- Arbitral Award
- ICC International Court of Arbitration 19127
JOINT VENTURE AGREEMENT - BETWEEN COMPANIES OF TWO DIFFERENT STATES FOR TECHNICAL ASSISTANCE TO A THIRD STATE - ACCORDING TO THE JVA IN CASE OF DISPUTE PARTIES COULD HAVE RECOURSE TO "AN ARBITRATION COURT" AND THAT "THE FIDIC RULES WOULD APPLY"
VALIDITY OF THE ARBITRATION AGREEMENT - ACCORDING TO ONE OF THE PARTIES TOO VAGUE AND THEREFORE INVALID - PARTIES UNABLE TO AGREE ON A PARTICULAR DOMESTIC LAW AS THE LAW GOVERNING THE ARBITRATION AGREEMENT - ARBITRAL TRIBUNAL DECIDED TO APPLY THE UNIDROIT PRINCIPLES TOGETHER WITH SWISS LAW (LAW OF THE SEAT OF ARBITRATION)
ARBITRATION AGREEMENT NO LONGER EFFECTIVE - BY REASON OF THE PARTIES' CONDUCT SUBSEQUENT TO THE CONCLUSION OF THE JVA - TACIT WITHDRAWAL OF THE ARBITRATION AGREEMENT - REFERENCE TO ARTS. 1.2, 4.1 AND 4.3(3) UNIDROIT PRINCIPLES AND TO SIMILAR RULES OF THE SWISS LAW
ARBITRATION AGREEMENT NO LONGER EFFECTIVE - TO INVOKE ITS VALIDITY WOULD AT LEAST FOR ONE OF THE PATIES AMOUNT TO AN INCONSISTENT BEHAVIOR - PROHIBITED BY ART. 1.8 UNIDROIT PRINCIPLES
"Company A from country X and company B from country Y entered into a joint venture agreement (JVA) to provide technical assistance to the government of country Z in the framework of a project in country Z. According to the JVA, any net margin of the joint venture company was to be divided equally between company A, which was the manager of the joint venture company, and company B. The JVA provided that the parties could refer their disputes to arbitration (pourront faire appel à la Cour d’Arbitrage) and that the FIDIC rules prevailed in such cases.
After the completion of the project, company B sent an invoice to company A for 50 per cent of the joint venture company’s net margin. Company A refused to pay, alleging that company B’s employees did not provide any assistance to its employees during the project. After first referring the case to the courts in country X, company B initiated arbitration proceedings against company A, which contested the jurisdiction and alleged that the arbitration clause was too vague to constitute a valid agreement to arbitrate and that company B had waived its right to arbitration by first commencing state court proceedings.
In their submissions on jurisdiction, the parties did not specify the rules of law determining the substantive validity of the arbitration agreement. For this reason, the arbitral tribunal seated in Switzerland considered to have, within the boundaries of Swiss law, certain discretion when deciding which rules of law it will apply to this issue. After considering the different sets of rules of law that came into play in determining the applicable law, the arbitral tribunal held that the lack of an agreement of the parties can be interpreted as implied negative choice and that the contract’s connection with the different countries is not predominant enough to justify the application of one national law to the exclusion of others. Based on the foregoing, the arbitral tribunal decided to apply the UNIDROIT Principles and Swiss law to the question of the substantive validity of the arbitration agreement. In determining whether the parties consented to submit their dispute to the arbitral institution, the arbitral tribunal applied Article 4.1 as well as Article 4.3(c) of the UNIDROIT Principles. In the context of interpretation of the subsequent conduct of the parties, the arbitral tribunal considered that company B’s statements evidenced the fact that, in its view, the arbitration clause was defective and inoperable. The arbitral tribunal held that claiming the opposite would go against the principle of venire contra factum proprium, which is applicable under Article 1.7 and Article 1.8 of the UNIDROIT Principles as well as Swiss law.
The arbitral tribunal further found that both parties revoked the arbitration agreement and accepted the jurisdiction of the state courts. It stated that ‘such mutual waiver can be concluded without observing any requirement of form and must be interpreted according to the generally applicable principles for the interpretation of private statements of intent’, thereby referring to and applying Article 1.2 of the UNIDROIT Principles.
Based on the foregoing, the arbitral tribunal decided that it had no jurisdiction to decide on company B’s claims."
(cf. N. Voser / S. Ninković in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 158-159, 165-166, 172-173, 195-196, 204-205)