'36. [The legal expert] was invited to answer the following four questions under French law:

(i) Is the law of prescription regarded as procedural or substantive? In other words, is the effect of a statute of limitation to extinguish only the remedy whilst leaving the right in existence or, on the contrary, is its effect to extinguish the right itself?

(ii) In the circumstances of this case, should an arbitrator sitting in Paris apply French law or the law of [State X] to the question whether or not the Claimant's claims are timed-barred by the applicable law of prescription?

(iii) If French law is applied to the question of prescription, are the Claimant's claims now time-barred?

(iv) What are the mandatory rules of French law applicable to this arbitration?

37. The report deserves to be read in full but its conclusions on the four questions to be answered can be summarised as follows:

(i) Is the French law of prescription regarded as procedural or substantive?

Under French national law there are conflicting decisions and opinions on this matter so that it is impossible to say whether the law of prescription is regarded as procedural or substantive in nature. However, under French international private law there is no doubt that the law of prescription is regarded as substantive, i.e. it is governed by the law governing the underlying obligations in question.

(ii) Should an arbitrator sitting in Paris apply French law or the law of [State X] to the questions of prescription in this case?

If this question were raised before a French court, it is clear that the court would regard the law of prescription as a substantive issue and so would apply the law governing the Contract itself, i.e. the law of [State X]. However, under French law, arbitral tribunals are free to characterise the question as to the nature of the law of prescription themselves. Thus if the arbitrator considered the law of prescription as a substantive issue, which is the civil law approach, he would probably apply the law of [State X]. Even if the arbitrator characterised the law of prescription as a procedural issue, it is not certain which system of law he would apply. This is because, pursuant to Article 1494 of the French Code of Civil Procedure and Article 15(1) of the ICC Rules,¹ the parties are free to choose the law of the arbitral procedure which is not automatically the law of the seat of the arbitration. In the absence of any agreed choice by the parties, the arbitrator is free to designate the procedural law of his own choice.

(iii) If French law is applied to the question of prescription, are the Claimant's claims now time-barred?

Originally the relevant period of prescription under French law which applies to the claims brought in this arbitration was 10 years from when the cause of action arose. However, under the reforms to the law of prescription enacted in 2008, the former prescription period applicable to these claims of 10 years has been reduced to five years. Under the transitional provisions, the Claimant would have either five years from 19 June 2008 (when the new law came into force) or, alternatively, ten years from when the cause of action arose within which to bring its claims. On the basis that the Claimant brought its claim in April 2009, when it served its request for arbitration, and, on the assumption that the relevant causes of action arose in 2001, the Claimant's claims would not be barred under French law under either of the bases set out above, since the prima facie period of ten years would not have expired until 2011, well after time stopped running against the Claimant.

(iv) What are the mandatory rules of French law which are applicable to this arbitration?

French rules of prescription are not mandatory in domestic cases and certainly are not mandatory in international arbitration. Thus there is nothing in French law which would be an obstacle to the application of a foreign law of prescription in an international arbitration. Further, under Article 1504 of the French Code of Civil Procedure, the application of a foreign law of prescription in an arbitration conducted in France would not be considered to be "contrary to international public policy". This is because the French courts practise a very light control of arbitral awards and will only intervene under Article 1504 and/or 1502 if the violation of international public policy is regarded as being "flagrant, effective and concrete". Concerning contractual and non-contractual obligations, international public policy has never been a ground to refuse the application of a foreign law of prescription either when the limitation is shorter than in French law or when it is longer.

38. By the time the process of the exchange of written submissions had been concluded, there was only one threshold defence left, as the Respondent had not pursued the other defences raised in its Answer and first round of submissions. The surviving preliminary issue concerned the argument raised by the Respondent that all the Claimant's claims which it advances in this arbitration are statute-barred under the [State X statute of limitations]. The Claimant joins issue with the Respondent and maintains that its claims are not statute-barred on account of the fact that the governing legal system to decide this question of limitation is the French Civil Code being the law of the agreed place of arbitration. Under that code, it is asserted that the relevant limitation period is ten years so that the Claimant's claims are not statute-barred.

