\U3Li: U 3)\ \l) l’RRA
fE i\
R\ \ I
\
\V\
Offl4i
,
L
r.
53
ARBITRATION AND PRIVATE INT
ERNATIONAL
LAW
GIUDITTA CORDERO MOSS*
Choice of Iaw; Conflict of Iaws; Internatio
nal commercial
arbitration
Introduction
property, insolvant v law or of anv arm
svht-’re the part
autonotny is restricted b specific
priva
law rules, such as questions ahout the te international
legal
Refiently, the UNCITRAL Working Group
iapacit3 ol
on Arbi
engaged in the inodernisation of the UNCITRAL tration, the parties; (ii) certain rules helonging to laws different
Arhi
from
tra
the Iaw chosen by the parties may be
tion Rules, discussed in the first reading
applicahie
Art33. Articie hecauseoftheir oerridingchar
33 provides, among other things, that the
acter. for example rules of
arbitral trihunal conlpetition law: er (iii) the latv
shall apply the law that was chosen 1w the
chosen by the parties may
parties and, give effect to rules helonging
to a foreign law, for example
feiling any choice made by the parties.
the law desig when illegalitv in the place
nateci by the private international law
of performance renders the
that the trihunal ohl igation ins aud or unen
forr eahle under the law chosen
deems applicable. Arnong the positions
that were clis by the parties.
cussed by the Working Group, was whet
her
to private international law should be elitn reference In these situations
, the parties’ expectati
inated froin
Art. 33
disappointed, as the contract svill be suhj ons niav be
ect to rules that
they had intended to exclude.
This artiale intends to show that priva
te international inav have drafted a contract In particular, the parties
that is enforceahle under
law plays an important role for internatio
nal commer the law rhosen by them, vet
cial arbitration. Disappearauce frem arbit
ration rules of turn out to be unenforceahle some of the terms rnav
because rules helonging to
reference to private international law may
creat
dictable rosults and is not ne essarilv the optii e unpre another lass are applicable. The arbitration clause does not
nal solution necessarilv pres ent the applir
ahi I it of rules helonging to
for husiness transactions.
a law different frem the ene choson by the
parties: sotne of
Lea’ ing asid’ the nbvious situation wliere the
these rules cannot be disrogarded r-’ven
lv, an international
parties have
not uhosen tlie governing law aud it is for th
arhitral trihunal aud. il thev are. the au arcl
will ha int aud
hunal to trid which law is applicahif’, this arbitral tri— er tinenforteable.
artiile will
ha ti’, on situations here the parties has e
madt-’ a hoice It is in these situations that
ilse
ut lan aud it will show that ( on tlict ru les
air’
ar]-’ r’’le ant international liw rules ontri ass arenass ahout
hutes to predii tahilitv for
even theri, Tlie partit’s iw often ons inaed
that the hoice international hosinoss irana
at law laii’o-’ in th
.tions, Rather ihin hting
0 cofitfit i -‘\ llf’ tlia appli(ahi
mv ispa fot thair rolifionship I. tas othai niint lit\ to ignort-’ I ar dittied as an ‘hinent foreiEn to th an ifrnlt\
s lasv:
r
asitirritions ni tvtiisnjti,n:iI lass
att ilitfe sa \ li’n us’-’ cantr
ila-s shonld P1 Ililiri’—
at t contiilN an arhittation
Os I nsihil teol thit prlt]its
lot sa. \rhitrouion i as k noss n hasad on
to iriiIi-rsitn,l md
the ss i Il el the prt’dn i r’sitlis litt atliv, ist
pirtias. tial Ila trihitnal is SflpJJO5I ta
11105 I 0111e ds 00 uttclr sin I
lolh s th iu tir’ sllrjrisf
instim tins. 1Jan a,
onir i t st ith ti ;irhitr[ioii
ar’fltiv rliint -‘s ds’ srti s r’liin
i
n tis’
la 1
t I at tI -5 in- i, fl tlt utiti a i iiil iii
iisr tid I dItt.
( ihrr Iasts
.
,
(
li.t
f tolis
Titti
i
ta
iii iS
f
i
I-ttits in hjsesar, ni Is is’,
il la
lii-\IE 1h
0 rtsolt l’siitI I t. th parti s
5] ll Iiiiiit i
‘I
II- Is I Ila .t i
li’:.l fl ild fl, ilanta li I
I
ass
‘
i
ni
r
i
Fl
i
th
at
ha
iii
i
iii
it
i,
to
i, I
‘FiFa i
fiS
The tribunal gives effect to the partie&
choice: is the award valid and
enforceable even though it violates the
otherwise appllcable Iaw?
I
at]]
)lflplFis
fl
il
‘ss
i
hs iii
s
i
I
Iii
\t,
/1.1(10
\
‘;
14
‘Iii) ‘sI
tJl
I
i,
\l
‘il sst
isI
ro
I ro
)ntF
i
‘i
itit
iii
ti t
fl’s
i
iii,
fl
‘si
iii
i
I
i.
tihtiiI
Isilig
p11 is
155 n
d
ti
i hr’ is lit
aoti
-liii
I ss iihl
I
i
t i litt]] dt.
Il tji I h Iss «at
(FltlslqlIllttl\.
lite ittttjonaj sonits tllid iii
irhitutifii’ii
iiti1ittal jttd’ iii ti ritt iii’, to at iii til]
ille part is i aflui li t nr t’\ ‘I i ilatis P5 I cttttlti
11/ III
og]- eitiani litt til l hat -lit_st’ il 5 iohai s Et i afltpliliilllt
uten ss iii li’-’ to
((3
154
O\ \I) iRI\ AT
3
\ I
I
inso
i a tin i othr n t I nding b€
k t itb st mo t( rm il roqnlrenit nts t ti
I lo in itr itoi s in n r nia nr t di ci
1m
tliv,e rules bnt, as k ng as the losing p mlv
r.snlt t ibe mrbitr mli n, (bore ta iii be n p
to st’ it ilo irbtr mtors ic ts
in i
I\ I RN \ I O\ \I I
lts
the 111
le (3 ai
at epts
ssibilit
ntt
sen
pl
(ho
tor
il
11 (be I siilg pait tions not soluntanily att ept time asvard,
(bom e are, as kness n, two possibilities ot obtaining judit bil
ontrol m an award: (i) time losing party niav t hallenge the
aliditt of in arbitral ass ard hefore the t ourts of time plate
ss bore time ass ard svas rendered; and (ii) the losing partt
niav abstain fronm carr ing out (be ass ard, so induting the
ss inning party to seek €‘nfortement of an arhitral award by
the ourts of the tountr (on ountries) where the losing
partv imas assets,
The validity of an award may be challenged hefore
the rourts of the plate sshere the award was rendered.
Het ause the challenge is regulated by national arhitration
law, and may differ from country to tountrv, it is
impossihie to make an analysis with a general validity.
Suffice here bok at the dist ipline contained in the 1985
UNCITRAL Model Lass on International Commercial
Arhitration, which is atknowbedged as embodving a
general consensus in the matter of arhitration, is adopted
more or less literally in circa 50 countries, and is used
a tonn of reference even in many tountries that have not
formally adopted it)
ial intc rprutations be to eI tili mnities of its spr ifi
n mbt n il s stenm, as stell as (hat it tikes inte c ensidt rafl in
i instrui tion md applit atk n et tlme iimstrunment in otlic’r
c ountnies, is a paraineter for its ett ti intc’rpretation.
Het anse of time identit et the c riteni m for t hallenging
(be s aliditx and rosistirmg the entort t mm’rmt et an award,
iflterpretatien er applit atiorm et Arts .34 and 36 et time
NCITRAL Model, as welI is ef Art,V et the Nt w York
Cons ention, ane relex ant to each other. Theretore, ta’n
will deal svith the grounds for mx alidit and the greunds
for uneniferceability jointly, aud the cc mnments made on
time Model Law ss iii be mpplh able miso to the New York
Cons ention, and vite x ersa,
sps t
It is, lmowever, impertant to bear in mmd that, as
mentioned above, invaliditv of an arbitral award is
regulated by the s anious national lavss. aud ttmat there
may be further greunds for insalidity in time i ountnies
that have not adepted (be UNLITRAL Medel Law.
Enforcement of an arbitrab award is regulated, in the about
150 t ountries that have ratified it, by time 1958 New York
Convention on Rot ognition and Entorcement et Foreign
Arhitral Awards. In Art.V the New York Convention
contains an exhaustive list of time grounds that may be
invoked to prevent enforcement of an award. There is
lange consensus on the opportunity to interpret these
grounds restrictis ely, in, to restnict the scope of judit iai
control.”
The grounds that mav be invokeci under Art.34 of the TIme anabysis hebou will show to ss hat extent the rubes on
heice et law may aftect time vaiidity tmn enfort eahility et
UNCITRAL Model Law to make an award invalid are
the same grounds that may be invoked under Art.36 of an arhitrab award.
the Modei Law is defent es against the enforcement of
an award. These are, in turn, the same grounds that are
listed in the 1958 New York Convention en Recognition No review of the application of Iaw
and Enforceinent of Forc’ign Arbitral Awards as the only
possible defences against enforcement of an award. In the The hst of greunds for invabiditv er unenforceahility
is, as mentioned, exhaustis e and nmust be interpreted
intercst of harinonisation, that in a Hold like international
arbitration is extremely important and fully complies restrictixeiy. Nothirmg in the wording of this list suggests
ssith the purposes of hoth the I. NCITRAL Model Law timat time t.ourts have time authenit to rev iexv (be mmmci its ef
md the New York Convontien, hoth instruments shall be the arbitrab decisien, either in respet t et (ho evaluation et
interpreted autonomouslv An autonemous interpretatmon time fatt, er in respet t ef time apphcation et time last’. Judicial
umns at i onstruing and ai plving a rule in a uniform tontrol under (ho UNCITRAL Medel b.mw and under time
ss mx, tomimmon to mli i ountnies tbat bas adoptod on Nest’ York Convention, in ether svortls, mmma not be used
ratilii cl (ho instru nm-nt It asstinies (hat a om t at oids is a s elmit le ter (be ourt to at:t npc mm in ener in litt’
incnnretl by time arhitral tnibummal, mmc irmatter hest es ident
lmt rnc,r i m. TIme irnp
siLiiU tu i imtnul f1mt uri,i(r,,l uts nd
0
iim
tIme
nit’rits,
mi
I uching alse dit’ mpp1ic mtien et time lasv.
i
f i,(
i
Iii im
ta A
I n, i i
is ‘c nerall 0
i knoss iecI.3’ ti bUh in tlmeor mImti in judit i,mi
I I
i
i
I ut II t
I is il I
pr mi (h i
I is i
ti
i
i
I
ta
“
,
i
3
(
i
i
i
ii
i’,t
I
i
i
I
il
t
I.
i
I
‘li
•
ti
,,
I
tI
i
ta i’, ta
i II
( I
,
,.
‘.
/(
i-
i
II
‘i
,
(I.
,h I
I’ii,
I
i
5
Y iI.. I
i
‘
ti,
fri t
li
aooj
liii
‘i
i
i
1
\(
i
ti t
I tI
i
I
\‘
,
‘
t
\
i
I
i
I
t
i
I
I
‘
i
i
i
I
i
i
‘
i
II
‘i
I is I
li
i
i
I
li i
Iii
i
i
‘
i
‘
.
uk
i
3
li
I (i il II
‘I uuli
iilit
Mi,
i i
‘.
ti
i
i
Iii I
k i
lii
i’
I
et.
