- Arbitral Award
- ICC International Court of Arbitration 19272
INTERNATIONAL SUPPLY CONTRACT - ORGALIME S2000 STANDARD TERMS INCORPORATED INTO THE CONTRACT - CONTRACT GOVERNED BY THE SUBSTANTIVE LAW OF SUPPLIER'S COUNTRY - REFERENCE TO THE UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW
CONTRACT INTERPRETATION - INTERPRETATION OF THE INTENTION OF THE PARTIES - REFERENCE TO ARTS. 4.1 AND 4.8 UNIDROIT PRINCIPLES
The dispute concerned an international supply contract incorporating the ORGALIME S2000 standard clauses (Orgalime General Conditions for the supply of mechanical, electrical and electronic Products). As provided by the Orgalime S2000 Conditions, the contract was governed by the substantive law of the Supplier's country.
The Sole Arbitrator found that the acts of an engineer, acting on behalf of the Supplier, was negligent as to commissioning and testing, and declared the Supplier responsible for the losses caused to the other party.
However, the parties discussed whether the damages and costs caused by the incident occurred during the commissioning phase were excluded by virtue of the ORGALIME S2000 standard clauses and if so to what extent the costs claimed were excluded.
The Sole Arbitrator found that the Buyer could not infer from the Orgalime Guide that the commissioning and testing for which the Seller was responsible pursuant to the contract were not governed by ORGALIME S2000. Indeed, a reference to ORGALIME S2000 was found in the contractual offer, which was accepted by the Buyer. Therefore, according to the Sole Arbitrator, ORGALIME S 2000 were agreed upon by the parties in their contract and applied to the ‘complete order’, including commissioning and testing. In the Sole Arbitrator's view, there was no reason to assume that a person would understand such a limitation provision to apply only to parts of the contract, also particularly when the reference to ORGALIME S2000 does not include any expression to that effect. In this respect, he referred not only to the law of the Supplier's country, but also to the UNIDROIT Principles Art. 4.1(2) ["If such an intention cannot be established, the contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give to it in the same circumstances"] and Art. 4.8 (2d) [In determining what is an appropriate term regard shall be had, among other factors, to ... d) reasonableness].
The remedies for breach of contract available to the Buyer were therefore validly limited to and shall only be those set out in ORGALIME S2000.