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Fouchard Gaillard Goldman on International Commercial Arbitration (edited by Emmanuel Gaillard and John Savage) The Hague 1999

Fouchard Gaillard Goldman on International Commercial Arbitration (edited by Emmanuel Gaillard and John Savage) The Hague 1999
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This document is included in TransLex by kind permission of Mr. Gaillard.
Table of Contents



(1009 to 1168)

Section I.- Arbitrators as Judges


§ 2.-Protection of the Arbitratos (1074 - 1100)


1088.- Because many countries have no relevant laws or precendents, it is iin fact a fairly hazardous task to attempt to classify the various positions taken in different juisdictions. In any event, the distinctions between the different positions are perhaps less marked than suggested by the classifications described above. No legal system allows arbitrators to be fully liable for any error of judgment they commit, in order to avoid judicial harassment of arbitrators by losing parties. Conversely, even in the United States, where immunity is ofthen depicted as being absolute, it is hard to imagine arbitrators being able to avoid liability for acts which clearly constitute a breach of their fundamental duties as judges. 



(1209 to 1301)


Section III: - Pleadings and Evidence

(1257 1301)


§1. - The Submission of Memorials and Evidence

(1261 to 1276)


A. - Evidence to be submitted

(1262 to 1266)


1266.-Where an argument as to the confidentlialitiy of a party‘s documents is based on a law or regulation prohibiting the disclosure of certain documents (on the grounds of national security, for example), on what basis can that law can be taken into consideration? Will it be procedural, substantive, or a mandatory rule? As this is a matter of evidence, over which arbitrators have unfettered discretion, arbitrators sitting in acountry other than that which issued the regulation in question are generally under no obligation to give effect to it. At the very most, they may take such regulations into consideration as an element of fact which might constitute a legitimate reason for non-disclosure. Arbitrators sitting in the country which enacted the regulation might have a more difficult task, as their award will be generally subject to an action to set aside in that country and the rule in question may be held to be a requirement of public policy.




(1421 to 1536)


Section II. - The Subject Matter of the Parties' Choice

(1431 to 1508)


§2. - Transnational Rules

(1443 to 1499)




(1455 to 1499)

1455. - When faced with a clause which, in one form or another,153 provides that a dispute is to be governed by transnational rules, the arbitrators, the parties and their counsels will have to determine, once the dispute has arisen, the actual content of the rules applicable to the dispute. This is the true test of the effectiveness of lex mercatoria as an Instrument for resolving disputes in international trade. Again, it cannot be too strongly emphasized that applying transnational rules involves understanding and implementing a method, rather than drawing up a lest of the general principles of international commercial law.154

Therefore, after first discussing the transnational rules method, we shall examine a few examples of rules generally considered as being general principles of international commercial law.

1. Method

1456. - Two issues should be borne in mind with respect to the method to be used when identifying and applying general principles. 814 1457. - The first is that the starting point for any analysis of the method for determining applicable rules of law must be the choice of law clause itself In using the generic term lex mercatoria to cover all of the different situations where the parties do not simply choose a particular national law, it is important not to lose sight of the diversity of the concepts liable to be included under that heading.155 Amid the controversy over the legal nature of lex mercatoria and the various criticisms it has attracted,156 it is equally important to take full account of the diversity of the contractual provisions submitting certain disputes to rules other than those of a particular legal system. The task of the arbitrators-and hence that of the parties when presenting their case-is invariably to give effect to the choice initially made by the parties. The parties and the arbitrators should therefore begin by examining the choice of law clause for guidance as to the method to be used to determine the relevant rules for resolving the dispute.

Some clauses provide that principles common to several specified legal systems are to apply. In such a case, the arbitrators must use the "tronc common" method,157 and conduct a comparative analysis limited to that of the listed legal systems, unless the clause itself allows other rules to be used on a subsidiary basis.

Thus, for example, the construction contract for the Channel Tunnel stated that it was governed by

common principles of English and French law, and in the absence of such common principles by such principles of international trade law as have been applied by national and international tribunals.158

On several occasions, the panel of experts appointed under Article 67 of that same contract was required to draw up such common or general principles, and succeeded in doing so.159

It is fairly frequent for the application of a national law to be combined with that of principles of international origin. Thus, for example, an Iranian petroleum agreement signed in 1954 was governed by 815

principles of law common to Iran and to the various countries to which the other parties belong and, failing that, by principles of law generally recognized by civilized nations, including such principles applied by international tribunals.160

Similarly, the Libyan nationalization arbitrations were governed by

principles of law of Libya common to the principles of international law and, in the absence of such common principles . . . then by and in accordance with the general principles of law as may have been applied by international tribunals.161

More recently, the arbitrators who made the ad hoc award in the Banque Arabe et Internationale d'Investissements case on November 17, 1994 in Amman were required to apply to a contract, in the absence of provisions to the contrary, "common legal principles prevailing in the member countries of the Corporation, and the recognized principles of International Law."162

Other clauses refer exclusively to rules of international origin, with or without indicating how those rules should be determined. Such clauses are less common than combinations of rules from different legal systems, and they tend to be formulated in a variety of ways.163

In all cases, any indications given by parties as to the method of determining the applicable rules must take precedence. Such indications would include a specified hierarchy between the various given sources or instructions to apply only principles common to certain regions of the world.164


1458. - The second point to bear in mind is that where the parties submit their disputes to general principles of international commercial law, or behave in a manner which can reasonably be interpreted as conveying the same intention,165 the arbitrators should determine the applicable rules by examining comparative law, international instruments and international case law.166

Comparative law is a fundamental source of transnational rules. Arbitrators often identify general principles by drawing them from various legal systems in which they are recognized, sometimes in different forms.167 However, in order to be considered as a general principle, a rule need not be found in every legal system. That would amount to giving a veto to systems which take an isolated position, whereas the goal is precisely to find a generally accepted tendency rather than to select, often somewhat randomly, a particular legal system to govern disputes.168

International instruments and, in particular, international conventions are also a common source of inspiration for arbitrators seeking to determine the rules of lex mercatoria. This is entirely justified, in so far as these texts reflect the agreement of a number of countries an a particular issue. Thus, for example, arbitrators deciding a dispute concerning international sales of goods on the basis of general principles are likely to refer to the Vienna Convention of April 11, 1980, on Contracts for the International Sale of Goods.169 Likewise, the 817 resolutions of sufficiently representative international organizations can certainly lead to the creation of new general principles. For example, it is not surprising that, an the basis of the measures taken by the United Nations and the European Communities during the Gulf crisis, an arbitral tribunal identified and applied principles which effectively justify the nonperformance of certain contracts signed with Iraqi parties.170 In the same way, the work of an organization such as UNIDROIT is particulary influential in determining general principles of law.171 In May 1994, UNIDROIT published a set of Principles of International Commercial Contracts. These principles are intended to apply particularly "where the parties have agreed that their contract be governed by 'general principles of law,' the 'lex mercatoria' or the like."172 The Principles consist of 108 rules presented in the form of a restatement and accompanied by a commentary. It is a remarkable work of comparative law, which has undoubtedly made a vital contribution to the development of transnational rules.173

Arbitrators also often refer to international case law in determining the content of transnational rules. This is naturally true of arbitral awards, which are now accessible as a result of their publication in various periodicals. It is in the area of general principles of law that it is most clear that the previously contentious issue of whether "arbitral case law" actually exists has been overtaken by arbitral practice. In arbitral practice, of course, arbitrators very often use precedents established by other arbitral awards rendered in similar 818 circumstances.174 The case law generated by permanent international courts, such as the International Court of Justice, will also be relevant, both when the parties expressly provide that it should apply175 and when, more generally, it reflects widely accepted rules of law.176

2. Content

1459. - As the theory of general principles of international commercial law essentially resides in a method of determining such principles,177 to present them in the form of a list will inevitably be too simplistic an approach.

As a result, the debate among certain authors as to whether a list of some twenty principles is long or short is irrelevant. A list of principles often quoted by commentators discussing lex mercatoria is that compiled in an article that seeks to demonstrate the inadequacy of the method.178 The author of that article listed twenty principles of varying importance which had been considered in arbitral awards as constituting general principles. His goal was to illustrate the dearth of such principles. Ironically, his list has subsequently been used to support lex mercatoria.179

Another author presented and discussed a number of principles more convincingly in an article on "the reality of international trade usages." He lists the principles under the following headings: (1) the predictability of transactions (including the "presumption of competence of parties in international trade," "the effectiveness of the arbitration agreement," "the principle of non-reliance on the lack of power of a contractual negotiator" and "the prohibition on contradicting oneself to the detriment of another;" (2) the adaptability of contracts (including "the presumption of acquiescence in an act of performance other than that which was defined in the contract" and "the obligation to renegotiate"); (3) the cooperation of the parties (including "the obligation to mitigate damages," "equal distribution of the burden of risks" and "the obligation to be candid"); 819 (4) ethical business practices (which essentially means "the unenforceability of contracts involving corruption").180

However valuable they may be, these lists are by no means exhaustive. The same is true of the list of principles drawn up by UNIDROIT181 and the examples discussed below.