‘
i
i
i
(
i
nu
kl
itmiin
ii
‘
Y
il
i
ti
i
i
ti’
i
i
I
til
I
3
i
i
i
is
I
I
i nu i.
t
li li’ I I i
ui iii ui (Dm1111 i I talt
Xti\ III ,() III i i I Iii
i
i i
13
I
‘
‘i
i
i I li
t i
tt iii
t
i
I
i
nu
liii
( i,
il i.
XXt I
I
k
ii e
,i
I
i
I
13 ii
i’
t
I
snu’
5
bl uti
o
.s
ur
ii
n tI
r I i
i.
1
nu
be
i
In
I
its
“,
k (‘
i
1
s
I
‘
i
iui iii
i
\‘
i
I i,
i
U ti
li
i
‘
s’
il
ut
i
I ( t
itli
i
ut
ti
‘(‘.3”
i
‘I I
ett
d
(i Ili.
il
‘
‘
i ta
‘,
i i
i
k(’muuui,
i
litt
iii
t
ti
kRBVrRA1 O\ ?\D PRIVA iZ
Legal capacity
Snppose a eontraet i tween a Norweitian and a Russian
partv contains a ehoiue of Iaw elause that designates
Swed ish law to govern the relationship. The Rnssian
party. by its statoles ar the law that governs it, has a
requirensent that certain tvpes ol contraut become binding
on the company oniv il thev have heen signed by two
authorised persons—one signature is not sufficient to
create obligations. Swedish law, (:hosen by the parties
to govern tlie contract. does not contain the same
requirement. li’ the contract is signed only by ane
person, vhich criterion applies to deterinine whether
tiie company is bound—the criterion set by the chosen
Swedish law (one signature, the contract is hinding) or
that set by the Russian lass’ (two signatures, the contract
is not binding)?
There is no uniform conflict rule to identifv which law
governs the legal capacitv of the partv to å contract. In
states of common law, the legal capacity is sometimes
considered a question of contract, ånd is therefore
governed by the law that governs the 7
contract. More
generalIv, however, the capacity to enter into å contrac;t
is regulated by the la’ governing the 8
company.
According to private international law, thus, the choice
of law made by the parties does not cover the question of
legal capacity. What would be the conseqnences for the
award, if the arhitral tribunal n evertheless disregarded
there is a tradition for parinitting s certain control at
error in law in the phase of cha]lenge of the vrilidity of
an 5 ward, ilthaugh it has bom consi ilerably rostrictia i
in modern Iei,’islation (sen, for example, s.69 af thii
Eng]ish Arbitration Act). This. bawever, dms not sffect
the anforciiibil i ty of s fereign asia rd Itnit is governed
by tha New York Cunvantion. See G. Barn, International
Com,nernial ArHtrofion: Coinjnen torv ond Meteriols, 2nd
ei]C. p181. with referonues to lise [S ]octrinu’
af manifest
‘1 isrs’gard at th Lise seL i h nia’ be usa] Ss is ietence
aa inst e nfarcensen 1 of is I award, hut not ut a foreign
-s
sivard.
7. 8. Se,les. P. Havs. P, Be hers aud 8. Symnonihis.
Cnflict uf hans, 4th -‘do, aud L, C-illi;is et el. Dicev.
Morris, CHina: Tb’ CunfiL I et Lsws (200u], i4th ‘in,
8.
I’’r (O’rinOnv, 1. K:’pl::;ll::, !nt, isiti jus ii ‘i’
s tro:ht (201 tO), p.iBl md for Ssvitz.irla ud tho Private
ljiierniti,,iii Lav \t Art, 115(1 Tho 1160 R’me (1,nm
-In
-‘,
.iadi!
1
ti’n ,u tL- Li’ \p
‘et
ntr,i:timd (JIii2itins. ihit
l?uro pian
i)’ jIii sI liv IL: 5Ii, In,
n’presenta thm private i uternationa I law in ti.
(1;niiiItv in’] is ‘JIi ti
li: I’-. ti” i Ila
.ppieiIL th’ ,hi -I av
vreiat.iug ti wta.itlmer 0 ot5n ille i..iind Ei c.impa
i.v. wIich
1-111511060 tInn PleIE th,n is n, l’rl.Is.’i’,n
il th
fl I min ppli
Gi’ I’ IL” i-,pil
1 Ho- fl,uti-’s,
and e:ich sIste Las ila owa nn.flict uis to li•it’rn:im1ii
‘
i:’: :‘I.’-, d
‘i,
I
mv
iii
i
i
i
i,,
i
i
Lii
i
i
j’:,
ii,1,l1
i
i
‘
n
1
il
the Iaw of the legal
parti es?
il
i
ti
I
—,
‘‘
aud follovvad tbe vi11 of the
Arbitrability
An award may be set aside ar refused enforcement if
the suhject matter of the dispute mav not be suhject to
arhitration according to the law of the court of the place
where the award was rendered or, as the case may be,
where the award is sought enforced (see Art.34(2)(h)(i) of
the UNCITRAL Model Lasv and Art.V(2)(a) of the New
York Convention),
National arhitration laws usualiv determine the arhitra
hility of disputes by making reference to concepts such
as the possibility by the parties to freely dispose of
the claims that the dispnte is based on. ar by defin
ing the claims as commercial, contractual ar having the
character at private law. This wouid exclude fram the
scope of cammercial arbitration matters such as taxa
tion. import aud export regulations, cnrrency ar securitv
exchange, concession of rights by administrative author
ities, hankruptcy, the protection of inteliectual property.
etc. These matters are mostiv regulated by mandatorv
rules fram svhich the parties (;annot derogate aud must be
decided upon by courts at justice—unless they are sub
ject to special arbitration, far example hased an treaties ar
special legislation. Disputes concerning the ather aspects
af cammercial transactians, which fall within the scope
at tise freedam ta contract, are nsuallv arbitrahie.
The rationale far restricting arhitrahility is ta reserve
Ille denisian at disputes rmiga.rding p.articularlv insportant
interests aud policies ta courts at law, whh;h are
deemed to be more accurate than nrhitral tribnnals in
lise consideratian aud applicatian of tha relevant risies,
Arhitration lars’s an.! court practice have became more
sild mare liheral in their dnfiuition of vvhat is ,‘srbitrnlde:
lirondiv simmisking. time aiov’
if applii:aIilitv at the ville
on arhitrahiiitv niav be seen to lsrgalv overlap the rule
on piihlii; paliev. bot svill Le v’xaissiised iisiisiediatelv
ii’Iow,”
ILa
i,’
50
i
SS il
i
15
i ti
il i i
0
i
I
i
i
si,,!” ‘viii’ Il. .,nt0i,t oss ‘ni’n-I :rj,
(iioiss i!
‘1’
GiitV WiiS aW:ire ‘if liii iimoii
ic 11v at thit pirtYl il is oen
1
iViiti’’i iii
i!
ei’iide,I li i’ii[-ini
Kopi’llr. p.1
1
5
—
capacilv
155
Articie 34(2)(a)(i) of tbe UNCITRAI, Model 1,aw
and
Art.V(1J(a) uf the New York Conventio n provile
. ss a
ground for setting aside or refusiug enforcesnent of
an
arbitral award, that a party to lise arhitration agreor
nent
svas under same incapacitv under the law applicahie
to il.
Tbe law apphcahle to å party, as just seen. is not
the Iaw
that Ilie parties chose to govern the eantract. Il th arbitris
i
award tollows the choice at Iaw made by the parties
aud
considers the contract as hinding in spite of the Russia
n
Iaw requirement. then the award tnay be sel aside
or
refused enforcement because the arbitral agreement bas
not come into existence 9
properiv.
I, ri.SEIit deOsiCu
‘i
i
si t
i
i.
i
‘iLR\Ti(i\L LA ilikJ lei A,LR
i
—
the
So
i
la
i
Li t(e
v
L
i
I
.Si.5’.h jilimi
‘1111 in
0
i
i,,
i
cu:uiitrsct (.iiflflil,” ed ui LiiEiVui’fl ing
‘I1h cv. s!’’,I lÅI’jii’
5’
u.. jul et. ApIeai.l
iaw
clii i.ism’
i
v h
il
i
,Hii
Gi 005 iii
,\.,.sk JIi,iis, :lnA.
Do’,oiuber 17. 218)7, Sv-i lj,,vn,iit,
10. For a no ire, OXtmmflSiViEi s’ubstantiatii.m ei thimi
iin.e
,f t!i,iiebt se (. C’,rl.n, \1’’s, N iil’n,il ilmi’s
,\rbitnilmil is oil li,: Vu,. lit if ‘iii iii ruiiuuu,l ,\rLii ,il
-
136
1511
i:t
iting 1’i- l’ in ii
iriglik r’lti ant gr11Ii1 ar
i oftising its ntori oiiii’nt is that tho a ard iaiates
the iiLilit puliov ut liii’ tortOhl (Artd4(2J(h)(ii) o’ thu
NC11RAL Modei Law md \it\li2)(i) at th Ne oik
tar ozdre
Lam ontion). ‘1 ha cxi “ptlon ot puhlft pcilft
publi ) is. in the cantext af internation il arhitration.
unniniouslv intorpreti-’d x ur\ narrovlv. Its rationale is
not to permit a judge to refuse entori ement or anniml
an international aord on the basis af anv differenri’
hetivi’en tho ri-’sult o t tho uvard and the resu It to ivfliuh
the judge would have roma appl ing his or her own
law. This ou1d run rounter the spirit of the New York
Convention, of the IJNCITRAL Model law, all pratic:e
that is generaliv reuognsed and legal itoctrine in the
international si ale, is si’en heloxv,
\
Res trictive application
Manv rourt decisions in the various states annulling an
award or reftising to enforce it hecause the award is in
contrast with the courts puhlic poiicv. are reported in
the ICCA Yew’hook, C’omrnerciul Arhitrrition. A survev of
these decisions, froni time first volume in the mid—1970s
to our davs, shovs ihat such decisions are not nuinerous.
In some cases there is relative unifornnty of consensus
from state to state: awards that violate rules on bribery
or smuggling, for example, are usually onsidered in the
international legal doctrine as heing against puhiic polk:v.
known, there is no absolute uriterion to cietermine
puhlic poiicv: vhat is fundamental mav varv from state
to stats, and, even vithin the same stats. the conceptions
develop, and what was deerned public policy a decade
1
earlier, may not be it any more)
As
f Di sp tites R gard iq Ri ioi inn
lvi ni: Th’’ Exii niplo
i iii ut
1(mfl I 1 Sto, kic tin .1 rljirztian
R ir I u ro
Tkpcrt 7 et seq.
11 Thr’ x impir’ 1 swap .igri’anwnts and r thor hnanr Pil
1 ti 0: I his kind at
li i i ate i nstr ,iini’iits is q ii to disi ii
II) peii nto a
‘ili li Is iii
of
iii”
0,
I
o1ilra1
I
i,
I’dO,,
tlii:1i01:
irtil
i
s
ni
i
1 ‘O’itS
‘!i
gnisi flnani iii
i
i
tja
0,101’
oi
I,
rm
fl
‘.
i(
tis ds
,,io,iilii”il
I
fl
i
‘,V’
‘l
il)
01)0,11 ii0
1
I
i
r
‘I
‘i:
‘
‘i
- -
I
I!
