Unidroit Principles of International Commercial Contracts

The Unidroit Principles of International Commercial Contracts set forth general rules basically conceived for ‘international commercial contracts’. The concept ‘international’ should be given the broadest possible interpretation, so as to exclude only those contractual relationships where no international element is involved at all. The term ‘commercial’ is intended to exclude so-called ‘consumer transactions’, aimed at protecting the consumer (i.e. a person who enters into a contract other than in the exercise of a trade or a profession).

The Unidroit Principles chosen as the applicable law #

Given that the Unidroit Principles embody a system of principles and rules of contract law common to existing national legal systems or best adapted to the special requirements of international commercial transactions, there might be good reasons for the parties to choose them expressly as the rules of law governing their contract. In so doing, the parties may refer to the Unidroit Principles exclusively or in conjunction with a particular domestic law that applies to issues not covered by the Unidroit Principles (see an explanation of the model clauses here – as also referred to in the footnote to the second paragraph of the Preamble).

The Model Clauses can be divided into four categories depending whether their purpose is to:

  1. Choose the Unidroit Principles as the (rules of) law governing the contract (see model clauses 1 below).
  2. Incorporate the Unidroit Principles as terms of the contract (see model clause 2 below).
  3. Refer to the Unidroit Principles to interpret and supplement the CISG (Vienna Convention on the International Sales of Goods) if CISG was chosen by the parties (see model clauses 3 below).
  4. Refer to the Unidroit Principles to interpret and supplement the applicable national law (incl. any international uniform law instrument incorporated into that law (see model clauses 4 below).

Unidroit Principles in arbitration #

Some (public) courts might consider that freedom to choose the applicable law is a matter of national law. Therefore, it is recommended that parties who wish to choose the Unidroit Principles as the rules of law governing their contract combine this choice of law with an arbitration agreement. Since the Unidroit Principles could be considered a mere set of rules, the law applicable to the contract would still have to be determined on the basis of private international law rules. In such approach, the Unidroit Principles would bind the parties only to the extent that they do not affect mandatory law.

This is different in arbitration. Arbitrators are not necessarily bound by a particular domestic law. This is self-evident if they are authorised by the parties to act as amiable compositeurs or ex aequo et bono. Moreover, the parties are generally permitted to choose “rules of law” other than national laws, on which the arbitrators must base their decision. Accordingly, the parties would be free to choose the Unidroit Principles as the “rules of law” according to which the arbitrators must decide a dispute.

Unidroit Principles and Lex Mercatoria #

Parties to international commercial contracts who cannot agree on the choice of a particular domestic law as the law applicable to their contract sometimes provide that it shall be governed by “general principles of law”, by the “usages and customs of international trade”, or by the Lex Mercatoria. In such cases, it might be advisable to submit to the Unidroit Principles. The Unidroit Principles can be considered to reflect the Lex Mercatoria (if any such body of law can be identified at all) and certainly reflect the usages and customs of international trade.

Throughout this book, many generally accepted principles of international contract law – rules of the Lex Mercatoria, so to speak, or usages and customs of international trade – have been discussed with reference to specific Unidroit Principles. In this paragraph, a few high-level concepts underlying international trade will be addressed by referring to the Unidroit Principles. These general concepts include:

A rich source of materials, cases and arbitral awards related to a ‘codification’ in 130 principles of the Lex Mercatoria (and referring also to the Unidroit Principles) has been collected by Prof. Klaus Peter Berger. The collection is available on the Trans-Lex website.

Applying the Unidroit Principles on your contracts or dispute #

Depending on the context, Unidroit recommends using the following model clauses for invoking and applying the Unidroit Principles to your contract or dispute:

1.   Model clauses choosing the Unidroit Principles as the rules of law governing the contract #

1.1    Model clauses choosing only the Unidroit Principles

(a)    Model Clause for inclusion in the contract

“This contract shall be governed by the Unidroit Principles of International Commercial Contracts (2016).”

(b)    Model Clause for use after a dispute has arisen

“This dispute shall be decided in accordance with the Unidroit Principles of International Commercial Contracts (2016).”

1.2    Model clauses choosing the Unidroit Principles supplemented by a particular domestic law

(a)    Model Clause for inclusion in the contract

“This contract shall be governed by the Unidroit Principles of International Commercial Contracts (2016) and, with respect to issues not covered by such Principles, by the law of [State X].”

(b)    Model Clause for use after a dispute has arisen

“This dispute shall be decided in accordance with the Unidroit Principles of International Commercial Contracts (2016) and, with respect to issues not covered by the Principles, by the law of [State X].”

1.3    Model clauses choosing the Unidroit Principles supplemented by generally accepted principles of international commercial law

(a) Model Clause for inclusion in the contract

“This contract shall be governed by the Unidroit Principles of international Commercial Contracts (2016) and, with respect to issues not covered by such Principles, by generally accepted principles of international commercial law.”

(b) Model Clause for use after a dispute has arisen

“This dispute shall be decided in accordance with the Unidroit Principles of International Commercial Contracts (2016) and, with respect to issues not covered by such Principles, by generally accepted principles of international commercial law.”

2.  Model clause incorporating the Unidroit Principles as terms of the contract #

“The Unidroit Principles of International Commercial Contracts (2016) are incorporated in this contract to the extent that they are not inconsistent with the other terms of the contract.”

3.   Model clauses referring to the Unidroit Principles as a means of interpreting and supplementing the United Nations Convention on Contracts for the International Sale of Goods (CISG) when the latter is chosen by the parties #

(a) Model Clause for inclusion in the contract

“This contract shall be governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG) interpreted and supplemented by the Unidroit Principles of International Commercial Contracts (2016).”

(b) Model clause for use after a dispute has arisen

“This dispute shall be decided in accordance with the United Nations Convention on Contracts for the International Sale of Goods (CISG) interpreted and supplemented by the Unidroit Principles of International Commercial Contracts (2016).”

4.   Model clauses referring to the Unidroit Principles as a means of interpreting and supplementing the applicable domestic law #

(a) Model Clause for inclusion in the contract

“This contract shall be governed by the law of [State X] interpreted and supplemented by the Unidroit Principles of International Commercial Contracts (2016).”

(b) Model Clause for use after a dispute has arisen

“This dispute shall be decided in accordance with the law of [State X] interpreted and supplemented by the Unidroit Principles of International Commercial Contracts (2016).”

 

 

Note 1: The introduction to the Unidroit Principles in this section is largely based on and inspired by the official comments to its preamble and Articles 1.1, 1.7 and 1.9.

Note 2: this chapter is also included in the e-book Cross-border contracting – How to draft and negotiate international commercial contracts, written by Weagree-founder Willem Wiggers and published by the ITC (the joint agency of the U.N. and WTO) and downloadable free of charge.

Terms of Use

I hereby accept (or reconfirm my acceptance of) Weagree’ Terms of use, in which:

Terms of Use

I hereby accept (or reconfirm my acceptance of) Weagree’ Terms of use, in which: