Abstract
The preamble to the UNIDROIT Principles on International Commercial Contracts (otherwise referred to as “UPICC”, “PICC”, “UNIDROIT Principles” or simply the “Principles”) suggests many potential uses. However, almost half of the known judicial decisions and arbitral awards referring to the Principles invoke them for the purpose of supporting or providing further legitimacy to a solution which is either dictated or at least suggested by some national (domestic) law of contract. This general report provides a comparative perspective on how the Principles have been used to “interpret or supplement domestic law”. While exploring the use of the Principles in domestic contract law for the sole purpose of corroborating that a similar solution may be reached under the PICC, this research study suggests how courts and arbitrators may fruitfully resort to some of the rules of the PICC either for the purpose of clarifying some ambiguities or filling same internal gaps in domestic contract law.
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Notes
- 1.
The truth of the matter, however, is that still very few are aware of their content. Confronted with the question why should lawyers spend time and money researching conflicts of law rules and different solutions provided by domestic contract rules to contracts that are international, an experienced international lawyer is said to have answered in 2016: “Of course, that is true. We believe that the UNIDROIT Principles are a wonderful tool. The problem is that most people do not know them and do not take the time to read them.” Brodermann (2018), quoting a senior director of the European Legal Department of a US manufacturing company selling pulp to 30 countries around the globe.
- 2.
See Preamble to the PECL (“These Principles may provide a solution to the issue raised where the system or rules of law applicable do not do so”). See Lando and Bale (2003), Parts I and II, Art. 1:101(4). The PICC consists of a Preamble and 211 articles divided into 11 chapters covering various aspects of general contract law and accompanied by detailed commentaries and illustrations, including general provisions (Ch. 1), formation of contracts and the authority of agents (Ch. 2), validity (CH. 3), interpretation (Ch. 4), content (Ch. 5, including third party rights and its conditions), performance (Ch. 6), non-performance (Ch. 7), set-off (Ch. 8), assignment of rights, transfer of obligations, and assignment of contracts (Ch. 9), limitation periods (Ch. 10), and plurality of obligors and obliges (Ch. 11). See Vogenauer and Kleinheisterkamp (2015).
- 3.
A fairly accurate tough incomplete report of court decisions and arbitral awards resorting to the UPICC may be found in the data base of UNILEX (http://unilex.info), developed by the Centre for Comparative and Foreign Law of the University of Rome I, with the support of the Italian National Research Council. For a more comprehensive account of the different uses of the UPICC, see Michaels (2015), paras. 134–140. For use of the UPICC by arbitral tribunals, see Scherer M, Preamble II, paras. 46–57. See also Meyer O (referring to the cases and awards reported by UNILEX in 2016) (“Of the more than 400 decisions that to date have referred to the PICC, the cases that concern the interpretation of a domestic law constitute the largest group in purely numerical terms”).
- 4.
See para. 6 of the Preamble to the 2004 edition of the UPICC (“They may be used to interpret or supplement domestic law”). See Bonell (2005). After prescribing that the Principles “shall” be applied when the parties have agreed that their contract be governed by them, the Preamble suggests that they “may” be applied when “the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like”, “when the parties have not chosen any law to govern their contract”, and to “interpret or supplement international uniform law instruments”. They can also be used, and they have in fact been used many times, to “serve as a model for national and international legislators”. For a discussion of how the Principles have been used to inspire legislative reform, especially in countries with scarce jurisprudential developments on contracts involving foreign companies or those that have undergone radical socio-political changes, see Whited (2011).
- 5.
The first question posed to the national reporters reads: Is there any legal source in your legal system allowing the use of the UPICC to interpret or supplement national contract law (either by way of explicit and specific legislation, by way of reference to “trade usages”, “general principles of law”, or based in any other source)? If so, please refer to such legal source, explaining how the court has reached such a decision (indicating, for example, whether and how the courts reached the conclusion that the UPICC represent “trade usages” or “customs” in the field of contract law). See The UNIDROIT (2018). (“Questionnaire on the UNIDROIT Principles as a Common Frame of Reference”) (http://gc.iuscomparatum.info/gc/project/the-unidroit-principles-as-a-common-frame-of-reference-for-the-uniform-interpretation-of-national-laws-english/).
- 6.
Michaels (2014) (Michaels refers to “nine surprising findings concerning the actual use of the PICC”, most of which pointing their perception of “a Restatement of global contract law, and their function as that of a global background law”).
- 7.
The second question posed to the national reporters reads: Have the UPICC been used as evidence of a general consensus on the law applicable to contracts (for example, on the existence of a duty of good faith, the obligation to pay interest, the requirement that a breach of contract must be “fundamental” in order to allow for the termination of the contract, etc.)? If so, please indicate which specific provision of the UPICC has been used in this way, referring also to the factual context of the dispute in which the UPICC have been used in this manner.
- 8.
This is probably the answer to the third question posed to the national reporters: Assuming that the UPICC have been not been used by courts in your country for the purpose of interpreting or supplementing national or local rules on contract law, indicate whether they have been used in any other way and how. Discuss, for example, whether references to the UPICC were made as a general body of contract law or to some of its provisions in particular; whether references to the UPICC were made in combination with other instruments of uniform law such as the UN Convention on Contracts for the International Sale of Goods (“CISG”) or a more diffuse body of state laws (e.g., the so called lex mercatoria).
- 9.
Question 5 lists selected provisions of the PICC, posing the following question: If there is a statutory or case-law rule (such as a code provision or jurisprudential line of decisions) dealing with the same or similar issue addressed by those selected provision of the UPICC, please reproduce the full text of such a provision or case-law rule, indicating any relevant difference you find between the domestic rule of contract law and the selected rule of the UPICC, also indicating whether the UPICC may be relied upon by the courts of your country as a general principle of contract law interpreting and supplementing national contract law.
- 10.
Question 7 reads: Please include those rules of the UPICC (other than those included in the given list) which have been relied upon by courts or arbitral tribunals for the purpose interpreting a similar provision of your national contract law or in order to supplement (thus serving as a gap-filler) the national contract law in force in your jurisdiction.
- 11.
Question 6 reads: If there is no such a rule of contract law in your jurisdiction, please indicate, with reasons, whether any of those selected provision of the UPICC may, in your view, be relied upon as a source of interpretation of the law of contracts in force in your country, or for the purpose of supplementing gaps in your national contract law.
- 12.
Russian Federal Commercial Court, Central Circuit, 19 July 2011, referred to by Meyer (2016), p. 601, n. 13.
- 13.
Tribunale Verona (Italy), 30 June 2010, also referred to by Meyer (2016), n. 14.
- 14.
Mexico Nat. Rep., referring to Article 14 of the Mexican Constitution, in fine (“…In civil actions, the final judgment must be rendered in accordance with the letter of the law or its legal interpretation and, in the absence thereof, in accordance with general principles of law”).
- 15.
See Article 4 of the Law of Introduction to Norms of the Brazilian Law, Law No. 12376 of September 30, 2010 (“Braz. LNDB”). When the legislation is silent, the judge shall decide the case according to analogy, customs and the general principles of law (“Quando a lei for omissa, o juiz decidirá o caso de acordo com a analogia, os costumes e os princípios gerais de direito”).
- 16.
Parag. Nat. Rep., referring to Article 6 of the Paraguayan Civil and Commercial Code of 1985 (“Parag CC”), directing judges to take into account, in addition to the letter and spirit of the statutes, analogous cases as well as the general principles of law.
- 17.
