Claimant, a French company, and Defendant, a Japanese company, entered into a license agreement according to which Claimant was given an exclusive license to manufacture, sell and distribute Defendant’s products in Europe. Subsequently Defendant entered into an agreement with an American company granting it an exclusive license for the North American market and a non-exclusive license for other countries. According to Claimant Defendant, by not expressly excluding Europe from those other countries, had violated its agreement with Claimant.
After determining in a partial award that the dispute was to be settled on the basis of the lex mercatoria, in its final award the Arbitral Tribunal addressed the merits of the case and decided in favour of Claimant. It reached its conclusion on the basis of a careful interpretation of the license agreements in question and in this context it expressly relied on Articles 4.1, 4.3 and 4.4 of the UNIDROIT Principles to which both parties had referred to in their pleadings. Yet in support of its decision the Arbitral Tribunal also invoked Article 1.7 of the UNIDROIT Principles and the general principle of good faith and fair dealing in international trade laid down therein: indeed it would be contrary to this principle to do indirectly what the contract prevents from doing directly.
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