:1
-
I I 1
.
-
I
III
I 111
I 11
i
liii
II
i
I 1,1 I
1 ,nois ‘i
i
i
I
-
li
i
t
i,
II
i
1
I
Oil
0
I
-1:
I
i
III)
I”
I’
I,1,
il
i iii
Iii’
il
i
i
I’
i
i
-
li
ilO
in
ai
The sar tions below will disr:uss case miv nelating to the
rietermination of public policv in respect of some of
the rules svare private international law designates as
applicabie a iaw different turm the iaw ihosen by the
parties. If the arbitral tribnnal decides to faiiow the ivill
of the parties and disregards time laxv that is applicabie
according to the private international law, is the award
valid and enforceable, or does it run the risk to be set aside
nr refused enforcement for contrast with public policy?
Company Iaw
Suppose that a Norwegian and a Russian company
enter into various agreements regulating a co-operation
ommerc.iai law md iotennational
inspire international
arhitr,ti,in. Th’ aiin uf thi’ th’i’rv unuii’ilviflg the tmuiv
i otemniitiooal public polk v. therefore, is to ‘lisregard the
tundam e nta I pri ni: i p li’s th,i t are prupo r in I u f 000 I og il
svstsm, ‘VI’n If thei- repr’sent th€’ ham values upon
which that socIt’tv is relying. Instead, that iegal system
shoulcl bok at ss hat basic pnini iples are rei ognised rn a
more international les el, ,m,i prr’fer th,ise pnioi.iples to its
‘iii ii It si’ems too imbitiuus to me. hnwes er, to expei
that a sInte ivaives ippiiiati;n ‘‘f its’’w n funci,jrn’’ot,il
prioi i p les in the 11111115- i f an ideal uf harm on i sntiun 111
t1i salilitv at sa
nt”rniti’’!lal (nun,’r’-e.A’ l’ng
,irhitrri i ,is’, aril i’ ri gubati il lii Oati,,flil ,moitr,i ti-,n 1,11V).
o ml the i aIr ni i ab iii ty of ;i fl iwartl is ti gil la ted bi th’’
J’w York (lonVehlt il) fl, the stanil,i ru II i eleN’Oi ss il!
5
e v faii lt haugh iii
be th i’ fii o dam enti I ri oi p li’s nf Ihe 1
Ila n irroxv s”nsi’ deu ribi il ilsiisa’) si’’. ii ni ililatiog tbns
,5j5,•fl\ Si, ppnrl. ihili I’ iii vnI
1
bot i
u,b Stinil i 1:’
i (2
I \rIotiiil ,sianiIs: ab,, li ii0r’ I
12004, I T,ro;vit( 011 Dvijot ‘il i:’;: 0’iit 7
lii l
o
li,
iiihii,
- ‘innhinIllig om ss ak ii 1
li ii,n’ ‘f thi l’at ialt; o I liii \ss ,%ili 0, lo’--rll lO il il
‘
0 Si! itmoI. i ( milil’ om
12. \ 11101)11 010 ap Li! i’n i Lii 1(111 \iin Oil (,a I’) 1(1 I
7 I 0 Oil-il 111)0 iii! Iii Jsiop \‘, Ui’]’’li. 1111 i Se-iif Ii
i, (2iiu,.itl1,l,’i-i,,.i \Xi1 E-;a
l0’Oi I-o/
0
Ro;:1 1:’’ HiOi l,o
-fl 1,11’ in 2!tiini’- LO!
.0105
Oni 5.:011)51 ;:,: j:,,.
J;u,
sI,
i ‘ f ‘-B
I’ ur I ik I) 111101, i il luiit: iti ti \X\
il I i ‘- 1
I
‘I I) stri- I - ut -ittilol I tI I I
i
- I
tI I i , h I
III
I
i - -‘
I i, I nI
2 I
i
In- I I(t
I - iii to
\iil - - ‘i
- Il
(
‘
-‘
I
I ‘
Ila Iti om
-
i
I
fl
ill
—
i
ir il
-,
I
‘I ‘li il I’ III
‘il
i
i-
ii
t
-
‘
text
,
340 “3
I
‘i i
5
‘
0
in
‘.iii1
\! /I
‘1
li
-:
I
-
i I
I
i
I
I
li
i
li
I
I
115
.t iii
i-,
ca.
‘
n’H ;I-ar
-
i’
.,-
‘
I
‘i’
--
1 le imispiring a nmanditor nok’ an le’
nm i
i x or
fnin ij’i’ Not -5 el) \ ni
’alii
ammirl,’re I a pul-’lii- 1
’lo insjiirina an avurritling man.latrrs ml” an I’.’
1
prini i
i onsiiii-’red at [‘ublil: polit v. it is anls tile fimnilanent,il
om’s. those that i oimstitmmte the basis of tiru Ui i’dv, Riiles
that si arild at first sight ccm to e cf iiL lii p lii y, like
embargo, h s e in se t’ral anses not been r onsidered as
sur li. under the onsiileration that, averm if einhangol’s
int af vmew, thu
1
ane imnportant fram a foreign poliav pr
cannot be onsidered uf public pohiv. Moreover. not
nr ter hniialities of a rnle
nov discrepancv ss ith time
hasuii on suah ftindaimn’rmtai prini iple inas ho di-enied a
violation of puhlic policy)
“
01
iii)
i0,i(
liii
liii::
oj:0,t I.
I ih \tifli tir,t i,11i11 1,i11llill (‘1 ilHi
ti i li 0,) fl tib
[i) J li 117111) i JO ij 5 I lii X mi
Iti
li
5 ‘, 10 I, i III’ I at iii’ 01 (I o I I 10
in i
( t Bind s i i nR! I)
i i n
u’ i 0
I o ‘11 ,1 a l,r. PRIi I
‘lo’ ltd
0 5
5.0,’:-
A
Not
PubIic policy
i
()\\i
\ROI RU1(>\ \\i)1R’\1i\!1 \U
.\
I I
nnI
li
in
i
i
i
i!]
1
1’-
i
‘hi
f
,
,
,iisi
si n in li’’,!!’
.\io,’,,i 0/t ‘i.
iIII
,‘
0 ‘
I
1
I
I
I. o
oil n, Il
SOl’ ‘1)1 I’
‘
‘
li
LiiOiiI 10. R.
I
i
i
‘li
il, I
I
i
III
-
-I
nts 13, ‘i’ni/t 50
kR11
Pen
t10011
.\ fUN \\ i
tilO t 0
tflfl i)dnies SII0d1
.4flJ {J ntI
L it i, w hh h sloiIl have its m in
0
I
i’ios aud jR
aitrai aIiniitratinn in
Russia fo reu1ate iheir cor3erat1on.
ihev ‘ntcr nto
n arphu Iders gr nent: the sharholder
s Igreenient
iitajn,:ii Frnin’2 1
he
h,ne S\d
md an arhitr ticn lause suhma ittiro. ns disp ish iaw
utes riing
mil ut ihe
omilrn t ei arh trutkn bufure time Sto Lholm
n
Chainher d Couunerc.
u
n
i
nipanv
ii
The hiruholilers areemnent montains
arious t:ninmnit—
nments for eaeh of the pamties, u li as Ihe
oblig
to disuluse to third parlies spocitie infermati ation not
on, time obli—
ation to meet periodicaliv to ascertain
tho
progress uf
the co-operation, the obligation to mak
e a’, uIahie funds
under mertain circumstanres, etc.
The ‘hareimolders agri-’ement c ontains
also ome obliga
tions regarding the jointiv uvned com
pany. the operation
or competcnce of its corporate bodies, its
capitalisation.
ett. For exanmple, the shareholciers agre
e to eam h appoint
a certain numher of memhers to the com
pany
of diretors, they specifv tho areas of m:om ’s hoard
petence that
each member of ihe board shall have aud
thev commit to
have the remaining hoard membors vote
in the svav that
tlie competent board mnemher indicated.
The sharehoiders
agreement mav further t:ontain rules asses
sing the value
of the respective contrihutions to the c:api
tai of the c.orn
pany and assigning a peruentage of the
shares in capital
increases that corresponds to the agre
ed assessmnent. The
shareholders agreement mav. finaliv, cont
ain rules on the
transfer of shares to third parties om prc-ernpti
ve rights for
the existing sharehoiders.
VhiIe the comniitmnents bekveen the
parties has e a
contractuai nature and will thus be suhj
ect to the chosen
Svedish iav, the rules ofthe shareholders
atfeet the rolmi aud responsibilit of the agrem’ment that
members of the
hoard of directors, the capitalisation
th-i transfer of shares have ti ditferent of the company ar
nature. Although the
tIarties to ihe shareholdors .igr-’enient have c:on
tractualiv
mommitted themselses to a certain r:onduct
in
the
hoard.
to a m’rtain eval uat on ut the mpitai
contributions aud to
ti certain restriction in
the sale ut sharos. these ‘mbhgatiens
lo not oniv ha e a i ontra ttrml n,mt
ure As
fimme [jun at thm’ imommd ‘mfhre’ tors. time mpitai known. time
in (1 [ho trammsferahiiit ut its sh ar.’s (at hast ola (ompanu
nu d’r -‘rtti in
i iii umstamo es) hmve
i i irgem signitim i ni 0 th
hal.mnm ‘il inti-’r’-sts le-in-i’n the Inn ommfr an th imm mo
.mm ting parti.’s:
tlii-’\ ,mttet i mspe is i liii I’ ,aL 1
merunIiv d ami -ntit
that it is immmpiii itiumib tc nu Is third partim
s, sin h is [ho
‘iii jR’s umipliit-s. is i
r»iit»r trth. .tim’r imar”licl’irs,
,mr’. ti: ni e-’. mm’— u’, t r
‘‘i nth?,! that an
mrt ti i ni fmi’tss’imm In u ei fi’-s (th im.ir
’huiri»ms ‘ti ho
siu’d tim» h mrt-lmci lersmmer’c’mi ‘nt)modiiies thir’
I1
,mtit
sdiii I
ii:iii’aiita th,’e i’ mmiina md1idiii
n rds. ,mtI ,mutuoum h i,iit mo I s tie iv. iii eth’’r
r
ut m1
m ml ml
0
liii ‘mi I ij,mrimes’ mm ii-1s
miot\
mi’ «on fl rs mmi s ml ku
i
I
th
,a “I’,tt;ii”l
il i?’ k ,o
i tI.
miii’
‘
O\ ti.
Asscmnming timat the ,mrbitral an ord
gives e(fi’c,t to
agreement of time parties. thus violn
tmng the apjh
m ,mhle
cmnmmpanv lass: ss iii time aoamd be vahd
aud enforoeahle
time c.uuntrv to ss himh 11w appib
able company an
in
bob mi gs?
The naturo of the puhiic poliov cleth
nce prev
gemmerai assertions as to [be quality as publ erits to make
ic:
whoie area of the Jan’: while some mule policy for a
s of company
lasv may proteci interests that are
deemned to be so
fcmndamneutal that their disregard
may contradict pubhc
pohuv, it svill ch’pend on the circ:ums
tances of the case
to ivhat extemmt time result of a specific
violation actuaily
is in contrast svith such fundamental
general basis. however, il seemmis legit princ:iples. On a
imate to affirm that
the policy mipon which varinus mule
s of
hased mmiav be deemed so strong, that company law are
a serious breach of
those rules mav represent a violation
of puhlic policv.