Urug. Nat. Rep., referring to Art. 332 of the Uruguayan Constitution (“The provisions of this Constitution acknowledging individual rights as well as those conferring rights and prescribing duties of public authorities shall be applied despite the absence of applicable rules, in default of which shall be governed by the rationale of analogous statutes, the general principles of law and generally accepted scholarly doctrine.”). Reference to general principles are also found in Art. 1302 of the Urug. CC (“In civil cases that cannot be resolved by the letter or the spirit of the law on the subject matter, resort shall be made to analogous statutes and, if doubt still persists, to general principles of law and the most accepted scholarly doctrine, taking into account the circumstances of the case.”).
- 18.
See USA Nat. Rep., referring Section 1-103 UCC and Karl Llewellyn’s idea of opening up the UCC to the “immanent law” emerging from industry’s practices. See 1-103 UCC (“Supplementary General Principles of Law Applicable. Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions”). Emphasis added. As noted by the US national reporter, the Official Comment accompanying this provision suggests that such references to the law merchant point to the common law of contracts developed courts in the United States, rather than some body of laws of a transnational nature.
- 19.
In the words of Lord Mustill, the PiCC “represent a distillation of a large number of laws which it would often be impracticable to examine individually…”, quoted in Bonell, An International Restatement at 239. For a pointed criticism of the concept of “lex mercatoria”, see Czech Nat. Rep. at 3 (“Czech legal theory does not differentiate substantially from traditional theories of private international law in Europe. Lex mercatoria is a fuzzy term, and it is in our opinion impossible to accept that the rules arising from lex mercatoria could be regarded as having the nature of generally binding legal norms. As sometimes mentioned in literature, lex mercatoria is not a “lex”. Only states adopt generally binding legal norms”).
- 20.
See, e.g., Urug. Rep. at 1, referring to an appellate court decision relying on Article 7.1.6 PICC to uphold the validity of an exemption of liability clause (Civil Court of Appeals of Montevideo, Term 1, Decision No. 152/204, 13 August 2014).
- 21.
Court of Appeals of Rio Grande do Sul, 14 February 2017, Noridane Foods S.A. v. Anexo Comercial Importação e Distribuição Ltda, reported in http://www.unilex.info/principles/case/2035 See also Court of Appeals of Rio Grande do Sul, citing the Brazilian national reporter, Professor Lauro Gama Jr., for the proposition that “the use of the UNIDROIT Principles – as well the application of the CISG even if not part of the Brazilian domestic law – reaffirms a flexible, non-positivist approach to disputes as is required in the field of international commercial law”. See also, Court of Appeals of Rio Grande do Sul, 30 March 2017, Voges Metalurgia Ltda. v. Inversiones Metalmecanicas I.C.A.—IMETAL I.C.A., reported in http://www.unilex.info/principles/case/2042.
- 22.
See, e.g., Turkish CC, Art. 1. For the ample room conferred on usages in Spanish law, see Spain Nat. Rep. (referring to the “normative” as well as “interpretative” function played by usages in the Spanish CC and ComC). See also UCC Section 1-303(c), referring to “usage of trade”. In many jurisdictions, however, trade usages or customary practices are allowed only in those cases in which the law refers to them (secuendum legem). See Parag. Nat. Rep. referring to Article 7 Parag. CC, according to which “commercial usages and customs can only apply when the law refers to them to determine the sense of words or technical phrases of commerce and to interpret acts and conventions of the same nature”.
- 23.
See the formulation of the binding force of trade usages under Art. 9(3) CISG and Art. 1.9 UPICC.
- 24.
Letter of the Supreme Economic Court of Ukraine, 7 April 2008, On Some Issues in the Application of the Civil and Commercial Code of Ukraine, referred to by Michaels (2014), note 27.
- 25.
See Huang (2008), pp. 105 and 135–136.
- 26.
Although acknowledging that the PICC was not and cannot be conceived as a restatement of commercial usages, Michaels notes that this may be one of the roles the Principles assume in order to gain legitimacy in its application (“If courts, especially in formerly socialist countries, draw on them regardless, it appears they use them as a hook to escape their overly restrictive domestic laws.”). See Michaels (2014), note 27.
- 27.
See, e.g., Greek Nat. Rep. at 1, reporting “no court cases …where the UPICC have been invoked as representing “trade usages” or “customs” in the field of contract law and, accordingly, no relevant court decisions.”.
- 28.
See Japanese Nat. Rep. at 1 (“The UPICC has never been explicitly used by Japanese courts in interpreting or supplementing Japanese law. There is no institutional barrier for using the UPICC for that purpose as far as the principles in the UPICC can be viewed as representing “customs” or “trade usages”. Nonetheless, that has not happened.”).
- 29.
Guatemalan National Rep., point to Article 36(2) and (3) of the Guatemalan Arbitration Law, referring to the application of the “usages and principles of international commercial law”, “trade usages and commercial practices of general acceptance”, and “usages of the trade applicable to the particular case.”
- 30.
Article 7 of the Paraguayan Civil Code provides customs and practices cannot create rights unless the parties refer to them.
- 31.
Article 5.1.2(d) PICC provides that implied obligations in a contract may arise, inter alia, from “the practices established between the parties and usages”. In a dispute involving a sales commission agreement, a Paraguayan court of appeals found that that the seller’s delivery of the goods directly to the customers, instead of at the place of the seller’s premises as originally agreed, resulted from the usages and practices binding on the parties by virtue of Article 1.9 PICC, which closely follows Article 9 CISG, giving rise to the seller’s implied obligation to deliver the goods directly to the customers. See Paraguayan Nat. Rep., referring to Ofelia Valenzuela Fernandez c. Paraguay Granos y Alimentos SA, Civil and Commercial Court of Appeals of Asuncion, 6th Chamber, Acuerdo y Sentencia 66 (2016).
- 32.
Paraguayan Nat. Rep., referring to Jorge Moises Etcheverry Ali c. Rosa Maria Ramona Etcheverry de Brizuela, decided by the Civil and Commercial Court of Appeals of Asuncion, Sixth Chamber, Acuerdo y Sentencia 62 (2015). The Paraguayan National Report refers to other cases in which Paraguayan courts of appeals consistently resorted to Article 5.1.3 PICC, providing thus: “Each party shall cooperate with the other party when such cooperation may reasonably be expected for the performance of that party’s obligation”. See Paraguayan Nat. Rep. (“The duty of cooperation is not expressly contemplated in Paraguayan domestic laws. However, the Court of Appeals sustained that it is derived from the duty of good faith in contractual relations, which, in turn, is contemplated by Paraguayan domestic laws. The Court supported its conclusion in the UPICC, relying on its Article 5.1.3 and also referring to its explanatory notes.”).
- 33.
Trade usages are generally regarded as born out of habitual practices, thus calling for an ascertainment of facts rather than law. See Oser (2008), pp. 80–81. On the evidentiary difficulties inherent in the finding of trade usages prevailing in relevant markets, geographic locations and branches of trade, see Bernstein (2015).
- 34.
See, e.g., ICC Case No. 10021 (2000) (“the reference to the UNIDROIT Principles as codified trade usages is rather of persuasive rather than binding nature”); ICC Case No. 124446 (2004) (“though this arbitration tribunal does not deny that UNIDROIT Principles indicate well thought good rues, that fact does not make the UNIDROIT Principles worldwide trade customs or usages”). See also ICC No. 9029 (March 2004) (“[A]lthough the UNIDROIT Principles constitute a set of rules theoretically appropriate to prefigure the fugure lex mercatoria should they be brought into line with international commercial practice, at present there is no necessary connection between the individual Principles and the rules of the lex mercatoria, so that recourse to the Principles is not purely and simply as recourse to an actually existing international commercial usage”), cited in Meyer (2016), notes 58–61.
