- Arbitral Award
- ICC International Court of Arbitration 12446
- Parties unknown
INTERNATIONAL SALES CONTRACT - GOVERNED BY JAPANESE LAW – ONE PARTY INVOKING APPLICATION OF PROVISIONS ON HARDSHIP CONTAINED IN THE UNIDROIT PRINCIPLES – APPLICATION DENIED AS THE UNIDROIT PRINCIPLES, THOUGH INDICATING “WELL THOUGHT GOOD RULES”, DO NOT REPRESENT “TRADE CUSTOMS OR USAGES PRACTICED WORLDWIDE BY BUSINESS PEOPLE OR BY JAPANESE BUSINESS PEOPLE”
In a dispute relating to an international sales contract the Respondent, which had refused to fulfil its obligation to buy a certain quantity of goods on the ground of a sharp decrease of the demand for such goods on the market, invoked the relevant provisions on hardship contained in the UNIDROIT Principles. The governing law was Japanese law which permits parties to agree on the application of “trade customs” provided that they do not contravene the Japanese public order (cf. Article 92 of the Japanese Civil Code). However the Arbitral Tribunal, composed of three Japanese members, excluded the applicability of the UNIDROIT Principles which in its opinion, though indicating “well thought good rules” cannot be considered to be “worldwide trade customs or usages”, let alone trade customs or practices generally practiced by Japanese business people.
“The Article 98 of the Japanese Constitution provides that the established international law should be observed. Also, Article 2 of Horei (Law No. 10 of 1898 as amended) sets forth that customs that do not conflict with public order or good moral have the effect as a law to the extent such customs are recognized by law or where there is no provision of law. Also Article 92 of the Civil Code sets forth that customs that are different from provisions in law which do not relate to the public order, should be observed if parties express their intention to rely on such customs. Article 17(2) of the Rules sets forth ‘(i)n all cases the Arbitral Tribunal shall take account of the provisions of the contract and trade usages. UNIDROIT Principles cannot be said to be an established international law or trade customs or trade usages supported widely in Japan as ‘customs’ referred to in Article 2 of Horei and Article 92 of the Civil Code or ‘usages’ referred to in article 17(2) of the Rules. There is no empirical study showing that UNIDROIT Principles are practiced as trade customs or usages by worldwide business people or by Japanese business people. It is not a compilation of world trade customs. Though this arbitration Tribunal does not deny that UNIDROIT Principles indicate well thought good rules, that fact does not make the UNIDROIT Principles worldwide trade customs or usages. This Tribunal concludes that UNIDROIT Principles cannot apply to this case’.”
E. Jolivet, L'harmonisation du droit OHADA des contrats: l'influence des Principes d'UNIDROIT en matière de pratique contractuelle et d'arbitrage, in Unifrom Law Review, p. 127 et seq. (p.145 fn 44)}}