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The Unidroit Principles of International Commercial Contracts in the Sino-European Sale of Goods Contracts

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International Sale of Goods

Part of the book series: China-EU Law Series ((CELS,volume 5))

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Abstract

The application of the Unidroit Principles in disputes related to Sino-European contracts of sale of goods is rare. Indeed, figures are not impressive and only a very few decisions refer in one-way or another to them, even though most arbitral awards referring eventually to them remain unpublished. Recent developments in the Chinese conflict of laws’ rules on international contracts should, however, foster the use of the Unidroit Principles in contracts not subject to arbitration. Since it offers new perspectives for the Chinese and European companies concerning the applicable law to their sale of goods contracts, it seems legitimate to question which role could the Unidroit Principle play in this field. Even if the new Chinese conflict of rules system creates new possibilities to the parties to choose the Unidroit Principles as applicable law to their contracts, it does not seem exaggerated to say that the Unidroit Principles will continue to play a very residual role in the Sino-European contracts of sale of goods in the near future. More precisely, and as it was already predicted in general terms for all other contract, the Unidroit Principles shall not become ‘the’ applicable law but, rather, one of several bodies of legal rules on which adjudicators draw—no more but also no less.

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Notes

  1. 1.

    World Trade Organization, World Trade Statistical Review 2016, Merchandise trade and trade in commercial services.

  2. 2.

    Top figures include North American and European, but also countries arising from transition economies from different points of the globe—particularly Brazil, China, India, Russia and some African countries. See, World Trade Organization, World Trade Statistical Review 2016, Statistical table.

  3. 3.

    Brödermann (2011), p. 589.

  4. 4.

    Bonell (2005a), p. 229: “‘[s]oft law’ is understood as referring in general to instruments of a normative nature with no legally binding force, and which are applied only through voluntary acceptance (…).”

  5. 5.

    With its seat in Rome, the Unidroit is an intergovernmental organization established in 1926 as an auxiliary organ of the League of Nations. Composed of 63 member States, the Unidroit studies needs and methods for modernizing, harmonizing, and coordinating private and in particular commercial laws between States and groups of States. It formulates uniform law instruments, rules, and Principles to achieve those objectives (Article 1 of the Unidroit Statut).

  6. 6.

    As opposed to the 120 articles of the 1994 edition, 185 articles of the 2004 and 211 of the 2010.

  7. 7.

    See in this book, Gutierrez, The Vienna United Nations Convention on Contracts for the International Sale of Goods: applicability, gaps and implementation.

  8. 8.

    Bonell (2005b), p. 26.

  9. 9.

    Gabriel (2013), pp. 661–680.

  10. 10.

    Ramberg (2013), pp. 681–690; Dennis (2014), pp. 114–151.

  11. 11.

    UNCITRAL, Possible Future Work in the Area of International Contract Law: Proposal by Switzerland on Possible Future Work by UNCITRAL in the Area of International Contract Law, 45th session, New York, 25 June–6 July 2012, Doc A/CN.9/758 (8 May 2012). See Vill. L. Rev. (2013) 58(4), which is entirely dedicated to this issue. See also, Schwenzer (2016), pp. 60–74; Bonell (2001), pp. 87–100; Lando (2005), pp. 379–401.

  12. 12.

    See, e.g., Estrella Faria (2016), pp. 238–270.

  13. 13.

    Zhang and Huang (2000), pp. 429–440; Li-Kotovtchikhine (2002), pp. 113–163; Shaohui (2003), pp. 219–230; (2008), pp. 153–178.

  14. 14.

    Brödermann (2012), p. 311.

  15. 15.

    Rapport au Président de la République relatif à l’ordonnance n° 2016-131 du 10 février 2016 portant réforme du droit des contrats, du régime général et de la preuve des obligations, JORF n° 0035 du 11 février 2016, Texte n° 25. See also: Réforme du droit des contrats: 3 questions à Carole Champalaune (Directrice des affaires civiles et du Sceau): http://www.textes.justice.gouv.fr/dossiers-thematiques-10083/loi-du-170215-sur-la-simplification-du-droit-12766/reforme-du-droit-des-contrats-3-questions-a-carole-champalaune-27931.html. Accessed 10 June 2016; Barbier (2016), p. 247.

  16. 16.

    So Fauvarque-Cosson (2014), pp. 271–272.

  17. 17.

    Consulting the annual ICC International Court of Arbitration Bulletin, it is not difficult to note that a choice of a national law corresponds to the most recurrent solution in international contracts containing a choice of law, at least for those subject to an ICC arbitration—about 97%. See, lastly: Cuniberti (2016), p. 773.

  18. 18.

    See, Agrò (2011), pp. 719–733; Michaels (2014), p. 650.

  19. 19.

    See, for instance, Manjiao (2010), pp. 5–36.