- 35.
Czech National Rep., at 3, quoting Article 558(2) of the Czech Civil Code: “In legal transactions among entrepreneurs, account is taken of business usages maintained in general or in a given industry, unless excluded by an agreement between the parties or by a statute. Unless otherwise agreed, a business usage is conclusively presumed to take precedence over a non-mandatory provisions of a statute; otherwise, an entrepreneur may invoke a usage if he proves that the other party must have known a given usage and was aware that it would be followed”.
- 36.
Czech National Rep., at 3 (“We are of the opinion that in light of the indicated approach to usages, it cannot be assumed that in the future Czech courts would use this provision to apply the UPICC. Such scenario is not likely to take place…”).
- 37.
See Russian Nat. Report at 6, referring to a series of published arbitral awards of the ICAC, including ICAC award of 5 June 1997, Case No. 229/1996, referring to the UNIDROIT Principles as “progressively acquiring the status of international customs”.
- 38.
- 39.
For a discussion of the draft contract law adopted by the Organization for the Harmonization of Commercial Law in Africa (“OHADA”), see Michaels (2015).
- 40.
- 41.
- 42.
See Bonell, note 78, noting the success of the UPICC as a progressive “model contract law” or source of inspiration for law reform, especially, though not exclusively, in former socialist states.
- 43.
For a general discussion of the use of the Principles as a model for law reform in Lithuania, Estonia, Latvia, Russia, and other jurisdictions, see Estrella Farias (2016), pp. 238 and 243–247.
- 44.
See amendments for the modernization and simplification of the law and procedure on the field of justice and domestic affairs (Loi No. 2015-177 du 16 février 2015 relatif à la modernization et à la simplification du droit et des procedures dqns les domaines de la justice et des qffaires interieures). See Fauvarque-Cosson (2014). See also Estrella Farias (2016), pp. 262–269. The statute authorizes the Executive branch to promulgate a regulation (ordonnance) revising twelve specific areas in the field of conventional obligations governed by the Code civil. In many instances, the reform reproduces pre-existing provisions or case-law developments ( jurisprudence constante), but many other provisions mirror the PICC. This is the case, for example, on the overriding duty of r1.7 PICC); liability for breaking off negotiations in bad faith and the duty of maintain confidentiality in the course of negotiations (Art. 1112 Fr.CC and Art. 2.1.15 PICC). Also in correspondence with the approach of the Principles, the amendments to the French Civil Code eliminate the concept of cause among the essential elements of the contract (see comments to Art. 3.1.2 PICC); introduces the notion of “anticipatory breach”, also covered by Art. 71 CISG, allowing one party to suspend performance in case of a serious risk of non-performance by the other party (Art. 1220 Fr.CC and Art. 7.3.3 PICC); excludes specific performance in cases where performance would be unreasonably burdensome and expensive (Art. 1221 Fr.CC and Art. 7.2.2 (b)). Following the approach of Arts. 6.2.2 and 6.2.3 PICC, Art. 1195 Fr.CC allows either party to the contract to request renegotiations when unforeseen and drastic changes after the conclusion of the contract disrupts the equilibrium of the performances, turning excessively harsh the performance of a party that had not assumed such a risk (“Si un changement de circonstances imprévisible lors de la conclusion d’un contrat rend l’exécution excessivement onéreuse pour une partie qui n’avait pas accepté d’en assumer le risque…”). If the renegotiations end in failure, both parties may request the court to adapt the contract. But if both parties fail to agree on how to adjust the performances, either party may apply for a judicial revision or termination of the contract.
- 45.
For a survey on the influence of the PICC in the modernization of the German law of obligations, passed on 27 November 2001 and entered into force in January, 2002, see Zimmermann (2005).
- 46.
A working group set up by the Legislative Council of the Japanese Ministry of Justice have been meeting since 2009 for the purpose of revising Book III of the Japanese Civil Code of 1896, dealing with obligations and contracts. The working group submitted a draft bill to the National Diet on March 31, 2015. According to Professor Takashi Uchida, a member of the Legislative Council, the PICC has been a “a rich source of inspiration” for some of the revised rules on contract law. See Ushida (2011), pp. 697 and 710. See also Estrella Farias (2016), pp. 259–260.
- 47.
This is case in a jurisdiction such as Lithuania, whose Civil Code replicated many provisions of the PICC. See Supreme Court of Lithuania, 19 Jan. 2005 (referring to Art. 2.1.15 PICC and its comments for the interpretation of Art. 6.163 of the Lithuanian CC dealing with liability for the braking-off contractual negotiations in bad faith); Svenska Petroleum Exploration AB, Government of the Republic of Lithuania, 4 Nov. 2005, a decision rendered by the English High Court, applying the relevant rules of contract interpretation in Arts. 6.193 to 6.195 of the Lithuanian CC, which according to a Lithuanian legal scholar “repeat Article 4.1 to 4.6 of the UNIDROIT Principles.” See Meyer (2016), notes 43–44. See also Zukas (2007), pp. 238–239.
- 48.
For the influence of the PICC in the drafting of Spanish legislative projects, see Martìnez Cañellas (2007) (discussing the wisdom of using the PICC as a source of inspiration of for the revision of commercial (or mercantile) contracts regulated in the Commercial Code, preventing the Spanish Autonomous Communities from passing special laws to regulate those issues of contract law). See also Estrella Farias (2016) reporting on the influence of many provisions dealing with the formation of contracts, taken from the CISG or from the PICC (e.g., Arts. 2.1.1 and 2.1.6), noting that those provisions with no equivalent in the CISG are clearly derived from the PICC, such as those on negotiations in bad faith (Art. 2.1.15 PICC), duty not to disclose information received during the negotiations of the contract (Art. 2.1.16 PICC), modification in a particular form (Art. 2.1.18 UPICC), and writings in confirmation (Art. 2.1.12 PICC).
- 49.
For a discussion of the impact of the UNIDROIT Principles on the reform of the Scottish reform of domestic contract law, see Orucu (2011), pp. 1002–1023.
- 50.
Contract Law of the People’s Republic of China, President’s Order No. 15, 15 March 1999 (“Chinese Contract Law” or “ChCL”). A statistical study undertaken by the Civil Law Bureau of the Legislative Committee of the National People’s Congress, cited by Professor Zhang Shaohui, refers to the influence of foreign domestic sources, including the civil codes from Italy (31.8%), Germany (25.7%), Japan (14.3%), France (10.7%), and even the Uniform Commercial Code (3.5%). Instruments of international uniform law such as the PICC are also credited with influencing the general part of contract law (47.3%) and the CISG on specific rules on the contract of sale (50%). See Shaohui (2008). The most evident influence of the Principles on the ChCL is in the field of formation of contracts, though such influence is questionable given the similarities with those of the CISG, upon which many of the PICC rules on formation of contract were modeled after. But the rules of the ChCL on the validity of contracts (Art. 55 ChL and Art. 3.2.9 UPICC) and the consequences of breach of contract corresponds to many of the rules found in Chapters 6 (“Performance”) and 7 (“Non-Performance”) of the PICC. See Yuqing and Danhan (2000). See also Estrella Farias (2016), pp. 250–252, notes 67–69.
- 51.