39. Thus the preliminary issue which I have to decide can be stated as follows:

Are the Claimant's claims in this arbitration time-barred by reference to the applicable rules of prescription?

40. This preliminary issue logically divides into four parts as follows:

(i) Do rules of prescription apply to the Claimant's claims at all and, if so, are the applicable rules those of the law of France (as the seat of the arbitration) or the laws of [State X] (as the governing law of the Contract) or of some other legal system?

(ii) When did time, for the purposes of limitation of actions, start running against the Claimant?

(iii) When did time for the purpose of limitation stop running against the Claimant?

(iv) Are the Claimant's claims time-barred?

Question No. 1: Which legal system governs the issue of limitation of actions?

The Respondent's case

41. The Respondent's primary argument is that, under the law of [State X], all questions of limitation of actions are regarded as matters of substantive law which must be decided according to the applicable law which governs the contract. Under sub-clause 5.1(b) of the Conditions of Particular Application attached to the Contract, the parties agreed that the law applicable to the Contract should be the law in force in [State X]. … Under [the State X statute of limitations] the limitation period is stated to be six years from the date when the cause of action first arose.

42. The Respondent maintains that this result derives from the fact that [State X] is a common law jurisdiction and whereas, at one time, under the common law, questions of limitation of actions were classified as questions of procedural law, that position no longer obtains. In support of this contention, the Respondent relies upon International Commercial Arbitration by Redfern & Hunter (5th Edition) at paragraph 4.08.

43. The Respondent also relies upon two recent cases in other common law countries which, it is submitted, show that the historical division between matters of substantive law and procedural law adopted by the common law, under which matters of limitation of actions were classified as procedural, now needs to be reconsidered in the light of these decisions. The first decision is Tolofson v. Jensen (1994) 3 SCR 102 (a decision of the Supreme Court of Canada) and John Pfeiffer Pty v. Rogerson (2000) 203 CLR 503 (a decision of the High Court of Australia). In those cases, both of which involved claims in tort for personal injuries, both courts overrode the existing consensus in the common law that questions of limitation of actions are regarded as procedural and found that they were in fact, under the conditions obtaining in those jurisdictions, properly to be regarded as matters of substantive law.

44. In the alternative the Respondent relies upon paragraphs 24 and 26 of the Terms of Reference which, it is submitted, allow the Arbitrator to decide what should be the procedural rules applicable to the arbitration, including the rules of limitation of actions.

45. In support of this argument, the Respondent submits that the French rules of limitation are not mandatory rules of law but, under Article 1494 of the French Code of Civil Procedure, the parties are permitted to establish their own procedural rules including, it is suggested, rules relating to the limitation of actions. So far as material, Article 1494 of the Code of Civil Procedure provides as follows:

The arbitration agreement may, directly or by reference to a set of arbitration rules, define the procedure to be followed in arbitral proceedings. It may also subject it to a given procedural law. If the agreement is silent, the Arbitrator, either directly or by reference to a law or a set of arbitration rules, shall establish such rules of procedure as may be necessary.

46. The Respondent refers to the case of Hecht v. Buismans (1970) (1972) Rev. arb. 67, a decision of the Paris Court of Appeal.

47. If, contrary to the Respondent's primary contentions, the law of limitation is regarded as part of procedural, as opposed to substantive law, then the Respondent relies upon Article 15 of the ICC Rules of Arbitration which provides as follows:

15(1) The proceedings before the Arbitral Tribunal shall be governed by these Rules and, where these Rules are silent, by any rules which the parties or, failing them, the Arbitral Tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration.

48. On this basis the Respondent submits that the Arbitrator has power to decide which procedural rules to apply and the Arbitrator should choose the rules of procedure of the Law of [State X] since the parties themselves selected the Law of [State X] as the law applicable to the Contract.

49. The Respondent also refers to Dicey, Morris & Collins on the Conflict of Laws (14th Edition) at paragraph 7-049 where reference is made to the Foreign Limitation Periods Act 1984 which provides that, in any actions tried in England, the court is to apply the rules of limitation provided by the lex causae or applicable law of the contract rather than the rules of English law if they are different.

