- Arbitral Award
- ICC International Court of Arbitration 14581
STATE CONTRACTS - SUPPLY CONTRACT FOR LEASING EQUIPMENT AND LICENSING TECHNOLOGY - BETWEEN TWO MINISTRIES OF STATE X AND A COMPANY OF STATE Y - UNIDROIT PRINCIPLES AS AN "EXPRESSION OF INTERNATIONALLY RECOGNISED PRINCIPLES"
ARBITRATION CLAUSE PROVIDING THAT DISPUTES TO BE DECIDED BY "THE INTERNATIONAL ARBITRATION COURT IN SWITZERLAND" AND "IN ACCORDANCE WITH INTERNATIONAL LAW" - INTERPRETATION OF AMBIGUOUS CLAUSE ACCORDING TO SWISS LAW AS LAW OF SEAT OF ARBITRATION AND ACCORDING TO UNIDROIT PRINCIPLES INVOKED BY PARTES AS "EXPRESSION OF INTERNATIONALLY RECOGNISED PRINCIPLES", TOGETHER WITH EUROPEAN PRINCIPLES OF CONTRACT LAW AND CISG - REFERENCE TO ARTICLE 4.2 UNIDROIT PRINCIPLES IN SUPPORT OF SIMILAR PROVISION IN SWISS LAW
"As a continuation of an earlier agreement, a supply agreement for leasing equipment and licensing technology was concluded by two ministries of country X and the lessor from country Y. The agreement contained an arbitration clause providing for a dispute to ‘[…] be brought before the International Arbitration Court in Switzerland. This Court will proceed in accordance with the international law.’ While the lessor initiated arbitral proceedings before the ICC, the ministries of state X initiated arbitration proceedings before the national arbitral institution of country X.
Considering the ambiguous wording of the arbitration clause, the arbitral tribunal seated in Switzerland had to decide whether it was the parties’ mutual intention to refer their disputes to the ICC. The arbitral tribunal held in that respect that under Swiss law the arbitration clause may be interpreted under either Swiss or international law and consequently decided to apply both Swiss law and international law in that regard. Considering that both parties invoked the UNIDROIT Principles as internationally recognised principles of law, the arbitral tribunal consulted the UNIDROIT Principles alongside the Principles of European Contract Law and the CISG. In particular, it referred to Articles 4.1, 4.2, and 4.3 of the UNIDROIT Principles.
The arbitral tribunal compared the provisions for the interpretation of contracts as set out in Swiss law and the aforementioned sets of rules. Both Swiss and international law, including the UNIDROIT Principles, provide that that parties’ common intent is to be established first (subjective interpretation). In case such common intent cannot be established, the Swiss law requires the court or arbitrator to examine and establish ‘how an average honest and diligent person had to reasonably understand or interpret the other party’s declarations and the particular provisions’ (objective interpretation). The arbitral tribunal found this to be in line with Article 4.2(2) of the UNIDROIT Principles which calls for ‘the understanding which a reasonable person of the same kind as the parties would give to the term’. Thus, the arbitral tribunal concluded that the provisions for the interpretation of contracts contained in all these sets of rules are very similar and do not lead to conflicting results.
The arbitral tribunal finally held that it has not been properly constituted in accordance with the parties’ agreement and that, for that reason, it cannot decide on the request for arbitration."
(cf. N. Voser / S. Ninković in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 196, 202-203, 206)