See Russian Nat. Rep., at 1 (“The travaux préparatoires to the reform stress that the UPICC were one of the main models and explicitly invoke their provisions many times. The (final version of the) Concept for the Development of Civil Legislation in the Russian Federation makes three references to the UPICC (the only reference to non-state law above that being the one to the ICC Uniform Customs and Practice for Documentary Credits (UCP 600)). The much more detailed draft Concept of the working group on obligations has built mainly upon soft law and international instruments: the ‘international principles of contract law’, generally meaning the UPICC and the like, were referred to 10 or 11 times, the UPICC specifically – 14 times (whereas the PECL – only 5 times and the DCFR – not a single time). The real number of inspirations from the UPICC might have been higher if one suggests that there were cases where the drafters have made use of the UPICC with no specific reference to the Principles. It is worth mentioning that Alexander S. Komarov, a member of the working groups for the preparation of the first three editions of the UPICC (1994, 2004, 2010), has participated in the drafting of the original text of the Code as well as of the amendments to it during the reform.”).
- 52.
See Argentina Nat. Rep., referring to Law No. 26.994 passed on October 1, 2014, adopting a new Civil and Commercial Code (“Arg. CCC”), replacing the Civil Code of 1869. Justice Ricardo Lorenzetti, who presided the legislative committee that drafted the new CCC, expressly referred to the influence of the PICC in the drafting of the new provisions on contracts. See Código Civil y Comercial de la Nación, Buenos Aires, Led. La Ley, preface by R. L. Lorenzetti, at XCII (¨The design of these provisions [referring to the title on contracts in general] draws heavily on the UNIDROIT Principles, which are widely accepted in today’s legal tradition (Arts. 971 et seq.)…”). Although the Committee’s final report fails to mention specific provisions of the Principles, the Argentine national report expressly refers to the text of a draft Civil Code prepared by a committee established by Executive Decree No. 685/95, whose “1998 CC Draft” (Anteproyecto de Codigo Civil de 1998) refers to the influence of the PICC (together with the PECL and a Draft of a European Contract Code by the Academy of Pavia) on areas such as the contract of representation or agency (mandate), the formation of contracts, as well as the impact of Art. 7.4.4 PICC on foreseeability of the harm. See Argentina Nat. Rep. (“The influence of the UNIDROIT Principles as a source of the [1998 CC Draft] --and therefore a source of the CCC-- is not limited to the occasions in which it is expressly mentioned in the recitals. As in the [1998 CC Draft], the Principles have inspired many other solutions… .”).
- 53.
Reportedly, Article 6.163 of the Lithuanian Civil Code follows verbatim Article 2.1.13 PICC on precontractual liability. See Meyer (2016), p. 607.
- 54.
Czech Nat. Rep., text accompanying note 26, referring to the Civil Code of the Czech Republic that came into effect on January 1, 2014 (Law No 89/2012) (“CzCC”) and at p. 18 (“Undoubtedly, the UPICC may be regarded as an interpretation tool with regard to the provisions of the new 2012 Civil Code, as the UPICC served, together with other sources, as a model for some new provisions”). Thus, the Czech Nat. Rep. refers to the influence of some provisions of the Principles in the drafting of the new Civil Code, such as Art. 1753 on surprising terms (Art. 2.1.20 PICC); Art. 2002(1) CzCC on the right to terminate a contract in case of fundamental breach (Art. 7.3.1(1) PICC). However, it is not the text of the PICC the one that always prevailed as a source of inspiration. See Czech Nat. Rep. at 9, referring to the rules on precontractual liability adopted in Sections 1728–1729 CzCC “(In 2012 the Czech Republic saw extensive recodification of private law resulting in the adoption of a new civil code which came into effect on 1 January 2014. In the new CC precontractual liability is expressly regulated under Sections 1728 – 1729. According to the Explanatory Report on the CC the drafters were inspired by the regulation of pre-contractual liability in Art. 6–8 Code Européen des Contrats rather than by the regulation contained in the UPICC”).
- 55.
Hungary Nat. Rep., referring to provisions of the Hungarian Civil Code (of 2013 (“HCC”) that were inspired by the Principles, such as Art. 6:63 HCC on trade usages (Art. 9 CISG and Art. 1.9 PICC); Art. 1:3 on liability for breaking off negotiations in bad faith (Art. 2.1.15 PICC); Art. 6:78 HCC on standard terms (Art. 2.1.20 UPICC); and Art. 6:86 HCC on interpretation of a contract as a whole (Art. 4.4 UPICC). See Hungary Nat.Rep. at 2 (“During the preparation of the [Hungarian Civil Code or “HCC”] several instruments of unification of contract law were taken into account, as a source of inspiration, especially the United Nations Convention on Contracts for the International Sale of Goods (CISG), the UNIDROIT Principles of International Commercial Contracts (UPICC) and the Principles of European Contract Law (PECL). This influence and inspiration was expressly admitted by the Editorial Committee preparing the original draft of the HCC. So, it is not surprising that the sections on contracts of the HCC fairly often contain similar or compatible norms to that of the UPICC”).
- 56.
See Japan Nat. Rep. at 4 (“The receptivity toward the UPICC, however, may have gradually changed during the course of the past few years, as it has been frequently referred to as an important legislative model in the recent amendment of the Japanese Civil Code. This may have some positive impact on the courts and arbitral tribunals, but it is still yet to be seen if the courts and arbitral tribunals in Japan are prepared to find that UPICC is a restatement of “customs” or “trade usages” in international contacts”).
- 57.
See Guatemalan Report, referring to Article 31 of the Law of the Judicial Branch, providing that “Legal acts and contracts are governed by the law chosen by the parties, unless such choice is contrary to prohibitive rules or public order”. The Guatemalan Report adds: “According to the rules of interpretation governing in Guatemala, the term “law” should be interpreted narrowly and refers only to a State law, i.e., one issued by the corresponding legislative authority of a State, and not an instrument of soft law.”
- 58.
Although party autonomy in the determination of the applicable law to commercial contracts may be considered a principle generally accepted in most Western jurisdictions, in some Latin American jurisdictions party autonomy in choosing the law applicable to contracts is only is only accepted in disputes submitted to arbitration (e.g., Bolivia, Brazil, Colombia, and Uruguay). See Albornoz (2010), pp. 47–48.
- 59.
See Model Clauses for Use by Parties at 20–21.
- 60.
See Michaels (2014), pp. 646–647, reporting in 2014 on those figures reported by UNILEX and the ICC (“…UNILEX lists only 19 arbitral decisions addressing the applicability of the PICC as rules of law governing the contract in disputes before an arbitral tribunal, out of 186 arbitral decisions that mention the PICC. Out of those 19, no more than four concern matters in which the parties had chosen the PICC in their contract…[T]he PICC were mentioned in only 54 proceedings or 0.8 % of all proceedings. From another report, we learn that, between 2007 and 2011, the PICC were mentioned in contracts in only seven matters referred to arbitration under the ICC, as opposed to 3, 551 in which national law was chosen…”).
- 61.
See Michaels (2014), p. 648, Figure 1, showing different applications of the UPICC by judges and arbitrators. By far the biggest portion of decisions were those in which the Principles were applied to interpret and supplement domestic law (221), followed by their use in the interpretation of international commercial instruments (62). In 60 cases the Principles were used in the absence of express choice of law by the parties, in 25 cases as a reflection of the “lex mercatoria” and the like, and only in 30 cases they were chosen by the parties.
- 62.