50. The Respondent also relies upon Articles 4 and 10 of the Rome Convention which, similarly, provides that the law of limitations shall be governed by the applicable law of the Contract and not the law of the state where the action is heard (lex fori).

51. Finally the Respondent relies upon a passage from International Chamber of Commerce Arbitration by Craig, Park and Paulsson (3rd Edition) in paragraph 7.04 as follows:

Various legal systems may provide different and incompatible solutions for issues such as those relating to the prescription of litigation (statute of limitations) … (One might note that common law practitioners are likely to view issues of statutes of limitations and legal interest rates as procedural rather than substantive matters and look to the law of the forum. In ICC Arbitration, it could seem appropriate to hold these issues to be governed by the same law that governs the merits, which is often the only one the parties agreed to).

Here the Respondent emphasises that the parties agreed that the law governing the merits should be the law of [State X] and, in that regard, relies upon Article 17(2) of the ICC Rules which provides as follows:

17(2) In all cases the Arbitral Tribunal shall take account of the provisions of the Contract and the relevant trade usages.

52. After receipt of the report from [the legal expert], the Respondent made further written submissions which largely repeated its earlier submissions. But, by way of new material, the Respondent made the following additional points:

(i) Under French law the rules of prescription are categorised as being rules of substantive law and thus are governed by the governing law of the contract, in this case the law of [State X].

(ii) So far as the decision of the House of Lords in the case of Harding v. Wealands (2007) is concerned, the Respondent submits that decision does not, in a case involving the limitation of actions, dispute that the law of the place of arbitration may characterise the rules of prescription as being substantive and thus governed by the law of the contract.

(iii) In addition to the passage already cited from International Chamber of Commerce Arbitration, the Respondent also relies on a passage in International Arbitration by Redfern and Hunter (5th Edition) at paragraph 4.08 to similar effect and which adds:

… however the modern tendency in common law countries is to classify "foreign" laws governing time limits as matters of substance.

(iv) So far as enforcement of any award is concerned, the Respondent relies on the opinion of [the legal expert] to the effect that the French courts exercise a light control over arbitral awards and would be unlikely to interfere where the award applies rules of prescription of a foreign law, such as the law of [State X].

The Claimant's case

53. The Claimant's principal argument is that the governing law to decide issues of limitation of actions is French law, being the law of the place of arbitration (lex fori) chosen by the parties after the dispute had arisen. Under French law per Article L100-4 of the Code of Commerce the limitation period in respect of the Claimant's claims is 10 years from the date when the cause of action arose.

54. The Claimant accepts that the result of this issue depends upon the correct characterisation of the law of limitation as either part of the substantive law or procedural law of the state. But the Claimant submits that, the Respondent having raised this issue, it can only succeed upon it if it is clear from the application of the correct law that the Claimant's claims are statute-barred.

55. The Claimant suggests that the correct approach to this issue is to resolve the question by the applicability of the law of [State X], being the law applicable to the Contract. The Claimant submits that, under the law of [State X], being a common law country, questions of limitation of actions fall into two categories viz. limitations which extinguish the right of action as well as the remedy are characterised as matters of substantive law whereas limitations which extinguish only the remedy whilst preserving the right are characterised as matters of procedural law. In this case the [State X statute of limitations] (following the Limitation Act 1939 in England) is in the latter category in that it only extinguishes the remedy, and not the substantive right of action. Accordingly, the common law regards it as a matter of procedural law and not substantive law, so that it is not to be applied in this case since the parties have, by agreeing to Paris, France being the place of arbitration, implicitly agreed that French law should govern all matters of procedure including limitations of actions.

56. The Claimant also argues that for another reason the [State X statute of limitations] does not apply to international arbitrations. … The Claimant argues that the [statute] does not say that it applies to an arbitration with its seat outside [State X] ...

