Academic journal article Australian International Law Journal

Symposium Paper: The UNIDROIT Principles of International Commercial Contracts: Achievements in Practice and Prospects for the Future

Academic journal article Australian International Law Journal

Symposium Paper: The UNIDROIT Principles of International Commercial Contracts: Achievements in Practice and Prospects for the Future

Article excerpt

ABSTRACT

After a brief account of what the UNIDROIT Principles have so far achieved in practice, this article sets out some proposals as to how to promote them from their present status as a mere soft law instrument. A first step in that direction would be a formal recommendation by the United Nations Commission on International Trade Law ('UNCITRAL') to use the UNIDROIT Principles as a means of interpreting and supplementing the United Nations Convention of Contracts for the International Sale of Goods ('CISG'). Another even more significant promotion of their legal status would be a formal recognition of the parties' right to choose the Principles as the law governing their contract. A last--and under the circumstances--the most ambitious way of fostering the legal status of the UNIDROIT Principles would be to adopt them in the form of a model law or alternatively to refer to them as the general contract law in the context of a 'Global Commercial Code'.

Introduction

This article first provides a general overview of the UNIDROIT Principles of International Commercial Contracts--what they are and what they have achieved so far in practice. This article then offers some suggestions and ideas as to how to promote the UNIDROIT Principles from their present status as a mere 'soft law' instrument.

I. The UNIDROIT Principles - An Overview

The UNIDROIT Principles of International Commercial Contracts--first published in 1994 and now available in their second enlarged edition of 2004, with a third edition about to appear (1)--are a non-legislative codification or 'restatement' of the law of international commercial contracts in general. They are the product of a group of independent experts from all the major legal systems and geo-political areas of the world--the Australians included Patrick Brazil and Justice Finn. (2) Apart from their wider scope--they cover virtually all the areas of general contract law: from contract formation, interpretation, validity, content, performance, non-performance and remedies to third party rights, agency, assignment, conditions and limitation periods. The only difference with respect to other internationally widely used soft law instruments, such as the International Commerce Terms ('INCOTERMS') or the Uniform Customs and Practice for Documentary Credits ('UCP') issued by the International Chamber of Commerce ('ICC'), is that they have been prepared under the aegis of an intergovernmental organisation, UNIDROIT.

This author thinks that in practice the reception of the UNIDROIT Principles--emphatically welcomed by an eminent American scholar as 'a significant step towards the globalisation of legal thinking' (3)--has gone far beyond the most optimistic expectations. They have been taken by a number of national legislatures as a source of inspiration for the reform of their domestic contract laws. (4) Moreover, also in view of the fact that the UNIDROIT Principles are available in their integral version, i.e. black letter rules and comments, in virtually all the principal languages of the world, they are more and more frequently used by parties in negotiating and drafting cross-border contracts. (5)

Finally, and most importantly, not only arbitrators but also domestic courts increasingly refer in their decisions to the UNIDROIT Principles. In a number of decisions--all arbitral awards--they have been applied as the rules of law governing the substance of the dispute. This is either expressly requested by the parties or because the contract referred to 'general principles of law', lex mercatoria or the like, and the arbitrators applied the UNIDROIT Principles on the assumption that they represented a particularly authoritative expression of similar supra-national or transnational principles and rules of law (6) Recently arbitral tribunals have gone even further and applied the UNIDROIT Principles in the absence of any choice of law clause in the contract. …

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