- Arbitral Award
- ICC International Court of Arbitration 20731
SALES CONTRACT - BETWEEN AN INDIAN SELLER AND A ROMANIAN BUYER - SILENT AS TO THE APPLICABLE LAW – WHEN A DISPUTE AROSE, THE PARTIES REFERRED TO THEIR RESPECTIVE NATIONAL LAWS – ARBITRAL TRIBUNAL DECIDED TO BASE ITS DECISION ON THE UNIDROIT PRINCIPLES BY APPLYING ART. 21(1) ICC ARBITRATION RULES ("RULES OF LAW WHICH [THE ARBITRAL TRIBUNAL] DETERMINES TO BE APPROPRIATE")
Seller, an Indian company, entered into a contract with Buyer, a Romanian company, for the sale of stainless steel tubes, which were intended to be incorporated into heat exchangers manufactured by the Buyer and supplied to a third party. The confirmation of the order which Buyer sent to Seller by e-mail included the following clause: “Arbitration: Court of Arbitration of Paris”. Therefore, when a dispute arose between the parties regarding a series of defects detected in the goods, the Buyer commenced arbitration proceedings before the ICC International Court of Arbitration.
Since the parties disagreed on the law applicable to the dispute, the Arbitral Tribunal decided to apply the UNIDROIT Principles on the basis of art. 21.1 of the ICC Arbitration Rules (“rules of law which [the arbitral tribunal] determines to be appropriate”). The Tribunal then ruled by majority that the Seller was in breach of its obligations under the contract and under the UNIDROIT Principles, and ordered him to pay compensation to the Buyer in the amount of one million euros.
The Seller filed an appeal for the annulment of the award claiming, among others: 1) the lack of jurisdiction of the arbitral tribunal, since the arbitration clause at issue was still at a negotiation and drafting stage, without the consent of both parties; 2) the arbitrators' violation of the limits of their mandate for having applied the UNIDROIT Principles 2010 in order to solve the dispute, instead of Indian law, thus rendering an award on an equitable basis and not according to law
The Court of Appeal rejected Seller’s arguments and confirmed the arbitral Award (see http://www.unilex.info/principles/case/2196) .