- Arbitral Award
- Arbitration Court of the Lausanne Chamber of Commerce and Industry
SATELLITE CONTRACT - PLURALITY OF PARTIES OF DIFFERENT NATIONALITIES (TURKISH, WEST INDIAN, PHILIPPINE) - CONTRACT CONTAINING CONFLICTING PROVISIONS AS TO THE APPLICABLE LAW (ENGLISH LAW OR SWISS LAW) - AT BEGINNING OF ARBITRAL PROCEEDINGS PARTIES AGREED ON APPLICATION OF THE UNIDROIT PRINCIPLES.
NON-PERFORMANCE OF CONTRACT - DUTY TO ACT IN GOOD FAITH - DUTY OF CONFIDENTIALITY - CONTRA PROFERENTEM RULE - REFERENCE BY ARBITRAL TRIBUNAL TO ARTICLES 1.7, 2.16 AND 4.6 OF THE UNIDROIT PRINCIPLES.
RIGHT TO DAMAGES - COMPENSATION FOR HARM SUSTAINED BY AGGRIEVED PARTY AS A RESULT OF NON-PERFORMANCE - NON-PERFORMING PARTY LIABLE ONLY FOR FORESEEABLE HARM - REFERENCE BY ARBITRAL TRIBUNAL TO ARTICLES 7.4.1, 7.4.2 AND 7.4.4 OF THE UNIDROIT PRINCIPLES.
A Turkish company and a company incorporated in Anguilla, West Indies, with an office in the Philippines, entered into an agreement concerning highly sophisticated equipment. The contract contained two provisions on the choice of law, which however appeared to contradict each other, since one was in favour of English law and the other in favour of Swiss law.
A dispute arose and the parties agreed to submit it to an ad hoc arbitration governed by the UNCITRAL Arbitration Rules.
In view of the uncertainties as to the applicable substantive law the arbitral tribunal suggested to the Parties to choose the UNIDROIT Principles as the applicable law. The Parties agreed, also in view of the fact that the application of the UNIDROIT Principles was not seen as precluding the application of the English law if applicable as maintained by one Party and the Swiss law if applicable as proposed by the other Party.
In a Partial Award the arbitral tribunal found that one of the parties had not properly performed its obligation arising from the contract. To this effect the arbitral tribunal referred to the following provisions of the UNIDROIT Principles:
- Art. 1.7 on good faith (a principle that is stated in many codification; the award cites civil codes of France, Quebec, Netherlands, Poland, Portugal, Argentine, Brazil and Turkey);
- Art. 4.6 and its Comment ("contra proferentem rule", which in the case at hand was however considered not fully applicable because a thourough review of the terms and conditions of the contract was made by both Parties);
- Art. 2.16 [Art. 2.1.16 of the 2004 edition] (duty of confidentiality; the award mentions the English and Swiss cases and commentary.
- Art. 7.4.1, 7.4.2(1) and 7.4.4 on damages (on the basis of these provisions the arbitral tribunal found that the aggrieved party had suffered a harm as a consequence of the non-performance by the other party, and that the non-performing party could have foreseen that harm.
The arbitral tribunal left to a Final Award the determination of the amount of damages to be paid by the non-performing party.