57. In relation to the Respondent's reliance upon the two recent cases in the Supreme Courts of Canada and Australia and in relation to the Respondent's reference to the English Foreign Limitation Periods Act 1984, the Claimant submits that those legal developments, whilst interesting, are not relevant to the issue in hand since they do not purport to relate to the law of [State X]. In the case of the English statute this is patently so and in the case of the other two decisions, they deal with entirely different considerations concerning personal injury cases and their effect should be read as being limited to the jurisdictions to which they relate. In other words the Claimant submits that the common law, as it existed in England prior to the passing of the 1984 Act, should be regarded as still being the common law in [State X]. If that is so, then the law of [State X] characterises the law of limitation, which bars the remedy only, rather than the right, as being procedural and not substantive. Or to put it another way, the Claimant submits that the question is not what is "settled international practice" as regards the treatment of limitation provisions as being substantive or procedural but rather, how does the current law in [State X] treat that issue?

58. In this regard, the Claimant relies upon and adopts a passage in The Conflict of Laws by Dicey, Morris and Collins at paragraph 7-047 as follows:

In considering foreign rules as to limitation the English Courts have traditionally applied their own classification based on the distinction between barring a right and extinguishing a remedy. The position resulting from this approach which would still be adopted in countries following the English common law rules, can be illustrated by reference to the different situations which can arise:

(i) If the statutes of limitation of the lex causae and of the lex fori are both procedural, an action will fail if it is brought after the period of limitation of the lex fori has expired although that of the lex causae has not yet expired; but will succeed if the period of limitation of the lex fori has not yet expired although that of the lex causae has expired. …

(ii) If the statutes of limitation of the lex causae is substantive but that of the lex fori is procedural, the lex fori will probably apply if its period of limitation is shorter than that of the lex causae on the ground that it is inconvenient for the forum to hear what it considers to be stale claims. But once a substantive period of limitation of the lex causae has expired no action can be maintained even though a procedural period of limitation imposed by the lex fori has not yet expired: in such a case there is simply no right left to be enforced.

(iii) If the statutes of limitation of the lex causae and of the lex fori are both substantive, it is probable that the same results would follow as in the case just considered.

(iv) If the statute of the lex causae is procedural and that of the lex fori is substantive strict logic might suggest that neither applies, so that the claim remains perpetually enforceable. A notorious decision of the German Supreme Court once actually reached this absurd result. But writers have suggested various ways of escape from this dilemma, and it seems probable that a Court would apply one statute or the other.

In this case the Claimant submits that, of the four options given in that passage, the first or the fourth should be applied.

59. Alternatively, even if the French law of limitation is properly regarded as substantive, then the Claimant suggests that it should still be applied as the lex fori or lex arbitri because the validity and enforceability of any arbitral award made where the place of arbitration is Paris would have to be decided by French courts under French law. In this regard the Claimant relies upon the South African case of Laconian Maritime Enterprises Limited v. Agromar Lineas Limited [1986] (3) SA 509 (D) at page 524.

60. Finally the Claimant observes that the ICC Rules are neutral on the question of choice of procedural law where the parties have not made that choice themselves and submit that the Rules give the Tribunal a "free rein" to choose the procedural law governing limitation of actions as may be most appropriate.

61. Similarly, to the Respondent, after receipt of the report of [the legal expert], the Claimant made further written submissions in which it repeated its arguments that the French law rules of prescription should apply to the present case. The Claimant made the following additional points:

(i) Under Article 15 of the ICC Rules, the arbitrator has a wide discretion and could, for example, decide that it is not appropriate to apply the rules of prescription of any national law in this case but, instead, to hold that no limitation laws apply to the Claimant's claims. What is, at first blush, a "startling proposition" is not so since the Respondent has not shown in any way that it has been prejudiced by the delay by the Claimant in starting this arbitration so no injustice would result from such a decision.

(ii) Under [State X] law, being a common law country, the law of limitation must be regarded as procedural and not substantive. The House of Lords decision in Harding v. Wealands [2006] UKHL 32 also reinforces the view that the law of limitation, being procedural law, is governed by the law of the forum in which the case is decided. Although that case was dealing with a different aspect of procedural law, viz. the law of damages, the same principles would apply to another aspect of procedural law, viz. the law of limitation.