1460. - Illustrations of general principles of international commercial law found in arbitral case law naturally include rules with an extremely broad scope. This is the case of both the principle of the binding force of contracts, often expressed in arbitral awards as pacta sunt servanda, and the principle of good faith.

There are now countless arbitral awards recognizing that both rules182 are general principles of international commercial law. In most cases, arbitrators simultaneously characterize the two rules as general principles.183

1461. - In fact, some awards treat the principle of good faith as simply another expression of the principle pacta sunt servanda. That will be the case if bad faith is defined as the failure to honor one's contractual commitments. That is a position that contributes little to the development of lex mercatoria.184 Likewise, a general principle that contracts are binding is hardly revolutionary given that the same principle appears in all legal systems. Besides, awards which restrict themselves to applying that principle are most exposed to the criticism that lex mercatoria is merely a device enabling the hierarchy of norms to be altered 820 by putting the contract before the law.185 The Same applies to the principle of the protection of vested rights, found in certain airbitral awards.186

1462. - However, the principle of good faith is particularly useful when understood as providing-the basis for more specific rules, which may in turn become general principles. This is the case, for example, of the principle that a party cannot contradict itself to the detriment of another. This principle is known in German and Swiss law by the maxim non concedit venire contra factum proprium and, in common law countries, as estoppel by representation. It is found in French law in the form of a principle of consistency187 and has also been recognized in arbitral case law.188 It enables arbitrators to take concrete measures where the conditions for the application of the principle are satisfied, which occurs far less frequently than parties suggest.189 Even the most reticent observers of a phenomenon which they perceive as a means allowing arbitrators to create new rules of law recognize that the principle of good faith potentially constitutes one of the richest sources of lex mercatoria.190

1463. - In any case, the principle pacta sunt servanda is subject to certain limits in all legal systems. It only applies if the contract is validly entered into, and exceptions to the 821 principle may be justified by the need to protect the weaker party or the general interest. The solemn formulation of principles such as pacta sunt servanda and the principle of good faith does not mean that similar prerequisites and exceptions do not exist when the transnational rules method applies.191 Arbitral case law shows that general principles are not confined to a few rules so broad in scope that they add nothing to the provisions of the contract, but that, on the contrary, they cover in some detail most of the major issues of international contract law.

This can be seen with respect to the validity of contracts, as well as to their interpretation and performance.

a) Principles Relating to the validity of Contracts

1464. - The issues of a contracting party's capacity and power have given rise to a number of general principles. It has been suggested that there is a principle according to which "a party cannot rely on the absence of power of the person negotiating a contract." This would prevent "one of the parties to a contract from relying on the fact that its own representative did not have the requisite powers, provided that the other party was unaware of that fact."192 Expressed in this way, this principle goes too far, as the fact that the other party is required to be reasonably diligent should also be taken into account.193 As one author has observed, there is "a tendency among arbitrators in international commerce to consider . . . that the law should only protect parties to the extent that are not under a duty to protect themselves."194 The real principle in this context is therefore that a reasonably diligent party can rely on its legitimate ignorance of the fact that the person who signed the contract was not empowered to do so.195

1465. - Arbitral case law has also given rise to principles concerning invalid consent given by parties to a contract. In particular, it has established a principle that "in international trade parties are presumed to be competent." This principle makes it more difficult for a professional party to seek to have a contract declared void an the basis of its 822 own mistake.196 In some cases, that principle has been extended to mean that "an error of fact or law cannot be recognized in international commercial relations, as it is incompatible with the presumption of competence established through usage."197 Once again, it would no doubt be sufficient - at least with regard to errors of fact - for the effect of this presumption of competence to be to increase the burden of proof on the party seeking to rely on its own error. It certainly cannot be excluded that in some circumstances an error of fact, even one committed by a professional, might lead to a contract being held void.

1466. - The principles of apparent authority and the presumption of competence tend to favor the validity of contracts. However, this is not to say that there is a general principle of favor validitatis.198 The validity of a contract, in itself, is not something deserving protection. Instead, that validity is conditioned on the compliance with the applicable rules of law, be they those of a national law or general principles.199 In fact, a number of general principles tend to clarify the conditions under which a contract can be held void.

1467. - As in national laws, the aim of some general principles is to protect only one of the parties. Thus, for example, arbitrators would have no difficulty in finding rules in comparative law as to vitiated consent which are accepted an a sufficiently wide scale to be considered as forming general principles of international commercial law.200 In the same vein, it has sometimes been argued that the unlawfulness of the abuse of a dominant economic position is also a general principle.201

1468. - By contrast, some principles are based on the protection of the general interest. In particular, arbitral case law has established a principle that contracts obtained by corruption are void. Early awards referred to the existence of 823

a general principle of law recognized by civilized nations that contracts which 1 seriously violate bonos mores or international public policy are invalid or at least unenforceable and that they cannot be sanctioned by Courts or arbitrators.202

In later cases, the arbitrators did not find such disputes to be non-arbitrable or that the nemo auditur principle applied, but instead held the contract in question to be void.203 Thus, for example, where a fictitious contract was designed to provide a party with credit to which it was not entitled, a 1982 ICC award made in Case No. 2730 found the transaction in question to be contrary

not only to Yugoslavian legislation [which was held to be applicable to the contract] but also to morals and bonos mores. In general, any contract the object of which is contrary to mandatory laws, rules of public policy, morals and bonos mores will be void . . . . This principle is accepted in all countries and by all legal systems. It constitutes an international rule, an element of the ordinary law of contract in international transactions.204


Authors generally favor the approach whereby an arbitrator dealing with an illegal contract should not decline jurisdiction, but should instead declare the contract to be void.205 The only situation in which it is unclear if this is still true is that where neither party requests the arbitral tribunal to rule on the issue of nullity. This would leave the arbitrators with no other choice than to ignore the issue of nullity or to resign if they believe that they should not become involved in a breach of international public policy.206

Similarly, the general principle that contracts contravening "public morality" are void might affect contracts such as those which facilitate drug trafficking, terrorism, agreements intended to incite subversion (the hiring of mercenaries, for example) and human rights violations.207

The protection of humanity's cultural heritage, as illustrated in particular by the work of UNESCO, can also provide a basis the creation of general principles. This was discussed at length in the Pyramids case.208

Likewise, antitrust law has also given rise to an analysis in terms of general principles.209

b) Principles Relating to the Interpretation of Contracts

1469. - Arbitral case law recognizes the existence of number of principles concerning the interpretation of contracts.210 These principles are fairly similar to Articles 1156 et seq. of the French Civil Code,211 and comparable provisions in other legal systems, and even more so to the UNIDROIT Principles of International Commercial Contracts.212


1470. - The most general principle of contractual interpretation is that contracts should be interpreted in good faith.213 Despite the tendency for many parties to see bad faith in any interpretation whereby one of the parties seeks to limit its undertakings, bad faith cannot be defined by reference to the restrictive or extensive nature of the interpretation proposed. A party only interprets a contract in bad faith where the interpretation it puts forward at the time of the dispute does not coincide with what the parties genuinely intended when they signed the contract. The requirement that contracts be interpreted in good faith is merely another way of saying that a literal interpretation should not prevail over an interpretation reflecting the parties' true intentions. As observed in an early award, "the fundamental principle of good faith . . . entails searching for the common intention of . . . the parties."214 Similarly, in the Aramco award of August 23, 1958, it was held that "the interpreter must . . . remember that the parties intended by their agreements to establish a reasonable contractual situation, in conformity with the common aim they had in view."215 Likewise, the award made in 1975 in ICC Case No. 1434 stated that:

the disputed limitation of liability clause should be interpreted in the light of general principles of the interpretation of contracts, and particularly those which appear in Articles 1156 et seq. of the [French] Civil Code, beginning with a literal and grammatical interpretation of the words used, without failing to place them in their context and to consider the contract as a whole, so as to discover the genuine common Intention of the parties, referring in particular, if the terms are ambiguous, to the principle of good faith (cf. Article 1134 Civil Code) and resorting, if need be, to extrinsic interpretational indicators, which may be found, for example, in the historic context and in the relations between the parties.216

1471. - The principle of effectiveness, whereby "it should be assumed that the authors of a clause intended it to have a real significance and impact,"217 is also applied in arbitral practice. As set forth in the 1975 award in ICC Case No. 1434, 826

there is a universally-recognized rule of interpretation whereby, if the terms of a contract are capable of two contrary interpretations or can convey two different meanings, one should favor the interpretation which gives a certain effect to the words, rather than the interpretation which renders them redundant or even absurd. This 'principle of useful effect,' which is also known as 'the effectiveness principle' (ut res magis valeat quam pereat) is endorsed, in particular, by Article 1157 of the [French] Civil Code.218

1472. - The arbitrators will also take into account the conduct of the parties subsequent to their entry into the contract and until the dispute arises, as that conduct will reflect the parties' own interpretation of the disputed contract an entering into it. This rule of interpretation is sometimes described as "practical and quasi-authentic interpretation," "contemporary practical interpretation" or "proof by the subsequent conduct of the parties."219 It can be applied in situations such as that where a party has performed the contract, without reserving its rights, under conditions different to those initially provided for.220

