- Arbitral Award
- ICC International Court of Arbitration 11256
CONTRACT CONTAINING A CHOICE OF LAW CLAUSE IN FAVOUR OF MEXICAN LAW –DEFENDANT INVOKING APPLICATION OF UNIDROIT PRINCIPLES AS “USAGES” ACCORDING TO ARTICLE 17(2) ICC RULES OF ARBITRATION – ACCORDING TO ARBITRAL TRIBUNAL UNIDROIT PRINCIPLES “DO NOT GENERALLY REFLECT TRADE USAGES”
ROLE OF UNIDROIT PRINCIPLES AS A MEANS “TO INTERPRET THE APPLICABLE DOMESTIC LAW AND SOLVE UNEXPECTED DIFFICULTIES IN APPLYING [THAT LAW] TO AN INTERNATIONAL CONTRACT” - AFFIRMED
A contract between a manufacturer of trucks and another business contained a choice of law clause in favour of Mexican law. Nevertheless, when a dispute arose Defendant invoked the application of the UNIDROIT Principles, together with other international uniform law instruments, in accordance with Article 17(2) of the ICC Rules of Arbitration. Claimant objected on the ground that none of these international instruments “are terms used or generally understood in the truck assembly industry”. In accepting Claimant’s objection the Arbitral Tribunal pointed out that the UNIDROIT Principles, while proposing “reasonable solutions to meet the needs of international trade in the light of the experience of some of the major legal systems […] do not generally reflect the trade usages referred to in Article 17(2) of the ICC Rules of Arbitration”. At the same time however the Arbitral Tribunal stressed “the UNIDROIT Principles, which are the result of a thorough comparative study, may be used to interpret [the domestic law chosen by the parties] and solve unexpected difficulties in applying [that law] to an international contract”.
According to Claimant
“There is no evidence that the CISG, the Inter-American Convention or the UNIDROIT Principles are terms used or generally understood in the truck assembly industry.”
According to the Arbitral Tribunal:
“When, as in this case, the parties have chosen the applicable law to the Agreement, the role of the UNIDROIT Principles can only be a limited one. These Principles have a non-binding character and it logically follows that the solutions of the national law chosen by the parties must prevail. It is only when a national law is ambiguous and therefore calls for interpretation that the UNIDROIT Principles, which are the result of a thorough comparative study, may be used to interpret this law and solve unexpected difficulties in applying it to an international contract. (See, inter alia, F. Dessemontet, ‘Use of the UNIDROIT Principles to Interpret and Supplement Domestic Law’, ICC International Court of Arbitration, Special Supplement 2002, pp. 43 and 49). Moreover, this assumes that legal sources of interpretation in the legal system at stake do not provide solutions in order to solve the ambiguity.
Article 17(2) of the ICC Rules (‘the arbitral tribunal shall take account of the provisions of the contract and the relevant trade usages’) does not affect this conclusion. As stressed by an ICC award of 1999, in the case 9029, “recourse to the Principles is not purely and simply the same as recourse to actually existing internationally commercial usage” (1999, 10; 2 ICC ICArb. Bull. 78; see also, Ph. Fouchard, B. Goldman, E. Gaillard, International Commercial Arbitration, p. 846). The UNIDROIT Principles propose reasonable solutions to meet the needs of international trade in the light of the experience of some of the major legal systems but do not generally reflect the trade usages referred to in Article 17(2) of the ICC Rules of Arbitration. As indicated by Juan Fernandez-Armesto ‘… all rules contained in the Principles do per se meet the traditional test required for usages to be accepted as source of law (‘repetitio’ and ‘opinion iuris’)…’ (J. Fernandez-Armesto, note on the Separate Arbitral Award in SCC case 117/1999, Stockholm Arbitration Report 2002:1 p. 59ff.). There are obviously some overlapping as specific solutions of the Principles may correspond to usages of certain trades. The emphasis put on good faith by the Principles is an example of such overlapping. But the Principles and the trade usages have completely different natures.
In conclusion, the Arbitral tribunal will apply Mexican law, with the possibility, in case Mexican law is ambiguous on specific matters, to resort to the UNIDROIT Principles as a tool for interpretation when no Mexican legal source of interpretation can be used to solve the problem met.”}}
E. Jolivet, L'harmonisation du droit OHADA des contrats: l'influence des Principes d'UNIDROIT en matière de pratique contractuelle et d'arbitrage, in Unifrom Law Review, p. 127 et seq. (p.144 fn 41)}}