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ICC Award 18203, Coll. ICC Arb. Awards 2016-2020

ICC Award 18203, Coll. ICC Arb. Awards 2016-2020
Table of Contents

Final award in case no. 18203


[27] “This issue arises from certain flaws within the Arbitration Agreement, which also includes a provision/sentence on the law applicable and provides that the Distributor Agreement 'shall be governed by the laws as defined by the EEC (European Economic Community), and the parties hereto consent to and accept the jurisdiction of its courts'. Since the EEC zone no longer exists and because there is no straightforward meaning for the terms ‘laws as defined by the EEC”, the Arbitral Tribunal is compelled to construe the Parties’ true intention in that respect.
[28] “The Sole Arbitrator is satisfied with Claimant’s arguments that this phrasing could mean or at least encompass the rules deriving from the CISG. More generally, even if the CISG was not per se applicable, the Sole Arbitrator deems the general principles and rules applicable in the field of international commerce, which are common to those deriving from the CISG, will also give guidance to settle the present dispute, which encompass, inter alia, pacta sunt servanda, the good faith duty, the principle of contractual liability in case of breach of a contract, the duty to fully compensate the harm suffered by the non-breaching party as proven by the latter.
[29] “First, it is a fact that the CISGis today part of most of European countries, ie. in the European Union, an organization that has succeeded to the EEC. At the time the EEC existed, and on the eve of its incorporation in 1993 with the EU, the EEC encompassed twelve European countries: Germany, France, Italy, Belgium, Luxembourg, the Netherlands, the United Kingdom, Ireland, Denmark, Spain, Portugal and Greece. Although the ‘laws’ of these EEC countries contain significant differences, this geographical zone has also built and agreed upon some common legal rules, even beyond the numerous EU Regulations applicable in almost all European jurisdictions.
[30] “Among those common rules, it is not unreasonable to state that the CISG has been incorporated in a great majority of these ex-EEC countries,9 and more generally in most European jurisdictions belonging today to the EU and even beyond (such as Norway). Thus, if one was to determine the Parties' intention when construing the wording 'laws as defined by the EEC', the Sole Arbitrator does not find it unreasonable to include the CISG therein and, ultimately, to rely more specifically on that Convention applicable to the type of transactions as the one here disputed.
[31] “Indeed, this inclusion is all the more relevant, as the CISG is meant to govern international sales of goods, which is the case of the Distributor Agreement (see below) and is the law governing such contracts in those European countries.
[32] “True, the CISG contemplates, as to its ratione materiae scope, that it applies to contracts of sale of goods between parties whose places of business are in different States, notably when the States are Contracting States (Art. 1(1)(a)) of the CISG). This is not however the case here as both Parties are UAE nationals and the UAE has not, as of today, and to the best of the Sole Arbitrator’s knowledge, ratified the CISG. Yet, this is not an absolute obstacle.
[33] “The Sole Arbitrator agrees with the authorities quoted by Claimant according to which the CISG may be opted for and/or applied, even though neither the country of the buyer nor that of the seller are State parties to the CISG.10 Furthermore, the CISG also contemplates its applicability when the rules of private international law lead to the application of the law of a Contracting State (Art. 1(1)(b)). The Sole Arbitrator believes that those international private law rules lead indeed to such à result (see infra). Consequently, the application of the CSIG both méets the Parties’ intent and appears consistent with its ratione materiae scope.
[34] “Second, it is also a fundamental liberty, implied by the CISG, for parties involved in international trade to be able to stipulate a set of rules, specifically designed for this field, although their countries have not ratified the CISG, and even if the law chosen has no connection whatsoever with the national law of the parties. This stems from the CISG’s preamble, its Art. 1(3) (which disregards the nationality of the parties when considering its scope of application), as well as from its Art. 1(6) (giving parties the liberty to exclude the application of the Convention or to depart from some of its provisions). Art. 17(1) of the [ICC] Rules also confirms the parties' autonomy in choosing freely the national law or the rules that best fit their contractual framework. Here, UAE Parties have freely chosen various 'EEC laws', exactly like they could have stipulated other non UAE rules to govern their agreement.
[35] “Third, the same Art. 17(1) of the Rules entitles the arbitrators to set the rules they deem the most appropriate in light of the circumstances in case the parties had not chosen a specific law, or even no law at all, situations which could be assimilated to the present case. In addition, it is not an uncommon practice for arbitrators, especially those seating under the ICC Rules, not to feel bound by strict, rigid, complex or too mechanical conflict-of-laws rules, all the more so as they would go against the clear intention of the parties, which is rather to apply sets of rules in Europe than a particular national law.
[36] "Indeed the CISG rules, which incorporate many trade usages — often referred to as the lex mercatoria — appear to adequately fit the arbitral tribunal's incrlination and power to apply, in similar situations, rules that do no pertain to a specific national legal system, which appears to be precisely the Parties' intention in this case. Indeed, both Art. 17(2) of the Rules and Art. 1511 of the French Code of Civil Procedure vest the arbitrators with such a faculty, which seems to meet the Parties' intention in the present case: an international contract for the sale of goods with no reference to a specific law.
[37] "Fourth, it is the Sole Arbitrator’s opinion, as per the case law quoted by Claimant, that the above remains true, even if part of the Distributor Agreement pertains not to items or goods per se but also, and to a certain and limited extent, to services.
[38] "At last, from a pure conflict-of-laws approach, the Arbitral is not convinced about the rationale followed by Claimant in relation to EU Regulation no. 593/2008 — the Rome I Regulation — leading, according to the latter, to the application of the law of a EU Country X as the law of the country with which the contract has the closest ties. First, because this EU Regulation applies only to contracts concluded after 17 December 2009 (Arts. 28 and 29), which is not the case of Distributor Agreement. Second, because, assuming Rome I Regulation was applicable and that one may reason on the basis of the provisions of the Rome Convention (which the Rome I Regulation replaces as it stands and which provisions are almost identical to said regulation), Art. 4(1)(a), (e) and (f), Art. 4(2), Art. 4(3) and Art. 4(4) of the Rome I Regulation11 would all lead to the application of the law of the UAE, although it is not the law of a EU member States (as per Art. 2). Third, becaus, even focusing on one secondary criterion (not necessary applicable here), Claimant has not produced sufficient evidence that the law of EU Country X is the most appropriate legal system with regard to the Rome I Regulation to its fullest extent, then, if the law of a EU country is to be considered, it is for its substantive rules of law and not for its international private law ones. Thus, the Rome I Regulation should not be even considered here, according to its own logic.
[39] “For all these reasons, a pure conflict-of-laws methodology, especially if bades on the Rome I Regulation could not lead to the application of the CISG, through the law of EU Country X.
[40] "However, this does not mean that all methods based on internationale private law are necessarily to be excluded. To the contrary, before proceeding to identify any law pursuant to a conflict-of-law method, most countries, including all EU jurisdictions and the UAE, pose this fundamental and preliminary rule that supersedes any other one in the contractual field: the law governing a contract is the law of autonomy, i.e. the law that was chosen by the parties in their contract. If this is the case, then, it is the end of the international private law query.
[41] Thus, going back to the provisions of the CISG pertaining to its applicability scope and relying specifically on its Art. 1(1)(b), the Sole Arbitrator considers that the CISG should apply when the rules of private international law lead to the application of the law of a Contracting State. This is the case here since international private law makes the law of autonomy — the law the parties opted for — prevail over any other competing or potentially applicable laws. As the Parties have chosen the 'laws of the EEC', this choice must be given full effect and lead to the application, not necessarily of a specific national law, but rather of those rules that are common to those 'EEC' jurisdictions, whoch includes the CISG
[42] "To conclude, based on the Parties common intent and following the contracts and related agreements or exchanges at stake in this arbitration, the Distributor Agreement, the Condition of Sale and the Addendum, the Sole Arbitrator confirms that he does not act here an amiable compositeur, but shall rule law and shall thus apply the Parties’ agreements, as agreed between the Parties, the applicable rules of law (CISG notably), as well as international trade usages and principles deriving from the CISG as well as, more generally, the lex mercatoria."