1473. - It has sometimes been suggested that there is a principle whereby silence should be interpreted as acquiescence.221 One author rightly criticized that proposition, noting that no such principle was accepted in English law.222 In fact, there is no such rule in continental legal systems either,223 and it cannot therefore be considered as constituting a general principle.224


1474. - There is, however, a principle of consistency whereby within a particular document a recurring word is deemed to have the same meaning throughout.225 This rule is set forth in more general terms in Article 1161 of the French Civil Code, which states that "all clauses of a contract are interpreted one by reference to another, the meaning of each clause being determined in the light of the entire document." The need for an interpretation of the contract or of its various constituent parts as a whole has also been recognized in arbitral case law.226

1475. - Although there have been fewer opportunities to apply it in arbitral case law, there is also a general principle whereby, if in doubt, a clause should be interpreted contra proferentem, or against the party that drafted it. This rule is usually, although not exclusively, applied when construing contracts of adhesion. It prevents the party that drafted the disputed provision from relying on any ambiguity in that provision in support of a position which is favorable to that party but which was not made clean when the provision was drafted. In other words, the rule requires the party drafting the provision in question to enlighten the other party as to what might be the least favorable Interpretation from the other party's point of view. As a result there should be no temptation for the party drafting the terms of the contract to leave deliberate ambiguities in the hope of exploiting them at a later stage.227

1476. - Contractual Interpretation is not based exclusively an intrinsic factors. It has been held that the parties' intentions should be examined in context and, in particular, in the light of current usages in the relevant business sector. In the absence of any indication to the contrary, the parties will be deemed to have agreed that such usages should apply.228

1477. - Lastly, it is a generally recognized principle that arbitrators are not bound by the characterization given by the parties to their contract. In the same way as the courts, arbitrators are entitled to recharacterize the parties' agreements as they see fit.229 Given the convergence of different legal systems on this issue, the existence of such a principle is not in doubt. However, the arbitral awards usually cited in support of its existence are irrelevant, 828 as one involved recharacterizing the parties' claims230 and in the other Moroccan law applied.231

c) Principles Relating to the Performance of Contracts

1478. - Some principles help to clarify the parties' obligations in the performance of their contracts.

1479. - Arbitrators often apply the principle found in Article 1134, paragraph 3 of the French Civil Code, as well as in many subsequent codifications in civil law systems,232 according to which "contracts must be performed in good faith."233 Again,234 the principle of good faith is often simply another way of formulating the principle that the failure to perform contractual obligations renders the defaulting party liable.235

1480. - The question of whether the parties' obligations should be assessed differently in economic development contracts is too controversial to generate general principles of law.236 On the other hand, there appears to be no doubt that contracts which require long-term cooperation between the parties can give rise to specific principles.237

1481. - It is in the context of these long-term contracts that the obligation to keep one's co-contractor fully informed, which was expressed in the Klöckner award as "the duty of full disclosure," is at its strongest.238 However, the requirement that each party inform its co- 829 contractor of circumstances liable to jeopardize the performance of the contract has sometimes been presented as a rule with a more general scope. Thus, as observed in an ICC award made in 1985, "the parties' obligation to collaborate with a view to ensuring that the contract is properly performed imposes . . . on each party a duty to inform, in particular."239

1482. - It is also in relation to long-term contracts that the question arises as to whether the doctrine of change in circumstances ("imprévision") is a general principle.240 Awards sometimes state in general terms that the parties' reciprocal obligations should be properly balanced as a matter of principle. For example, in the 1975 award in ICC Case No. 2291, the arbitral tribunal observed that:

any commercial transaction is based on a balance between the reciprocal obligations and . . . to deny that principle would amount to deprive commercial contracts of all certainty, and to have them based on speculation or chance. Lex mercatoria contains a rule whereby the obligations should remain balanced from a financial point of view.241

Similarly, it was held in another award that:

in an international contract concluded without any speculative intention, the parties can be considered, in the absence of an express agreement, to have wanted a guarantee against devaluation; furthermore, it would be contrary to good faith if the government of a State, having ordered and received services, were to refuse to pay for them at their true value, thereby intending to benefit from a substantial devaluation of the payment currency.242


However, arbitrators will not generally go so far as to conclude that, on the basis of general principles, they can adapt a contract to meet a change in economic circumstances,243 unless of course the parties have so provided by means of a hardship clause.244 This is an appropriate solution, given the significant divergence of views among different legal systems as to the admissibility of the change in circumstances doctrine in private law.245

1483. - However, arbitral case law tends to recognize that in long-term contracts the parties have a duty to re-negotiate in good faith. Arbitral case law also tends to reject, in this context, the English doctrine according to which an "agreement to agree" has no binding effect.246

1484. - Other principles serve to determine the consequences of the failure by a party to perform its contractual obligations.

1485. - Arbitral case law has established a general principle that the failure to perform a contract renders the defaulting party liable.247

1486. - The fact that the co-contractor of a defaulting party can rely an that party's failure to perform to withhold performance itself has also been held to be a transnational rule.248 The award rendered in 1980 in ICC Case No. 3540 states that "the non adimpleti 831 contractus rule . . . should be considered as belonging to the general principles of law forming the lex mercatoria."249

Awards generally provide that this principle is not effective where the failure to perform relied on by the co-contractor is of far less significance than its own non-performed obligations. In other words, a party can only properly withhold performance if it complies with the principle of proportionality.250 As one author has observed, "it would be contrary to good faith to rely on . . . the non-performance of a relatively minor obligation . . . in an attempt to avoid performance of an essential obligation of one's own."251

1487. - Termination of the contract for failure, to perform or lack of proper performance, which is closely related to the withholding of performance, is also considered by some arbitrators to be a general principle of law.252

1488. - The release of a party from its obligations by an event satisfying the conditions of force majeure,253 and the fact that force majeure has a purely suspensive effect,254 provided that it is not long-lasting,255 are also recognized as general principles.256


1489. - Another general principle will be that the party to which a non-performed obligation is owed cannot rely an the non-performance if it has not objected to that nonperformance within a reasonable period of time.257

1490. - Another set of general principles governs the evaluation of damages resulting from a total or partial failure to perform the contract.258

1491. - One of the most well-established general principles in arbitral case law is the duty of the party to which the non-performed obligation is owed to mitigate its losses.259

1492. - Arbitral case law also accepts the principle of full compensation for the loss sustained, with damages covering both the loss actually suffered and loss of profit.260 Certain distinctions are made in some cases regarding state contracts, depending on whether the 833 dispute concerns a lawful261 or an unlawful262 expropriation. These distinctions remain, however, controversial.

1493. - In contrast, the rule whereby punitive damages can be awarded against the defaulting party in some circumstances is not sufficiently established in comparative law to be considered a general principle.263

1494. - However, in cases where the contract does stipulate that the arbitrators may make an award of damages exceeding the value of the actual loss, it is possible for them to apply a principle, based an comparative law, whereby the effects of excessive penalty clauses should be tempered. The precise remedy varies in different legal Systems, but reducing the effects of penalty clauses (rather than holding such clauses void altogether) would be more in keeping with the spirit of international commercial law, particularly in cases where the parties have submitted their disputes to general principles of law or remained silent as to the applicable law.264

1495. - Some awards have held, by way of a general principle, that only direct and foreseeable losses are capable of giving rise to compensation.265

1496. - In the case of partial non-performance, damages are to be assessed on the basis of what proportion of the entire set of obligations provided for in the contract has been performed.266 That, again, is an application of the principle of proportionality.267


1497. - It is even possible that an issue as technical as the method of calculating reparable loss could give rise to general principles.268

1498. - Likewise, the conditions governing the set-off of the respective sums which parties to a contract may owe one another have been treated as general principles in some awards.269 We may also witness the development of transnational rules governing interest.270

1499. - To summarize, it is essential to recognize that the system of general principles cannot be reduced to the application of a list of rules which have already been formally codified, but that it consists instead of a method enabling the underlying principles of comparative law to be uncovered, if required.271 It is hard to deny that such a method is an appropriate tool for resolving all disputes liable to arise out of contracts which the parties intended to be governed by transnational rules or to which arbitrators choose to apply transnational rules where the parties fail to elect a governing law.272