Timus, an asvard disregarding the appl
icahie company lass’
to give effect to the parties’ agreemen
t
nf heing ineffective, if it is challenged mav run the risk
om sommght enfortecl
14. Sumh ris English l,iw, sce 0. CoH
ins et el, Dicev. M’mrris.
C Ilins: Thi (%inflic:t uf Laws (200B
), l4th eda, partis 30002 (t em.; t S l,mw. s(e th Restat’niemm
t St’ ‘mil. (‘oim likt
nf L ta’s (1071), partis 206
et seq. ,mjiml Scolt’s, [livs t rmL,
imircms 2.1.2 et seiJ.; th’ ,Ssvis Pris
1
sto lni.rnatim’n,ml Law A i
Aril 54: titt’ li mlion Private Immti’rjm mtiona
I i an’ At i Art. 25.
1 5. Som’ I. Kr plmullm’r. lmm[’’rn-iti’m
nrm les Priv,mtr, ht (2001)),
pp.5a ei’ seq. Whr’ri’ 1km’ rami
stil is mi”nmml to ho
is
ti ut n’e- ‘ss,m mils i’ vi cl ‘ut: cv
liii’ ih’ Om ti ‘-se 5 (3 mv nihim ,o
Jnrismlim 1jan imiti Tht Ro, ‘‘muiiomm if
Julti mn’’nfs, is toll
‘is li” ‘mrm!lt1 Lug.mno C’ncenhi
on, l’fi [ho nu ri i (mr
I timining ss km i’’ liii’ s’t sItt ib» I
ss
Brus’m.-i’- Ri d,mti,.r, 44 20(11 il i’- tIupt ,f th. iorwn. Iii,’
t’il i om
1 r ummms”
stiritm, mm km mli pcmro’’s” mi i’t”r’ninim
:7 vh, i’, i i,’, i til IS
i- ‘I’. ‘ad i’ ho. , l’,m’t: ji, mmm,l
1’i”t’ I;’”
si i’ i ,‘.mr’ rvl,’ r ti’ nijis ms
i
mi [ its si m’mjf Is i
il’nOt1 lrn,nstr,” 0’ m li Om
i i.,
li ,sin s
lii \‘ ss i,
0 is tO, 0, stk lii
I I?-,
lI
iff fr,’smo.;,m
ftsth lIt 4
mss’-,’.
m
t.tR
i
11,
t
di, 1cm’
i,,.
-l .
0: Om 0 is
e
li
m’
km is ‘m 1.1
li I ‘1
mci
,
‘
‘,
“
lt
ts” nm’
i
‘i
li
5’
is
,
s
‘i
ur mils
i st ti\ le I
d i mmli
n
.s fimi
at titie-litim ni miii! iii’ 01mb 11juli )t
‘oil
midt’s. 1h’’,m’II a
m’.mkin. ilm’r” mm” live ,liift’i»imt
1
mlmprlt,ml lit’s: th. i urmf!iit mmmii’ 11mai mli’sigim,itm s ihe
Inn ut h
‘
li I”’
il
st
,, I
1
i
I
:‘.j
mm
TA. km
I
I’.
‘i
I
fl
:
tI
‘i
I
!m/
I ,
‘i
.,
‘
t
.
‘‘
i!
r’
:1
.0
:5
I
(i
iii
oil
i
‘
‘m
-
I . : i
fRI i,’
mm
ss
i .o
st
.e
Ritt
-,i,,’,
‘
st
I
‘
-
‘
‘
;.
i
,
sir
‘
I v
.‘
‘
lIt
,
-
,
samt
li ,‘ i ‘i
[‘1
Jt,,mt tit’; s.i’it-It (mmi)
Il ( 1.;
i
i
Is
‘:
I
I
,‘.
‘t
.‘
mi I
‘,i
,1
i1’ i
I
a
‘5
i
‘,ir,’t
ti ‘1 I 5
‘
0 I’
10
r;
‘
ci
157
,
‘,
i
\ .
si ate u lier» the I,’ ml entit’.
flt
r ‘ritt i w r- isiered,
in i tlm’
‘mmliii i rult litt ,i sisnai.-s
0
1,155 ut the st mie
svlmere tIme legai entits hms
tts i mmim,ti m,imimrisim miim’mm ni
mmm,mimi l mc e el hmin ss (ihe so-m
illid
il s -uk In liii
:mse desc rihed liere, ilmeretbre.
lii” i(!O ,I’!
inn om mmld be [hat
f laR ia (jmiece af rm’gi’-irati’ mml
t ur ut
Rcmssia (real s’,mt) depenmbmig
on time pi li il is ris ,ile
i
intc-’rnationai lmmw,
‘
tO
oa :o
tit
i
I
!
\ .m’li
Jtl
(,jd,
..
i’n
‘
I
ti; 2(iH t(OJ
ni
m
t
Il’
0
Ii i,.,
21(101 koR
I ‘;‘O’
mitt kunl», mitt I. ‘‘j li ialt I ‘o
I ml.,,’ f’ mm i “i
,lai “i-imot i lro ut’ In iti
i, (tlOlJ 2001! 11 R
1 Jul 1.
158
PU;
c I
i
.
:0
1
t
i
Li s h
\!<3 i. R\ ïiUN \\i) Ri \ IE iN RN\ aiNAi. \tV
p
i
hel iL
t
d
ii
I ency
Supp
ti it tho
i
\orsi oti
n ti
t i i 0 i
o cl r -ep r ticu. th it i r t
irieus nutu il
ment
iiiiaticns. 1h
lOePt iros ids that oac fl uartvs
i m nr chi ig.it ien shill r .t- l iiainst the ither
p irt s pa 1nnt ehhiation. se Ihat oiik tho not aniount
shall ho ille. 11 ene ol the parties hei omes inspl ut.
si iii its oreilitor’, ho ahie to claim trein tlii-’ othr parts
iii vuent in fi il ot tho eiit’tanding eL] igations. er ss 111 tlio
s t-ult .igrer ment ho respet ed Se that onh Ihe n-t dnlOunt
e\L eedi
thi othor partvs (.laim’, ss iii have to be paid
In
Rue.i
Suppo th t the agreem nt i ontains i 5o-( all d cio e ont
o tting rrangement. a ( ordine to xvhb h all ohligitionL,
ofth dehtorbecoine imm diatel du aud paable (even
prior to tli i
latu it ) upon the d fault by ti t partv of
one of its obligations, a ‘cariation of this arrangen ent
is the 50 call d a ccl ration, particulark uide spr ad
for loan agreerrients, accordin to sshich th loan shall
be tcrminated and the whole outstanding amount shall
hel ome immediatelv pa’. aLle if the borrower “Lhreatens
to het rune insolvent’’. The reason for these mot hanisrns
is ovidont: the oreditor wishes to ensure that ihe debtor
Las sufficient means to coniplv with its obligations: if the
fl nancial sitnation of the deblor is such that there is an
imminent risk that it ber omes insols ent. the repas ment
of the loan mav Le atfei ted Moreovor, if the borrou er
heromes insols ent, the insols encv pro eeding u iii aim
at rcde mine all the horrower’s liahilities, and there mav
not be suffi ient means to r pa’. the loan in t tot lit’.
To as oid this situation, the close-out nettin airns at
obt ining p m ut of Il outstanding obligations prior to
in fin ni h 1 difficulti s that rna anse s a consequence
of the d fa ut and pos. uble ubsequ ut (ros defaults in
olher contrac ts, aud th ba ag e ment Las a mci hanism
that proi. id
for repas ment of the outstnndung mount
prior to the initidtion el il insolvenev pu o cedung, se
fLat the leniler loes not hu’.e to li’. ide the horr’ss er’s
ussIs 55 Oil tbe tli.r ,reItors. Manv L gal svstenis
iuoi e iliSol’. Ciii.’. regulation’, that nm ut preventiug tliese
il— hanisni’,. uuu1 tliO pornut to res ers
p15 nlents tliat
Li ‘l’ fli.idL’ ss ithin i
rtaun poiiud rrie to ilie ii’ititioii
th. jui-el’. in s p1
‘dip Can th- I’n ler is d iii—
(I I l ru 1 th-se
li’. ‘,lhflLitfJ ii
( il
ti
‘
11
‘i:
I
r
I
1
si
i
IL
h
Li. li
i
in
ir
‘-
iitt
lii
i,ilits
1
1 tni
f iaduunen Il I
i i(l’iil
ut ane
ti
fl
q
I
et
‘Il thi
ass
th
n
I
1110
sios
di
ls i
i
in
rs,
regulations, would be considerahiv sveakened, aud the
ereditors would not be aLle to assess ihe assets ihat ane
availahle, This is not a reconimendabie situation, and for
this reason tbe uhoii:e of law contained in the agreement.
svhile fully effeiti’. e for the contractual aspects of tbo
legal relatiouship. hav uot have full emthi.t for the part
ihat Iias impliiatiouus on tlw svincling lip ur iusolvoucv
pro eeediug.
As a general approacli, th clissolution el a company is
governed Lv the company law that is applicable to that
company. In rase of :ornpanies having activitv in more
tlian one state. this raises the question of hosv to ensure
a just aud equal troatuuent of all creditors in respect of
assets that mav be located in varions countries. The two
opposite approai:hes ane the ternitorial aud the universal:
acconding to tbe former, a state’s law aud junisdiction
extends only to the assets that are located in the state’s
territorv. According to the latter, the competent state’s law
aud jurisdiction is to be recognised by foreign states,
To harmorose this area, the Eunopoan Union issued
Regulation 1346/2000° which determnines that for a
company with cross-border activities insolvencv is
governed by lasv of tlw place ‘.vhere tbe main proceeding
is carnied out. In tuurn. the main proceeding is to be
conducted in the rountry svhere the company bas the
centre of its main interests (‘COMI”). The nebuttable
presumption is that tbe COMI is ivhere the company is
° The insolvency regulation, hosvever. carves
2
registered.
orut froni the application of this connecting factor a senies
of situations that involve vested nights by thincl panties,
sucb as propenty aud secunity rights, set-off aud netention
of title, and confirins tor them the applicahility of the
govenning law determined according to the nespective
conflict rule (which is not necessanily the law chosen by
the panties, as will be seen hebow). To ‘.vhat extent this
svill be sufficient to provent applicahiiitv ofthe insolvencv
rule neversing payments on traosactious made in the last
moutbs on years(s) pnion to tbe insolvcnrv. depends on
ss’lui’tjier 11w rule is iIoonied to ovorrido the proper Iasv ur
21
not.
Do the same roasons for i:onsidening niattens relatiug to
insolvenev is not suhjct to the lasv u;hosouu Lv the parties
ionstitnte a stutfiriont basis for invoking tlio clefeni:e of
puiiL: poliov to sol aside er retuse euiforieuuoiut of iii
:Isv;lrcl ihat gives If,’ t to iL- ja rties’ igreInent aud tLLIs
ielatos the appliulile illSUlVtnCV ILISVt
ilie. cjuestion svas :lnsivered afiïniuatis ei v in ibe United
States in a rase regard ing the on forreluellt of an arhitral
asvard rendered in London that ordored
i
i
i
iii
li
i
i
(
L
I
‘
1’
i
() (i I
.\.I \
(i
i
I
i
il
I
I
i.
.
i
I
,\
I
offie;t i
S’.ved ish partv
i
certain pavment, The debtor svas sohjert to
n
i
I
i
to
01
li
I
i
‘,
18. Sto ScoI:.s Hiivs et el. por:i20IJ7: CIiIn, paris :101)10 et 50/.: Ki:ihir. PI•002 et .scsJ.: d: SuOs. On
iii: nn.ith::I
v 1 I
1
ci
is
i.
di
011)110 (il 1:.ti• 0
I’
(
i
‘i,
i,
liii
i
‘
,
i.
I
i
‘
I
IL
i
i
Li
Li
‘.
OIL’
-s.
ni
imizu, i-i! ftiif::!nri ed i]:. 01s1 lv
Inn (tortli ILL:iitJ ‘i I
01
fl. ldJdi
1/1’
0k HUN k\H HV
\
IN FR\\HON\i
\\V
?oOaI I
ino R
v pro ctlin
Appa1 tumid that: os in Su c 1n, nid lht (:ourt ‘f
i 0
159
Vbi li of 111cm I I
lilits pi nil
s. 15 iii hInt..! fl 55
ilEtiler
tnaleri:il .1 tualis
llln light ut SaIns ba
n’s’-r s
1u
1j;
5 in
ss
iii
1c
tom. tin.
nkrupt
..n
I
nu
titt’ last govertl
11w 1IfLr uincn
m Id contlict v ith the
ing tbe pne.age ut til
public pob v d
le
Thu ass ga’ ..rtïing
u
u
1
itab
t
h md ud rk Jisti ihu
ill
e
ius
sag
tin
..
n ut i al asts at
ab
tit
le
tim
is
e
lnrin 13.(nkrupt.
las
no
s
t
ne
tbat the parti
i essarii
a
r-u1ating tha transfer s’s Innse to go ciii lIw i omitraot
.
lh
cl
t(ice ut Iasv nide
The (otLrt lalanc d
ontras t has ettti:ts
nii nst uuch utlwr
in tba
for [ho
. n on hand the toss ards
intarest in unsurin
eac li utlier, litt it du obligitions of tIme parties
g enfor einent to inte
i-s
rn
not nsu tssdrj1 hav
and. on the otlwr ha
at
nd. [be interut in en ional aw ards, abihity to atfect vssted rights
s’ 11w
su
ar
treatment to the (re
d itors hen an i nsolv ring an oqual by third partis’s. For tite s’tfect legitinmate expw tations
uncv procdttre tite applica
s toss ards third
has been opuned. Th
hie lasv is not lite
parlies,
ltw
avard, thus preventi e ourt resolved not to entorce the contract, bo
t the law at lite pla chosen to gos cm the
ng that ane creditor
the detrinient of the
ba preferred to located, so-ca
e where tite good
others.
s are
lied Iex rei 4
situe.
Other court decision
Su
pp
os
e
ihat [ha parties agree
s have enforced award
that the debtor shall
panding bankruptuv
s in spite at ds obligation
sec
proceedings. hecaus
stances of the
e the circum the English s by pledging in favour of the ara ure
ases ware not making
ditor
pa
rti
’.
all
fut
ure prodtiats at
enforr ement
patible with
incom.
manufactiirin
the dehto
the prin:iple
s underlying
proreedings.
tbe hankruptc that the Ru g piant in Russia, nr the future pro r’s
ssian part wiIl have
ceed
for the sale of its fut s
products. The parti
ure
es choose to suhmit
lasv [hat permits the
the contraot to a
Property and encu
mbrances
pledge of future (hu
lk) things or, as
the case maybe. of fut
Suppose that an En
glish company transfer
ure income. Arethe
in
parties justified
s
company the posse
rel
to
vin
a
Ru
g
siminpiv on
ssian
ssion of certain ra
v material. for Russian iaw on ple the chosen law and disregarding
example alumina,
dge? If [be pledge
sa
of bulk things ar
pracess it and produ that the Russian company may the pledge of future
thi
ce
for so making it avail aluminium of a certain quality, Russian law, is the chngs ar claims is not allowed under
ahle again to the En
oice of law made
glish company suflicient to render
against pavment of
in the pledge
a fee—a so-called tol
the
ling agreement. and effective tosvards piedge valid between the parties
The toihng agreeme
nt
third parties?
does not pass at anv specifies that title to the material
time and that the En
glish company A further method to (:reate a securitv
remains the owner
of
interest is to assign
located in tho Russian the material even when this is to tbe creditor a claim that [be dehtor
has towards another
partys premises. Supp
Russian partv, while
ose that [be party (for exampie, the manufacturer
in
assigns to its maw
hankrupt. Suppose tha possession of the materiai, goes mnaterial supplier, as pavinent of the
uarious parties in res t the trustee receives iiaims from c.laims [hat the rnanufacturer uilI raw materials, the
pw t ofthis material
have in [be future
against the purchase
: fram
parti, that ac( ording
to tbe tolling agreente the English consider [be assign rs of the manufacturer’s products). To
lille to the material
nt alwavs had
mn
ent valid in respent
; fram a Russian bank
time during whicli
, tbat in the (tite manufacturer’s clients ar the mn of third partis’s
the rnaterial vas in
anufacturer’s otbar
cre
dit
ors) is il suffh:ient to
at the Russian party
tbe possession
comply svith [be
bad granted a loan
by
[be
Iaw i.haseri
pa
rti
eS
. ar is the lasv govemn
uhtainad i first pri
to this party and
oritv
ing lite assigned cia
int
and front a trader. tha pledge on the niaterial dS swuritv: also relevant?
t bad enter-’d into
lite pu rchase of tha
a
(:u
ntr
An
ac
oti
t
for
tar mnetbod to i reate
ina
s€n,uritl interests is
Ruian partv vas the tarial on tbu assuinpt ion that tha 11w i reditor.
to dalis er
os fler and bad 11w
right l dispose cash ar sec as so-cal led coliateral, certimin assuts (us to
ut it. Thui a ar’. this pE
ua i1
uri
ICO
tis
s),
tiO
lIE
pro
viding tbat 11w ,:r
bor Iaints on the san
\JlifliW f tttitri
ntitl.d to rs’tain
editar svill be
w
il: (i) l,\ be oriin
lit
en
ip
un
Ila
\vi
t1
tmlt by lite delibur
Ihi tallilg
t.i’. 1 uus
uten oblig
go ment
i I 11w
bank. hw lusu il r’gist iti ur ir9n.trrrrd titlo: iii) 1 the nisfl1rii)ility .ition. Bs’ ass’ th i ri ditor nltn,nls ha ti
urud i Igal pludo
ni [ho .issetS, tius arr
iii) 1, tlw
liaser, ha 1,1w it nter.ue on 11w niaterial: risk at iuss in use ut latault. angement iiiinimnisss lite
VihI th
antr ut I
uhh’it»r’il mi’’d i
ham: md Ii I l lit l ml ii 1iidittg i. r.cignmseI Is se is lier
e
thc hus ni [ha
Russiiti part\ s rIit,
ne
ril
ity
ut
lii’
i’e
tlw
uts
r... 1. ni iii ,nat
tra lu util, r is lit
pI mi ss ber’
.rial is n lit
e lo ,)gimtiun
il ut iii
ti In the
i\ lite 1155
i 11 r.
i tie sutti
i.. ttt
titlo to lite
..,
.
\ii -lE umnl,m,um
‘:,
i
nI
‘
X\ 1i1r
in, (
mi
I
i
/
I
I
I
I’
‘
i
i
I Iii
,.fnrn XXIN ((0
n,
111111?
i
‘
1.
.
i
‘I i
.
.
I
\
I ‘10 i
I \;
I
1?
ti
‘
l
11 r\
i
.‘
i
i
is trumi
‘ho
,Oi.
.‘
..-i
-
0 (
10 Il I,’
uIrr k ( I!?? (‘i
1 t ti.
il
I?) I i
01,r Ila;. li
10(11
‘rj.
0
I,! .0
i
I,!.
‘
‘
i!
,
l
1
-
I
I
1.1,,!
Jon ,
f’.
V\
1
li!
I
‘
;
il
I
((0
‘0
,
(Il nilS 1.’.)
‘ltslllE’ 1111 in
u,Iir h(fs tI,’t
i
lit IssEt ss iii L ‘im
nilISi5 Is iii???,
f I.
;tl”i1il’.illi5. tis’ ‘mii
tIti is iiiihihils
lim
1 th il ,.nonl tur tIm cn ti l’ll1tI itii, Is
)I,t i tt’,iit ris is li”
dl ie dI’! t( (1(1 to
15
ti.., f
10
I 0
I
nI 1 ho IS ot 5 iii
hts
tIi 0 fl-oil iinii, ti, I
r
h
i ‘H ,ij’ Iii
ni
l ml i
i
I
1110
111
I el
in
il
r li
I
i
(1!
‘‘‘‘00’
1))) ‘.1
i
104 II
S\.
I.
\ i (JrI il
1,1 I’ il, (
Il tI i/
(ni li II
ris), 11(0/nr kr
‘uiiit,itnii 111? (Il
P,entr, lit. 2 i nnl
li 101)
I 1410”) r’, 140 .1
mo in 1.1 [31
s s4tE
I 11,
3 iiIk: 1! iii jr)
I,
I
ti .11 ‘)i .1
.111:,.,
o’ :4 (IL) ‘i er/.
1n
0
i.’
i
v
-«
1tO
.050
R
0031
ON \\1) eRI\.\ 1. \ fl. N \
\
rditors is th it tiie ‘-,liall e tr itid e ju ilIv. md the
riorito-s thot ir ids mi id plod es or oth r n mai r m s
ii
ni xitp(i’n riiIit-i hs mandat r ribs
t iasi
oml onr iII s hi- t to pihi dv md r-istr itin. 11 i
I i k is uiii den ng gi v ing o tom to a partv in d requ ires
m units, it must ho ilb ssed to rei n tin i ros slities iid
In lir ‘0 ih s nth iil losv ssti ii s niftiu si ht1mr
th li’htor’s assnts lrn at radv ‘ati joc.t tu mi si mbraiis ei
in tivotir sf jth-r i roditurs. If it svos possible for a
debtur to avnid thnsn roquirnnients by t.huusing n furnign
lasv for a r ontran t ioutainirig an -ncunihrance. the bank
ss ould have to vnnifv the status of the asmts in all the
world’s junisdii tions in orden to satisty itselt tliat the
assets are free form encumhnanc es. This is obviouslv not
o reconimendable situation, ann this is the reason svhv
tlin ornation uf encuinhrantes or olher seuuritv rights [hat
niav atte(t the position of third parties is not suhject to
the choice of law made by (be parties in the agreement.
