II. To the Arbitration Proceedings
Traditionally, the law applicable to the arbitration proceedings (the lex arbitri) is in principle considered to be the arbitration law of the country of the seat of the arbitration (the lex loci arbitri). In such a case, the lex arbitri and the lex loci arbitri are the same. Since in most cases the lex loci arbitri, however, allows for derogations from its provisions, the parties may agree on a different national procedural law, on a set of institutional arbitration rules governing their proceedings, they may tailor their own set of procedural rules or they may agree on a combination of the aforementioned options. In such a case, the lex arbitri and the lex loci arbitri will only partly be the same for there are usually mandatory provision of the lex loci arbitri that the parties will not be able to derogate from.
Following the traditional approach, this leads to the following arbitral legal hierarchy: First, the mandatory provisions of the lex loci arbitri apply. Second, regard is to be had to any agreements of the parties (including agreements on institutional arbitration rules or a national procedural law) that do not conflict with such mandatory provisions. Within this second order, any specific agreement of the parties that conflicts with the arbitration rules also agreed upon by the parties, is to be seen as a derogation from those rules and will therefore, in principle, prevail. Yet, it is unclear whether there are also mandatory provisions of institutional rules that the parties may not derogate from. In practice, there is at least the risk that the arbitral institution will refuse to administer the parties’ proceedings if they consider a specific rule mandatory that the parties want to derogate from. At a third level, the non-mandatory provisions of the lex loci arbitri will apply where aspects are not governed by the (often fragmentary) arbitration rules agreed upon by the parties. Last but not least, if also the lex loci arbitri gives no answer to a specific question, it lies within the discretion of the arbitral tribunal to decide over such subject matter.
The traditional approach to the law applicable to the arbitration procedure finds its basis in the relevant provisions for setting aside an arbitral award or refusing the award’s enforcement. Pursuant to Art. 34 Section II lit. (a) (iv) UNCITRAL Model Law, an award can be set aside if the court finds that “the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law”. Similar to that Art. V Section 1 lit. (d) New York Convention stipulates that “[r]ecognition and enforcement of an arbitral award may be refused if the competent authority in the country where recognition and enforcement is sought finds that: (…) (d) the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place” (i.e. the country of the seat of the arbitration).
Apart from the traditional approach, there is also the idea of a delocalization of arbitral proceedings. According to some scholars, international commercial arbitration should be independent of any local law, including the law of the country where the arbitration takes place. Oftentimes, when determining the seat of the arbitration, parties think of it primarily, if not exclusively, as the venue of the arbitration. A specific venue for the arbitration, however, often is chosen simply for reasons of convenience; in particular, because it offers the required infrastructure for the parties (i.e. it is easily accessible, there are hearing rooms, etc.). Only in rare cases, the venue is located in a country where one of the parties has its business or where the contractual performance takes place. Specifically in those cases, it appears odd that the award could be set aside for non-compliance with the mandatory provisions of the lex loci arbitri or its public policy. Yet, in the current situation, under the laws of most countries, an awards can be set aside for violating certain requirements of the law of the country of the seat of the arbitration. Therefore, the law of the seat of the arbitration should in any case be taken into account by the arbitral tribunal since if the award is set aside, the whole arbitral procedure turns into as a waste of valuable resources for the parties.
What happens, however, if the parties have neither chosen a law applicable to the arbitration proceedings nor have chosen a seat of the arbitration? In most cases, the answer to this question will be found by taking a look at the national procedural law or the arbitration rules agreed upon by the parties. They often either determine a specific seat of the arbitration in the absence of any agreement by the parties, or stipulate that the seat of the arbitration shall be determined by either the institution administering the proceedings or by the arbitral tribunal. Should the parties have neither agreed on a seat of the arbitration nor any law or rules governing the arbitral procedure, it lies within the discretion of the arbitral tribunal to decide over the seat of the arbitration.
 See above.
 On the difference between the seat and the venue of an arbitration see footnote 2.
 The term public policy refers to the core principles of a state that the state considers to be so fundamental that its state courts will have to pay regard to them even if, in principle, a foreign law is applicable. This will almost always require a violation of a mandatory provision of that state. Yet, not every violation of a mandatory provision amounts to a violation of public policy.