Latest News

Arbitration and the Evolution of Lex Mercatoria: A Nexus in International Dispute Resolution

Arbitration and the Evolution of Lex Mercatoria: A Nexus in International Dispute Resolution


Arbitration is a dispute resolution mechanism and a process where the parties involved agree to resolve their disputes by applying the law applicable to that particular country or nation, or usually it could be the generally accepted laws and principles, which is also known as the lex moratoria. There is enough freedom provided to the parties involved so that they can freely choose the method for resolving the dispute on their terms and the general principles of Lex Mercatoria. The term ‘lex mercatoria’ basically means the body of the commercial law used by the merchants, and it has the same meaning as that of the law merchant.[1] In the 11th and 12th centuries, during the Renaissance in Europe, the creation of lex merchant laws evolved, which further encompassed maritime law as well. It is also a modern term that coexists with the regional or domestic laws of Europe. It is rapidly applied and accepted on the European continent to resolve international disputes, as often the clauses referred to are put in the contract between the parties and the government; usually, the parties are private enterprises. This helps the parties and allows them to reduce the technicalities of the national laws and the system involved and also avoid difficulties in the application of the domestic laws. The parties argue on an equal footing and on the same page, as there will be no advantages or disadvantages to having the cases governed by their laws or the other nations' laws.[2]

The Relationship Between Lex Mercatoria and Arbitration

Lex moratoria and international commercial arbitration have the most direct and straight connection with each other, and it is so because of their approach to priority in the national legal system. The contracts related to international arbitration after 1950 stipulated that in the process of arbitration, the arbitrators should include international commercial rules and regulations, even though the lex moratoria is not mentioned in the arbitration clause.[3] These days, approximately 90% of the contracts include the arbitration clause in them, and they have a special mention of the new Lex mercatoria in them along with the equity. Lex mercantoria’s consolidation has been mostly and increasingly achieved by the inclusion of arbitral clauses in the contract, and the principles of the same have been explored and unloaded at the same time. Though the theories present that there is no belongingness between the domestic law and the international laws in the system of lex mercatoria, the comparative analysis has expressed the UNIDROIT Principles drafting process, which has the intention of giving a system of rules and regulations tailored to the international commercial transaction.[4] The UNIDROIT principles, on the other hand, have also been involved in the application of the new Lex mercatoria rules, and they have also been recognized in the growing body of arbitral awards. The transactional rules and regulations are also governed under the contracts in international dispute resolution, and the parties decide to apply as per their wish. The application of these rules is controversial, and some questions exist about their source, content, and identification. Nevertheless, the involvement of the parties is more crucial, and the contractors in the transition may also have compelling reasons for the subject matter per se to international or transactional matters, and the percentage of the cases may also be subjected to the standards over time.[5]


[1] Lando, Ole. “The Lex Mercatoria in International Commercial Arbitration.” The International and Comparative Law Quarterly, vol. 34, no. 4, 1985, pp. 747–68. JSTOR, Accessed January 31, 2024.

[2] Pryles, Michael. "Application of the lex mercatoria in international commercial arbitration." University of New South Wales Law Journal, 31.1 (2008): 319–329.

[3] Roba, Roxana Maria. "Lex Mercatoria in International Commercial Arbitration." Journal of International Law 47.4 (2011): 811.

[4] Lex Mercatoria in Arbitration," Law Explorer, October 5, 1970,

[5] Lex Mercatoria in International Arbitration, Dergipark, Accessed January 31, 2024.

  • The article highlights that international contracts now include arbitration clauses, highlighting a clear preference for this dispute resolution method.
  • The UNIDROIT Principles significantly shape the evolving lex mercatoria, playing a key role in international commercial transactions and gaining recognition in arbitral awards.
  • Flexibility in applying transactional rules underscores the importance of party intent, allowing tailored solutions for resolving international disputes.

BY : Vaishnavi Rastogi

All Latest News