The distinction between the application of the UNIDROIT Principles as a mere incorporation of its rules into the contract, as opposed to their application as a contract legal regime, may be relevant to determine the impact of the mandatory laws (Art. 1.4 PICC). As to the theoretical underpinnings of relying on the PICC as “applicable law”, as opposed to incorporating them into contract clauses, see Michaels (2014), n. 38. On the negligible practical differences between these different manners of choosing the UPICC, see Estrella Farias (2016), n. 12.
- 63.
See, e.g., Art. 3(1) of the Rome I Regulations.
- 64.
See, e.g., Council Regulation (EC) 593/2008 on the Law Applicable To Contractual Obligations (2008) OJ L 177 recital 13 (“Rome I Regulation”), enabling the choice of non-state law through incorporation. See also Italian National Report, referring to Italian case law according to which the parties’ reference to the lex mercatoria and the UNIDROIT Principles do not constitute a veritable “choice of law” by the parties, but rather the incorporation of such rules into the contract, so that they bind the parties to the extent they are not in conflict with mandatory domestic law.
- 65.
Inter-American Convention on the Law Applicable to International Contracts (1994), 33 ILM 732 (1994). In the absence of the parties’ choice of the applicable law, the first paragraph of Article 9 of the Mexican Convention (ratified to this date only by Mexico and Venezuela) provides for the application of the law with which the contract has “its closest ties”. However, in an undisputable reference to the UNIDROIT Principles, the second paragraph also allows the court to resort to “the general principles of international commercial law recognized by international organizations”. Article 10 of the Mexican Convention provides in turn that in the determination of the applicable law to the contract, the court may also take into account “the guidelines, customs, and principles of international commercial law as well as commercial usage and practices generally accepted”.
- 66.
See Hague Principles on Choice of Law, Art. 3 (allowing a court to apply the “rules of law that are generally accepted on an international, supranational, or regional level as a neutral and balanced set of rules, unless the law of the forum provides otherwise”.). On the influence of the 1994 Mexican Convention on the 2015 Hague Principles on Choice of Law, see Moreno and Albornoz (2011), pp. 491–526.
- 67.
See Parag. Nat. Rep. and Moreno Rodriguez (2016). (hereinafter “2 Eppur si muove”).
- 68.
CJI/RES. 249 (XCIV-O/19). The text is available at the site http://www.oas.org/en/sla/iajc/docs/Guide_Law_Applicable_to_International_Commercial_Contracts_in_the_Americas.pdf.
- 69.
Unlike state choice-of-law rules, those governing international commercial arbitration, or the arbitration rules chosen by the parties, by and large do not compel arbitrators to determine the applicable law on the basis of predetermined choice of law rules. This is not always the case, but many arbitration laws speak in terms of “rules of law”, thus opening the door for the application of non-state law such as the UNIDROIT Principles.
- 70.
See, e.g., Art. 28(2) UNCITRAL Model Law on International Commercial Arbitration, providing for the arbitral tribunal to choose the applicable law throughout the application of the pertinent choice of law rules (voie indirecte) (Art. 33(1) Swiss Rules of International Arbitration), as opposed to arbitration regimes in which the arbitral tribunal may directly choose the applicable rules of law (voie directe), such as Art. 1115 French Code of Civil Procedure. See also the many institutional arbitration rules authorizing the arbitral tribunal, in the absence of the parties’ choice, to determine the “rules of law” most suitable to decide the dispute. See, e.g., ICC Rules on International Commercial Arbitration, Art. 21(1); UNCITRAL Arbitration Rules, Art. 35; London Court of International Arbitration, Art. 22(3); CEAC Hamburg Arbitration Rules, Art. 35(c).
- 71.
See Muñoz and Geny (2016), pp. 109 and 114.
- 72.
- 73.
See Hughes Aircraft Systems International v. Airservices Australia, 30 June 1997, cited by Meyer (2016), p. 606, attributing to Justice Finn, an Australian member of the PICC Working Group, favoring an expansive application of the principle of good faith more in tune with the case law and legal scholarship developed in civil law jurisdictions. Quoting from the language of the Hughes Aircraft case, Justice Finn stated that good faith, pursuant to Art. 1.7 PICC, “has been propounded as a fundamental principle to be honored in international commercial contracts”.
- 74.
- 75.
- 76.
Tribunale di Nola, 6 December 2010, in which an Italian court relied on the PICC for the purpose of deciding a dispute in which a patient sought restitution of a fee paid to a dentist, referred to in Meyer (2016), p. 604, n. 32.
- 77.
- 78.
See Spain Nat. Rep., pointing that the assumption that Spanish courts would resort to the Principles in order to interpret or supplement domestic law appears “too optimistic” (“[I]n the case were the UNIDROIT Principles have been used the function of the Principles is restricted to that of supporting or ratifying the decision based on national law in international litigation or to support the interpretation of contractual clauses, i.e., as support of the ratio decidendi, or as a comparative or doctrinal reference which supports the decision of the judge or arbitrator.”).
- 79.
See Michaels (2014), p. 652 (“The desire of judges seems to be to ascertain that a solution they find in domestic law is compatible with what is considered a global consensus. The PICC are not cited as applicable law nor are they usually the only source used, but their use is for the purpose of information and confirmation.”).
- 80.
See Russian Nat. Rep. at 5 (“In an overwhelming majority of cases the courts have invoked the UPICC to just additionally endorse the conclusion following from the relevant provisions of the Russian law. The courts introduce references to the UPICC with help of expressions like ‘besides, it should be noted that…’, “based on a similar premise”, “the normative basis…is not only Art…of the Civil Code…but…the UPICC as well…Cases where the court explicitly states that the UPICC were used as a gap-filler are extremely rare.”).
- 81.
Argentine Nat. Rep., responding to Question (2).
- 82.
Michaels (2019), p. 657 (“Contrary to their explicit international character, the PICC are used in similar intensity in domestic and international situations”).
- 83.
See Comment 6 to the Preamble of the UPICC, stating that the Principles may be used for guidance in the interpretation of domestic law “[e]specially where the dispute relates to an international commercial contract, it may be advisable to resort to the Principles as a source of inspiration”].
- 84.
See Meyer (2016), p. 604 (“If national law is the same on the decisive question as the PICC, which of course were especially formulated for international commercial contracts, this can remove any doubt as to the suitability of the national law in an international context.”).
- 85.
See Berger (2001), pp. 877 and 879 (referring to the process of examining the application of national law in light of the PICC standards applicable to international contracts as an “international method of construction”). See also Marrella (2003) (pointing to this legal methodology for checking on the suitability of domestic law as a “transnational test”).
- 86.
See Meyer (2016), p. 604 (“[T]his ‘ trick’ of rephrasing an interpretation contra legem into one praeter legem should only be used when very good reasons permit so as not to disappoint the legitimate expectations of the parties.”).
- 87.
This conception of the Principles as embodying a “consensus” on general rules of contract law is consistent with the trend towards economic globalization and the increase of cross-border contracts and disputes, compelling judges, lawyers and law students to think about contract law side the confines of their own legal systems. Thus, the use of the PICC as an instrument of comparative interpretation of national contract law conforms to this idea of “general consensus”. Lord Mustill has been quoted as pointing out this feature of the Principles when stating that “[T]he Principles may be of particular value here since (a) they represent a distillation of a large number of laws which it would often be impracticable to examine individually; and (b) they have the imprimatur of an international organization and numerous distinguished scholars.” (quoted in Bonell 2005, p. 239).
- 88.
In areas where legal systems diverge, the Principles by force give preference to one solution over the other, even if the chosen formula is not found in most domestic legal systems. See Bonell (2005). See also Michaels, 662 (“The authors of the PICC admitted freely that differences between existing contract laws existed and that they frequently chose one over the other on the basis of quality”).