9"With the notable exceptions of the United Kingdom, Ireland und Portugal."
10 "See e.g. ICC award no. 5713/1989, published in Collection of ICC Arbitral Awards/Recueil des sentences arbitrales de la CCI, by Sigvard Jarvin, Yves Derains and Jean-Jacques Arnaldez, 1994, Kluwer Law, pp. 223-226, p. 225."
11Art. 4 of Regulation (EC) No. 593/2008 ofthe European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) reads: “Applicable law in the absence of choice 1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3 and without prejudice to Articles 5 to 8, the law governing the contract shall be determined as follows: (a) a contract for the sale of goods shall be governed by the law of the country where seller has his habitual residence: (b) a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence; (c) a contract relating to a right in rem in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated; (d) notwithstanding point (c), a tenancy of immovable property concluded for temporary private use for a period of no more than six consecutive months shall be governed by the law of the country where the landlord has his habitual residence, provided that the tenant is a natural person and has his habitual residence in the same country; (e) a franchise contract shall be governed by the law ofthe country where the franchisee has his habitual residence: (f) a distribution contract shall be governed by the law of the country where the distributor has his habitual residence: (g) a contract for the sale of goods by auction shall be governed by the law of the country where the auction takes place, if such a place can be determined: (h) a contract concluded within a multilateral system which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments, as defined by Article 4(1), point (17) of Directive 2004/39/EC, in accordance with non-discretionary rules and governed by a single law, shall be governed by that law. 2. Where the contract is not covered by paragraph 1 or where the elements ofthe contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. 3. Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a Country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. 4. Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country which it ist most closely connected."

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