clause, the parties may fail to des- ignate an applicable law, in which case the arbitral tribunal is expected to identify the rules applicable to the merits of the dispute. The tribunal’s task in determining the applicable law is an extension of the principle of party autonomy. The tribunal hence acts as an agent of the parties and has the authority to choose the law governing the issues at stake. A modern approach, which will be the focus of this article, maintains that localizing legal issues originating from an international * Reza Beheshti, Assistant Professor in International Commercial Law, University of Nottingham, UK. Tel: 0115 74 84098, Email: reza.beheshti@nottingham.ac.uk. ! The Author(s) (2019). Published by Oxford University Press on behalf of UNIDROIT. All rights reserved. For permissions, please email journals.permissions@oup.com Unif. L. Rev., Vol. 0, 2019, 1–23 doi:10.1093/ulr/unz026 Downloaded from https://academic.oup.com/ulr/advance-article-abstract/doi/10.1093/ulr/unz026/5553049 by University of Nottingham user on 23 September 2019