- Arbitral Award
- Ad hoc Arbitration (Place unknown)
STATE CONTRACTS - LONG-TERM CONTRACTS - CONSTRUCTION CONTRACT - BETWEEN A UNITED STATES OIL COMPANY AND THE GOVERNMENT OF A STATE OF THE FORMER SOVIET UNION – CHOICE OF LAW CLAUSE IN FAVOUR OF DOMESTIC LAW OF THAT STATE - ACCORDING TO ARBITRAL TRIBUNAL DOMESTIC LAW IN QUESTION NOT FULLY DEVELOPED – REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET AND SUPPLEMENT IT
INVESTMENT CONTRACT GRANTED FOREIGN INVESTOR A LONG-TERM CONTRACT FOR SUPPLY OF ELECTRICITY TO CUSTOMERS IN HOSTING STATE AT PROFITABLE PRICES – DUE TO SUBSEQUENT CHANGES IN ENERGY SUPPLY SYSTEM OF HOSTING STATE SUPPLY OF ENERGY BY FOREIGN INVESTOR NO LONGER PROFITABLE – REFERENCE TO ARTICLES 1.4, 6.2.2-6.2.3 AND 7.1.7 OF UNIDROIT PRINCIPLES.
A U.S. oil company entered into a contract with the Government of a State formerly belonging to the Soviet Union. The U.S. company was to invest a large amount of money and construct a power station, in return for which it would be granted a long-term contract for the supply of electricity to customers in that State at prices fixed in such a way that a return from the investment could be expected. Later the energy supply system in the State in question was fundamentally changed by law, making it impossible for the power station set up by the U.S. company to supply energy at profitable prices.
The contract contained a choice of law clause in favour of the domestic law of the State in question. However, the Arbitral Tribunal found that this domestic law had not yet been fully developed following the changeover to a market economy and contained a number of lacunae and ambiguities having a bearing on the dispute. Consequently, the Arbitral Tribunal found that the domestic law of that State should be supplemented by taking into consideration particularly Articles 1.4, 6.2.2-6.2.3 and 7.1.7 of the UNIDROIT Principles.
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Unpublished. For a notice of the award see K.H. BÖCKSTIEGEL, The Application of the UNIDROIT Principles to Contracts involving States or Intergovernmental Organizations, in ICC/UNIDROIT (eds.), UNIDROIT Principles of International Commercial Contracts. Reflections on their Use in International Arbitration, Special Supplement- ICC International Court of Arbitration Bulletin (2002), p. 51 et seq. (at p. 54)}}