- 89.
See Austria Nat. Rep., referring to cases in which the provisions on the measure of recoverable damages under the PICC embody the principle of “full compensation” underlying the CISG, hence could be legitimately resorted to for the purpose of filling the gap left under Articles 74 and 78 CISG. On the use of selective provisions of the UPICC for the purpose of interpreting some issues governed by the CISG e.g., the calculation of damages (Arts. 4.7.2 and 4.7.3 PICC; the definition of standard terms, Art. 2.1.19 PICC; the calculation of interests, Art. 4.7.9 UPICC), see Michaels, pp. 665–666.
- 90.
But see the USA Nat. Rep., reporting a couple of decisions by the Federal District Court for the Southern District of Florida dismissing the use of the gross disparity provision in Art. 3.10 PICC of 1994 (Art. 3.2.7 of the 2010 and 2016 UPICC) and as evidencing gross disparity as an internationally-neutral defense against the enforcement of contracts. In a decision rendered in 2005, the 11th Circuit Court of Appeals held that a seaman’s right to bring a court action under the Jones Act (46 U.S.C. Section 30104) does not apply to prevent the enforcement of an arbitration agreement falling under the New York Convention. Bautista v. Star Cruises, 396 F.3rd 1289 (11th Cir. 2005). When the defendant objected to the enforceability of the arbitration agreement on the ground that it was unconscionable, the 11th Circuit referred nonetheless the parties to arbitration declaring that Art. II(3) NY Convention offers little guidance on the applicable law to the validity of the arbitration agreement. The Court refused to invalidate the agreement given the absence of universally accepted standards of enforcement of arbitration agreements, declaring that it is “doubtful that there exists a precise, universal definition of the unequal bargaining power defense that may be applied effectively across the range of countries that are parties to the [New York] Convention.” Ibid., at 1302. When plaintiffs invoked the gross-disparity provision in the Principles, the Federal District Court for the Southern District of Florida, in a decision rendered in 2007, dismissed the argument on the ground that the PICC are not binding. Koda v. Carnival Corporation, 2007 WL 7757994, 7 Sep 2007 (S.D. Florida), and subsequent cases cited in USA Nat. Rep., note 40. In another decision rendered in 2013, the same court dismissed the application of the gross-disparity provision in the Principles on the ground that it cannot have status of a “universal principle” since only 63 countries have joined UNIDROIT. The Court also noted that neither Art. 3.10 UPICC (1994) nor its official comment provide a the type of “universal definition” called for by the Bautista holding of the 11th Circuit. See Singh v. Carnival Corporation, 2013 WL 12139415 (S.D. Florida). See USA Nat. Rep., criticizing these decisions on the ground that unconscionability or gross disparity amounts, as noted by Gary Born, to a “generally-applicable and internationally-neutral” defense against the enforcement of contracts that is available virtually everywhere. See Born (2014), p. 839.
- 91.
See, e.g., Chartbrook Ltd. v. Persimmon Homes Ltd. & Ors [2009] UIHL 38 (1 July 2009) 39, in which the House of Lords rejected the view of the PICC as representing a general consensus on contract law, suggesting that Art. 4.3 UPICC does not represent English law, but rather a “French philosophy of contractual interpretation, which is altogether different from that of English law.” For a critique of this decision, see Vogenauer (2007), pp. 123 and 127–129. See also Michaels, 651, n. 37, referring to five UK decisions, two Australian decisions and three New Zealand decisions rejecting the view embodied in Art. 4 UPICC that pre-contractual negotiations can be relied upon to interpret the terms of a contract.
- 92.
In a case in which resorting to the PICC was indeed of limited assistance, the plaintiff relied on the rules of the Principles on freedom of contract and on agency in order to assert his status as an agent of a corporation. Although reference to the Principles in this case does not seem to have been helpful or even appropriate, the court dismissed the reference to the PICC as a “somewhat nebulous discourse on the law of corporations and his view on the effect of [the UNIDROIT Principles]”. Chien v. Commonwealth Biotechnologies, Inc., 484 B.R. 659 (E.D. Virginia 2012).
- 93.
Federal Commercial Court (Central Circuit) of the Russian Federation, 19 July 2011, holding that the PICC have no place among the sources of law listed in Article 7 Russian CC, cited by Meyer (2016), n. 13.
- 94.
Tribunale Verona, 30 June 2010, cited by Meyer (2016), n. 14.
- 95.
In a case reportedly decided by the New Zealand Court of Appeals, it was decided to exclude evidence of what transpired at the contractual negotiations for determining the meaning of the terms of the contract, arguably allowed under Art. 8(3) CISG and Art. 4.3 UPICC, in favor of the more restrictive approach of the English common law towards contract interpretation. Hideo Yoshimoto v. Canterbury Golf International Limited, 27 Nov. 2000, cited in Meyer (2016), n. 37. Meyer also refers to a couple of decisions in which the standards of interpretation of contracts espoused by the CISG and the UPICC were contrasted with those of the English common law, the UK Supreme Court finally deciding that the presumably freer and more “international” standards reflected in those instruments “reflect the French philosophy of contractual interpretation, which is altogether different from that of English law.” See Meyer (2016), pp. 606–607, notes 38–39, referring to Proforce Recruit Limited v. The Rugby Group Limited (17 Feb. 2006) and Chartbook Limited v. Persimmon Homes Limited and others (1 July 2009).
- 96.
See Denmark Nat. Rep. (“[I]t seems safe to say that no Danish court has ever cited the UPICC as evidence of a ‘consensus on the law applicable to contracts’.”).
- 97.
See, for example, the reception accorded to the UPICC in Russian law, especially during the first years following the adoption of the new Civil Code, when the law of contract was sought to be modernized in order to catch up with the winds of transition towards a free market economy. Alexander Komarov, referring to the doctrinal developments on contract law advanced by the International Court of Arbitration of the Chamber of Industry and Commerce of the Russian Federation, in Unif. L. Rev. 657, 659 (2011).
- 98.
See Denmark Nat. Rep., referring to the dominant influence played by the PICC in contract legal scholarship, in which the “the unwritten (judge-made) general principles of Danish domestic law as regards Contracts and Obligations will, in the long term, increasingly be inspired and affected by foreign and international rules of law.” Professor Christina Ramberg also refers to the warm reception of the UPICC in Scandinavian countries, “where it is hardly possible to analyze a contractual problem without reference to the PICC”. See Ramberg (2014), pp. 669 and 673. For the receptiveness towards the UNIDROIT Principles on part of the Paraguayan legal community, from early teaching in law schools to the training of judges, see Paraguayan Nat. Rep. (“The UPICC are part of the legal discourse of Paraguayan practice and academia. A contract law textbook which compares the UPICC with the Civil Code’s solutions is used in regular Contract Law courses in major universities. The 2010 version of the Principles were published in Asunción by Intercontinental Editora. There is a specific subject in the Judicial School (Escuela Judicial) which deals with the interpretation of the Civil Code aided by the UPICC. Teams of National and Catholic Universities of Asunción have participated in Arbitration Moot Competitions involving the application of the UPICC such as the Vis Moot, the Moot Madrid and the Moot jointly organized by the University of Buenos Aries and Rosario of Bogotá. Moreover, as stated, the UPICC are being used by courts for interpreting and supplementing national contract law.”).
- 99.
