28. Rules applicable to substance of dispute.—
(1) Where the place of arbitration is situate in
India,—
(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall
decide the dispute submitted to arbitration in accordance with the substantive law for the time being
in force in India;
(b) in international commercial arbitration,—
(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated
by the parties as applicable to the substance of the dispute;
(ii) any designation by the parties of the law or legal system of a given country shall be
construed, unless otherwise expressed, as directly referring to the substantive law of that country
and not to its conflict of laws rules;
(iii) failing any designation of the law under clause
(a) by the parties, the arbitral tribunal
shall apply the rules of law it considers to be appropriate given all the circumstances surrounding
the dispute.
(2) The arbitral tribunal shall decide ex aequoet bono or as amiable compositeur only if the parties
have expressly authorised it to do so.
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(3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account
the terms of the contract and trade usages applicable to the transaction.]
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