- Arbitral Award
- ICC International Court of Arbitration, Geneva 10351
LONG-TERM CONTRACTS - GAS SUPPLY CONTRACT - GOVERNED BY A PARTICULAR DOMESTIC LAW
SUBSEQUENT MODIFICATIONS TO THE FORMULA FOR CALCULATING THE PRICE - DUTY TO RENEGOTIATE IN GOOD FAITH - REFERENCE TO ART. 1.7 UNIDROIT TO CONFIRM THAT THAT THE OBLIGATION TO PERFORM THE CONTRACT IN GOOD FAITH IS A GENERALLY ACCEPTED PRINCIPLE IN INTERNATIONAL CONTRACTS
The dispute concerned a long-term contract for the purchase of liquid natural gas by Claimant from Respondent. In the course of their contract, the parties agreed to refer to FOB Breakeven prices as published by Platts instead of the market price for crude oil and to include a correcting factor. Platts subsequently modified the formula for calculating FOB Breakeven prices, which resulted in higher prices. Consequently Claimant objected to the use of a parameter based on Platts' revised formula and requested a return to the previous formula and the refund of overpaid amounts. As the disagreement could not be resolved by the parties, Claimant resorted to arbitration.
The Arbitral Tribunal affirmed that according to the applicable law "le contrat doit être exécuté conformément à son contenu, et de bonne foi. Il oblige le contractant, non seulement à ce qui y est exprimé, mais encore à tout ce que la loi, l'usage et l'équité considèrent comme une suite nécessaire de ce contrat d'après la nature de l'obligation". It added that the obligation to perform the contract in good faith is a generally accepted principle in international contracts (Art. 1.7 UNIDROIT Principles), which includes, depending on the circumstances, the duty to renegotiate in good faith certain contractual provisions.
Published in English (excerpt):
- ICC International Court of Arbitration Bulletin, Vol. 20/2 - 2009, pp. 76-86}}