- Arbitral Award
- ICC International Court of Arbitration, Paris 15949
LONG-TERM CONTRACTS - SERVICE CONTRACT - BETWEEN A NORTH AFRICAN COMPANY AND EASTERN EUROPEAN COMPANY - UNIDROIT PRINCIPLES AS MEANS TO INTERPRET AND SUPPLEMENT APPLICABLE DOMESTIC LAW (FRENCH LAW)
HOTEL MANAGEMENT CONTRACT - TERRORIST ATTACKS IN NEW YORK, DJERBA AND MARRAKECH AMOUNT TO FORCE MAJEURE EVENTS - RESPONDENT ALLOWED TO SUSPEND PAYMENT OF MINIMAL GUARANTEE PROVIDED IN THE CONTRACT - REFERENCE TO ART. 7.1.7 UNIDROIT PRINCIPLES
EFFECTS OF FORCE MAJEURE - WHEN THE IMPEDIMENT IS ONLY TEMPORARY, THE EXCUSE FOR NON_PERFORMANCE HAS EFFECT ONLY FOR A REASONABLE PERIOD OF TIME HAVING REGARD TO CONSEQUENCES OF THE IMPEDIMENT ON CONTRACT PERFORMANCE - REFERENCE TO ART. 7.1.7 UNIDROIT PRINCIPLES AND ITS COMMENT
A company registered in a North African country (Claimant) and a company registered in an Eastern European country (Respondent) concluded a management contract, according to which the former entrusted the latter with the operation, management, supervision and direction of an hotel and an events centre located in North Africa. The contract, which contained a choice-of-law-clause in favour of French law, provided that Claimant was entitled to a minimal financial guarantee, except in case of force majeure.
A dispute arose when Respondent terminated the agreement and sought reimbursement of the minimal financial guarantee on the grounds of force majeure. According to Respondent, terrorist attacks in New York in 2001, Djerba in 2002 and Marrakech in 2003 were force majeure events allowing it to suspend the payment of the minimal guarantee.
The Arbitral Tribunal noted that, under the terms of the contract, an event amounted to force majeure only if it materially affected the tourism in the country where the hotel was situated. It thus acknowledged that the events in question constituted force majeure pursuant to the contract, since the terrorist attacks were irresistible, unforeseeable and exterior to the parties, as well as they materially affected the local tourist market.
As a consequence, the Arbitral Tribunal ordered Claimant to reimburse Respondent for the money it had paid in 2003 and 2004 as the minimal guarantee following the application of the force majeure clause. In doing so, it expressly referred to Art. 7.1.7 UNIDROIT Principles 2010, which provides that when the impediment is only temporary, the excuse for non-performance in case of force majeure shall have effect for a reasonable period of time having regard to the consequences of the impediment on performance of the contract.
The Arbitral Tribunal cited also the Commentary of the provision, affirming, first, that the expression "force majeure" is widely known in international commercial practice and, on the other hand, that if in certain cases the impediment will render execution impossible, in many others, it will merely delay execution and give to the debtor of the obligation additional time for performance.
Published in French (excerpt):
- in ICC International Court of Arbitration Bulletin 2016, Issue No. 2, pp. 47-58}}