- Arbitral Award
- International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation
LONG-TERM CONTRACTS - LICENSING AND SERVICE AGREEMENT - BETWEEN A RUSSIAN COMPANY AND A CYPRIOT COMPANY
UNIDROIT PRINCIPLES AS A MEANS OF INTERPRETING APPLICABLE DOMESTIC LAW (RUSSIAN LAW) - UNIDROIT PRINCIPLES DEFINED AS "THE RECOMMENDED SOURCE OF RULES GOVERNING GENERAL ISSUES OF PERFORMANCE AND INTERPRETATION OF CONTRACTS OF AN INTERNATIONAL CHARACTER".
REFERENCE TO ARTICLE 1.7 AND 5.1.3 OF THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS
Claimant, a Russian company, entered into a license and service Agreement (the "Agreement") with Respondent, a Cypriot company. In accordance with the Agreement, Respondent was granted a license to broadcast sport events as well as telecommunication services necessary for the broadcasting. In the course of the performance of the Agreement Respondent refused to pay the price on the ground of improper performance by Claimant. Claimant commenced arbitral proceedings for the payment of the price.
The Agreement was governed by the law of the Russian Federation.
The Arbitral Tribunal found that Respondent has failed to substantiate its claim on improper performance of obligations under the Agreement. In fact, as to Respondent's argument that it did not pay the price because Claimant had not sent the original invoices. The Tribunal held that Respondent could have easily asked Claimant to send such originals or paid on the basis of copies which Respondent had not done.
In support of its decision, the Tribunal referred to the UNIDROIT Principles of International Commercial Contracts, which in its opinion "in modern international practice of many arbitration courts are viewed as the recommended source of rules governing general issues of performance and interpretation of contracts of an international character". In particular, the Tribunal referred to Article 1.7, which states that each party must act in accordance with good faith and fair dealing in international trade, and to Article 5.1.3, which states that each party shall cooperate with the other party when such cooperation may reasonably be expected for the performance of that party's obligations. Accordingly, the Tribunal concluded that Respondent's performance of the Agreement did not fully meet the requirements set by the above provisions of the Principles.