(iii) Even under French law, in an arbitration, it is recognised that either the parties or, in default of agreement, the arbitrator may decide which legal system should govern the procedure. Article 15 of the ICC Rules is to the same effect so that the arbitrator has complete discretion as to which system to apply. In the present case, although the contract works were carried out in [State X] and the law of [State X] is the governing law, there are other contra-indications. For example, the Claimant is [a European/Middle Eastern] joint venture and the contract is based upon a widely used international form viz. the FIDIC Red Book (4th Edition).

(iv) The Respondent also relies on a passage from Commercial Arbitration by Mustill & Boyd (2nd Edition) which states:

In the absence of express agreement, there is a strong prima facie presumption that the parties intend the curial law to be the law of the "seat" of the arbitration, i.e. the place at which the arbitration is to be conducted, on the ground that that is the country most closely connected with the proceedings. So in order to determine the curial law in the absence of an express choice by the parties it is first necessary to determine the seat of the arbitration, by construing the agreement to arbitrate.

(v) It would be more convenient for French procedural law to apply to this arbitration since, if an award was ever challenged in the French courts, those courts would be more familiar with the rules of prescription under French law than those rules under the law of [State X].

(vi) If one applies French law to the problem, by whatever route one takes, the answer is always that French procedural law should apply to the arbitration. However, this is caveated by the concession that French law is not prescriptive as to how the arbitrator in an international arbitration should go about determining which law is to apply. In French law there is no "right" or "wrong" answer to this problem because there is nothing in French law which compels the arbitrator to reach one conclusion or the other.

(vii) Finally, on the facts of this case, whether or not one applies the law of [State X] or French law to the question of limitation, the Claimant's claims are not statute-barred since it commenced the arbitration within six years of its cause of action first arising.

Discussion and decision

62. At the end of the three rounds of submissions so far as the preliminary issue is concerned, the Claimant argued that there should be no rules of prescription applicable to its claims at all or, alternatively that, either by virtue of French law or in the exercise of my discretion under Article 15(1) of the ICC Rules, I should hold that the rules of prescription applicable in this case were the rules of French law. In that case the relevant period of limitation is ten years from the accrual of cause of action so that the Claimant's claims are not time-barred. The Respondent's position, which it has maintained throughout, is that under French law, the law of the seat of this arbitration, rules of prescription are characterised as being rules of substantive law. The substantive law of this Contract is, by agreement of the parties, the law of [State X]. Under the law of [State X], the rules of prescription provide a six-year limitation period from the accrual of the cause of action. Accordingly the Claimant's claims are time-barred since this arbitration was not commenced until more than six years had elapsed after the accrual of the causes of action.

63. Whilst the parties differ widely on their approach to this issue and their solution of it, there are a number of matters of common ground. First, the parties accept that there has never been any express agreement between themselves as to which procedural law applies to this arbitration, other than their agreement that the ICC Rules apply. Second the parties accept that they have agreed that the place of arbitration should be Paris, France. Third, the parties accept that, under Article 15(1) of the ICC Rules, a wide discretion is conferred upon me in these circumstances to select which procedural rules, including the rules of prescription of actions, should apply to this arbitration. Fourth, neither party has taken serious issue with the exposition of French law as set out in the report of [the legal expert].

64. I approach the resolution of this issue in the following manner. I have been appointed by the ICC as sole arbitrator in an international commercial dispute. That dispute involves major civil engineering works carried out in [State X]. The parties agreed that the governing law of the Contract, upon the basis of which any disputes arising under it would be decided, was the law of [State X]. After the disputes arose, the parties then agreed that the place of arbitration of those disputes should be Paris, France. Accordingly the seat of this arbitration is Paris and I must approach these issues with due regard to those aspects of French law which apply directly to my mission.

65. The relevant French law has been set out clearly and non-controversially by [the legal expert]. It seems to me that a consideration of that report and of the principles of French law referred to in it must be my starting point in this enquiry. The parties have made wide-ranging submissions to me and have cited a number of authorities under which various courts have grappled with the issues of the choice of procedural law in the private international law sphere. Whilst interesting, those authorities and arguments have little relevance to the position I am in and the enquiry which I must make.

