UNIDROIT Principles of International Commercial Contracts Use in ...

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UNIDROIT Principles of  
International Commercial Contracts 
 
 
Use in International Contract Practice 
 
 
 
 
 
 
 
 
 

Seminar co-sponsored by

the Chamber of Commerce Santiago and the Center for Arbitration and Mediation (CAM)

Santiago, 13 June 2007 

Herbert Kronke, Secretary-General UNIDROIT

h.kronke@unidroit.org 
 

 
 
 
 
 

THE UNIDROIT PRINCIPLES AS A GUIDELINE IN CONTRACT NEGOTIATION 
 

The UNIDROIT Principles are particularly useful to parties when negotiating and drafting international contracts   
Available in all major languages of the world, they  
help parties to overcome linguistic barriers  
serve as a checklist of issues parties may wish to address in their contract  
serve as model clauses parties may wish to incorporate in their contract (with or without adaptation)      
 
 
 
 
 
 

 
 
 
 
 

THE UNIDROIT  PRINCIPLES  
AS THE LAW  GOVERNING THE CONTRACT 
 

There are a number of reasons why parties may wish to choose the UNIDROIT Principles as the law governing their contract  
neither party is strong enough to impose its own domestic law   
parties cannot agree on the choice of the domestic law of a third country  
the UNIDROIT Principles provide a comprehensive set of rules governing the most important areas of contract law  
the UNIDROIT Principles, written in a clear and non-technical terminology, are easier to understand than most domestic laws  
the UNIDROIT Principles, prepared with the participation of experts from the same countries/regions of the parties, let parties feel immediately comfortable with them   
 
 
 
 

REFERENCE TO THE UNIDROIT CONTRACT PRINCIPLES IN MODEL CONTRACTS RECOMMENDED BY THE 
INTERNATIONAL CHAMBER OF COMMERCE  AND THE 
INTERNATIONAL TRADE CENTRE (WTO/UNCTAD)  
I 
 
 

00/font>Unless otherwise agreed in writing [00/font>] any questions relating to this

Agreement shall be governed by the rules and principles of law generally

recognised in international trade as applicable to international contract

with occasional intermediaries together with the Unidroit Principles of

International Commercial Contracts.00/font> 

Cf. Art. 13.1 of the 1999 ICC Model Occasional Intermediary Contract   

00/font>This Agreement is governed by the rules and principles of law generally

  recognised in international trade together with the Unidroit Principles of

  International Commercial Contracts.00nbsp; 

Cf. Art. 32A of the 2000 ICC Model International Franchising Contract

 
 
 
 
 

REFERENCE TO THE UNIDROIT CONTRACT PRINCIPLES IN MODEL CONTRACTS RECOMMENDED BY THE 
INTERNATIONAL CHAMBER OF COMMERCE  AND THE 
INTERNATIONAL TRADE CENTRE (WTO/UNCTAD) 
 
II 

00/font>Any questions relating to this contract which are not expressly or

implicitly settled by the provisions contained in this contract shall be

governed, in the following order: 

(a) by the principles of law generally recognized in international trade as applicable to international [agency] [distributorship] [selective distributorship] [merger and acquisition] contracts, 

(b) by the relevant trade usages, and 

(c) by the UNIDROIT Principles of International Com颅mercial Contracts, with the exclusion [00 of national laws00 

Cf. Art. 24.1 A of the 2002 ICC Model Commercial Agency Contract, Art. 24.1 of the 2002 ICC Model Distributorship Contract00ole Importer00istributor, Art. 23.1 A of the 2004 ICC Model Selective Distributorship Contract, and Art. 18.1 B of the 2004 ICC Model Mergers & Acquisitions Contract

 
 
 
 
 

REFERENCE TO THE UNIDROIT CONTRACT PRINCIPLES IN MODEL CONTRACTS RECOMMENDED BY THE 
INTERNATIONAL CHAMBER OF COMMERCE  AND THE 
INTERNATIONAL TRADE CENTRE (WTO/UNCTAD)  
 
III 

00/font>(1) This Agreement is governed by the laws of [specify country]. 