The nights aud obligations of the parties hetsveen each
nth’n are regulated by th
0 law that tliev have ohusen. hut
the nntorceabilitv of seizuritv rights that rnay affect third
partins is not. Shauld the nncumhranm:e turn not not to be
effective under its proper law, the consequences hetween
the parties wilI be determined by the lasv chosen hx them:
svhile in sorne svstems the clebtor 1nov be (leemed to be in
hreach ofits contractual commitnient towards the creditor
even though the perferrnance nfthe obligation is illegal nr
ineftective under its proper lasv, under other svstemns the
invaliditv of noe obligation mav affect (be validitv of the
whole contract, [hus rendering the encumhrance a nullitv
even between the parties.
The law governing encumhrances on tangible gnods is
generally determined hy [be same cnnflict rute as [be law
‘f property seen above, i.e. the connectiog factor is the
state where the goods are lot ated.
25
I
ON Si. LU
in
oil’ m is te imitennaticuol lisss. In nIlsen ss Opnss,
thn i noe ti og ii tor duter inmnm iU ‘be appli Ist lass is
tts» plai.i-’ -1 mli’-’ i ns-’ditun.-” Tu Imirmunise tin’, orua. lise
L NCI’I RAL hos pn-’pared the 2001 Cunv-’ntion n thu
signnsent f Rei eis iisies imm International ‘I’ade, bot tise
nstr miss’ ut Isas so far nut umsterod mIn fon u,
For ilst -‘s-entimoiitv timat thse Si-i mmlv uterust nr i ilIaten’ml
oneatid with seimsritiu’, ur sther bnantial iuslrumuumsts.
spe ifin rules mnav be rei ommendable: tberefone, the Euno’
peao Union bas issued two direitis es,’ ‘md i aninus ullser
initiatives ane ht’ing pursum’d by international organisa—
tions sum:h as lise Hogun Conference, time UNGITRAL aud
tlse UNIDROIT.
is
Would an asvard that disregards these conflict rules and
applies instnad [be law husen hx’ [be parties ise valid
and enfnrceahle? Lacking any specific case lass’ on time
effectiveness nf arhitral awards that give effect to (be
parties’ agreement and vinlate applicable lasv on propnrtv.
encumnbrances nr sen.uritv interests, il seems advisable to
refer to 11w reasoniog made above in respect ni cnrnpany
law and insnlvencv prnceedings, that respnnd tn the same
logic.
Competition Iaw
Suppose that twn cnmpe[ing manufacturers enter intn a
cnntract for the licensing of certain technnlogv, ann tisat
the transfer of technolngv is accnnmpaoied by a system for
sharinmg the nsarket between the twn cnmnpetitors, which
violates Eurnpean cnrnpetition law. The cnntract i ontains
o chnice uf law ciause. accordiog to which the governing
ass’ is a foreigo law. If a dispute orises hetsveen [be (syn
parties, and une nf the tsvn parties alleges [hat [be cnntract
is null and vninl hi’cause it violates Lurnpean rompm’tition
iaw, the otber pantv will ailn’ge [hat EC nonspetition law
is not apphcalsle to tise cnntract. [hat Ihe chuice of the
fnreign gnverning lasv svas useant ‘,pecificallv to avoid
appikahility of EC law and [hat the svill of the parties
sball be respem.ted.
Time lass’ govurning assignahilitv of iaims nr rem;eivahles
md tbe effect of (be assignment tnsvards third parties
and betsseen the assigned debtnr and the ssignen is,
gi-niraliv, Ihe iosv govsrnilmg the i lains hat is heing
sssignnd. svheneas tbe utfeut ut the assignment hntsveen Time purpose of the EC rules on inmpi’titinn is to ensmmr
thi’ ossignor aud 11w assignee snu governud by the law that isusirmess parties du not disturt the market by, k r
gos erning tbe i ontrit of assignnleot, sne for exampie ex’mmple, sharing it hetsi nen themoseives, Pru tices sm h
Art. 12 if dii’ Risnmu Ccns untion. I {oss i’v”r, (li’ osv ut th as umankit shsmning 1mai, i’ negative i’ltuit on ila’ offer aud
pin.e svh’nu tlmp iti-’htor is ni ati’d is min is i
‘n lite p’ is, mmai this ni--gmtivi’ls slR’i2s t1s’ tsui “is.
sii ahl’
1
0 liii parti’s iTimid as oid iipj lii ahilili ut tis,c’ mli s
I
“it’joi t0 thc
mitrm I to
thlrd Imss, ‘bru liiim ti
‘i
-
si
1:
\ i I
•.
i
I>.
1
ii.
iii
-
i ‘i
.
I
Il i i
i
Is
3
3(
‘-‘
[li
.
Iii
I
4
si.)
i
,
1i:1ii
0 iS ut
tI i II. 5
‘4
-i
I
.
i
i
‘Il,’
‘
1
til,)
li’
•s
1
i’
‘i
i
51
‘5 5
I
u
\iI,,2 I
14 Si /14 102 ,7:
5
imot)
[lo i
55
il [i
i”
i
‘;
4
li
. js..
‘i i
i
J(
‘‘i
4’
Iistif;ii’i .11.11
11,1 i’
s 54 0
iti
«i
il
i .
s
il
1
I
‘
i’
iii
i
“5
iO
Si niii
oir
4
i,,-,
i
ei
ei
il
le
i
,
,
i
3’’’
i
is 111
et
‘.
,i
!‘‘Iiiiitt
“
‘
i
i?
5
,,
:.--
.
,i0’
, I
li
ii
‘
‘seil? .
i
5!
14 il
111
5 ‘i
“:1-;
‘‘
—«‘:
n
‘et
iii,
i)’
1’
5 ‘4-
[Si,’
C
“-
lOt’s
‘
i
i
‘
i,
[“‘il
“
‘‘4
5,
I? aO
«i il
is
i;
S’,O..
:
.°
li
‘ii
‘,‘
Ii
1
1)1’
(
,i
iii
5 fl
-‘
(
i,.
5i
i i
I’
\i ‘(i’m
I
3 om’s
i
5 ,Sii(IioIj:n
00.,
iii i Si ‘i
0
24. ‘4,-
i’.!:’-s’
i
to,,
l:”u
5.
‘
.
I)
Ii
i
,
is
‘
i
‘
i
.
til, iSi i
:?ii
iii.
1.1
\.
,
hi,’!it
t-r’;
1/ii:
-‘
4
i
I
s 4
i
i
j l•
i
_
i
‘is
1
i. i
-I’
).
5
(
...
‘.
0,
I’
01
iit
.<‘s
‘SI
ss, I, I’ns,
i 11
i’’
5
til
‘i
i-i, ii
i
5
3 i, i
i
S.i.-
i
‘“‘
li
i
N
iii
I
il
I
i/i
s,,’t-
t[
i ‘i
Iitlp
i
,
0)5
5
‘I,
li i’iiif’[
!Iui”riiI
,,l,
fl
i
.ii(if
i,
il
iii
ei!t,iii
ii
il TO
ei
5’
il
‘ei’,
li
uke I I
I,,
‘
il
ti’.
ii iii i
o /1
il
iii
;iki
5
,
.,
i
\iT
‘
\ iO\ \\D “V \ i i:
i\
\ \ IO\ T.
.\
r.
(S)i
\ R.
t1
utun Ifl 0 niild itto t th ptsi
tifuI ot th hu rs. ind
i ontlad.t tII,it
his is mi lsirihio, lisni o. uI1
tIi» agrei- roii,,i
1piitin rulos s iii ipplx
in torinin 1
ti-d at 11w
lit o-tir fl if th /r dii
r ‘monts dod nldrLnt fra tI( s
er ml tliat ti-i dinifehi-,
I
hat
hav
e
elle
,t
ull
the
ti li
shill be paid to 11w agi- nt
reies ant terrltc rv, irrespot Ii e
ti Inn sw li tnj mi nul
f tlw Lov that
-rte, the
l n (ho
rutrai I 011111115 i i bob
(mtrd( i (impetitim IJW is on
e I law ilin (Itirminitig
ut th- fleljs vith n los lasv
thr
t)oit v»rri
cl \ew V- rL Is
he r - I
I mfliiig. i ni
t ho thero is a
aos’ tins r’gnliti
n
ihie
la w.
pI
of tliu piitios’ i nterests
ii
is il full ud unds r that
Ru enth the EuriJean Cou
lasv,
rt uf Jiistire liasJotrmined ( ruter Nos ‘gi-in Iasv. hun ove
r (is well as uniler
that European Competition rule
s have to ho ionsidered Italian law). 11w agent is i-ntitledf
to
conipon—ation
part ni piiblic polit.
ii poti
t-m
niinatinn nf tlie relationship.
The Europa
Is the i hoice of law laus
upon a rt’ferenoo made liv the Dut n Court xas acting sufficient
e
to exclude application ofthe
oh Suprenie Court in a
Norwegian rule Oil
caso for the annulmont ni an arh
ompensation?
itral award, The aard
bad given ofte I to the agreement
het
iolated the provision on competi een the parties, that ‘(be rute on compensation is part of
a sel of rirles designed
tion of tlie EC Treatv, to pro
then Art.85. The Dutch Sup
tect 11w agent. which is deo
reme Court bad affirmed that
med
to be tlw sveaker
partv in the relationship. An
ni avard violating Dutzh com
agencv assumes that the
petition rules oiild not age
be cienmed against Dutch pub
nt exercises its activitv for
11w
lic policy, and requested a
on terminatjon of the rolation benefit of the principal:
decision of the European Cou
slnp, the rmsults of tlie
rt as to hether European
agent’s activitv fall to the
tonipetition poliev i hold b’ trea
principal ‘s hendt, that
ted in Ili same vav or enj
svill
o the market aud the goo
not. The ECJ ruled that the rule
dwill developed for il
on conipetition contained lite
by
agent. The agent, on 11w con
in Ihe Ihen Art85 of the EC
Tre
trar
provision which is ossential for atv is a fundamental benefit from the artivitv carried y, svill not havn any
not for the principal.
the accomplishrnent of Henne.
the tasks entrusted to the Com
the i-ornpensation upon term
munit} and, in particular, bala
for the function ing of the interna
nce the parties’ interests. Tho ination is meant to
l n]arket. Based on this, dee
protection regime is
med to regard all i ommercial
the Court o»plicitly affirmed:
agents oarridng out their
ti- tivity svithin
the territory, aud the cimcum
stance that
tire parties i hose a different
‘The provisions of articie 85 of
law to govern the contrant
the
Tre
aty rnay be should not
regarded as a mattor of puhlic
exclude its 1
application)
policy within the
nieaning of the New York Con
venlion.”
Does this affect the validitv and
enforceahu1it ofan award
that gives effent to the will
Tbe ECJ docision in Ein Swiss
of tbe parties and disregamd
means, therefore, that the tlie applica
s
ble mule on compensation upo
arhitral trihunal risks to ren
n tumnunation?
dor an award that will be
deemed invalid aud refu
sed enforcement by Europoan Applving the rationale of Enn Sw
iss China Time Ltd
courts il the avard gives effe
ut to the rhoic’ if law rnade v Benetton International NV (C126197) might bad
hv tho parties in the contraet, and
to
cor
isidering also the European
this leacis to violating
rules protecting
tlie uthorwise applicable Eur
opan competition law: 11w vonunercial agunts as puhuic pol
icv. This is bec,ause
award 111 be deemed to con
flict u-ith Europeari puhlic Ilie European Court uf Justice alfi
rmed in Iii,giirar OB
policv. This, in tom, is a gro
imd for setting aside the Ltd v Euton Li-’onoi’d Technologies
inn (C-38 1/98) that
award il the award was rendered
thes
o
rule
s have as a purpose to
in a European country
pmotm t freedoni
and xvas i hallenged lwfore
11w conri of that pla:e. rii1 a ot estahlishment and the protect
ion of undistorted
ground tor refusing unforocine
nt it this is sought hefore a colupetition in the intemnal markot
”
European iourt.