  20. 20.

    Michaels (2014), p. 649 and ff.

  21. 21.

    Goldman (1963), p. 382.

  22. 22.

    Goldman (1963), p. 382.

  23. 23.

    Gabriel (2013), p. 676.

  24. 24.

    Gabriel (2013), p. 676.

  25. 25.

    Indeed, the assimilation of the Unidroit principle into the lex mercatoria is disputed. See Seraglini (2003), pp. 1101–1166, n° 11–22. Refusing such an assimilation: Award ICC n° 9474 (2001), 60–67, Award ICC n° 7375 (1996), A-1 A-69, Award ICC n° 9029 (1998), 88–96, mentioned by the author.

  26. 26.

    International contracts concluded before 1 April 1991 are subject to the national or conventional conflict of law rules that were in force in each European Member State.

  27. 27.

    See in this book Nord, Identification of the applicable law in China and in Europe.

  28. 28.

    Derains (2002), pp. 9 at 12.

  29. 29.

    Michaels (2014), p. 647 and ff.

  30. 30.

    Article 21 of the 2012 ICC Rules of Arbitration determines in paragraph 1: “The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate”.

  31. 31.

    Article 14.5. of the 2014 LCIA Rules determines: “The Arbitral Tribunal shall have the widest discretion to discharge these general duties, subject to such mandatory law(s) or rules of law as the Arbitral Tribunal may decide to be applicable; and at all times the parties shall do everything necessary in good faith for the fair, efficient and expeditious conduct of the arbitration, including the Arbitral Tribunal’s discharge of its general duties.”

  32. 32.

    Article 1511: “The arbitral tribunal shall decide the dispute in accordance with the rules of law chosen by the parties or, where no such choice has been made, in accordance with the rules of law it considers appropriate. In either case, the arbitral tribunal shall take trade usages into account”.

  33. 33.

    330 United Nations Treaty Series, 38.

  34. 34.

    The reference in Art. V(1) lit. (a) of the New York Convention to the validity of the agreement under the law chosen by the parties or, failing such indication, under the law of the country where the award was made, refers solely to the arbitration agreement as defined in Article II(1) of the New York Convention.

  35. 35.

    See, e. g., Nord and Cerqueira (2016), pp. 79–104; Nord and Cerqueira (2011), pp. 70–101; Cerqueira (2011), pp. 181–228; Cerqueira et al. (2011), pp. 52–56; Chen and Bertrand (2011), pp. 375–389; Tu (2011), pp. 563–590; Huo (2011), pp. 1063–1093; Pissler (2012), pp. 1–46; Cavalieri Renzo and Franzina (2012).

  36. 36.

    Manjiao (2010), pp. 5–36.

  37. 37.

    Xiao and Long (2009), p. 202; contra Li-Kotovtchikhine (2002), p. 123.

  38. 38.

    Michaels (2014), p. 647 and ff.

  39. 39.

    China International Economic and Trade Arbitration Commission, unknown date (2007).http://www.unilex.info/case.cfm?id=1208. Accessed in 14 juin 2016. See also Huang (2008), pp. 135–136; Lefebvre and Jiao (2002), p. 148. For a criticism of such an approach: Michaels (2014), p. 649.

  40. 40.

    See some decisions mentioned by Michaels (2014), p. 649.

  41. 41.

    China International Economic and Trade Arbitration Commission, September 2004, n° 0291-1: http://www.unilex.info/case.cfm?id=1441. Accessed in 14 juin 2016.

  42. 42.

    China International Economic and Trade Arbitration Commission, 2 September 2005. http://www.unilex.info/case.cfm?id=1355. Accessed in 14 juin 2016.

  43. 43.

    Pursuant to Pr. Chi Manjiao, what seems quite conflicting is that the tribunal let us suppose that the Unidroit Principles could have been applied on the ground of the parties’ will. To justify such paradox, the tribunal tried to draw a clear distinction between the wording “apply the Principles” and “refer to the Principles”, which was expressly mentioned in the sentence, to avoid leaving an impression that the Principles were effectively applied as applicable law Manjiao (2010), p. 29.

  44. 44.

    Shaoguan Intermediate People’s Court, 28.04.2005, Hengxing Company v. Guangdong Petrochemical Subsidiary Company. An abstract of this case is available at http://www.unilex.info/case.cfm?id=1120. Accessed in 11 June 2016.

  45. 45.

    In China, “case comments” are internal court circulars and have no binding force in law. Hence, the Principles served a scholarly or educational purpose—often published and intended as guidelines for judges (particularly those of the lower courts)—and are not effectively applied to resolve the disputes. See Manjiao (2010), p. 23.

  46. 46.

    See infra 3.2.

  47. 47.

    Manjiao (2010), p. 23.

  48. 48.

    See in this book Nord, Identification of the applicable law in China and in Europe.

