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History & Modern Evolution of Transnational Commercial Law

Lalive, Pierre, Arbitration with foreign states state-controlled entities: some practical questions, in: Julien D. M Lew (ed.), Contemporary problems in international arbitration

Title
Lalive, Pierre, Arbitration with foreign states state-controlled entities: some practical questions, in: Julien D. M Lew (ed.), Contemporary problems in international arbitration
Table of Contents
Contemporary problems in international arbitrationArbitration with foreign states state-controlled entities: some practical questions 
Content

Contemporary problems in international arbitration
289

Arbitration with foreign states state-controlled entities: some practical questions

 

 Pierre Lalive

[...]

294

[...]

In an (unpublished) ICC arbitration award between Western European companies and two Iranian state agencies (and this is not the Framatome case previously  mentioned), it was submitted by the claimants that neither of the Iranian state entities (which had relied on force majeure to be excused from performing) could claim to be exterior to the Iranian Government; although one of them had a 'separate legal personality under Iranian law, it was, under its charter and by-laws, totally controlled by the Government. It is interesting to note that, having considered various concepts of force majeure in relation of course to the contractual provisions, the award refers to another concept of force majeure applicable only to state enterprises, in the case of which additional conditions must be simultaneously fulfilled:

(a)

the act of state or government must be a political decision of national sovereignty;

(b)

it must not have been taken in favour and the personal interest of the state (') or of its own enterprise; and

(c)

it must be such that its effects would have been the same regarding private enterprises.18


Furthermore, the tribunal considered that, with regard to third (contracting) parties, the state enterprise and the Iranian state itself could only be considered as one single entity, so that there was no character of 'exteriority' and therefore no force majeure could be relied upon.


18See K.H. Böckstiegel, 'The Legal Rules Applicable in International Commercial Arbitration Involving States or State-Controlled Entities'. in 60 Years of ICC Arbitration 117 (Paris 1984); K H Böckstiegel, Arbitration and State Enterprises (Kluwer 1984), at 37-48.

Referring Principles
Trans-Lex Principle: VI.3 - Force majeure
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