International Commercial Contracts Research Articles

The Hell-or-High-Water Clause in Aircraft Leasing Contract: UNIDROIT Principles and the Indonesian Civil Code

This research analyses the hell-or-high-water clause in aircraft leasing contracts in the context of the principle of freedom of contract. Focusing on the review of the principle of freedom of contract based on UNIDROIT Principles of International Commercial Contract (UPICC) 2016 and Indonesian Civil Code, this research uses normative juridical method with analytical descriptive approach. The findings show that the hell-or-high-water clause has a high binding force, providing legal certainty, especially for the lessor. However, its application must be in line with the principle of freedom of contract regulated in UPICC 2016 and the Civil Code. The application of this clause is suggested to consider three limitations stipulated by the UPICC 2016: first, the principle of freedom of contract that allows businesses to choose partners and transaction terms; second, the exclusion of certain sectors in the public interest by the state; and third, mandatory rules that limit the content of the contract. Therefore, the hell-or-high-water clause should be applied with due regard to the implementation of the principle of freedom of contract as well as national law or the existence of compelling national regulations.

Changes of Paradigm in Private International Law of Contracts – A high-level comparison between 1989 and 2024, with tribute to the Unidroit Principles, the development of arbitration law and to Simplified Global Contracting

The article on German private law of contracts compares the state of private international law in Germany in 1989 with its state today, in 2024. It demonstrates a change of paradigm by looking at six selected parameters of relevance: (i) the respect of constitutional rights and European fundamental freedoms, (ii) the unitarian European character of private international law of contracts, subject to treaties, (iii) the dissemination of the CISG, (iv) the emergence of the the Unidroit Principles as a sound system of general principles and rules of international commercial contracts, (v) the development of international arbitration, and (vi) the emergence of internet and data platform based comparative legal research. Regarding the traditional private international law of contracts, as applied by European courts (of member states of the European Union), the author observes that more European uniformity has come at the cost of complexity. At the same time, the emergence and dissemination of the Unidroit Principles – described as “the biggest achievement of the international legal society since the year 534” – has enabled Simplified Global Contracting (i.e. the choice of the Unidroit Principles in combination with an arbitration clause) and thereby more freedom on a global level.

Cross-Cultural and Linguistic Dynamics in the Deterritorialization of Legal Concepts Through International Commercial Contracts

Cross-Cultural and Linguistic Dynamics in the Deterritorialization of Legal Concepts Through International Commercial Contracts

Conflict regulation of international commercial contracts in Ukraine: modern approaches and prospects for development

Conflict regulation of international commercial contracts in Ukraine: modern approaches and prospects for development

The ‘Manifest Injustice’ Clause in Article 4 of the Hague Convention on Private International Law: Applicability in International Commercial Contract Disputes

This paper critically examines the ‘manifest injustice’ clause in Article 4 of the Hague Convention on Choice of Court Agreements, focusing on its applicability in international commercial contract disputes. The clause serves as a safeguard to ensure fairness in choice of court agreements by allowing courts to set aside agreements that result in unjust outcomes for one of the parties. The paper explores various contexts in which this clause applies, such as situations involving unequal bargaining power, fraud, duress, coercion, procedural injustice, and unconscionable terms. It also discusses the significant legal challenges associated with its application, including the lack of a clear definition, variability in judicial interpretation, conflicts with the principle of party autonomy, and evidentiary burdens. The paper concludes that while the ‘manifest injustice’ clause is a critical tool for promoting fairness in international commerce, its effectiveness depends on the development of clearer guidelines and more consistent jurisprudence to harmonize its interpretation across jurisdictions, thereby enhancing its role in ensuring justice and equity in cross-border contractual relationships.