(2) The Agreement shall be performed in a spirit of good faith and fair dealing. 

(3) In the interpretation and application of the Parties00 rights and obligations under this Agreement, due weight shall be given to applicable practices in international trade. When defining these practices, reference shall be made inter alia to the Unidroit Principles of International Commercial Contracts. [...]. 00/font>

 

Cf. Art. 31 of the 2004 ITC Contractual Joint Venture Model Agreements 

Bibliography

Mourre 00E. Jolivet, La r茅ception des Principes d00nidroit dans les contrats mod猫les de la

Chambre de Commerce Internationale, in Uniform Law Review 2004, p. 275 et seq. (pp. 281 00

283; 285 00 287) 

J.-P. Vulli茅ty, Le contrat-type pour les Joint Ventures contractuelles du Centre du Commerce

International au regard des Principes d00nidroit et d00utres norms d00nification du droit des

contrats, Uniform Law Review, 2004, pp. 295-314. 

M.J. Bonell, An International Restatement of Contract Law, 3rd ed. Transnational Publishers,

2005, pp. 276-278.

 
 
 
 
 

HOW TO CHOOSE THE UNIDROIT PRINCIPLES AS THE LAW GOVERNING THE CONTRACT 

Parties wishing to choose the UNIDROIT Principles as the law governing their contract may do so in different ways  
They can  
choose the UNIDROIT Principles as the sole law governing the contract:  
00/font>This Contract shall be governed by the UNIDROIT Principles 2004 [except as to Articles 00/font> ]00/font>  
choose the UNIDROIT Principles together with a particular domestic law for questions not expressly settled by the UNIDROIT Principles:  
00/font>This Contract shall be governed by the UNIDROIT Principles 2004 [except as to Articles 00/font> ] supplemented when necessary by the law of  [jurisdiction x]00/font>

 

 
 
 
 
 

EXAMPLES OF ACTUAL CONTRACT PRACTICE 

An example of the first approach is the Membership Agreement of COVISINT, an electronic market place recently set up among DaimlerChrysler, Ford, General Motors, Nissan, Peugeot and Renault providing  
00/font>The Product Agreement shall be construed in accordance with the UNIDROIT Principles of International Commercial Contracts, with the exception of Section 4.6 [00/font>Contra proferentem rule00/font>] which is excluded due to the difficulty of providing explicit language to cover each possible interpretation that may arise in a multi-national legal structure.00/font>  
 
 
 
 

EXAMPLES OF ACTUAL CONTRACT PRACTICE 

An example of the second approach is a letter of intent negotiated by a Korean and a French-owned Hong Kong based company  
00/font>The agreements contained in this document shall be governed by the Principles of International Commercial Contracts [00/font>] Should it become necessary to rely in addition on a national law, this will be the law of Hong Kong.00/font>  
 
 
 
 

CHOICE OF LAW CLAUSE IN FAVOUR OF UNIDROIT  
 
PRINCIPLES TO BE COMBINED WITH ARBITRATION AGREEMENT  

Parties choosing the UNIDROIT Principles as the law governing their contract should combine such choice with an arbitration agreement  
In fact, given the non-binding nature of the UNIDROIT Principles  
Courts may not be willing to apply the UNIDROIT Principles as the law governing the contract to the exclusion of any domestic law  
Arbitral tribunals are generally prepared to apply 00ules of law00such as the UNIDROIT Principles either because so requested by the parties or because  they themselves consider them appropriate       
 
 
 
 

THE POTENTIAL ROLE OF THE UPICC IN DRAFTING CONTRACTS BETWEEN CHILEAN AND FOREIGN BUSINESSES 

Industries and Trade Branches with Significant Proportions of International Business  
Specific Needs and Specific Experiences in Contract Drafting  
Disputed Matters in Major Litigation and Arbitration Cases Chilean v. Foreign Parties  
Chapters and Individual Provisions of UPICC of Particular Interest for Chilean Parties (Examples)

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