  49. 49.

    Fauvarque-Cosson (2014), p. 280 and ff.

  50. 50.

    Cass. Ch. Civ., sect. civ., 21 juin 1950, Messageries maritimes.

  51. 51.

    Michaels (2014), p. 647 and ff.

  52. 52.

    See: new article 1195 of the Civil Code.

  53. 53.

    Cass. Civ., 6 March1876, Canal de Capronne.

  54. 54.

    Cass. Com., 17 February 2015, n° 12-29550, 13-18956, 13-20230. It shall be noted that the same Commercial Chamber has already showed some inflexions to the Canal de Capronne jurisprudence in order to sanction on the basis of good faith, the contractor, which benefits of the changing of circumstances, for refusing to renegotiate the contract.

  55. 55.

    See, e. g., Pissler (2012), p. 10, and references quoted by this author at footnote 47; Huo (2011), p. 1085. Already before the advent of the 2010 Private International Law Statute: Shaohui (2004), p. 421 and references quoted by this author at footnote 6.

  56. 56.

    Article 41 of the 2010 Private International Law Statute.

  57. 57.

    Nord and Cerqueira (2016), pp. 90–91.

  58. 58.

    Michaels (2014), p. 657.

  59. 59.

    Michaels (2014), p. 663.

  60. 60.

    See, supra, point Sect. 1.1.1.1.

  61. 61.

    ICC International Court of Arbitration, sentence n° 10114, March 2000, Unkown parties. http://www.unilex.info/case.cfm?id=696. Accessed in 11 June 2016.

  62. 62.

    International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation, 2 June 2009, n° 148. http://www.unilex.info/case.cfm?id=1552. Accessed in 11 June 2016.

  63. 63.

    International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation, 16.07.2013, n° 177/2012. http://www.unilex.info/case.cfm?id=1807. Accessed in 11 June 2016.

  64. 64.

    Article 1.7 (Good faith and fair dealing): “(1) Each party must act in accordance with good faith and fair dealing in international trade. (2) The parties may not exclude or limit this duty”.

  65. 65.

    Article 5.1.3 (Co-operation between the parties): “Each party shall co-operate with the other party when such co-operation may reasonably be expected for the performance of that party’s obligations”.

  66. 66.

    International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation, 27 May 2013, n° 166/2012. http://www.unilex.info/case.cfm?id=1791. Accessed in 11 June 2016.

  67. 67.

    Michaels (2014), pp. 643–668.

  68. 68.

    Also known as Lando Principle’s: Lando and Beale (1999); Lando et al. (2003).

  69. 69.

    Fauvarque-Cosson, Mazeaud (coord.), Wicker, Racine (dir.) (2008b).

  70. 70.

    Fauvarque-Cosson, Mazeaud (coord.), Tenebaum (dir.) (2008a).

  71. 71.

    Von Bar et al. (2008).

  72. 72.

    In Europe, a few more private initiatives undertook similar projects, among them the Academy of European Private Lawyers (Pavia Group), which issued the preliminary draft for a European Code (2001) (see Gandolfi (2001) The Academy of European Private Lawyers and the Pavia Draft of a “European Contract Code”’. http://ec.europa.eu/consumers/cons_int/safe_shop/fair_bus_pract/cont_law/stake) and the Trento Common Core Project (see <www.common-core.org/). Accessed 18 June 2016.

  73. 73.

    See Han (2013), pp. 589–599.

  74. 74.

    Michaels (2014), p. 656 and ff.

  75. 75.

    See Seraglini (2003), n° 2 and 19.

  76. 76.

    Michaels (2014), p. 667.

  77. 77.

    Ibid. Such a broad comparative survey lead by adjudicators is not rare, as illustrates a recent decision held by the Spanish Supreme Court, which cited, in matter of contract interpretation, not just Article 4.1 of the Unidroit Principles but also Article 236 of the Portuguese Civil Code, Article 1156 of the French Code Civil, Article 1362 of the Italian Civil Code, and Article 5:101 of the Principles of European Contract Law (Tribunal Supremo, Case n° 74/2012 (29 February 2012). http://www.unilex.info/case.cfm?id=1652. Accessed 11 June 2016). For other examples, see also Michaels (2014), pp. 651–652.

  78. 78.

    Schwenzer (2016), p. 68.

  79. 79.

    Schwenzer (2016), p. 68.

  80. 80.

    Schwenzer (2016), p. 68.

  81. 81.

    Gabriel (2013), p. 678.

  82. 82.

    As an example, the 1999 ICC Award has justified the application of the Unidroit Principles with these arguments: (1) developed by a group of leading international experts, they are an international formulation of general principles applicable to international commercial contracts; (2) they are largely inspired by the CISG which already enjoys international recognition and is generally considered to reflect the customs and practices of international trade in the field of international sale of goods; (3) they are particularly suited to the subject of arbitration; and (4) they consist mainly of clear rules, clearly articulated and organized in a coherent and systematic manner (Award ICC n° 7110 (1998), 54–57).