The Unidroit Principles on International Commercial Contracts and sustainable development

Abstract A number of motivations currently drive multinational corporations to the inclusion, monitoring, and enforcement of contract requirements for sustainability. These can be either as a result of investor demand for environment, social, and governance policies; regulatory requirements for inclusion of such contract stipulations; or the increasing litigation for conduct leading to environmental harm, but they can also be a result of reputational risk linked to the failure of adoption of such policies. This article examines the role of contract law in enforcing such requirements, which have traditionally been viewed with suspicion due to their unilateral nature. The article poses the features of the International Institute for the Unification of Private Law’s Principles on International Commercial Contracts as a beneficial regime to further the goals of sustainability through the use of contextual interpretation enabled through the good faith principle, the recognition of the importance of trade usages, and the limitations placed on party autonomy. The article posits that a major shift in the ideological orientation of contract law through the imposition of limitations on the pacta sunt servanda principle in order to protect the public interest is not warranted. Rather, tools such as contractual interpretation and the establishment of contractual standards of sustainability are better placed to ensure enforcement and compliance with the widely established practice of inclusion of sustainability standards and codes of conduct.

The choice of the PICC as the proper law of the contract in Latin American jurisdictions: Chilean contract law as a sample study

Abstract This article analyses a distinctive trend in Latin American conflict laws to enable the parties to choose the Unidroit Principles of International Commercial Contracts (PICC) as the proper law of the contract since this choice must be upheld by national courts. This provides an incentive for contracting parties linked to Latin American jurisdictions to adopt updated and fair rules that are inexistent in their domestic contract laws. This trend began with the 1994 Mexico Convention and has spread to the new conflict rules on contracts enacted in Latin America and even to the 2015 Hague Principles. Nowadays, the choice of the PICC to govern the substance of a contract might be upheld in the national courts of several Latin American countries. This solution is unique since it is not allowed in most jurisdictions, such as those of the European Union, which only accept ‘ordinary legal techniques’ for applying the PICC. There is now legal certainty that the PICC will be applied in arbitration and litigation in these Latin American jurisdictions, either via the ordinary legal techniques or via choosing the PICC as the rules of law governing a contract subject to judicial adjudication. This benefits parties that do not have in their domestic contract law some of the PICC’s solutions. Using Chilean contract law as a sample study, we will show that the PICC’s rules on the pre-contractual stage and on hardship are better suited than existing national laws to negotiate, conclude, and perform international commercial contracts.

Sustainable development clauses in international contracts through the lens of the Unidroit principles

Abstract Most transactions that leave an imprint on the environment and communities are organized by commercial contracts. However, little is known about the way in which parties reflect sustainable development in contractual clauses. How can parties to international contracts commit to respect sustainable development goals? What are the possible degrees of commitment? Which contractual mechanisms can apply to the monitoring of compliance? How does one establish a link between the failure to meet sustainable development goals and the contractual liability or termination of contract? This article identifies contractual clauses relating to sustainable development and analyses these clauses through the lens of the 2016 International Institute for the Unification of Private Law (Unidroit) Principles of International Commercial Contracts (PICC). Drawing inspiration from open access contracts, the analysis will demonstrate that Article 1.8 of the PICC, precluding inconsistent behaviour, and Articles 5.1.4 and 5.1.5, on the duty of best efforts and the obligation to achieve a specific result, as well as the provisions on liability, can assist contract drafters, judges, and arbitrators in drafting and interpreting such clauses.

Potential Influence of Article 6(1)(b) of the Hague Principles on Choice of Law in International Commercial Contracts on Indian Private International Law

Potential Influence of Article 6(1)(b) of the Hague Principles on Choice of Law in International Commercial Contracts on Indian Private International Law

The UNIDROIT Principles of International Commercial Contracts as a System of Transnational Contract Law: Two Recent Arbitral Awards

The UNIDROIT Principles of International Commercial Contracts as a System of Transnational Contract Law: Two Recent Arbitral Awards

The Unidroit Principles and the inflexibility of code as law: reconciling smart contracts with general clauses

Abstract Smart contracts are a set of digital technologies enabling the automation of certain aspects of contractual performance and/or remedies. These technologies follow a deterministic, if/then logic that is often difficult to reconcile with the inherent malleability of contract law. This article scrutinizes this tension, with specific reference to the International Institute for the Unification of Private Law’s (Unidroit) Principles of International Commercial Contracts (PICC). The article argues that some recurring PICC general clauses (such as good faith and reasonableness) play a crucial role in ensuring fairness. Therefore, their operation should not be constrained by smart contracts. To the contrary, the parties to an international commercial contract should use technology to empower arbitrators to make full use of the flexibility inherent to the PICC and issue (partially) self-enforcing awards.