153 See supra para. 1446.
154 On this issue, generally, see TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88; Gaillard, supra note 88, 10 ICSID REV.-FOREIGN INV. L.J. 224-28 (1995); 122 J.D.I 22-26 (1995); but see BERGER, supra note 88, at 218 et seq.
155 See supra para. 1447.
156 See supra paras. 1450 et seq.
157 See, for example, ICC Case No. 5163 where the arbitrators had to apply "the principles common to the laws of the Arab Republic of Egypt and the United States of America" (unpublished clause cited in Gaillard, supra note 88, 10 ICSID REV. -FOREIGN INV. L.J. 225 (1995); 122 J.D.I. 23 (1995)). On the terminology, see supra para. 1447.
158 Clause 68 of the contractual conditions attached to the construction contract signed an August 13, 1986 by Eurotunnel and Transmanche Link (ed. of Jan. 27, 1987).
159 On this panel, see supra para. 28.
160 Article 46 of the Tehran petroleum agreements of October 1954, 1956 REV. Alts. 63, 69. See also the unpublished arbitration clause in ICC Case No. 5331, cited in Gaillard, supra note 88, 10 ICSID REV. -FOREIGN INV. L.J. 225, n. 71; 122 J.D.I. 23, n. 71 (1995).
161 See Apr. 12, 1977 ad hoc Award by S. Mahmassani, Libyan American Oil Co. (LIAMCO) v. Government of the Libyan Arab Republic, 20 I.L.M. 1, 33 (1981); VI Y.B. COM. ARB. 89 (1981); for a French translation, see 1980 REV. ARB. 132. See also Robert B. von Mehren and P. Nicholas Kourides, International Arbitrations Between States and Foreign Private Parties: The Libyan Nationalization Cases, 75 AM. J. INT'L L. 476 (1981). On the validity of these provisions, see, for example, Derains, supra note 28, at 390.
162 Award by O. Nabulsi, Chairman, Z. Hashem and A. EI Kosheri, arbitrators, supra note 68.
163 For example, "generally recognized principles of international commercial law," ICC Case No. 5333, unpublished. See also Article 3.4 of the Multilateral Investment Guarantee Agency General Conditions of Guarantee for Equity Investments, dated January 25, 1989, 4 ICSID REV. - FOREIGN INV. L.J. 112, 114, which refers to the contract, the convention establishing MIGA, and general principles of law. On this issue, see Jean Touscoz, Le règlement des différends dans la Convention instituant l'Agence Multilatérale de Garantie des Investissements (A.M.G.I.): un développement de l'arbitrage international et du droit des investissements internationaux, 1988 REV. ARB. 629, 636; Ibrahim F.I. Shihata, Towards a Greater Depoliticization of Investment Disputes: The Roles of ICSID and MIGA, 1 ICSID REV. - FOREIGN INV. L.J. 1 (1986).
164 For example, "principles of law applicable in Western Europe," ICC Case No. 6378 (1991), 120 J.D.I. 1018 (1993), and observations by D. Hascher; principles of law applicable "in Northern Europe," unpublished clause. On regional transnational rules, see Gaillard, supra note 88, 10 ICSID REV. - FOREIGIV INV. L.J. 230-31 (1995); 122 J.D.I. 28-30 (1995).
165 See supra para. 1448.
166 On the sources of lex mercatoria, see especially Lando, supra note 19, at 144 et seq.
167 See, for example, on estoppel by representation, known in German and Swiss law as the principle of non concedit venire contra factum proprium, infra para 1462.
168 See, with regard to the arbitration agreement, the example of the principle of separability set forth supra para. 405, note 43. On this issue, generally, see Gaillard, supra note 88, 10 ICSID REV. - FOREIGN INV. L.J. 228-30 (1995); 122 J.D.I. 26-28 (1995).
169 On the application by arbitrators of the 1964 Hague Convention on the International Sale of Goods, which was the predecessor of the 1980 Vienna Convention, see ICC Award No. 2879 (1978), French buyer v. Yugoslavian seller, 106 J.D.I. 989 (1979), and observations by Y. Derains. But see, on the refusal to apply the 1980 Vienna Convention an the grounds that the Convention was not in force on the date the contract was signed, ICC Award No. 6281 (1989), Egyptian buyer v. Yugoslavian seller, 116 J.D.I. 1114 (1989), and observations by G. Aguilar Alvarez; 118 J.D.I. 1054 (1991), and D. Hascher's note; for an English translation, see XV Y.B. Com. ARB. 96 (1990). On the use of the Vienna Convention as a means of determining international trade usages, see ICC Award No. 5713 (Paris, 1989), Seller v. Buyer, XV Y.B. COM. ARB. 70 (1990); ICC Award No. 7331 (1994), Yugoslavian seller v. Italian buyer, 122 J.D.I. 1001 (1995), and observations by D. Hascher; ICC BULLETIN, Vol. 6, No. 2, at 73 (1995). On the use of the Vienna Convention to support the position of a national law, see ICC Award No. 6281 (1989), supra, 118 J.D.I. 1056 (1991); on the finding that the 1964 Convention had been incorporated into German law, see ICC Award No. 6309 (1991), German company v. Dutch company, 118 J.D.I. 1046 (1991), and observations by J.-J. Amaldez; and, on the application of the Vienna Convention as the applicable law, ICC Award No. 7153 (1992), Austrian party v. Yugoslavian party, 119 J.D.I. 1006 (1992), and D. Hascher's note; ICC Award No. 8324 (1995), Seller v. Buyer, 123 J.D.I. 1019 (1996), and D. Hascher's note; ICC Award No. 8128 (1995), Buyer v. Seller, 123 J.D.I. 1024 (1996), and D. Hascher's note. On this issue, generally, see Jean-Paul Béraudo, The United Nations Convention an Contracts for the International Sale of Goods and Arbitration, ICC BULLETIN, Vol. 5, No. 1, at 60 (1994); Andrea Giardina, International Conventions on Conflict of Laws and Substantive Law, in ICCA CONGRESS SERIES NO. 7, PLANNING EFFICIENT ARBITRATION PROCEEDINGS / THE LAW APPLICABLE IN INTERNATIONAL ARBITRATION 459 (A.J. van den Berg ed., 1996). On the use of international treaties to establish transnational choice of law rules, see infra para. 1549.
170 See the July 20, 1992 Award rendered under the auspices of the Chamber of National and International Arbitration of Milan, Subcontractor v. Contractor, 1993 INT'L CONSTR. L. REV. 201; XVIII Y.B. COM. ARB. 80 (1993). For a compilation of the legislation passed following the Gulf conflict, see, for example, THE IMPACT OF THE FREEZE OF KUWAITI AND IRAQI ASSETS ON FINANCIAL INSTITUTIONS AND FINANCIAL TRANSACTIONS (B.R. Campbell &, D. Newcomb eds., 1990); THE KUWAIT CRISIS: SANCTIONS AND THEIR ECONOMIC CONSEQUENCES (D.L. Bethlehem ed., 1991) (2 vols.); more generally, see Yves Derains, L'impact des crises politiques internationales sur les contrats internationaux et l'arbitrage commercial international/The Impact of International Political Crises on International Contracts and International Commercial Arbitration, 1992 INT'L BUS. L.J. 151; Lambert Matray, Embargo and Prohibition of Performance, in ACTS OF STATE AND ARBITRATION 69 (K.-H. Böckstiegel ed., 1997).
171 See, e.g., Michael Joachim Bonell, The UNIDROIT Initiative for the Progressive Codification of International Trade Law, 27 INT'L & COMP. L.Q. 413 (1978).
172 Supra note 118, at 1. For an example of an award solely based an UNIDR0IT Principles pursuant to the Intention of the parties, see ICC Award No. 8331 (1996), Vehicle supplier v. Purchaser, 125 J.D.I. 1041 (1998), and observations by Y. Derains.
173 On this issue, generally, see UNIDROIT PRINCIPLES FOR INTERNATIONAL COMMERCIAL CONTRACTS: A NEW LEX MERCATORIA? (ICC Publication No. 490/1, 1995); Klaus Peter Berger, The Lex Mercatoria Doctrine and the UNIDROIT Principles of lnternational Commercial Contracts, 28 LAW & POL'Y INT'L BUS. 943 (1997); BERGER, supra note 88; Andrea Giardina, Les Principes UNIDROIT sur les contrats internationaux, 122 J.D.I. 547 (1995); Jean-Paul Béraudo, Les principes d'Unidroit relatifs au droit du commerce international, JCP, Ed. G, Pt. I, No. 3842 (1995); MICHAEL J. BONELL, AN INTERNATIONAL RESTATEMENT OF CONTRACT LAW -THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS (1994); Michael Joachim Bonell, The UNIDROIT Principles of International Commercial Contracts: Towards a New Lex Mercatoria?/Les principes UNIDROIT relatifs aux contrats du commerce international: vers une nouvelle Lex Mercatoria?, 1997 INT'L BUS. L.J. 145; Michael Joachim Bonell, The UNIDROIT Principles in Practice: The Experience of the First Two Years, 1997 UNIFORM L. REV. 34; Hans van Houtte, The UNIDROIT Principles of International Commercial Contracts, 11 ARB. INT'L 373 (1995).
