Date: 00.00.2001
Country: Arbitral Award
Number: 117/1999
Court: Arbitration Institute of the Stockholm Chamber of Commerce
Parties: Unknown
Two Chinese companies and a European company entered into an agreement (hereinafter „the Agreement“) on technology exchange and technical co-operation. The Agreement imposed upon the parties a duty of strict confidentiality concerning the information exchanged and a duty of non-competition. The dispute arose when the European company accused one of the Chinese companies of having violated such commitments. The European company claimed damages for the alleged breach and in accordance with an arbitration clause contained in the Agreement filed an arbitration before the Arbitration Institute of the Stockholm Chamber of Commerce

The Agreement was silent as to the law governing the contract. According to Claimant Swedish law (as the law of the place of arbitration and a neutral law) or Luxemburg law (as the law of the country where the party rendering the "characteristic performance“, the granting of a licence, had its place of business) should apply; alternatively, it invoked the application of the UNIDROIT Principles. Defendant argued that the applicable law was the law of the People’s Republic of China as the law of the country where the contract has been concluded and/or the main performance has to be rendered.

The Arbitral Tribunal recalled that according to Article 24(1) of the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce the tribunal, in the absence of an agreement between the parties, shall apply the law or rules of law which the tribunal considers to be most appropriate, a principle often referred to as voie directe.

In the case at hand the Tribunal held that the parties had deliberately refrained from agreeing on the law governing their contract (which otherwise was carefully drafted), apparently on the assumption that should the question of the applicable law ever arise, the law eventually chosen would protect their interest in a way that any normal business man would consider adequate and reasonable, without any surprises that could result from the application of domestic laws of which they had no deeper knowledge. As a consequence, the Tribunal found that the dispute at hand should not be decided according to the law of any particular jurisdiction, but on the basis of such rules of law that have found their way into international codifications or such like that enjoy a widespread recognition among countries involved in international trade. And since, apart from international conventions such as the Convention on Contracts for the International Sale of Goods (CISG) and other conventions that are not directly applicable to a licence agreement, the only codification that could be considered to have this status were the UNIDROIT Principles. The UNIDROIT rules have wide recognition and set out principles that in the Tribunal's opinion offer a protection for contracting parties that adequately reflect the basic principles of commercial relations in most if not all developed countries. The Tribunal therefore concluded that in deciding the dispute at hand it would base itself primarily on the UNIDROIT Principles, and only where the UNIDROIT Principles do not provide an answer to any question of substantive nature raised in the arbitration, it would resort to domestic law, i.e. the law of Sweden as a neutral law.