  83. 83.

    Arbitration Institute of the Stockholm Chamber of Commerce n° 117/1999 (2001). http://www.unilex.info/case.cfm?id=793. Accessed in 16 June 2016.

  84. 84.

    For an author: “This dual decision – to not address regulatory policies within the PICC and to refer to domestic laws for them – is wise. It reflects the fact that the PICC – like the ius commune – lack the democratic legitimacy that would be needed for such policy choices.” (Michaels (2014), p. 660).

  85. 85.

    Award ICC n° 9029 (1998), 91.

  86. 86.

    Michaels (2014), p. 649.

  87. 87.

    Michaels (2014), p. 655.

  88. 88.

    Michaels (2014), p. 657.

  89. 89.

    Michaels (2014), p. 659.

  90. 90.

    Michaels (2014), p. 659.

  91. 91.

    Schwenzer (2016), p. 62.

  92. 92.

    Schwenzer (2016), pp. 62–64.

  93. 93.

    Multilingual model clauses for use by parties of the Unidroit Principles have been suggested, as for example, by the Unidroit (http://www.unidroit.org/instruments/commercial-contracts/upicc-model-clauses), the French ICC and the Chinese European Arbitration Centre in Hamburg (http://www.ceac-arbitration.com/index.php?id=47; see, Brödermann (2011), pp. 593–604. About the promotion of choice of law model clauses by the ICC, see Cuniberti (2016), pp. 774–780.

  94. 94.

    Michaels (2014), p. 663: “They are not a full codification, much less a legal order; they are ‘rules of law,’ not ‘law’. Even within their area, the law of contracts, they are incomplete in two important regards. First, the Unidroit Principles contain no rules on specific contracts. They are like the PECL and the Common European Sales Law (CESL), confined to rules of general contract law. Second, the Unidroit Principles contain opening clauses for the entry of State national law—be it in presence of mandatory rules (Articles 1.4 and 3.3.1) or gaps (Article 1.6, comment 4). This means, on the one hand, that the parties will not be able to select, in the Unidroit Principles, rules catered specifically to their specific contracts. And it means, on the other hand, that precisely those rules they most want to avoid through their choice remain applicable. With these restrictions, the Unidroit Principles, as chosen law, can have only a supplementary character.”

  95. 95.

    Article 49 Making of Award: “1. The arbitral tribunal shall independently and impartially render a fair and reasonable arbitral award based on the facts of the case and the terms of the contract, in accordance with the law, and with reference to international practices. 2. Where the parties have agreed on the law applicable to the merits of their dispute, the parties’ agreement shall prevail. In the absence of such an agreement or where such agreement is in conflict with a mandatory provision of the law, the arbitral tribunal shall determine the law applicable to the merits of the dispute”.

  96. 96.

    On this conroversy, see Schlechtriem and Witz (2008), p. 66.

  97. 97.

    Michaels (2014), pp. 665–666.

  98. 98.

    Article 7.4.2: “(1) The aggrieved party is entitled to full compensation for harm sustained as a result of the non-performance. Such harm includes both any loss which it suffered and any gain of which it was deprived, taking into account any gain to the aggrieved party resulting from its avoidance of cost or harm. (2) Such harm may be non-pecuniary and includes, for instance, physical suffering or emotional distress.”

  99. 99.

    Article 7.4.3: “(1) Compensation is due only for harm, including future harm, that is established with a reasonable degree of certainty. (2) Compensation may be due for the loss of a chance in proportion to the probability of its occurrence. (3) Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the court.”

  100. 100.

    Article 2.1.19: “(1) Where one party or both parties use standard terms in concluding a contract, the general rules on formation apply, subject to Articles 2.1.20–2.1.22. (2) Standard terms are provisions which are prepared in advance for general and repeated use by one party and which are actually used without negotiation with the other party.”

  101. 101.

    Michaels (2014), pp. 666–667.

  102. 102.

    Michaels (2014), p. 647 and ff.

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  1. Faculty of Law, University of Reims Champagne-Ardenne, Reims, France

    Gustavo Cerqueira

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  1. Faculty of Law, University of Strasbourg, Strasbourg, France

    Nicolas Nord

  2. Faculty of Law, University of Reims Champagne-Ardenne, Reims, France

    Gustavo Cerqueira

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Cerqueira, G. (2017). The Unidroit Principles of International Commercial Contracts in the Sino-European Sale of Goods Contracts. In: Nord, N., Cerqueira, G. (eds) International Sale of Goods. China-EU Law Series, vol 5. Springer, Cham. https://doi.org/10.1007/978-3-319-54036-8_8

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