- Arbitral Award
- ICC International Court of Arbitration 11869
SALES CONTRACT - BETWEEN AUSTRALIAN SELLER AND BUYER OF UNKNOWN NATIONALITY - PARTIES' CHOICE OF ENGLISH LAW AS APPLICABLE LAW
ARBITRATION AGREEMENT PROVIDING “FOR ARBITRATION IN VIENNA, AUSTRIA, IN ACCORDANCE TO THE RULES OF ARBITRATION” - TO BE UNDERSTOOD AS REFERENCE TO ARBITRATION TO BE HELD IN VIENNA IN ACCORDANCE WITH ICC RULES OF ARBITRATION - REFERENCE BY ARBITRAL TRIBUNAL TO PRINCIPLES OF “IN FAVOREM VALIDITATIS” AND “CONTRA PROFERENTEM” UNDER ENGLISH LAW AND TO PROVISIONS ON INTERPRETATION IN UNIDROIT PRINCIPLES WHICH ACCORDING TO ARBITRAL TRIBUNAL “THOUGH […] TO A LARGE EXTENT IDENTICAL TO THE ENGLISH CANONS OF CONSTRUCTION […] INCLUDE CERTAIN ADDITIONAL OR BROADER RULES THAT SUPPLEMENT THE ENGLISH PRINCIPLES TO AVOID THAT THE BAD DRAFTING LEADS TO THE UNCERTAINTY OF A CONTRACT”
An Australian Seller and a Buyer of unknown nationality entered into a sales contract according to which the goods were to be delivered within a time limit of sixty days and in case of delay Seller would pay the Buyer 0,1% of the cost of the undelivered goods for each day of delay, up to a maximum of 3% of that cost. The contract was governed by English law and provided “for arbitration in Vienna, Austria, in accordance to the rules of arbitration”.
A dispute arose when Seller informed Buyer that it would not be able to deliver the goods and the Buyer asked for 3% of the sale price as liquidated damages for non-delivery.
The Sole Arbitrator first of all affirmed that he had jurisdiction over the dispute because the arbitration clause contained in the contract was valid under English law. In interpreting the arbitration clause, the Arbitrator applied the principles of “in favorem validitatis” and “contra proferentem”. In this context, he expressly referred to the UNIDROIT Principles (Arts. 4.5 and 4.6) which, in his view, “though […] are to a large extent identical to the English canons of construction […] include certain additional or broader rules that supplement the English principles to avoid that the bad drafting leads to the uncertainty of a contract”.
On the merits, the Arbitrator awarded Buyer damages on the basis of the liquidated damages clause in the contract, which he considered valid under the applicable English law, compensation for the costs of opening a letter of credit for the benefit of Seller and interest on both sums.
Albert Jan van den Berg (ed), Yearbook Commercial Arbitration 2011 – Vol. XXXVI (Kluwer Law International 2011) pp. 47-69}}