The right to avoid the international sale of goods contract: Comparison of Viet Nam to CISG and PICC

Foreign trade is an indispensable activity in the globalization era. Researching the liabilities of parties in performing the sale contracts and the avoidance right of parties in the contracts is a vital issue. Therefore, this article compared Vietnamese Commercial Law 2005 with the United Nations Convention for the International Sale of Goods (CISG) and Principles of International Commercial Contracts (PICC) regarding the avoidance of sale contracts, including the three aspects, fundamental breach, failure in performance obligations of contract at the end of adding time, and anticipatory breach. The findings not only enable Vietnamese merchants to master international rules in establishing foreign trading but also show differences and similarities between Vietnamese law and international rules. By doing that, this article puts forward some implications for rebuilding the definition of “fundamental breach” in Vietnamese commercial law. Also, this paper suggested that the avoidance clause of the Vietnamese law should include the claim to terminate the agreement of the innocent party due to the non-performance party’s failure to fulfill contractual duties at the end of adding time, and the other party will be constituted an “anticipatory breach”.

When the goose stops laying golden eggs: supervening loss of trust in long-term contracts under the PICC

PurposeThe purpose of this paper is to examine the supervening loss of inter-organisational trust in long-term commercial contracts. The underlying research question is whether contract law – the legal institution regulating economic exchanges – should intervene and enable a party to a long-term commercial contract to extricate itself from a situation where a relationship of trust has broken down irretrievably.Design/methodology/approachThis paper uses doctrinal methodology and theoretical conceptualisation to answer the underlying research question. The legal instrument chosen for analysis purposes is the UNIDROIT Principles of International Commercial Contracts. This paper also draws on extant literature on inter-organisational trust (including conceptual and empirical studies) to support the arguments and propositions. Furthermore, this study proceeds to assess the substantive justifiability of the proposed remedial measure using four normative values: legal certainty and predictability, protection of the performance interest, economic efficiency and the preservation of the relation.FindingsThe central argument put forward in this paper is the reformulation of draft Article 6.3.1 proposed by the UNIDROIT Working Group on Long-Term Contracts, which confers a novel right to terminate for a compelling reason. This paper presents a multidimensional model of inter-organisational trust that would serve as the conceptual framework for the proposed reformulation of the provision and establishes a coherent juridical basis for the legal solution that would accord with the Principles of International Commercial Contracts’ general remedial scheme. As for the normative assessment, this paper demonstrates that the proposed remedial measure would significantly promote efficient outcomes and positively serve the norms of legal certainty, protection of the performance interest and the preservation of the relation.Originality/valueThis paper addresses the lacuna in current legal scholarship in relation to the adverse socio-economic effects following trust violation and deterioration in inter-organisational relationships. Additionally, the propositions and findings should contribute to the workings of the UNIDROIT in adopting new rules and principles that would serve the special requirements of cross-border trade.

Оговорки в международных коммерческих договорах с участием российских предпринимателей

Currently, Russian entrepreneurs are faced with great difficulties in concluding and executing international commercial contracts. The difficulties of Russian entrepreneurs are caused by the restrictive actions, which are imposed by unfriendly States (the USA, Great Britain, Australia, the European Union and others). In this regard, it is necessary for Russian entrepreneurs not only to take into account these restrictions, but also to take actions reducing the negative consequences of these restrictions. For this reason, the author of this work has made an attempt to analyze some clauses advisable to include in international commercial contracts with the participation of Russian persons.