66. Under French law, the law of the seat of this arbitration, great latitude is given to the parties and, in default of agreement, to the arbitrator in relation to the choice of the procedural rules which should apply to an arbitration as per Article 1494 of the French Code of Civil Procedure. It is interesting to note, as does International Commercial Arbitration, by Gary Born, at paragraph 1180, that the French law on international arbitration "makes no reference to the law of the seat in its provisions concerning the determination of the law of the procedure".

67. It is clear that, in this case, neither the arbitration agreement itself nor the ICC Rules, which are incorporated into it, define completely the procedure to be followed in the arbitral proceedings. In particular, they do not define which rules of prescription should apply. Thus Article 1494 expressly gives me a discretion to "establish such rules of procedure as may be necessary". It goes without saying that, in this case, it is necessary for me to establish which rules of prescription should apply to the Claimant's claims.

68. Similarly it seems to me, and the parties both so submit, that Article 15(1) also gives me a wide discretion, in the circumstances of this case, to establish the necessary rules of procedure, in particular the rules of prescription. So much is common ground. I must now consider how best I should go about this enquiry.

69. As a preliminary matter, I need to deal with the point made in its third round of submissions by the Claimant, that I do not need to apply any rules of prescription at all since the Respondent has suffered no prejudice by the delay in bringing the Claimant's claims and any hardship could be compensated by reduction in the sums awarded to the Claimant or, possibly, by an award of costs. This is a novel proposition, described by the Claimant itself as "startling" at first blush and no authority, either academic or judicial, is cited in support of it. For my part, I cannot see how this argument can get on to its feet. The rules of prescription are laid down by statute in the laws of most, if not all countries, in order, as a matter of public policy, to prevent stale claims being brought to the prejudice of defendants and the public at large. It is axiomatic that, in all commercial contracts, the parties to them are well aware of such rules when they decide the system of law to govern their contractual relations. If they wished to abrogate or modify the rules of limitation, many legal systems permit them to do so but this must be expressly provided for in their agreement. Absent such agreement, the ordinary rules of prescription which apply to the Contract will inevitably also apply to any claims brought under it.

70. Even if it were technically possible, which I strongly doubt, for an arbitrator under Article 15(1) to decide that a contract should be subject to no rules of prescription, I can see no reason in the present case to do so. It is true that the Respondent has not put forward any specific case of prejudice but experience shows that documents get lost, the memories of witnesses fade and relevant witnesses may no longer be available when claims go to sleep. In this case, the claims first arose in 2001 and, after the Engineer's decision given in February 2002, the Claimant allowed over seven years to pass before commencing this arbitration. This delay has not been explained save that it is said that the parties attempted to settle their differences by negotiation. In such circumstances, even if I had the power to abrogate all rules of prescription as the Claimant contends, I would not do so since the circumstances of this case do not, in my view, justify it.

71. Accordingly it seems to me that my decision in this case lies between applying the rules of prescription laid down by French law on the one hand or by the law of [State X] on the other hand. In approaching this decision I am conscious that, if I hold that the French rules of prescription apply then the Claimant's claims are probably not time-barred, whereas, if I hold that the rules of prescription of the law of [State X] apply, they may well be. Thus my decision, either way, will have serious consequences.

72. Given the wide discretion given to me by French law and Article 1494 and by Article 15(1) of the ICC Rules, I now consider whether I should categorise the rules of prescription in this case as substantive or procedural since that decision will guide me in deciding which set of rules to apply. Of course I must exercise that discretion judicially and by reference only to factors which are legally relevant to the issue.

73. Under French international private law it is clear that rules of prescription are regarded as rules of substantive law and are governed by the law applying to the contract. In this case that would mean that the [State X statute of limitations] provides the applicable rules of prescription.

