- Arbitral Award
- ICC International Court of Arbitration 10022
LONG-TERM CONTRACTS - COOPERATION AGREEMENT - ARBITRAL TRIBUNAL REQUESTED TO TAKE INTO ACCOUNT “RELEVANT TRADE USAGES” (ARTICLE 17 ICC RULES OF ARBITRATION) – REFERENCE INCLUDES BUT IS NOT LIMITED TO THE UNIDROIT PRINCIPLES AND THE PRINCIPLES OF EUROPEAN CONTRACT LAW.
Claimant and Defendant had entered into a series of agreements aimed at developing Defendant into an efficient cement producer. Notwithstanding a choice of law clause in the agreements stating that they are governed by Lithuanian law, Claimant invoked also the application of the UNIDROIT Principles and the Principles of European Contract Law as a source of trade usages referred to in Article 17 of the ICC Rules of Arbitration.
In a partial award addressing the issue of the applicable law, the Arbitral Tribunal acknowledged both sets of Principles represented the latest codification of international commercial trade usages. At the same time however it pointed out that unless they were expressly incorporated by agreement between the parties – which they were not in the case at hand – they were not of a mandatory but only of a persuasive nature. The Arbitral Tribunal decided that it would refer, when necessary, to “the relevant trade usages” according to Article 17 of the ICC Rules of Arbitration, and that such reference included but was not limited to the UNIDROIT Principles and the Principles of European Contract Law.
‘ According to article 17 of the Rules, the primary source of the law applicable to the merits of the dispute is determined by the will of the parties. In article 5 of the Export Company Agreement, as well as in article 4 of the AEER [Agreement on Exclusive Export Rights, Upgrading of the Plant and Delivery of Cement], the parties have agreed that: “This agreement is governed by Lithuanian law.” This choice of law clause has been interpreted as providing that Lithuanian law is to govern both the formation of the contract and the rights and duties of the parties arising from the contract as well. Throughout the proceedings the choice of Lithuanian law has not been disputed by the parties. (Claimant has expressly confirmed that the applicable law is Lithuanian and Respondents have impliedly confirmed this choice by invoking the provisions of the respective Lithuanian laws and arguing their applicability)
 In its closing arguments Claimant has expressed the view that it is legitimate to look to the Unidroit Principles of International Commercial Contracts and the Principles of European Contract Law as a source of usage, customs and practice and that they are to be relied on when interpretation of the law is necessary in order to determine the parties’ rights and obligations. Article 17 of the Rules confirms reliance on trade usage: “In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usage's.” Both sets of principles represent the latest codification of international commercial trade usage's. However, unless expressly incorporated by agreement between the parties, which they are not, they are not of mandatory but only of persuasive nature. Therefore, when necessary the Tribunal refers in this Award to “the relevant trade usage's” and such reference includes, but is not limited to, the Unidroit Principles and Principles of European Contract Law’}}
Excerpts published in
ICC International Court of Arbitration Bulletin, Vol. 12, No. 2 (Fall 2001), 100.}}