174 On this issue, generally, and on the affirmative response to the question of whether arbitral case law actually exists, see supra paras. 371 et seq.
175 See the examples cited supra para. 1446.
176 On the use of the case law of the International Court of Justice as a basis for the principle of estoppel by representation in international trade law, see, for example, the September 25, 1983 Jurisdictional Decision by B. Goldman, president, I. Foighel and E.W. Rubin, arbitrators, in ICSID Case No. ARB/81/1, Amco Asia Corp. v. Republic of Indonesia, 23 I.L.M. 351, 381 (1984); X Y.B. COM. ARB. 61 (1985); 1 ICSID REP. 389 (1993); for a French translation, see 1985 REV. ARB. 259; 113 J.D.I. 200, 220 (1986), and observations by E. Gaillard.
177 See supra paras. 1455 et seq.
178 See Mustill, supra note 116.
179 See, e.g., Philippe Kahn, Les principes généraux du droit devant les arbitres du commerce international, 116 J.D.I. 305, 325 (1989); Andreas F. Lowenfeld, Lex Mercatoria: An Arbitrator's View, in LEX MERCATORIA AND ARBITRATION 71 (T.E. Carbonneau ed., rev. ed. 1998), who responds to Mustill's criticism that the Ten Commandments or the U.S. Bill of Rights might also be considered "modest," at 89. See also Goldman, Nouvelles réflexions sur la Lex Mercatoriasupra note 88.
180 See Loquin, supra note 114, at 168 et seq.
181 See supra para. 1458.
182 For awards which recognize the rule pacta sunt servanda as a general principle, see, for example, ICC Award No. 3540 (1980), French contractor v. Yugoslavian sub-contractor, 108 J.D.I. 914, 917 (1981), and observations by Y. Derains; for an English translation, see VII Y.B. COM. ARB. 124 (1982); ICC Award No. 2321 (1974), Two Israeli companies v. Government of an African state, I Y.B. COM. ARB. 133 (1976); for a French translation, see 102 J.D.I. 938 (1975), and observations by Yves Derains; the November 20, 1984 Award in ICSID Case No. ARB/81/1, Amco Asia Corp. v. Republic of Indonesia, which was later annulled on different grounds, 24 I.L.M. 1022, 1034-35 (1985); I INT'L ARB. REP. 601 (1986); 1 ICSID REP. 413 (1993); for a French translation, see 114 J.D.I. 145, 154 (1987), and observations by E. Gaillard. For awards recognizing the principle of good faith to be a general principle, see, for example, the October 26, 1979 Award by Messrs. Cremades, Chairman, Ghestin and Steiner, arbitrators, in ICC Case No. 3131, Pabalk Ticaret Limited Sirketi v. Norsolor, 1983 REV. ARB. 525, 531. On this issue, generally, see Pierre Mayer, Le principe de Bonne foi devant les arbitres du commerce international, in ETUDES DE DROIT INTERNATIONAL EN L'HONNEUR DE PIERRE LALIVE 543 (1993).
183 See, for example, the April 12, 1977 LIAMCO Award, supra note 162, 20 I.L.M. 54-58; 1980 REV. ARB. 158-162; VI Y.B. COM. ARB. 89 (1981); for a French translation, see 1980 REV. ARB. 132, especially at 158-62; see also the commentaries by Patrick Rambaud, Un arbitrage pétrolier: la sentence LIAMCO, 26 AFDI 274 (1980), and by Brigitte Stern, Trois arbitrages, un même problème, trois solutions - Les nationalisations pétrolières libyennes devant l'arbitrage international, 1980 REV. ARB. 3; the January 19, 1977 Award by R.-J. Dupuy in Texaco, supra note 56; ICC Award No. 5953 (1989), supra note 64.
185 See supra paras. 1451 et seq.
186 See, e.g., the August 23, 1958 Award in the ARAMCO case, supra note 47; the 1984 Award of the Iran-U.S. Claims Tribunal in Starrett Hous. Corp. v. Iran (Case No. 24), Interlocutory Award No. ITL 32-24-1, 4 Iran-U.S Cl. Trib. Rep. 122; the November 20, 1984 Award in Amco, supra note 183, 24 I.L.M. 1035 (1985); 114 J.D.I. 154 (1987).
187 See, e.g., CA Paris, Feb. 13, 1990, Sunkyong Ltd. v. Interagra Ipitrade International, Dalloz, Jur. 593 (1990), and G. Peyrard's note. See also Philippe Blondel, Les "principes généraux" dann la jurisprudence de cassation - Rapport de synthèse, JCP, Ed. E., Suppl. 5-1989, at 16 (1989), especially at 20; Horatia Muir Watt, Pour l'accueil de l'estoppel en droit privé français, in L'INTERNATIONALISATION DU DROIT - MLANGES EN L'HONNEUR DE YVON LOUSSOUARN 303 (1994).
188 See, for example, the September 25, 198,3 Jurisdictional Decision in Amco, supra note 177, 23 I.L.M. 377-82 (1984); 113 J.D.I. 218-21 (1986), and observations by E. Gaillard at 250-52; the September 2, 1983 Award of the Iran-U.S. Claims Tribunal in Woodward-Clyde Consultants v. Iran, Award No. 73-67-3, 3 Iran-U.S. Cl. Trib. Rep. 239 (1983); for a French translation, see 1985 REV. ARB. 272; the June 5, 1990 Award in ICSID Case No. ARB/81/1, Amco Asia Corp. v. Republic of Indonesia, 5 INT'L ARB. REP. D4, D37 (Nov. 1990); XVII Y.B. COM. ARB. 73 (1992); 1 ICSID REP. 569. (1993); for a French translation, see 118 J.D.I. 172, 177 (1991), and observations by E. Gaillard, at 183-84; see also the preliminary award in ICC Case No. 15 12 (Jan. 14, 1970), Indian cement company v. Pakistani bank, 1992 BULL. ASA 505; V Y.B. COM. ARB. 174 (1980); ICC Award No. 5926 (1989), unpublished, in which the parties, from Latin America and North America respectively, both recognized the existence of the principle but each sought to invoke it to support its case. See, for the same situation, ICC Award No. 6363 (1991), Licensor v. Licensee, XVII Y.B. COM. ARB. 186 (1992), especially 44 at 201. See also the April 8, 1999 ad hoc, Award made in Paris, Construction companies v. Middle East State, unpublished, which decides that a party which has assigned a contract without the prior consent of its cocontractor cannot rely on this circumstance in the context of the determination of the parties to the arbitration agreement (at 75).
189 On this issue, generally, see Gaillard, supra note 127; Loquin, supra note 114, at 173; SCHMITTHOFF, supra note 110, [para] 70; Kahn, supra note 180, at 323; Pinsolle, supra note 127; Paul Bowden, L'interdiction de se contredire au détriment d'autrui (estoppel) as a Substantive Transnational Rule in International Commercial Arbitration, in TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 125.
190 Mayer, supra note 183.
191 Comp. with Virally, supra note 110, at 381.
192 Loquin, supra note 114, at 173. See also Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in ICCA CONGRESS SERIES NO. 3, COMPARATIVE ARBITRATION PRACTICE AND PUBLIC POLICY IN ARBITRATION 257 (P. Sanders ed., 1987), and, for a French version, 1986 REV. ARB. 329, 345.
193 See, for example, in French law, Patrice Jourdain, Le devoir de "se" renseigner (Contribution à l'étude de l'obligation de renseignement), Dalloz, Chron. 139 (1983). On this issue, see also XAVIER BOUCOBZA, L'ACQUISITION INTERNATIONALE DE SOCIÉTÉ [ ]673 et seq. (1998).
194 GEORGES RIPERT, LA RÈGLE MORALE [para]43, cited by Y. Derains, observations following ICC Award No. 1990 (1972), Italian company v. Spanish company, 101 J.D.I. 897 (1974).
195 On the widely accepted idea that the doctrine of apparent authority serves to correct the absence of necessary powers, see Article 11 of the June 19, 1980 Rome Convention on the Law Applicable to Contractual Obligations. See also an this issue, with regard to state contracts, Audit, supra note 51, at 38 et seq. Compare, with regard to the arbitration clause, supra para. 470.
196 See ICC Award No. 1990 (1972), ItaIian company v. Spanish company, 101 J.D.I. 897 (1974), and observations by Y. Derains; ICC Award No. 3776 (1982), cited by Guy Horsmans, L'interprétation des contrats internationaux, in L'APPORT DE LA JURISPRUDENCE ARBITRALE, supra note 113, at 123, 146; the October 27, 1975 Award by the Czechoslovak Chamber of Commerce, id. at 146.
197 Loquin, supra note 114, at 169.
198 But see ICC Award No. 4145 (1984), supra note 64.
199 On the different question of the principle of interpretation whereby sense should be given to the provisions agreed by the parties, see infra para. 1471.
200 On the affirmation that "contractual principles such as the invalidity of contracts where the parties' consent is defective are general principles of law which are applicable here," See ICC Award No. 3327 (1981), French company v. African state, 109 J.D.I. 971 (1982), and observations by Y. Derains. On the affirmation of the general principle that misrepresentation constitutes a cause of nullity of contracts, See the award cited by FOUCHARD, supra note 112, at 433. Compare the more conservative position taken by Paulsson, supra note 88, at 96, which, in our view, overestimates the differences in national laws an these issues although, admittedly, the terminology used differs significantly from one jurisdiction to the next.
