International Public Contracts : Applicable Law and Dispute Resolution

This paper examines the legal regimes of international contracts concluded by States and public entities. These agreements come in many shape and form. Some of these contracts are long term arrangements involving
massive amount of capital and touching upon key resources of the State. Other contracts are of more limited scope. The paper focuses on the law applicable to such agreements. The importance of
determining the law applicable to 'state contracts' follows from the peculiar features of a contractual relation with a State, and most notably the additional risk this creates. As in the domestic context, the State is not a contractual partner like any other. It comes into the contractual relationship with its exorbitant powers and sometimes bad manners. This explains why, in contrast with private agreements, where such clauses
are too often neglected, provisions on applicable law and settlement of disputes are often considered the “most sensitive legal issues” in the framework of contracts concluded by States. In this against this background that public international contracts will be examined. The attention will first focus on the determination of the law applicable to such contracts (section 1). Thereafter the focus will be on the various stabilization mechanisms used
in practice (section 2). This will include both direct stabilization mechanisms and dispute resolution provisions, as these two elements are central to the legal regime of public international contracts. An attempt will be made to present both the generalprinciples and the current practice of States – even though it is difficult to draw
general lessons as contracts concluded by states, which come in various formats and shapes, are not easily accessible.