See USA Nat. Rep., mentioning, among other reasons attempting to explain the negligible attention paid to the PICC, the “almost stereotypical internationalization of US law and US lawyers, who have more difficulty than lawyers elsewhere to think in terms and ways other than those of their own law.” See also Japanese Nat. Rep. at 4 (“Though comparative studies of foreign laws have significant influence on academic studies, and attorneys might refer to foreign laws in their memorandum, it is rare for judgments in Japanese courts to refer to foreign laws in their judgments, and the same could be said in relation to the UPICC”).
- 100.
This seems to be the case in Russia, where its highest courts, the Supreme Court and the Supreme Commercial (Arbitrazh) Court of the Russian Federation refer to the PICC with relative frequency. See Russian Nat. Report at 3, note 5, noting that the impact of the PICC in Russia is suggested by the UNILEX database, reporting at by the end of 2018, 48 Russian judgments out of the 266 decisions in which the PICC were referred to worldwide, thus provides a strong indication of the role played by the UNIDROIT Principles in the Russian Federation. A caveat is nevertheless entered with regard to the actual relevance of the Principles in the outcome of the cases. See Russian Nat. Rep., at 2 (“The numbers of cases where the UPICC have been invoked by the court or the tribunal undoubtedly attest to a warm reception of the Principles by the Russian judges and arbitrators. However, a cautious attitude is appropriate. If is noteworthy that judges and their assistants frequently tend to borrow phrasing from previous decisions in similar cases, thus generating series of judgments with similar structures and wording…”).
- 101.
See Denmark Nat. Rep., stating that Danish courts often need to determine, for example, whether a given breach of contract reaches the level of seriousness to justify termination, a determination resting almost invariably on domestic (Danish) law. The Danish National Report adds, however, that “no formal barrier would prevent a Danish Court from applying Article 7.3.1 of the UPICC to determine whether a given breach of a given contract with an international element had reached “fundamental” proportions under the Danish domestic law of contracts and sales”. See Denmark Nat. Rep. n. 4 (adding that “the opinions of Danish courts rarely include references to scholarly writing --a category which arguably might include the UPICC”.).
- 102.
See the answers provided in the Denmark Nat. Rep. to the first three questions in the survey, the first focusing on whether the Principles have been used for the purpose of interpreting and supplementing domestic law, the second one on whether the UPICC are regarded as “evidence of a consensus on the law applicable to contracts”, and the third question whether they have been used in any other way (“(2) Turning to the next question posed by the General Reporters (and judging, once again, by the reported decisions available online in the Danish Weekly Law Reports), it seems safe to say that no Danish court has ever cited the UPICC as evidence of a ‘consensus on the law applicable to contracts’… .3) Turning now to Danish scholarly opinion, the situation is quite different from that set forth under heads (1) and (2) above, in that Danish legal scholars frequently refer to the UPICC, both as a general body of contract law and as regards many of its specific provisions …”). Emphasis added.
- 103.
Czech Republic Nat. Rep. (“The UPICC may be regarded as an interpretation tool with regard to the provisions of the new 2012 Civil Code, as the UPICC served, together with other sources, as a model for some new provisions”)
- 104.
Hungary Nat. Rep. (referring to the UPICC as a source relied upon for drafting the new Civil Code).
- 105.
See Meyer (2016), p. 605.
- 106.
See, for example, decision of the Spanish Supreme Court of 29 February 2012 (Case No. 74/2012), dealing with the interpretation of contracts, for which the Spanish legal system provides ample coverage (Arts. 1281–1289 Spanish CC; Arts. 50, 57, and 59 Spanish CoC), in which the PICC are relied upon, in a broad comparative survey on contract interpretation, together with canons of interpretation in Art. 236 Portuguese CC, Art. 1156 French CC, Art. 1362 Italian CC, and Art. 5:101 PECL, cited in Michaels (2014), p. 648.
- 107.
See Argentina Nat. Rep., answering Question No. 2, referring to nine decisions rendered by Argentine courts in which selective provisions of the Principles are cited mostly for the purpose of confirming a result consistent with Argentine law or the domestic law applicable to the dispute. See., e.g., Ingeniero Nestor A. Brandolini y Asociados SRL c. Oviedo Funes, Maria Lila y otro, Cordoba Ct. App., 6th Panel, 14 March 2008 (resorting to the notion of “fundamental breach” in Art. 7.3 UPICC (2004)); Trianna Transportes SRL c. Cervercería y Maltería Quilmes S.A., Càmara Nacional en lo Commercial, Sala A (“ Nat.Com. Ct. App., Panel A”), 8 April 2008 (referring to Art. 2.2.1 UPICC for the proposition that non-standard clauses prevail over standard clauses), a rule also relied upon in subsequent cases, D.G. Belgrano SA. C. Procter & Gamble Argentina SRL, Nat.Com.Ct.App., Panel A, 28 June 2013; Nea Commerce S.A. c. Sky Arentina S.C.A., Nat.Com.Ct.App., Panel A, 13 March 2009; LV7 Radio Tucuman S.A., c. Provincia de Tucumán, 27 June 2008 (confirming the outcome reached under Art. 919 of the former Argentine CC, to the effect that silence shall not be construed as a tacit acceptance by referring to Art. 2.9.1 UPICC (2010)); Compibal SRL c. Roux Ocefa SA, Nat.Com.Ct.App., Panel D, 17 Nov. 2008 and Editorial Ver S.A. v. DYS S.A., Nat.Com.Ct.App., Panel D, 19 Aug. 2009 (alluding to Art. 5.1.8 PICC (2004) and comments to decide that a contract for an indefinite period may be terminated giving notice a reasonable time in advance; Horbath Abraya Gildeharth, Sofia Hilda c. Cabaña Solaz S.A., Nat.Com.Ct.App., Panel A, 30 Dec. 2012, resorting to Art. 5.1.3 PICC to corroborate the cooperation mutually owned by the parties to a contract, a corollary of the overriding principle of good faith consecrated by Argentine law; NSS S.A. c. Mera Latina S.A., Nat.Com.Ct.App., Panel A, 20 Dec. 2012, referring to several articles of the Principles pointing to the binding force of the course of dealing and practices observed by the parties, as well as trade usages widely known and regularly observed in the am branch of trade; Sanovo International v. Ovoprot International S.A., Nat.Com.Ct.App., Panel A, 16 Oct. 2013 (in a case governed by the CISG, the Court referred to different paragraphs of Art. 7.4 PICC for the purpose of establishing the obligor’s foreseeability of the harm as a limit of the recoverable damages, as well as resorting to Art. 7.4.6 PICC (2010) in order to determine the meaning of “current market price”; Murex Argentina S.A. c. Abbott Laboratories y otro, Nat.Com.Ct.App., Panel A, 1 Apr. 2014, affirming the court’s power to fill a gap in the contract with “a term appropriate to the circumstances”, which the court was entitled to fill pursuant to Art. 1198 of the former Argentine CC (current Art. 961 Argentine CCC) but found support in Art. 4.8 PICC; D.G. Belgrano S.A. c. Procter & Gamble Argentina S.R.L., Nat.Com.Ct.App., Panel A, 28 June 2013, finding in the concept of gross disparity under Art. 3.10 PICC.
- 108.
See Michaels (2014).
- 109.
See Questionnaire on the UNIDROIT Principles as a Common Frame of Reference, Question (5): If there is a statutory or case-law rule (such as a code provision or jurisprudential line of decisions) dealing with the same or similar issue addressed by those selected provision of the UPICC, please reproduce the full text of such a provision or case-law rule, indicating any relevant difference you find between the domestic rule of contract law and the selected rule of the UPICC, also indicating whether the UPICC may be relied upon by the courts of your country as a general principle of contract law interpreting and supplementing national contract law.