74. If I look at the question through the eyes of [State X] law, the answer is less clear. [State X] is a common law country and, traditionally, the view taken by the common law has been that procedural rules (including rules of prescription) are part of the procedural law and not the substantive law. Subject to any contrary agreement by the parties, the procedural law applicable to any arbitration is the law of the seat of the arbitration, in this case Paris. Accordingly, in the present case, the application of the law of [State X] would point to the procedural law of this arbitration being governed by French law, including the rules of prescription.

75. The Claimant argues that this is the true position whereas the Respondent argues that the traditional common law position has been modified in recent years and, in any event, it need not apply to international arbitrations at all.

76. It is true that, as is said in International Arbitration by Redfern and Hunter (5th Edition) at paragraph 4.08 that:

Civil law countries tend to classify provisions relating to time limits as substantive, while the approach of common law countries until the second half of the 20th century was to treat questions relating to time limits as procedural. However, the modern tendency in common law countries is to classify "foreign" laws governing time limits as matters of substance.

77. Further in International Chamber of Commerce Arbitration by Craig, Park and Paulsson (3rd Edition) at paragraph 16.02 it is stated:

Without any sophisticated analysis, parties expect two things in practice: first, that by adopting an ICC clause in their contract, they will have escaped procedural particularities of local courts; and second, that international arbitrators will have the power to supplement the procedures set forth in the Rules. If the parties have not fixed the seat of arbitration in their contract and a neutral seat is fixed by the Court of Arbitration, it is clear that the national procedural law of the seat has no natural claim to govern the arbitral proceedings insofar as the intention of the parties is concerned. Even if the parties have chosen the place of arbitration in their contract it is most doubtful that by such choice they intended to follow the rules of national procedure applicable to domestic arbitrations at the seat, let alone the practices followed in judicial proceedings there. More likely, they have chosen a site which is neutral and geographically convenient and has a reputation for the successful conduct of international commercial arbitrations.

78. In this case I do not regard the choice by the parties of Paris as the place of arbitration as being any indication that they, by making that choice, intended that French procedural law, including the laws of prescription, should apply to this arbitration. When they made that choice, the Claimant had proposed either London or Paris as the place of arbitration. The Respondent opted for Paris and, in so doing, it is highly unlikely that it had regard to the rules of French procedural law since those rules, i.e. the rules of prescription, are unfavourable to the Respondent's position taken in this arbitration. It is inconceivable that the Respondent would have actually intended such unfavourable rules to apply, if it was aware of them. I take the view that the reason that the parties chose Paris as the place of arbitration is that it was a neutral location with a high reputation for the activity of international arbitration supported by an experienced and sophisticated legal system. I therefore conclude that the parties have not, in any way, demonstrated any specific intention as to which procedural law should apply to this arbitration.

79. In the light of the wide discretion given to me by Article 1494 of the French Code of Civil Procedure and by Article 15(1) of the ICC Rules, I do not consider that it is strictly necessary in my decision-making process for me to decide whether the rules of prescription applicable to this case should be considered to be procedural rules or rules of substantive law. A judge, sitting in a national court may well have to make that decision but I am in a very different situation. However, if it is necessary or even helpful for me to reach a decision on that point, I prefer to categorise the rules of prescription applying in this case as substantive rather than procedural. My reasons are as follows. It does seem to be the case that, in recent times, in common law countries, such as Canada and Australia, the categorisation of rules of prescription as being procedural and not substantive has weakened and in some places broken down. But in Harding v. Wealands (2006) the House of Lords had to consider whether the proper assessment of damages for a personal injury under the Motor Accidents Compensation Act 1999 of New South Wales, Australia should, under English law, be classified as a matter of procedural law or substantive law. The Court decided that it was to be regarded as a matter of procedural law under English law, even though other common law countries (including Australia) would regard it as a matter of substantive and not procedural law.

