The Use of the UNIDROIT Principles and Other Transnational Principles of Commercial Law in Treaty Arbitration: Hazards and Opportunities

Abstract

Abstract The UNIDROIT Principles of International Commercial Contracts and more generally transnational principles of commercial law are often relied on, not only by international commercial arbitral tribunals, but also by investment tribunals. In rare cases, investment tribunals have relied on such principles as applicable law per se. More frequently, transnational principles have been relied on to supplement the tribunal’s findings based on the applicable domestic or international law as ‘general principles of law recognized by civilized nations’ in the meaning of Article 38(1)(c) of the Statute of the International Court of Justice. In commercial arbitration, reliance on transnational principles aims at strengthening the tribunal’s conclusions and enhancing their acceptance by the parties, whereas in investment arbitration reliance on transnational commercial principles shows growing convergence between the ways in which general principles are understood and applied in domestic private law and public international law. Transnational principles of commercial law serve a useful purpose in corroborating tribunals’ conclusions based on domestic or international law. However, their use requires an appropriate choice-of-law methodology to avoid risks for the enforceability of awards.