With the recent trend of globalization, more companies are engaged in international trades and resultant international commercial disputes. However, parties to these disputes generally prefer arbitration to litigation as the means of resolving their differences. In parallel to the growing prevalence of arbitration in cross-border disputes, the UNIDROIT principles are also increasingly applied as the substantive law to determine such disagreements.
This paper principally discusses application and importance of the UNIDROIT principles in international commercial arbitration by showing statistical analysis of international commercial arbitration awards from the UNILEX database.
Through a private international law analysis, both theoretical and practical perspectives on when and how the UNIDROIT principles are applied in international commercial arbitration can be observed. Such an analysis demonstrates that the UNIDROIT principles are more frequently used in international commercial arbitration than in state-court litigation. This is due in large part to the fact that state-courts tend to apply the conflict of laws rules of the lex fori (being mandatory rules of law) and decides which law to apply based on connecting principles of such conflicting norms. In this case, generally a certain domestic law-rather than transnational law - is likely to be designated as being applicable.
In the context of international commercial arbitration, however, there is a greater chance of a tribunal applying non-national rules of law, including the UNIDROIT principles, in light of the discretion afforded to tribunals by arbitral rules or national arbitration law.
In practice, it was found that there were a considerable number of international arbitration awards in which the UNIDROIT Principles were applied as the subjective applicable law where the UNIDROIT Principles were expressly chosen by the parties or where the parties agreed that their contract would be governed by general principles of law or lex mercatoria or the like.
It was also found upon reviewing international arbitration awards that the UNIDROIT Principles were applied by arbitrators as the objective applicable law in the absence of any choice-of-law clause in the contract, in accordance with the most appropriate conflict of laws rules, or as the most appropriate / most closely connected rules of law to the contract.
Furthermore, in circumstances where non-legal standards were referred to in the contract, such as amiable compositeur or arbitrator(s) deciding ex aequo et bono, or taking account of trade usages or in compliance with the contractual terms, the UNIDROIT Principles were also applied.
Additionally, in reviewing awards, it was also found that the UNIDROIT Principles often play an important gap-filling role in the context of internal or external gaps in the CISG, thereby providing an appropriate principle and criteria of interpretation in this regard.
Such an in-depth case study provides parties involved in international trade, not only with an enhanced awareness of the importance and increasing use of the UNIDROIT Principles in international commercial, but also an in-depth analysis of their interpretation and application in practice.