- 110.
See Questionnaire on the UNIDROIT Principles as a Common Frame of Reference, Question (6): If there is no such a rule of contract law in your jurisdiction, please indicate, with reasons, whether any of those selected provision of the UPICC may, in your view, be relied upon as a source of interpretation of the law of contracts in force in your country, or for the purpose of supplementing gaps in your national contract law.
- 111.
Questionnaire on the UNIDROIT Principles as a Common Frame of Reference, Question (7): Please include those rules of the UPICC (other than those included in the given list) which have been relied upon by courts or arbitral tribunals for the purpose interpreting a similar provision of your national contract law or in order to supplement (thus serving as a gap-filler) the national contract law in force in your jurisdiction.
- 112.
Most national reports pointed to a statutory—and occasionally jurisprudential—domestic counterpart to the UPICC rules indicated in the survey. With the exception of the provisions regarding the liability for breaking off negotiations in bad faith (Art. 2.1.5 UPICC), linguistic discrepancies (Art. 4.7 UPICC), and interest on damages (Art. 7.4.10), most national reports pointed and discussed provisions dealing with the same topic.
- 113.
For example, many legal systems provide for the obligation to pay interest for failure to seasonably perform a monetary obligation, and in most cases the parties, judges, and arbitrators can rely on a statutory legal rate of interest in case the parties fail to agree on a reasonable rate. What many legal systems lack is a specific choice-of-law rule to determine the applicable rate of interest for the failure to perform timely a monetary obligation. Although the classic principle of full compensation may be relied upon in order to recover compensation for additional losses, most legal systems fail to expressly address the question whether the obligee may recover damages over and above the statutory rate of interest by establishing a greater loss. Although the national reports invariably point to a counterpart to the pertinent UPICC rule, most of domestic provisions fail to address the choice-of-law issue and other issues addressed in Art. 7.4.9 UPICC.
- 114.
By way of exception, see Art. 125(2) of the Chinese Contract Law, pointing to the purpose of the contract (“Where a contract is concluded in two or more languages and it is agreed that all versions are equally authentic, the words and sentences in each version are construed to have the same meaning. In case of any discrepancy in the words or sentences used in the different language versions, they shall be interpreted in light of the purpose of the contract.”). Some jurisdictions address the problem of multiple language versions in consumer protection statutes. USA Nat. Rep., referring to Section 1632 (j) of the California Civil Code (“The terms of the contract or agreement that is executed in the English language determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.”). See also Ramos v. Westlake Services LLC, 242 Cal.App. 4th 674 (2015) (in a consumer contract drafted by one of the parties, where the English original includes an arbitration agreement that is missing from the Spanish translation, the agreement is void); Torres v. United Staffing Associates LLC, 2015 WL 5752583*4 (Cal. Sup.) (Trial Order) (in a consumer contract drafted in the English language but only signed in its Spanish version, the court held that the Spanish version prevails).
- 115.
See, e.g., Argentina Nat. Rep., referring to Art. 765 Arg.CCC, providing for the release of the debtor by paying in national currency (“Concept. When the debtor owes a certain amount of currency that is determined or determinable at the time the obligation is constituted, such an obligation shall be considered an obligation to pay a sum of money. If at the time the obligation is constituted it is stipulated to give currency that is not legal tender in Argentina, such an obligation shall be considered as an obligation to deliver a quantity of things, and the debtor may be released by giving the equivalent amount in legal tender.”). The Argentina Nat. Rep. adds that it is disputed in Argentina whether this is a mandatory or a default rule. To the same effect, see Art. 403 of the 2017 Revised Japanese Civil Code (“When the amount of the claim is specified in the currency of a foreign state, the obligor may pay in the legal currency of Japan using the foreign exchange rate current in the place of performance.”) It is unclear under those provisions which is the relevant day for determining the exchange rate between the national and foreign currency, but the Japanese Nat. Rep. points to the judicial practice in Japan of fixing the exchange rate at the time of conclusion of the oral arguments in the proceedings. For a more nuanced, though not necessarily more predictable legal framework offered by federal and state law in the United States, see USA Nat. Rep., referring to different solutions offered by federal and state case-law, as well as the law of negotiable instruments (Section 3-107 UCC), the Restatement on Foreign Relations (Section 823 of the Restatement (3rd) on Foreign Relations), and the Uniform Foreign-Money Claims Act (“UFMCA”, Section 7(b) on Judgments and Awards in Foreign Claims and Section 1(3), defining “Conversion Date”).
- 116.
But see Japanese Nat. Rep., referring to Article 403 of the 2017 Revised Civil Code for Japan, replicating the rule found in the 1896 Civil Code (“When the amount of the claim is specified in the currency of a foreign state, the obligor may make payment in the legal currency of Japan using the foreign exchange rate current in the place of the performance”).
- 117.
Article 6.1.9(3) and (4) PICC provide for the applicable rate of exchange prevailing where and when payment is due, unless the payor is in default, in which case the payee may choose between the rate of exchange when payment was due or at the time of actual payment. See Japanese Nat.Rep. at 8, pointing to Japanese “court practices” relying on the exchange rate “available in Japan when the oral arguments in the proceedings are concluded.”
- 118.
See CISG Advisory Council No. 14, Interest Under Article 78 CISG, at http://www.cisgac.com/cisgac-opinion-no14-p3/.
- 119.
For one thing, Article 7.4.9(3), following Article 78 CISG, allows the obligee to claim, in addition to interest, other damages as long such damages can be established. See Japanese Nat. Rep. at 13, referring to a decision of the Japanese Supreme Court of October 11, 1973, according to which the aggrieved party cannot recover additional damages even if it proves that its loss exceeds the interest. Contra, see Article 345 of the Greek Civil Code (obligee is entitled to recover damages in addition to interest as long as it can prove having suffered such harm).
- 120.
See Gotanda (2009).
- 121.
See Japanese Nat. Rep., at 16 (“…[T]he UPICC may have some role to play in the future in developing case law in areas where Japanese law is not settled. Among the principles discussed above, such areas include regulation of surprising terms (Art. 2.1.20 UPICC) and the solution of linguistic discrepancies in contract interpretation (Art. 4.7 UPICC).”).
- 122.
Swiss Federal Tribunal, 16 Dec. 2009. See Kleinheisterkamp (2017).
- 123.
See, e.g., Guatemalan National Report (“In Guatemala, there are no reported cases in which national courts have used the UPICC to interpret or supplement national laws, nor in any other way.”).
- 124.
See Michaels (2014), p. 657 (“Doctrinally, the PICC are rarely an ‘applicable law’ in the sense of private international law. Instead, they enter judicial opinion in a variety of other ways. The most important way is in the course of comparative legal argument for questions where judges do no find a clear and/or satisfying answer in their own legal system…”).
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Garro, A.M., Moreno Rodríguez, J.A. (2021). The UNIDROIT Principles as a Common Frame of Reference for the Uniform Interpretation of National Laws. In: Boele-Woelki, K., Fernández Arroyo, D.P., Senegacnik, A. (eds) General Reports of the XXth General Congress of the International Academy of Comparative Law - Rapports généraux du XXème Congrès général de l'Académie internationale de droit comparé. Ius Comparatum - Global Studies in Comparative Law(), vol 50. Springer, Cham. https://doi.org/10.1007/978-3-030-48675-4_3
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