On the International Unification of Rules on International Commercial Contracts

The globalization of trade is influencing the development of commercial legislation by unifying the rules of international commercial contracts internationally, and the ascent of China is imperative for the global community and an inevitable consequence of ongoing advancements in international business. In terms of practical achievements, it has effectively promoted and safeguarded the progress of the worldwide economy. In an effort to facilitate the advancement of worldwide standardization in regulations pertaining to global matters and fully utilize its potential, It is crucial to possess a comprehensive comprehension of the notions and attributes associated with it, and to analyse the problems that exist in the process of its implementation. In addition, by combining the actual situation of specific countries, we can also better understand the current situation of the unification of international commercial contract rules in practice, which is more conducive to its implementation and improvement. Accordingly, this paper will make full use of the research methods of literature study and comparative analysis to discuss the above issues by analyzing the theoretical studies and legislative overviews of different countries.

Enhancing the Draft African Principles on the Law Applicable to International Commercial Contracts

Enhancing the Draft African Principles on the Law Applicable to International Commercial Contracts

Novel aspects of the proposed African Principles on the Law Applicable to International Commercial Contracts

Die voorgestelde African Principles on the Law Applicable to International Commercial Contracts is vernaamlik gebaseer op die Rome I Regulation on the Law Applicable to Contractual Obligations en die Hague Principles on Choice of Law in International Commercial Contracts. Hierdie bydrae bespreek egter die oorspronklike en vernuwende aspekte van die African Principles (“die Afrika-Beginsels”). Sowel gedeeltelike as veelvuldige regskeuse word in die Afrika-Beginsels, benewens op sekere dele van die kontrak, ook van toepassing gemaak op verskillende aspekte van ’n kontrak (bv bepalings insake monetêre eenheid of indemniteit). Die keuse van regsreëls wat nie op staatlike soewereiniteit gebaseer is nie, word slegs toegelaat met betrekking tot sekere omskrewe instrumente op die regionale, supranasionale en internasionale vlak. Die Afrika-Beginsels maak ook uitdruklik voorsiening vir die inkorporasie van nie-staatlike regsreëls deur middel van voldoening aan die vereistes daarvoor van die reg wat op die kontrak van toepassing is. Die Afrika-Beginsels stel streng vereistes vir stilswyende regskeuse, onder meer dat die keuse baie duidelik moet blyk uit die bepalings van die kontrak of die besondere omstandighede van die geval. Daar word bepaal dat die jurisdiksionele keuse van ’n hof of gelokaliseerde arbitrasietribunaal nie genoegsaam is vir die aanname van ’n stilswyende regskeuse nie maar dat dit wel ’n rol in die verband mag speel. Die Afrika-Beginsels stel voor dat konflikterende regskeuseklousules in standaardbedinge mekaar uitsluit, in elk geval as uitdruklike regskeuse. Die Afrika-Beginsels bevat ’n aantal bepalings waaronder die substantiewe reg ’n selfstandige rol mag speel binne internasionaal-privaatregtelike verhoudings, en wel met verwysing na sekere internasionale instrumente. Die Afrika-Beginsels inkorporeer artikel 5 van die Haagse Beginsels binne ’n wye alternatiewe aanwysingsreël vir formele geldigheid, wat geïnspireer is deur ’n verskeidenheid van modelle. Die Afrika-Beginsels maak voorsiening vir ’n meer presiese omskrywing van die lex loci solutionis as wat gebruiklik is in die verband van voorrangreëls. Dit verskaf ook ’n voorstel vir die oplossing van die probleem van die toepassing van derdelandsreg benewens die lex loci solutionis. Die Afrika-Beginsels inkorporeer in die internasionale kontraktereg twee beginsels insake bestraffende skadevergoeding uit die reg insake die erkenning en afdwinging van buitelandse vonnisse. Daar word aan die hand gedoen dat die formulerings in die Afrika-Beginsels gebruik kan word in toekomstige projekte vir die kodifikasie van internasionaal-privaatregtelike reëls insake kontrakte, nie slegs in Afrika nie, maar ook daarbuite.

