- Arbitral Award
- ICC International Court of Arbitration, Brussels 9459
SHARE PURCHASE AGREEMENT - BETWEEN A FRENCH SELLER AND A SPANISH BUYER - SILENT AS TO THE APPLICABLE LAW - APPLICATION OF SPANISH LAW AS THE LAW MOST CLOSELY CONNECTED WITH THE CONTRACT
SILENCE OF THE PARTIES ON THE APPLICABLE LAW DOES NOT AMOUNT TO AN IMPLICIT CHOICE OF LAW - GENERIC REFERENCE TO UNIDROIT PRINCIPLES
A French Seller and a Spanish buyer concluded a contract for the sale of all shares of a joint subsidiary. The sale price included a fixed part and a variable part, which was to be determined on the basis of the price fixed for the sale of an assembly line of car chassis by the joint subsidiary to a specific purchaser, third party to the share sale agreement. The parties also agreed that, if the sale of the shares was not completed before a certain date, Buyer would have to pay a fixed sum in settlement of the sale price of the shares. Since the sale of the assembly line did not take place, the Seller commenced arbitral proceeding against the Buyer claiming the payment of the stipulated fixed sum. The Buyer alleged that the Seller was not entitled to ask payment of the variable part of the sale price, since it did not sell the assembly line to the intended customer and had acted in bad faith.
In a Partial Award the Arbitral Tribunal determined that the law applicable to the merits of the dispute was Spanish law because the parties had not reached an agreement neither implicit nor explicit on the application of a particular domestic law, whereas Spain was the country with which the contract was most closely connected. The Arbitral Tribunal added that neither under applicable Spanish law, nor under French and Belgian law the mere silence of the parties amounts to an implicit manifestation of a common intention in the absence of additional elements demonstrating the existence of such an intention. In support of its reasoning, the Arbitral Tribunal generically referred to the UNIDROIT Principles (without indicating on what specific provisions thereof it was relying), arguing that they correspond to an international consensus.
Furthermore, the Arbitral Tribunal dismissed the application of the lex mercatoria, because the parties' silence can not be interpreted as a manifestation of the implicit will to submit the dispute to the lex mercatoria. It also dismissed the connecting criterion of the characteristic performance (Art. 4 of the Rome Convention) on the ground that the contract in question was not merely a contract for the purchase of shares, since it involved three parties and included obligations which are not usually found in a contract of sale.
E. Jolivet, La jurisprudence arbitrale de la CCI et la lex mercatoria, in Gazette du Palais, 2001, n.119, pp.36-44}}