- Arbitral Award
- ICC International Court of Arbitration, Paris 10504
SETTLEMENT AGREEMENT - BETWEEN TWO EASTERN EUROPEAN COMPANIES - SOLE ARBITRATOR AUTHORIZED TO ACT "EN ARBITRAGE EQUITABLE" - APPLICATION OF UNIDROIT PRINCIPLES
THREAT COMING FROM A THIRD PARTY - RELEVANT IF IT HAS LEFT THE CONTRACTING PARTY "NO REASONABLE ALTERNATIVE"- REFERENCE TO ART. 3.9 UNIDROIT PRINCIPLES
THREAT COMING FROM A THIRD PARTY - CONSIDERED AS A LEGITIMATE GROUND FOR THE AVOIDANCE OF CONTRACT WHEN THE THIRD PARTY IS ACCESSORY TO THE OTHER CONTRACTING PARTY - REFERENCE TO ARTS. 3.11 UNIDROIT PRINCIPLES
Claimant and Respondent, two companies located in Eastern Europe, entered into an agreement whereby the Respondent undertook to compensate the Claimant for the loss it suffered as a result of the fraudulent disappearance of goods under the Respondent's custody and control. The Respondent paid only part of the amount due, so the Claimant initiated arbitration proceedings to recover the unpaid balance plus interest. The parties' agreement, which was in French, provided that the Arbitrator would act 'en arbitrage équitable'.
The Sole Arbitrator found as a fact that Respondent signed the agreement under pressure, since during a year and a half it refused to recognize its fault. In establishing the existence of threat, the Arbitrator referred to Art. 3.9 UNIDROIT Principles (now Art. 3.2.6), affirming that "threat is considered in all systems of law as a legitimate ground for the party to avoid the contract". He also specified that the fact that the threat originated from a person who was not a representative of [Claimant] had no influence thereon, because it is generally admitted that the threat which vitiates the consent of a contracting party may come either from the other party or from a third party (see e.g. UNIDROIT Principles, art. 3.11 - now Art. 3.2.8) presumed under these circumstances to be accessory to the other party. According to the Arbitrator, who still mentioned the UNIDROIT Principles, the threat left the Respondent "no reasonable alternative".
As a consequence, the Arbitrator considered that it was fair and equitable, in light of the circumstances, to reduce by half the amount of the damages to which the Claimant was entitled to be paid under the agreement.
Published in English (excerpt):
- ICC International Court of Arbitration Bulletin, Vol. 18/1, 2007, pp. 95-97}}