- Arbitral Award
- Ad hoc Arbitration, New York
SERVICE CONTRACT - BETWEEN AN INTERNATIONAL ORGANIZATION AND A COMPANY SITUATED IN AN AFRICAN STATE
“GENERAL PRINCIPLES OF INTERNATIONAL CONTRACT LAW” AS THE RULES OF LAW APPLICABLE TO SUBSTANCE OF DISPUTE – REFERENCE TO UNIDROIT PRINCIPLES
An international organization entered into a contract with a company situated in an African State for services to be rendered in the context of the organization's operations in a neighboring African State. The dispute arose when the company claimed for the balance of the price due for the services rendered.
The contract, which provided for arbitration pursuant to the UNCITRAL Arbitration Rules, did not include a choice of law clause. During the course of the arbitration, the parties agreed on the application of "general principles of international contract law."
Claimant and Respondent both relied on the UNIDROIT Principles of International Commercial Contracts, to establish such "general principles of international contract law." The Claimant in particular cited the UNIDROIT principles extensively, and also referred to New York law consistent with the UNIDROIT Principles.
Claimant maintained that respondent's claims to offsets and credits were based on an interpretation of the contract which was inconsistent with the intent of the parties. The Claimant also argued that respondent had engaged in a post-contract attempt to unilaterally modify the final agreement to be more in line with the proposal on which the contract had been initially awarded rather than with the subsequently negotiated and modified final agreement.
Claimant relied principally on UNIDROIT Principles Articles 1.1 (Freedom of Contract), 1.3 (Binding Character of Contract), 4.1 (Intention of the Parties), 4.4 (Reference to Contract or Statement as a Whole), and 4.5 (All Terms to be Given Effect). Moreover, according to Claimant Respondent breached its obligation to act in good faith, as set forth in Article 1.7 of UNIDROIT Principles, when seeking to unilaterally alter the terms of the agreement. Claimant finally relied on UNIDROIT Principles Articles 7.4.9 (Interest for Failure to Pay Money), as well as on New York law, to support its claim for interest. Respondent cited only UNIDROIT Principles Article 1.7 (Good Faith and Fair Dealing).
In a detailed, fact-intensive decision, the Arbitral Tribunal did not identify the source of law or legal principles it applied in arriving at the award. The Tribunal awarded Claimant approximately 85% of its claim, together with a corresponding percentage of Claimants' attorneys' fees based on the UNCITRAL Arbitration Rules, plus interest at the rate of 9% simple (the New York statutory rate and, arguably, an approximation of the calculation contemplated in Article 7.4.9 of the UNIDROIT Principles), reimbursement for Claimant's share of arbitrators compensation, and other costs.
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