201 Kahn, supra note 180, at 317. But see the reservations expressed by DE BOISSÉSON, supra note 41, at 636. Compare, for the idea that the lifting of the corporate veil can be based on lex mercatoria, with ICC Award No. 8385 (1995), U.S. company v. Belgian company, 124 J.D.I. 1061 (1997), and observations by Y. Derains.
202 ICC Award No. 1110 (1963) by Mr. G. Lagergren, Mr. X, Buenos Aires v. Company A, 10 ARB. INT'L 282, [para]16 at 293 (1994).
203 See, e.g., ICC Award No. 3916 (1982) Iranian party v. Greek party, 111 J.D.I. 930 (1984), and observations by S. Jarvin; ICC Award No. 3913 (1981), cited by Y. Derains, observations following ICC Award No. 2730 (1982), Two Yugoslavian companies v. Dutch and Swiss group companies, 111 J.D.I. 914, 920 (1984); ICC Award No. 5943 (1990), 123 J.D.I. 1014 (1996), and observations by D. Hascher.
204 Supra note 204, at 917-18. On the issue of the nullity of contracts for corruption, see EXTORTION AND BRIBERY IN BUSINESS TRANSACTIONS (ICC Publication No. 315, 1977); Ahmed S. EI Kosheri and Philippe Leboulanger, L'arbitrage face à la corruption et aux trafics d'influence, 1984 REV. ARB. 3; François Knoepfler, Corruption et Arbitrage international, in LES CONTRATS DE DISTRIBUTION - CONTRIBUTIONS OFFERTES AU PROFESSEUR FRANÇOIS DESSEMONTET À L'OCCASION DE SES 50 ANS 357 (1998); Loquin, supra note 114, at 180; Lalive, supra note 193, at 345; Kahn, supra note 180, at 314. For a more reserved position on the ground that the nullity of contracts for corruption is less frequently pronounced than is sometimes alleged to be the case, see Bruno Oppetit, Le paradoxe de la corruption à l'épreuve du droit du commerce international, 114 J.D.I. 5 (1987). The broad ratification of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on December 17, 1997, should put an end to this minority view. See also ICC Award No. 5622 (Geneva, Aug. 19, 1988), Hilmarton v. OTV (1993 REV. ARB. 327, and the commentary by Vincent Heuzé, La morale, l'arbitre et le juge, id. at 179; 1992 RIV. DELL' ARB. 773, and A. Giardina's note; for an English translation, see XIX Y.B. COM. ARB. 105 (1994)) and, on the subsequent proceedings to which this award gave rise, infra para 1595; for a case where the arbitrators considered that corruption could lead to the nullity of the contract but where there was insuffcient evidence of such corruption, see the March 21, 1992 ICC Award upheld by CA Paris, Sept. 30, 1993, European Gas Turbines v. Westman International Ltd., 1994 REV. ARB. 359, and D. Bureaus note; 1994 REV. CRiT. DIP 349, and V. Heuzé's note; 1994 RTD Coat. 703, and observations by J.-C. Dubarry and E. Loquin; 1994 BULL. ASA 105, and the commentary by Adel Nassar, Ordre public international et arbitrage? Y a-t-il eu une évolution?, id at 110; XX Y.B. COM. ARB. 198 (1995); ICC Award No. 7047 (Feb. 28, 1994), by H. Raeschke-Kessler, Chairman, J. Patry and D. Mitrovic, arbitrators, Corporation W. v. State Agency F., 1995 BULL. ASA 301, upheld by Swiss Fed. Trib., Dec. 30, 1994, 1995 BULL. ASA 217; 1996 REV. SUISSE DR. INT. ET DR. EUR. 545, and observations by P. Schweizer. See also the awards cited supra para. 586.
205 See Berthold Goldman, The Complementary Roles of Judges and Arbitrators in Ensuring that International Commercial Arbitration is Effective, in INTERNATIONAL ARBITRATION - 60 YEARS OF ICC ARBITRATION - A LOOK AT THE FUTURE 257, 272 (ICC Publication No. 412, 1984); EI Kosheri and Leboulanger, supra note 205, at 14; Lalive, supra note 193, at 337. More generally, on the arbitrability of issues of corruption, see supra para. 586.
206 See Pierre Mayer, La règle morale dans l'arbitrage international, in ETUDES OFFERTES A PIERRE BELLET 379, [para] 34 (1991). On the fact that these principles are part of international public policy, see infra para. 1535.
207 See Lalive, supra note 193, at 341.
208 See supra para. 508 and especially Kahn, supra note 180, at 317-18; DE BOISSÉSON, supra note 41, at 639.
209 See Jean-Hubert Moitry, Arbitrage international et droit de la concurrence: vers un ordre public de la lex mercatoria?, 1989 REV. ARB. 3. But see Laurence Idot, Les conflits de lois en droit de la concurrence, 122 J.D.I. 321, 328 (1995).
210 On this issue, generally, see Philippe Kahn, L'interprétation des contrats internationaux, 108 J.D.I. 5 (1981); Horsmans, supra note 197; FOUCHARD, supra note 112, at 434 et seq. On the principles of construction of arbitration agreements, see supra paras. 476 et seq.
211 See, e.g., ICC Award No. 1434 (1975), supra note 14. On these rules, see especially Jacques Dupichot, Pour un retour aux textes: défense et illustration du "petit guide-âne" des articles 1156 à 1164 du Code civil, in ETUDES OFFERTES À JACQUES FLOUR 179 (1979); CORNU, supra note 185, [paras] 44 et seqSee also J. LOPEZ SANTA MARIA, LES SYSTÈMES D'INTERPRÉTATION DES CONTRATS (Thesis, University of Paris (France), 1968), with a foreword by J. Flour.
212 Supra note 118, especially Arts. 4.1 to 4.8, at 90-100.
213 See, e.g., ICC Award No. 2291 (1975), French transporter v. English company, 103 J.D.I. 989 (1976), and observations by Y. Derains; the September 25, 1983 Jurisdictional Decision in Amco, supra note 177.
214 Award of June 10, 1955 by President Cassin, Gouvernement Royal Hellénique v. Gouvernement de sa Majesté Britannique, 1956 REV. CRIT. DIP 279, and H. Batiffol's note; 1956 REV. ARB. 15.
215 Supra note 47, 27 INT'L L. REP. 173 (1963); for a French translation, see 1963 REV. CRIT. DIP 272, 319. See also the reasons given for an award made by a Dutch arbitrator on December 23, 1932, according to which the examination of the contract "cannot be limited to its literal terms as contracts must be performed in good faith" (European company v. European company cited by FOUCHARD, supra note 112, [para] 619 at 439).
216 Supra note 14. With respect to the arbitration agreement, see supra para. 477.
217 See the June 10, 1955 Award by President Cassin, supra note 215.
218 ICC Award No. 1434 (1975), supra note 14. See also ICC Award No. 3380 (1980), Italian enterprise v. Syrian enterprise, 108 J.D.I. 927 (1981), and observations by Y. Derains; for an English translation, see VII Y.B. COM. ARB. 116 (1982); ICC Award No. 3460 (1980), French company v. Ministry of an Arab country, 108 J.D.1. 939 (1981), and observations by Y. Derains; the March 24, 1982 ad hoc Award in AMINOIL, supra note 56, [para] 89; the September 25, 1983 Jurisdictional Decision in Amco, supra note 177; ICC Award No. 8365 (1996), supra note 109; ICC Award No. 8331 (1996), supra note 173. See also Paulsson, supra note 88, at 92; SCHMITTHOFF, supra note 110, [para] 70; with respect to the arbitration agreement, see supra para. 478.
219 See, e.g, the August 23, 1958 Award in ARAMCO, supra note 47, 27 INT'L L. REP. 197-98 (1963); 1963 REV. CRIT. DIP 338; ICC Award No. 7792 (1994), 122 J.D.I. 993 (1995), and observations by D. Hascher.
220 Compare, on the "presumption of acquiescence to an act of performance different from that defined by the contract," Loquin, supra note 114, at 175. With respect to the arbitration agreement, see supra para. 477.
221 See ICC Award No. 543 (1934), French company v. Belgian company, cited by FOUCHARD, supra note 112, [para] 615 at 432; ICC Award No. 3344 (1981), Arab State Enterprise v. Arab State Enterprise, 109 J.D.I. 978 (1982), and observations by Y. Derains; ICC Award No. 8365 (1996), supra note 109.
222 Mustill, supra note 116, at 177, n. 106. Comp. with Loquin, supra para. 1459 and note 114.
224 But see Paulsson, supra note 88, at 89.
225 See, e.g., ICC Award No. 1434 (1975), supra note 14, and Kahn, supra note 211, at 18.
226 See, e.g., ICC Award No. 1434 (1975), supra note 14, and the September 25, 1983 Jurisdictional Decision in Amco, supra note 177, 23 I.L.M. 377 et seg. (1984); 113 J.D.I. 218 et seq. (1986), and the observations by E. Gaillard at 231. With respect to the arbitration agreement, See supra para. 477.