‘I’his renunds of
the formula ot Enn Srviss, that
defined as public polh.v oil
‘‘ssuntia
l
for
the un i-oniplishinent of the
That 11w Furoptan (nrt of Justit i-’
tasks entriistel to
hos defined Eniopan ute Communitv’ini
i 0 ni pi-ti tion Li iv is piih
l. in parmicular. for lite fu
li pol io iloes not ni-an thiit nth
ni mioning i il
tlie
intimna
-r
l
market,
ss stns culs ide ut (urope svi li
lo Ihe same In the (niteil
t il s, ti r ixim
iilt. i fort ni
-il -n Ir el i 015 ml
Labour /aw. insurance
iliat 201 ofte i ti i til irk-t iIli
ition gri—enh-it on tlw
basis Iliat liii ompaIiLilit u ith
Uthem mm-ris ss bore Fl in Li-i
n il inn I ivis pr ov ide for
Cli ionipntition lasv iiil rira
nuintirv mIles Iliat Irot
dr-il
In ‘-i il I II- I In- liiiert n enkir i ontrattial
irhitra I trihiinal anl liii
lamli’s
ml thmofrm’ mm l’un’l
niirt ni ild rot riS in ii li el
to us irrile tlie othm’rxs ise
al iititiin.
liu il le lov, ar li
1
ip
tros i insurim e md liii
om
lasv
bor ssant nI
Agency
ist’ lisv on li-si mli s,
5 ‘i itii
il
iii’i\ li
u’l
ul
to
‘Iii
i
50 Iliiit in it.iI i in
mo mlii nationaL’ o[ 11w ohio
I Li
md i f i-ut’ 5 i om
i inhi a
iti i 11usd hun
151111 a \iii\iiiiin
Sriiss md fiignioi lii isions:
C’hiI hr tur’ [- nr tin of
ti; Ihi- i-’\I ut
tlo’ Ilimt iii ulil,ihrl
dii i-f S fi lii is td mh I
lot mmm t 0 mi km mas I d ‘ou’l muli--s ‘i I ml,nmr in til ni instnibli i’ li’s
i mlii- \‘i’- ihi vrri’
t le
st-rmial lor tlu- luiii ti(nihi
r\ 1 ho arti’s im stil ti tii
I ml;‘
-
-
- -
i
-
i—
s
/
/
sb.i
bil
i
Y’
i
‘i
‘-l
;
I
/‘s?
i Ii
/
:1
(‘i.
iii
i
i
/
P
i
i;
i
-i
-
oil
i
.,1,i
5,
i
I
i
i:.
/1
1
ni
i
Ii? Om
i- i
i
i,
i
i
‘
Il
\X\ III
1
ju
/-
J(i il)
li
ii
—
-
i
i
I
i
il
ti-
i
4. J!i;tui
i
‘1
i
-,-.
i
i i
/
—
I’
-
‘
I
li
I
2
‘
ti
‘
I
i
‘i
li i i
i’, I 15 0
i 11 i
J
i
—
i
1
i
i
-r
‘
i
-
1
i
0111 1(0 I ‘oil il
ail
lit-ru ut
tl
ti
ti
I
i
i
r ut—
i
i
jul
1,i
iS
jriti i,.
-,
; i il
s.22
iii
162
2Ot5
iii.
i,, I.:
\Ri31
<.\I!U\ ANE) i’RIV\ FE iNïER\A i( )\r\L LA\V
nvirkot tintluding frpdom of estohi ishiuont and
award that aivs ffeot to tho narties
,iOroinent ancl thiis violates thostr’ rtIlos nigJit ren th risk
to h jueffetlive if it is presented to a tomt within the
Enropean Coniinunitv er tbe EFTA,
ntrnaI
fliOVOfl1r’Ut), ,fl
Good
faith
and fa,r dealing
Sorne legal sxstems, particularly those inspired by
German law, base their contrat:t laws on the prineiple of
good faith and fair dealing This principle may be used to
guide the interpretation of the contract, its perforrnance,
to ereate anciliarv obligations for the parties in spite of
ibeir not heing expressly provided for in the contract er
t?vttn to correet the reculation (.:ofltaifled in the contract.
Contract olauses that expresslv perrnit an interpretation
er a perfornimce that violate the princ:iple of good faith
and fair dealing, for example exeinpting froin ]iahilitv
uten in case of gross neghgence or wilful rnisconduct
er permitting terniination of the contrac;t for capricious
reasons, might be deemed to violate the prim:iple of good
hith and fair dealing. If the contract is suhject to, for
exarnple, English law, which has no general principle of
good faith for comrnercial contracts, there are no ohstacles
to a literal impleinentation of the contract’s provisions,
as long as thev are sufficientiv clear.
36
\Vould the literal implementation of these clauses be
affected by an overriding principle of good faith and fair
dealing in the law that would have heen applicable if
the parties bad not chosen English law to govern the
:ontract? The principle of good faith and fair dealing
is considered to be central in the contract laws of
thus rt’main applit ahie in spite efa ‘I itferent
hoPe of iav ntade by the pnrti7s.
i:iitiracterand
The printiple ef goed faith aud tair dealinp is nise the
basis for many provisions of Diret t:tive 93/i 7.’ In Icistozt1
v Cpntu \IotiI \filitnittn, SL (C—ltiH:tt3j.
’’ Ihe
t
Etiropean Ccturt of justiite rttled en thu qiiestielt tvhether
Art.6 ef the Dirtative represents public policv iiii thus
van be a basis for setting aside an arhitral award. Articie 6
of the Directive provides that contract terms that are
defined as unfair under the Directive shall not be binding
on the consunler.
The ECJ found that:
“lAls the airn of the Diretitive is to strengthen
consurner protection. it constitutes. according to
Articie 3(1 )(t) EG. a measure tvhich is essential to
the accomplisbrnent of the tasks entrusted to the
Comrnunitv and. in particular. to reising the standard
of living and the quality of life in its territory. ‘41
The ECJ concluded thus that the rule on unfair contract
terms is to be deerned ofpublic policy.
The CIoz’o decision was rendered in a case involving
a consurner, and its rationale is hased on consumer
protection. It is. therefore, quite douhtful. ‘.vhether
corresponding rules mav be deetned to be puhlic policv
when the award regards a comrnercial dispute.
42
There is a certain case law in support of the restrictive
approach recommended here,
45
:ivil law svsterns, and it has been transferred from
there into various restaternents of principles of contract
law that have the ambition of being applicahie to
international contracts, such as the UNIDROIT Principles
of International Comrnercia] Contracts aud the Principles
of European (Zontract Law. Jt has even heen proposed
il.
ii
til,
ti
I
[i
to extend to coininercial contract the overriding rules
base d on good faith that have so tar bet-in applicahie to
:onsumer protection. 0 There are sorne indications that
rttIts ‘spressing th is priliti ple in ight have an overriding
lit
i
Per
iO,
1,Oiiitiotjofl 2
tii
(Zordero EI
0
i ui’
fl.
‘i
liii’
a,
‘
et ‘n
hi’ n:
i
‘.1,,]’.
‘
‘‘
i
..tirtt (rettt
I
li
tiitti’
:
t
1
t
7
I)
i,
..
‘.
tt’It
iii
ti
i
i
is
i t
i’ i
I
ti i
r
iii
,
ti
i
li
fl i
.
il
i-i,,
i
ti
‘
lot
et
h{,,..,,:,;
i • ‘i
ti
:‘g
i
:.
it
li ‘i ‘‘‘i:’
I’;]’’
‘‘ti
i
i
,
‘
lit
‘ ‘i
il
1..:
‘I
71.he7-i
il
0
ti
I—ii]
.1’I]
),
tent’ htat
li
i 15
i
li
leceipereteti !O iititiit. iti.flt: 000 5 hi. hii ctintriict iArt6:201)
ciii
ting dette Artii:Ies
mv writitis
Certtacis
Iietween (Loisitristr Prettti1i,tt ned Trittitt
‘titt”,
in
li.
fl’ ItUul
Jbt::te’ ‘4 !‘tJ’t’ii,
11:1 lAtcii
jo;(:t.,,i
ii
:
ti
/1.5
.:.‘
‘1.’.
.
.,
.
i!’
.
.
.
ti).
I
‘‘
ltt
—
itfi
,
i
‘‘
‘.
:.t.o tr
tiflj..%iflfl
:0
:
EI;
it
be exercLoJ in geed Etith tAt07:102), P
i
0
.
‘‘ni:
i
m’
I
:‘
‘I
tfl
i’
(ti 1
III
i
I
‘:,
‘.I nAtt. 7 I
ti
i ti
«
heht.
‘i t.
hH I
‘s 2 “.‘;
In
.iri i I
t ii
v I’ flt4
i
‘iii ti_
h i
ti’ 4 tO i
i, I ta
‘.
‘i
—.
L.
Cerrijiiim Frtimeef i?efdrenr e oncl Eyittinit LO Oentrect
Lot v (2007) pp
135 ei seq, 72 t tteq
t7 0
i’ ti
Oi
x i
if
I (
I ii
Ettt.enetin
‘
i .‘.,‘in
i
sumerPretotï.tnand Trt.tdi.t Loei.ts:Sorne Ob.:irvath ris on
.
I)
R
I
titiment , •.t th helhet
Contracis titt in Con
th im[iorta nett ef Sinte Centract Law in R, Sih.nize (ed
ii
.
i
ni
li
‘,
Nt’.t ‘t,’,iii \ titt I
72 il
ti
‘I .1 i ‘,i fl
l’,i’’ti’ii
l’ ‘‘iii’
0
I On ‘0
!] I
.1
i]. i ‘1’, ti
:
i
I’
‘ti
‘I
1 j
referi.trici.o
li’’ pi’
i
.1
1,-g
.
i,
:1’:
\k9I R\ I O\ \\fl LI\
\ IL
The tribunat disregards the
pa
choice in favour of the appli rtie&
ca
the award valid and enforce ble Iaw: is
able?
0\\L A\
1Hk h
r.
103
The tribuna wishes to apply
applicabte Iaw: how shaH it the
choose it?
