Various questions in respect to one of the most important and beneficial of legal institutions – as Friedrich Carl von Savigny described the law on limitation periods – are proving difficult to clarify in the preeminent method of settling disputes of international trade, namely in international arbitral proceedings.
First of all, evaluating the relevant limitation period for international sales contracts in international arbitral proceedings is still challenging because of the different classifications of the legal institution.
While the categories of “substantive” and “procedural” law as classification criteria are elusive per se; the very same division of legal rules is particularly vague in international arbitration, which is characterised by a multifaceted and complex interaction of different laws and rules. When classifying the legal institution, thus, the essay refrains from resorting to formal categories such as “substantive” and “procedural” law and rather examines the underlying rationale of the laws and rules governing international arbitration and their coherence with the objective of the law on limitation periods.
Even after the law on limitation periods has been properly classified and assigned to the adequate legal framework, difficulties remain to be solved when the arbitrators exercise their discretion in determining the applicable prescription regime. The essay shows that in the realm of international trade, rules of law directly derived from commercial usage and of an international nature such as the Limitation Convention or the UNIDROIT Principles may – in contrast to many national prescription regimes – ensure that the dispute is decided in accordance with the ideals of accuracy, efficiency and predictability, which inspire the international arbitral process. Since the virtue of this choice is the fact that it is free of the vagaries and arbitrariness of a national legal system, the outcome also coincides with the very nature of the law on limitation periods to create legal certitude by warding off delicate problems of evidence and stale proceedings.ASA Bulletin