- Arbitral Award
- ICC International Court of Arbitration 20757
LONG-TERM CONTRACTS - CONCESSION CONTRACT FOR THE USE OF TELECOMMUNICATION INFRASTRUCTURES - RELATED MAINTENANCE SERVICE CONTRACT -BETWEEN TWO ITALIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES IN ORDER TO SUPPLEMENT APPLICABLE DOMESTIC LAW (ITALIAN LAW)
DUTY TO RENEGOTIATE - APPLICATION OF THE GENERAL PRINCIPLE OF GOOD FAITH AND FAIR DEALING IN CONTRACT PERFORMANCE - NOT UNANIMOUSLY RECOGNIZED BY ITALIAN LEGAL WRITERS AND CASE LAW - REFERENCE, AMONG OTHERS, TO ARTS. 6.2.3 (1) UNIDROIT PRINCIPLES AND 6:111 PECL IN SUPPORT OF THE SOLUTION ADOPTED BY THE ARBITRAL TRIBUNAL
REQUEST FO RENEGOTIATIONS - MUST BE ADEQUATELY MOTIVATED AND DOES NOT IN ITSELF ENTITLE THE DISADVANTAGED PARTY TO WITHHOLD ITS PERFORMANCE - REFERENCE TO ART. 6.2.3 (2) AND (3)
A and B, two Italian companies, entered into a series of contracts which granted A for a period of 25 years the indefeasible right to use part of the telecommunication infrastructures owned by B, along with the maintenance services thereof; in return B was granted the same right with regard to part of infrastructures owned by A. After 14 years, following a refusal by B to renegotiate the maintenance services contract, A no longer paid the maintenance fee provided in the contract, asserting a breach of contract by B. The parties negotiated an installment plan, which A however only partially complied with, prompting B to file a request for a payment injunction before an Italian court. A contested the jurisdiction of the Italian court and initiated arbitration proceedings in accordance with the arbitration clause included in the contracts, in which it asked the Arbitral Tribunal to establish B’s breach of the maintenance contract and A’s consequent right to request the renegotiation of it, while B filed a counterclaim requesting the outstanding payments.
The law applicable to the substance of the dispute was Italian law. In its award the Arbitral Tribunal held inter alia that (i) A has breached the maintenance services contract; (ii) B has violated its duty to renegotiate the said contract and that, as a result, (iii) B was the temporarily prevented from requesting from A the payment of amount of money A was ordered to pay as a consequence of its breach of the maintenance services contract.
The Arbitral Tribunal pointed out that, although this was far from being generally accepted by current Italian legal writings and case law, it followed from the general principle of good faith in contract performance as laid down in Art. 1375 of the Italian Civil Code that parties, especially in long-term contracts, are under a duty to renegotiate the contract when there is a marked discrepancy between the terms of the contract originally agreed upon and those which are currently practiced on the market for similar performances. In support of this finding the Arbitral Tribunal referred to similar solutions recently adopted at domestic level, such as by Art. 1195 of the French Civil Code as amended in 2016 or, at least in substance, by § 313 of the German Civil Code as amended in 2002, as well as at international level, such as by Art. 6.2.3 of the UNIDROIT Principles and Art. 6:111 of the Principles of European Contract Law. The Arbitral Tribunal also referred to Art. 6.2.3 of the UNIDROIT Principles in order to affirm that the request for renegotiation had to be adequately motivated, and did not in itself entitle the disadvantaged party to withhold performance.