\Ve ha r’ sto’n that m ihoic
parties in a i’ontrait that unt e at Iaw nmade by time
riins mo arbitratian c’laimse
i
I dtllOI tha fl hoth at
th’in. tha is not tataik indep’ndent fram thr’
rt that v rild ha e ro
antage fram it) P\pO(
inte
rnational i iw. The ne\t quostion applh’ahle private
that their u iii is resperted
is. therefare, how to
by time arbitral trih
unal: in deternmine vhii li private international
the situatians dpsriheml in the
iaw is appik ahie
r-tions ahove, ho e er. in international i imn
f lhn ing the choi e at lat mad
mercial arhitration.
mean that the award is not effe e by the partios mnav The aver on
ativ
mnade ahove shawed that it
tribunal might be in lined to take e. Cansequentlv the wav indifferen
is
t
whic’h private international in na
into
con
side
rati
on
the
appin ahie iav, thus avoiding
law is
app
hed. Conllict rules varv fram
rendering an invalid nr
system to s stem, and
nnenforoermhle avard.
consequentlv the Iaw design
imted as applicahle \ aries
lepending on \vhioh
Does the tribunil have the pov
er to disregard the vi1l Timeretore. it is nec country’s conflict rules are applied.
essary bot not suffim,ient to
of the parties? Nornaillv, an irhi
refe
tral trihunal rmrns the private international
risk to exceed its pa.ver ar
lav as a tooi to avoid stlrpris r to
to incur in a proredural respeat ot the enf
orieahilitv at the award. In add es in
irrr-rgularitv, f it disregards the
ition, it
par
ties
is
’
inst
also
ructians.
necessary to specifr vhich priv
Exaess of pover and proced
ate international
nral irregularitv are hoth law the arbitral trih
unal shall use in order to asse
graunds for setting aside ar refusing
ss
nward (respectivelv. Arts 4(2)(a) to enforce and arbitral party autonorny’s horders and the applicahility of the
oth
(iii) and 34(2)(a)(iu) of laws in specific area
s ol the legal relationship in disp er
the UNCITR.\L Madei Law and
Art.V(1)(c) and (iPd) of
ute.
the New York Conventian).
In respect af courts at law it
is generally recognised that
judges aiwas appl time
In nther words: is the arhitral
trihunal forced to chanse own country to design private international iaw oftheir
between two grounds for invalid
ate the applicable suhstantive
iaw.
ity
the award, i.e. conflict with puhlic or unenforceability of In respect at international commercial arhitration
there
polic ar inexistence of is not a corresponding
the arhitral agreemnents on ane han
automatic and absolute referen
ce
nr procedural irregularitv on the d aud excess at power to the private international Iaw at the place whe
re the
other hand? Or is there arbitral trihunal has its
a legitimate basis for the trihuna
venue. The arhitration law at
l
from tbe one chosen by the par to appl a Iaw ditferent piac:e at arhitratian has. as a matter of fact, ci conside the
rable
ties ithout incurring in significance for the
excess ofpover or procedural
arbitration
irregularitv?
governs important aspects srmc praceeding, in that it
h as the arhitrability of
As seen ahove, private internation
al law permits to appiv the dispute, the regularity at time arhitral pracedure, the
the proper law in spite
paxvers of the arhitrators, (be
at u hat
passibility by time caurts
hosen in thcir ontrac:t, hecaus the parties might have to interfere, the validity
at the axvard, the fundamenta
e it determines the scope
l
at applicatian ot the partins’ rho
principles at pmmhlirt palicv.
Therefore, it s°ems nnlv
autonrnl ‘s si ape at ipplicatinn h e. Vithin thn partv natural to 1nok to the
iaw at the place at arh
. arbitral trihimals do
itratian
not have the pni er ta disregard
es en when it inmas ta tind
ing the applh imirle :onflict
parties’ insirmo tions,
Be and the party armtunam s s the
rule
s.
Han
ove
r,
time
eag
erm
npm
ic’ssta ‘nhani e the international
parties’ instruatians do not hav offer at appih atiomi, the i,haracter at intr’rnatiomr,ml
e
arbit ration has led various
t and do not hinit
Ihe artiitr,ii trihunril’s power to
di’tc’rmuine the rpplk ahie legislatimres and arhitrai institm mt iomrs to loosc’n the ink
i
an
hetiveeri the pla e ufarhitrati
on and tlie apilii ahie
lirix mti’
i fl t’rn,itii imLil on, I Iri
e. tli’re is 00
Pmn dte intritir J I in hos,
rstian t ut lmin Im private intemuniform in ss’ om’
sur on ta ti to tre 1
irhitrit r’ dih’nmir’m in reimetnn
’ri,itiaritii I in
’
’
1
a
ih ohio to in irhitrai cltspnte.
ng
t ht ir g to lriiris hr’tneen ‘jmi it il is n t
Tim’ varions ,irhitr,itinrmr
tlirt nitir pirhir’ pilr’ i,mn s ,mmrcl rini’s at institimtian
ril amiritratianis pr’sl’nt 0
ord ‘i
•,t 1
en’r, it is i iustiu at rio
sr’ric’s at s lintirins, r,mnnino franm
n
girising I
the ipphi ,rtttmi ot tur’
Iii rt .r rt a’ iii\
‘0’ liipriv itt’ intr fijimtian
il lasu at lIne 1,1cr ‘il ,iriiitia
tiani.’
lii’ ipplim ittuII il uro
p iti’ rit”rnm iti n,iI Iou Iii mi
. ,i hitml tnihn
1
if
‘,
in
in,ml
,,
1
jniii ,mtm’,n
‘‘
‘,‘
‘
t.\,
r
I ‘t’i’,
:.
i.j,)
.
i,
I ‘/
.
rtr
‘‘‘
‘ili
s\, \
,
li
44.
i
.
i Li
I
I’n’
\1
-I
‘i i’
,fj’.’nn!
‘
ss,
t, I
i’.’
(In
ni
\1d li
in/iL jij,fl
li’
i?’
-
\,,.‘,
‘i;)
‘ti.’’
f
01(14) I
s’IJ.
inni’t
nins
:
,
g
nu,,
I
0,,
j mitt’,’
[‘‘
itin il)’,
‘(‘i
0
,
‘
‘
n1i’si’nrr’nl lar
i’
‘
-‘i
\
i
,i
‘,S
,
,
o.
i
,
li’n
t rnnIo
,I,’,,,,,,
if44\
ni,
0 II’
I fins
sin n
\nI hit I tl,imni,il I)isi» il ila’
ti’ ni
)
f
(I’
\\X ID
to
I
t
‘iIjI]jn
,
-
i
‘
‘
iiS
‘i
‘i
is
i
-
I
i
‘
I’
‘
I In,
I
‘
,
,
I
\.
i
in n’’.
‘o’
li,
nrn°.n L’’o Inn ‘I’’’ in ‘nr )‘‘
‘5)-I
‘I.,- nI liii in
ni’, il’. ‘ ‘nu,’ ut ,inin’ih’ I ru
tln,,t
‘nnns
i’
1
Inn
nppm,Jitn ti’ I i i ti i . ‘ I flo Sf0
n ti
,uu 0 0. in in Lo fins
‘‘og .in” fin’ l: ut ‘In’s n’i’’
I i I ‘-055 iI’
t nnnnInI ti’
1
is ,i, inn’
1 g i
0 01 1,0 n Inn i ‘ ,fln Iii’
ni li in ni inntil I
‘i’
‘
‘
‘‘
‘‘
.‘
‘
,
,‘
-
(Il
164
i (t\ \\)
\i
.
;t;v. i
\ il <‘t)\.\.
i th dirna t q pii ati an of a tihtnti
n-1-Iai ril.
;ui
i;iinin
ii
II ;h appIii al.l- inlitralin lov r irhitration rnl-s li not
i” ren is; gui li llflns as to ihit 11 private intn rnation Il
up tc
is is ipplin iI,Ie to tii nliiL itico il vnill 1
11w trihitnal to le; ide. I 1w anio;s i;itions ntIined
givn fl siiding v din trn;n the niost prndi; liLle
ir.)\
ili;;ahie pri ate
1
flui tlins lirelirahlnl regime ;vhrrn thn ip
niti-rnational iaw is deterninned in advanot, ia the
mix;d solutions where the identifi:ation ofthe appib ahie
ris ate intnrnati onal Iaw is lett to the ni iscr.tinn of the
tnihiinal nr is onls implin itiv mintioned by stating a
i intlitt rule, to thn least predic.tahle regime thnt does
not inention private international law at all. It is not
unusual that arhitral trihonals exercise their dis rntion
so as to enhanne prediotahilitv and bok to the private
international baw of the plai:e of arbitration. lbosvever. in
the svstenis that do not make nxpress refnrence to the
applicahilit of the confik t rules of the Iex mci aihitri,
this depends on the trihunals disnretion and it cannot be
exclnded that the trihunal decides to appiv other conflict
rules. This has a negative elfect on the predictahilitv of
the apphcahle lasv, which in tnrn niay be decisive for the
outcome of the dispute. As Inng as a private international
law is in the pioture, however, tbe interpreter will have
in anv case to choose the proper law by applving a
ionf]ict rule: the determination ofthe baw, in otber svords.
will be based on the application nf fl (.onnec:ting faotor.
\ihile the a priori identification of the applicable private
international law is preferable because it permits to create
(ertaintv as to which conneiting thctor that svill be used
(tor exainple. the place of registration nr the seat in case
01 company the iasv), a discretionary ;.hoice of svhich
private international law is applicable will at least ensure
that tine proper law svill be chosen on the basis of a
reference to
i onnei ting tactor. in the absen e of an
a private international Iasv, there is no indiration that
11w trihnnal svill appiv a inntiL t rule to identifv the
proper I sv: il ma identif the proper lasv on tl;e basis
in
ti il;
n.
oi;hit
if i m letelv di ifei; nI ntcnia, sto li as, bi exanii le, the
1 ‘ii to knoss
Iau dm1 11v nienit ur, st io tniii;inal ha
lirst, !‘lii R i ‘ntainl not a nu uinniu i; lalul; suuiitin In u!n
tlln juuuint il s ixv if prediu tahililv.
Conclusion
-
approa h to pris ate international lass tbat is
noinntimeS onsidered to be the nm st progressis e is an
appn;iacli f denial: the purpiuse md tlie nwthnd ot
private intnrnational lass’ art- looknd u pon as somne ut-hos
af the past that do not helong in nioulern :ummeri ml and
arhitration instruments, I his is based on the assumption
I Le
tbat international comrnercial transa tions do not need
national lasvs bot nm heller snrvd by transnational
uniform lasvs. and that international arhitration is
delocaliseni and is based simph on the svill of thn parties
without the interference by any national laws.
The first nssumption. ahout the presalence of transna
tional uniform law for commercial transactions aud the
(:onsequent irrelevance of national luisvs and of mecha
nisms to choose the apphicable national laws, svas not the
ohject of this arth len
The second assumption. ahont the ciebocalisation of
arbitration and the ;:onsequent irreles anne of miles
of national laws has been analysed here, While this
assuniption is correct whenever the party that boses the
arhitration voluntarilv (arries out the award, it mnst be
considerabiv qualified svhen sm.h volontary comphiance
nloes not tak; place.
This arth le hos tried to show that private international
mav be a oseful aud even necessary tool to avoid rendering
asvards that. alheit fuilv reflecting time svill at the parties.
niav be set aside nr retnsed enforct’nment.
i.::
i ‘i
“i
‘i
III
‘i-
i i.
i,
il il
i
i
iii
o;in ,1ii il
i ti
i
ii ti
.Hui.iits
‘i
il
Li
i
i
us i i
i
ut.
‘li
i
iii
i
i;- li
il
I
i,,
lu (
5.-ii
i, iii
i
‘fl (.ui’i
li lii’
1 suuiHt
‘1’
iii i/
li
nI
i
:‘-.
fl iu
‘i
i
ii i
n
ii
i
.
i’
i iL.
t r.
i!
i
oir
i
f.
i
ti
i
iii
I
(ii
ti
ti
:
.
I i
Iii
‘i,
u,
i
itI
iii?