- Arbitral Award
- ICC International Court of Arbitration
SALES CONTRACT - BETWEEN TWO EUROPEAN COMPANIES - SWISS LAW APPLICABLE - REFERENCE TO UNIDROIT PRINCIPLES TO CONFIRM SOLUTION ADOPTED UNDER SWISS LAW
SELLER'S FAILURE TO PERFORM DUE TO BUYER'S BEHAVIOUR - BUYER MAY NOT RELY ON SELLER'S NON-PERFORMANCE (ARTICLE 7.1.2 UNIDROIT PRINCIPLES)
SELLER'S IMPOSSIBILITY TO PERFORM DUE TO BUYER'S BEHAVIOUR - CONTRACT NOT NULLIFIED (COMMENT 3(A) TO ARTICLE 7.2.2 UNIDROIT PRINCIPLES
Claimant, a European company and lessee of an aircraft, sold the aircraft, with the consent of the lessor, a financial institution, to Defendant, another European company. As the deregistration process in Claimant’s country lasted longer than expected, Defendant decided to buy the aircraft under a second sale agreement from the lessor, which did not reserve the rights of Claimant. A dispute arose when Claimant claimed damages from Defendant in the amount of its lost profit. The arbitration clause referred to Swiss law as the law applicable to the merits of the case.
The Sole Arbitrator decided in favour of Claimant awarding damages for violation by Defendant of the first sale agreement. According to the Sole Arbitrator, since the seller’s impossibility to perform was due to the conduct of the buyer who acted in such a way that the conveyance of the title became impossible although it had not been impossible at the time of entering into the agreement, the first sale agreement was not nullified and in this respect referred to Comment 3(a) to Article 7.2.2 of the UNIDROIT Principles of International Commercial Contracts  stating that “[h]owever, impossibility does not nullify a contract”. Moreover the Sole Arbitrator, in pointing out that in the case at hand Defendant could not rely on the non-performance of Claimant to the extent that such non-performance was caused by Defendant, referred to Article 7.1.2 of the UNIDROIT Principles as well as to Stefan Eberhard, Les sanctions de l’inexécution du contrat et les Principes UNIDROIT, CEDIDAC No 63, Lausanne 2005, pp. 168 ff; according to whom the same solution prevails under Swiss law although the Swiss Code of Obligations does not have an express rule to this effect; see ATF 114 II 274, 277.