Međunarodni institut za unifikaciju privatnog prava i ugovorno pravo reosiguranja

Within the International Institute for the Unification of Private Law (UNIDROIT), the idea of working on an instrument of reinsurance contract law existed since the 30’s in the twentieth century. However, the final realization of this project happened only in 2019 with the publication of the Principles of Reinsurance Contract Law and in cooperation with the so-called PRICL Project Group. This harmonization endeavor is special in many ways, considering that in addition to the application of a specific bottom-up method of law creation, there was also an innovative approach in the use of a successful soft law regulation - the UNIDROIT Principles for International Commercial Contracts as lex generalis in relation to the new adopted regulation for the field of reinsurance. The author analyzes the relationship between the two mentioned acts in general, but also regarding the crisis caused by the COVID-19 virus pandemic. The paper also analyzes the contribution of the Principles of Reinsurance Contract Law to legal certainty and the characteristic role that the International Institute for the Unification of Private Law plays in the process of legal harmonization, and more specifically in the process of reinsurance contract law harmonization.

Re-assessing the African Principles on the Law Applicable to International Commercial Contracts through the prism of African traditional values

Die ontwikkeling van die African Principles on the Law Applicable to International Commercial Contracts is geïnspireer deur die noodsaak van ’n betroubare en stabiele transnasionale regsraamwerk in ooreenstemming met die verbintenis van die Afrika-Unie tot die bevordering van ekonomiese groei by wyse van die daarstelling van ’n vryehandelsone in Afrika. Die African Principles is ontwerp as pan-Afrikaanse instrument en dien as ’n modelwet vir nasionale en, in die toekoms, regionale en supranasionale wetgewing in Afrika. Dit poog om reëls oor die internasionale handelsreg op die Afrika-kontinent te harmoniseer. Die African Principles is beïnvloed deur internasionale instrumente soos die Hague Principles on Choice of Law in International Commercial Contracts en die UNIDROIT Principles of International Commercial Contracts, asook ander internasionale instrumente. Met die pan-Afrika aspirasies van die African Principles, verwag ’n mens dat dit die gedeelde waardes en etiek van Afrika-samelewings weerspieël en absorbeer. Hierdie verwagting is geanker in die toenemende hoeveelheid uitsprake van sommige howe in Afrika om tradisionele Afrika-waardes en -etiek te demarginaliseer en in die Afrika-handels- en kontraktereg op te neem. Ongelukkig gee die huidige konsep van die African Principles nie uitvoering aan die groeiende oproep om tradisionele Afrika-waardes en -etiek op eiesoortige en unieke wyse te inkorporeer nie, ten spyte van die pan-Afrika omvang en toepassing daarvan. Kenmerkend van die African Principles is die verbintenis tot Westerse beginsels van individualisme en party-outonomie as ’n middel om oorgrens-kommersiële aktiwiteite op die Afrika-vasteland te bevorder. Met hierdie artikel poog die outeur om die African Principles deur die lens van tradisionele Afrika-waardes en -filosofie te heroorweeg. Daar word besin oor die debatte en implikasies van die invoeging van tradisionele Afrika-waardes in die handels- en kontraktereg. Dit stel voor dat die bepalings in die African Principles gemodelleer word in ooreenstemming met daardie waardes.

On the Value Content of the International Contractual Monetary Obligation in the Context of Digitalization of Means of Payment

The article deals with the problems of formation and change of the value content of contractual monetary obligations in international commercial contracts. The connection of the value content of monetary obligations with the dynamics of changes in the purchasing power of currencies used to denote the amount of monetary obligation is noted. The dependence of the monetary obligation to pay the contract price on the valuation of goods (services, works, intellectual property rights, information products) that serve as a counter representation is analyzed. Attention is drawn to the principle of nominalism, which retains its significance, historically developed in the legal doctrine and legal regulation of monetary obligations. The article highlights topical issues of stabilization of the value content of contractual monetary obligations, taking into account the property interests of the parties to an international commercial contract. The role of currency reservations in the conditions of changes in the purchasing power of the debt currency and the payment currency is shown. Various aspects of the value content of payment obligations involving the use of cryptocurrencies and digital platforms, including in the implementation of international settlement transactions, are considered.