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 the Model Clause in the footnote to the second paragraph of the Preamble).

Unidroit Principles in arbitration #

Some (public) courts might consider that freedom to choose the applicable law is limited to national laws. 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 freedom of contract, the principle of good faith and fair dealing, and practices and usages of international trade.

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.

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.

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