227 See, e.g., ICC Award No. 2795 (1977), Swiss buyer v. Enterprise of socialist country, seller, IV Y.B. Cotvt. ARB. 210 (1979). Comp. with ICC Award No. 3460 (1980), supra note 219; the April 26, 1993 Award under the aegis of the Society of Maritime Arbitrators, Inc., New York, in Case No. 2972, Nordic American Shipping A/S v. Bayoil (USA) Inc., XX Y.B. COM. ARB. 126, 131 (1995). See also Art. 4.6 of the UNIDROIT Principles, supra note 118. With respect to the arbitration agreement, See supra para. 479.
228 See, e.g., ICC Award No. 2583 (1976), Spanish contractor v. Libyan owner, 104 J.D.I. 950 (1977), and observations by Y. Derains.
229 Goldman, La lex mercatoria dans les contrats et l'arbitrage internationaux: réalité et perspectives, supra note 88, at 489; Paulsson, supra note 88, at 92.
230 ICC Award No. 3540 (1980), supra note 183.
231 ICC Award No. 3243 (1981), U.S. company v. Moroccan company, 109 J.D.I. 968 (1982), and observations by Y. Derains. See also, an the basis of Portuguese law, ICC Award No. 7518 (1994), Italian party v. Portuguese party, 125 J.D.I. 1034 (1998), and observations by Y. Derains.
232 See, for example, Article 148 of the Egyptian Civil Code, which was used as a model in many other Arab countries.
233 See, e.g., ICC Award No. 3131 (Oct. 26, 1979), Norsolor, supra note 183, and the commentary by Berthold Goldman, Une bataille judiciaire autour de la lex mercatoria - L'affaire Norsolor, 1983 REV. ARB. 379. On this issue in the context of state contracts, see Pierre Lalive, Sur la bonne foi dans l'exécution des contrats d'Etat, in MÉLANGES OFFERTS À RAYMOND VANDER ELST 425 (1986).
234 See supra para. 1461.
235 See, for example, the Norsolor award, supra note 183.
236 In favor of a specific assessment of such contracts, see, for example, Patrick Rambaud, L'annulation des sentences Klöckner et Amco, 32 AFDI 259 (1986); the January 19; 1977 Texaco Award by R.-J. Dupuy, supra note 56; but see the October 21, 1983 Award in Klöckner, subsequently annulled on different grounds, supra note 140, 111 J.D.I. 426 (1984), and observations by E. Gaillard, 114 J.D.I. 141 (1987). See also Prosper Weil, Droit international et contrats d'Etat, in MÉLANGES OFFERTS À PAUL REUTER - LE DROIT INTERNATIONAL: UNITÉ ET DIVERSITÉ 549 (1981); Kahn, supra note 51.
237 Gérard Morin, Le devoir de coopération dans les contrats internationaux - Droit et pratique, 1980 DPCI 9, 13.
238 Supra note 140. See also Loquin, supra note 114, at 179 et seq., according to which it is a general principle of law, and Audit, supra note 51, at 111.
239 Award cited by Sigvard Jarvin, L'obligation de coopérer de bonne foi; Exemples d'application au plan de l'arbitrage international, in L'APPORT DE LA JURISPRUDENCE ARBITRALE, supra note 113, at 157, 167-68. See also ICC Award No. 3093 (1979), supra note 60. On this issue, see also Piero Bernardini, Is the Duty to Cooperate in Long-Term Contracts a Substantive Transnational Rule in International Commercial Arbitration?, in TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 137. On the corresponding obligation of reasonable diligence in seeking out information, see supra para. 1464.
240 On this issue, see especially Denis Philippe, "Pacta sunt servanda " et "Rebus sic stantibus ", in L'APPORT DE LA JURISPRUDENCE ARBITRALE, supra note 113 at 181; ANTOINE KASSIS, THÉORIE GÉNÉRALE DES USAGES DU COMMERCE [paras] 548 et seq. (1984); Paulsson, supra note 88, at 95.
241 Supra note 214. See also SCHMITTHOFF, supra note 110, [para] 70.
242 Ad hoc Award of July 2, 1956 by Messrs. Ripert and Panchaud, Société Européenne d'Etudes et d'Entreprises v. République fédérale de Yougoslavie, 86 J.D.I. 1074 (1959), and the statement of the Yugoslav Govemment in connection with the arbitral award, 87 J.D.I. 760 (1960). See also Guy Horsmans and Michel Verwilghen, Stabilité et évolution du contrat économique international, in LE CONTRAT ÉCONOMIQUE INTERNATIONAL - STABILITÉ ET ÉVOLUTION 451 (Report of the VIIe Journées d'études juridiques Jean Dabin, held at Louvainla-Neuve (Belgium) on November 22-23, 1973 (1975)).
243 See, for example, the reservations expressed in ICC Award No. 1512 (1971), Indian cement company v. Pakistani bank, I Y.B. COM. ARB. 128 (1976); for a French translation, see 101 J.D.I. 904 (1974), and observations by Y. Derains; ICC Award No. 2404 (1975), Belgian seller v. Romanian purchaser, 103 J.D.I. 995 (1976), and observations by Y. Derains. See also Goldman, La lex mercatoria dans les contrats et l'arbitrage internationaux: réalité et perspectives, supra note 88, at 495. On this issue, generally, see Hans van Houtte, Changed Circumstances and Pacta Sunt Servanda, in TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 105.
244 On this issue, see supra paras. 35 et seq.
245 For a comparative law analysis, see René David, L'imprévision dans les droits européens, in ETUDES OFFERTES À ALFRED JAUFFRET 211 (1974). For the position of the UNIDROIT principles with respect to hardship, see Articles 6.1.2 to 6.2.3; see also P. Kahn, review of the Principles in 121 J.D.I. 1115 (1994). For an application of the doctrine of change in circumstances under Algerian law, which expressly accepts the rule, see, for example, the ad hoc Award rendered in Paris on December 29, 1993 by D.G. Wright, chairman, P. Mayer and C. Molineaux, arbitrators (C. Molineaux dissenting), Icori Estero S.p.A. v. Kuwait Foreign Trading Contracting & Investment Co., 9 INT'L ARB. REP. A1 (Dec. 1994). For an example of the refusal to apply the doctrine of change in circumstances recognized, within certain limits, by Dutch law, see ICC Award No. 8486 (1996), Dutch party v. Turkish party, 125 J.D.I. 1047 (1998), and observations by Y. Derains.
246 On the duty to renegotiate in good faith, see, for example, ICC Award No. 2291 (1975): "reasonable renegotiation [is] customary in international contracts" (supra note 214); ICC Award No. 8365 (1996), supra note 109. See also Loquin, supra note 114, at 175 and, on the similar concept of the "equal sharing of the burden of risks," at 178; Goldman, La lex mercatoria dans les contrats et l'arbitrage internationaux: réalité et perspectives, supra note 88, at 492. On the fact that the invalidity of an "agreement to agree" is not a transnational rule, see ICC Award No. 8540 (Sept. 4, 1996), unpublished.
247 See, e.g., ICC Award No. 3131 (Oct. 26, 1979), Norsolor, supra note 183, and Kahn, supra note 180, at 321.
248 See, e.g., ICC Award No. 2583 (1976), supra note 229.
249 Supra note 183. See also ICC Award No. 7539 (1995), French company v. Greek company, 123 J.D.I. 1030 (1996), and observations by Y. Derains; the Ostober 21, 1983 Award in Klöckner, supra note 140, and observations by E. Gaillard, 114 J.D.I. 142 (1987); ICC Award No. 8365 (1996), supra note 109; Paulsson, supra note 88, at 93. On this issue, see Philip D. O'Neill, Jr. and Nawaf Salam, Is the Exceptio Non Adimpleti Contractus Part of the New Lex Mercatoria?, in TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 147.
250 For another application of this principle, see infra para. 1496.
251 JEAN CARHONNIER, DROIT CIVIL - Vol. 4 - LES OBLIGATIONS [para] 84, considered to reflect a rule of lex mercatoria by Y. Derains, observations following ICC Award No. 2583 (1976), Spanish contractor v. Libyan owner, 104 J.D.I. 950, 951 (1977). See also the October 21, 1983 Klöckner Award, supra note 140, and the observations by E. Gaillard, 114 J.D.I. 143 (1987). On whether there is a general principle under which the right to withhold performance is subject to the prior formal notification by the party invoking it to its co-contractor, see Gaillard, id. at 143-44 (1987).
252 Compare, on the effect of express termination clauses, ICC Award No. 2520 (1975), Two Czechoslovak companies v. Italian company, 103 J.D.I. 992 (1976), and observations by Y. Derains.
253 Compare, on the definition of force majeure, ICC Award No. 2478 (1974), which was subject to Swiss law, but was expressed in general terms (French company v. Romanian company, 102 J.D.I. 925 (1975), and observations by Y. Derains); ICC Award No. 2142 (1974), 101 J.D.I. 892 (1974), and observations by R.T.
254 See, for example, the November 25, 1971 Preliminary Award in ICC Award No. 1703, Société Générale de l'Industrie du Papier "RAKTA" v. Parsons and Whittmore Overseas Co., Inc., reprinted in J. GILLIS WETTER, THE INTERNATIONAL ARBITRAL PROCESS: PUBLIC AND PRIVATE, Vol. V, at 361, 369 (1979); for a French translation, see 101 J.D.I. 894 (1974), and observations by R. Thompson. Comp. with ICC Award No. 7539 (1995), supra note 250.
255 On the consequences of the long-lasting embargo against Iraq, held to be a cause of termination of a construction contract, see ICC Award No. 8095 (Sept. 25, 1997), unpublished.
256 On this issue, see David W. Rivkin, Lex Mercatoria and Force Majeurein TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 161; Henry Lesguillons, Pratique arbitrale concernant la "force majeure" et la "frustration", in INADEMPIMENTO, ADATTAMENTO, ARBITRATO - PATOLOGIE DEI CONTRATTI E RIMEDI 457 (1992).
257 See, for example, ICC Award No. 2520 (1975), in which the arbitrators took into account, in their assessment of damages, the absence of any adverse reaction by one party to the failure by the other party to perform its obligations (supra note 253); ICC Award No. 8365 (1996), supra note 109. Compare, in a case governed by Moroccan law, ICC Award No. 3243 (1981), supra note 232.
258 On this issue, see Marcel Fontaine, Il danno risarcibile nella giurisprudenza arbitrale della Camera di Commercio Internazionale, in INADEMPIMENTO, ADATTAMENTO, ARBITRATO - PATOLOGIE DEI CONTRATTI E RIMEDI 541 (1992); JÉRÔME ORTSCHEIDT, LA RÉPARATION DU DOMMAGE DANS L'ARBITRAGE COMMERCIAL INTERNATIONAL (Thesis, University of Paris XII (France), 1999).
259 See, e.g., ICC Award No. 2478 (1974), supra note 254; ICC Award No. 3344 (1981), supra note 222; ICC Award No. 4761 (1987), Italian consortium v. Libyan company, 114 J.D.I. 1012 (1987), and observations by S. Jarvin; ICC Award No. 5910 (1988), Belgian purchaser v. Belgian seller, 115 J.D.I. 1216 (1988), and observations by Y. Derains; ICC Award No. 5514 (1990), French company v. Government committed to the provision of financing, 119 J.D.I. 1022,1024-25 (1992), and observations by Y. Derains; ICC Award No. 6840 (1991), Egyptian seller v. Senegalese buyer, 119 J.D.I. 1030, 1034 (1992), and observations by Y. Derains; the June 5, 1990 Award by R. Higgins, president, M. Lalonde and P. Magid, arbitrators, in Amco, supra note 189, 5 INT'L ARB. REP. D41 et seq. (Nov. 1990); 118 J.D.I. 178 (1991), and observations by E. Gaillard, especially at 187; on this issue, generally, see Yves Derains, L'obligation de minimiser le dommage dans la jurisprudence arbitrale, 1987 INT'L BUS. L.J. 375; Kahn, supra note 180; at 321-22; Loquin, supra note 114, at 177-78; Goldman, La lex mercatoria dans les contrats et l'arbitrage internationaux: réalité et perspectives, supra note 88, at 495. On the application of this rule in awards where different national laws apply, see the references cited by Y. Derains, observations following ICC Award No. 5910 (1988), supra, at 1222; in French law, see ICC Award No. 2404 (1975), supra note 244; see also CA Paris, 1e Ch., Sec. C, Dec. 8, 1998, Peter Van Vugt Agrow Products B.V. v. Hydro Agri France Nouvelle Denomination Hydro Azote, No. 1997/04763, unpublished; in English law, see ICC Award No. 5885 (1989), Seller v. Buyer, XVI Y.B. COM. ARB. 91 (1991); in Algerian law, see ICC Award No. 5865 (1989), supra note 15. For a convincing demonstration that, in spite of the fact that it is not formulated in the same way, this principle is recognized under French law, see ORTSCHEIDT, supra note 259, [paras] 200 et seq.
260 See, e.g., ICC Award No. 1526 (1968), Belgian parties v. African state, 101 J.D.I. 915 (1974), and observations by Y. Derains; the November 20, 1984 Award, set aside on other grounds, in Amco, supra note 183, 24 I.L.M. 1036 (1985); 114 J.D.I. 155 (1987).
261 On the recovery of compensation in cases of lawful expropriation, see the discussion in the June 5, 1990 Award in Amco, supra note 189, 5 INT'L ARB. REP. D41 et seq. (Nov. 1990); 118 J.D.I. 179 (1991), and observations by E. Gaillard, especially at 187. See also the May 20, 1992 Award by E. Jimenez de Arechaga, president, R. Pietrowski, Jr. and M. EI Mahdi, arbitrators (M. El Mahdi dissenting), in ICSID Case No. ARB/84/3, Southern Pacific Properties (Middle East) Ltd. v. Arab Republic of Egypt, 8 ICSID REV. - FOREIGN INV. L.J. 328 (1993); 32 I.L.M. 933 (1993), with correction at 32 I.L.M. 1470 (1993); XIX Y.B. COM. ARB. 51 (1994); 8 INT'L ARB. REP. A1 (Aug. 1993); 3 ICSID REP. 189 (1995); for a French translation, See 121 J.D.I. 229 (1994), and observations by E. Gaillard. On the issue, see ORTSCHEIDT, supra note 259, [paras] 426 et seq 
262 On the recovery of compensation in cases of unlawful expropriation, see, for example, the June 5, 1990 Award in Amco, supra note 189, S INT'L ARB. REP. D41 et seq. (Nov. 1990); 118 J.D.I. 187 (1991).
263 On this issue, See E. Allah Farnsworth, Punitive Damages in Arbitration, 7 ARB. INT'L 3 (1991); ORTSCHEIDT, supra note 259, [paras] 604 et seq. But See, on the arbitrability of the question, supra para. 579.
264 See UNIDROIT Principles, supra note 118, Art. 7.4.13, para. 2; See infra para. 1556.
265 ICC Award No. 1526 (1968), in which the arbitral tribunal reasoned in terms of general principles although it had declared a specific law to be applicable (supra note 261); ICC Award No. 2404 (1975), supra note 244; the November 20, 1984 Award in Amco, set aside on other grounds, supra note 183, 24 I.L.M. 1037 (1985); 114 J.D.I. 155 (1987); the June 5, 1990 Award in Amco, supra note 189, 5 INT'L ARB. REP. D41 et seq. (Nov. 1990); 118 J.D.I. 179 (1991), and observations by E. Gaillard, especially at 187.
266 See, for example, the November 1, 1978 ICC Award in Banque du Proche-Orient v. Fougerolle, upheld by CA Paris, June 12, 1980, 1981 REV. ARB. 292, and G. Couchez' note; 109 J.D.I. 931 (1982), 2d decision, and B. Oppetit's note.
267 See supra para. 1486.
268 On this issue, particularly in the context of state contracts, see Ignaz Seidl-Hohenveldern, L'évaluation des dommages dans les arbitrages transnationaux, 33 AFDI 7 (1987); William C. Lieblich, Determinations by International Tribunals of the Economic value of Expropriated Enterprises, 7 J. INT'L ARB. 37 (Mar. 1990). On this issue, generally, see Bernard Hanotiau, La détermination et l'évaluation du dommage réparable: principes généraux et principes en émergence, in TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 209; Yves Derains, Intérêts moratoires, dommages-intérêts compensatoires et dommages punitifs devant l'arbitre international, in ETUDES OFFERTES A PIERRE BELLET 100, especially at 114 et seq. (1991); ORTSCHEIDT, supra note 259, [paras] 21 et seq.
269 See ICC Award No. 3540 (1980), supra note 183, and the observations by Kahn, supra note 180, at 323. See also Paulsson, supra note 88, at 93. See also Klaus Peter Berger, Set-Off in International Economic Arbitration, 15 ARB. INT'L 53 (1999).
270 Pierre A. Karrer, Transnational Law of Interest in International Arbitration, in TRANSNATIONAL RULES IN INTERNATIONAL COMMERCIAL ARBITRATION, supra note 88, at 223; Derains, supra note 269, at 102 et seq.; Yves Derains, La jurisprudence arbitrale de la Chambre de commerce internationale en matière de monnaie de compte et de monnaie de paiement, in INADEMPIMENTO, ADATTAMENTO, ARBITRATO - PATOLOGIE DEI CONTRATTI E RIMEDI 477 (1992); ORTSCHEIDT, supra note 259, [paras] 482 et seq.; Herbert Schönle, Intérêts moratoires, intérêts compensatoires et dommages-intérêts de retard en arbitrage international, in ETUDES DE DROIT INTERNATIONAL EN L'HONNEUR DE PIERRE LALIVE 649 (1993); Martin Hunter and Volker Triebel, Awarding Interest in International Arbitration - Some Observations Based an a Comparative Study of the Laws of England and Germany, 6 J. INT'L ARB. 7 (Mar. 1989); David J. Branson and Richard E. Wallace, Jr., Awarding Interest in International Commercial Arbitration: Establishing a Uniform Approach, 28 VIRG. J. INT'L L. 919 (1988). On the starting point for interest, see the May 20, 1992 Award in Southern Pacific Properties, supra note 262. On the question of interest, see excerpts of ICC BULLETIN, Vol. 3, No. 1, at 15 et seq., ICC BULLETIN, Vol. 3, No. 2, at 46 et seq. (1992); supra note 170.
271 See supra paras. 1458 and 1459.
272 See infra para. 1556.

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