§ 172.102.Substantive Rules

The governing law section, and it is the one determination the parties may not delegate under Section 172.007.

The parties choose. The tribunal decides the dispute according to the rules of law designated by the parties as applicable to the substance of the dispute.

A designation means substantive law. Unless otherwise expressed, naming the law of a given state refers to that state’s substantive law and not to its conflict-of-laws rules.

That subsection prevents renvoi. Choosing Texas law means Texas rules of decision, not Texas rules about which other law might apply.

Absent a designation, the tribunal supplies one, applying the law determined by the conflict-of-laws rules it considers applicable.

The tribunal chooses the conflicts rules as well as the outcome, which is a wide grant, and it exists because there is no forum whose conflicts rules plainly govern.

Deciding outside law requires express authority. The tribunal decides ex aequo et bono or as amiable compositeur only if each party has expressly authorized it.

Those terms describe deciding on fairness rather than by legal rules, a familiar option in civil law systems and unusual in common law ones.

Two things bind the tribunal in every case. It must decide in accordance with the terms of the contract, and take into account the usages of the trade applicable to the transaction.

Trade usage is a substantive source here, not merely an interpretive aid, which reflects how international commerce operates.