80. Whilst the decision of the House of Lords in Harding v. Wealands (2006) does not encourage this development, which has occurred in other Commonwealth countries in relation to the law of damages, I consider that, so far as the rules of prescription are concerned, this development is well established and welcomed. It seems to me that rules of prescription, which potentially have such a dramatic effect on the parties' rights once disputes have arisen, should properly be regarded as part of the substantive law which governs all the other rights of the party under the contract. In modern conditions, it seems to me to be strange to saddle two parties who have chosen the law governing the merits of their dispute with a different legal system applying its rules of prescription which can bring a dispute to a rapid conclusion. It is even more strange if this can happen arbitrarily where the parties cannot agree on the place for arbitration so that it is decided either by the institution which administers the arbitration or by the arbitrator himself. Under the principle of party autonomy, it seems to me that the imposition of such important procedural rules as the rules of prescription upon parties, either by the arbitral institution or by the arbitrator, runs counter to the view that party autonomy is the very bedrock of modern commercial arbitration.

81. There is a further consideration which leads to the same conclusion. When the parties entered into the Contract, they were both aware that the agreed governing law was the law of [State X]. At that time no place of arbitration had been agreed so neither party would be in a position to know where the seat of any arbitration might be. Thus, the only legal system of which the parties would have been aware at that time was the legal system of [State X]. Had the parties been interested in finding out what were the relevant rules of prescription at the time they signed their Contract, the only rules which they could have had regard to would have been those of [State X]. In such circumstances it seems to me that it is fair and reasonable that those rules should be applicable to the Contract, in the absence of any identifiable agreed alternative.

82. The Claimant argues that, if the true position is that, under French law, rules of prescription are substantive whereas, under [State X] law, such rules are procedural, a real difficulty arises. For an arbitrator sitting in France would be required to apply [State X] law whereas [State X] law categorises the rules as procedural and so governed by French law. This conundrum is dealt with in The Conflict of Laws by Dicey, Morris & Collins (14th ed.) Vol. 1 at para. 7-047. There the learned authors suggest that, in such a situation, strict logic might suggest that neither set of procedural rules would apply so that the claim remained perpetually enforceable. In fact, in a notorious decision, the German Supreme Court once actually reached this result in 1882 but more recent German decisions have refused to follow this precedent. The learned authors conclude that:

But writers have suggested various ways of escape from this dilemma, and it seems probable that a court would apply one statute or the other.

I find this analysis to be helpful, even though it applies to what a court would do rather than an arbitrator. As I have already said, it seems to me that both under French law and under the ICC Rules themselves, I have been given a wide discretion to resolve this type of question by deciding which set of rules is most appropriate in the circumstances.

83. Finally, I must deal with two arguments raised by the Claimant which I have not already addressed. The first is that, since all questions of the validity of my award will be considered by the French courts, it would be desirable that the French law rules of prescription should be applied since the French courts will be familiar with their operation. I do not consider there is any substance in this suggestion. As the report from [the legal expert] makes clear, there is nothing under French law to inhibit an arbitrator sitting in Paris from applying foreign law rules of prescription to an arbitration. Judges, in France and elsewhere, are often experienced in applying foreign law and will be perfectly capable of doing so expertly. Thus this objection lacks any real substance.

84. The second argument raised by the Claimant is based upon [the State X statute of limitations]. The Claimant's argument to the effect that [the statute] only applies to arbitrations proceeding in [State X] is, in my opinion, untenable. There are no words … which so limit the application of the [statute] to arbitrations proceeding in [State X] and the natural reading of the words leads to the opposite conclusion. That is all I need say about that argument.

Conclusion

85. In the exercise of the discretion given to me in this regard by Article 1494 of the French Code of Civil Procedure and by Article 15(1) of the ICC Rules, I have reached a conclusion that the appropriate rules of prescription to apply to the Claimant's claims in this arbitration are contained in the [State X statute of limitations]. That law is the substantive law of the Contract expressly agreed by the parties and it is appropriate that it should apply in this case, particularly since all the construction works, the subject of the Contract, were carried out in [State X] for the government of that state. There is nothing in French law, being the law of the seat of the arbitration, which prevents or inhibits such a conclusion, nor would the French courts question the fact [that] the rules of prescription of a foreign law are being applied to an arbitration taking place in France. Neither would my decision affect the validity of my award under French law or its enforceability either under French law or, I may add, under the law of [State X].'

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1
Editor's note: This and subsequent references are to the 1998 ICC Rules of Arbitration.

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