International Commercial Contracts Research Articles

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

Purpose The 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/approach This 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. Findings The 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/value This 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.

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.

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.

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.

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.

SHAREHOLDERS’ AGREEMENTS AND UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS

The article examines the issue of the foreign law as an applicable law of shareholders’ agreement at companies established under the laws of Ukraine. The emergence of shareholders’ agreement in the legal system of Ukraine, as well as the changes that have taken place during the last decades regarding the possibility of applying foreign law to contractual corporate relations, have been studied. Because of authority of English common law among Ukrainian legal practitioners, there is an attitude among them to choose it as the foreign law that will be applied to shareholders’ agreement. At the same time, there are significant differences in the basic principles of common law and continental legal family, which includes the legal system of Ukraine. On the other hand, the law of Ukraine will remain the applicable law for the rest of corporate relations in the relevant companies insofar as it is its lex societatis (i.e. everything with except of obligations of the parties to the shareholders’ agreement). Taking into account all the above, a conclusion was made to introduce a document equidistant from both legal systems and able to ensure a high quality regulation of general issues of contract law, namely the UNIDROIT Principles of International Commercial Contracts, among instruments providing regulation of relations under shareholders’ agreement. It is proposed to use one of the standard UNIDROIT clauses in order to determine the hierarchy between the provisions of foreign national law and the UNIDROIT Principles, as well as their correlation with the provisions of the shareholders’ agreement itself. It was also concluded that the UNIDROIT Principles might be applied to shareholders’ agreement even in the absence of a foreign element to establish a regulation of a contractual relations at the level of the best international standards.

Assignment of Contracts: Italian Law and the UNIDROIT Principles of International Commercial Contracts in Parallel

In contemporary business relations, the possibility for one party to a contract to transfer all of its rights and obligations under the contract to a third party by way of a voluntary act is of great utility. While the possibility to do this generally exists in jurisdictions across Europe, the rules by which it must be done can differ under the relevant national laws, not to mention the fact that a specific legal regime is not articulated in most civil codes. Against this background, this paper compares the approaches taken in Italian law and the uniform rules elaborated at an international level in the UNIDROIT Principles of International Commercial Contracts.

Bargaining inequality: ways to overcome it in international commercial law and in private international law

The basic tenet of contract law is freedom of contract, including the freedom to negotiate and the autonomy of the will of the parties. However, practice and doctrine show that many international commercial contracts are formed in conditions of actual inequality of counterparties. The present work is the first comprehensive study of the problem of cross-border bargaining inequality among professional merchants. The aim of the study is to systematize and critically evaluate the effectiveness of legal conditions formulated in the unified acts of international commercial law and private international law to overcome inequality of counterparties at the pre-contractual stage. The study is based on logical, formal-legal and comparative-legal methods. The results and conclusions may be formulated as follows: (1) The set of legal means to resolve the problem of unequal position of the contracting parties is represented by a complex of complementary spheres of unified normative regulation - substantive norms and conflict-of-law norms. (2) Universal conventional legal regulation of the pre-contractual stage has not been developed. (3) Recommendatory acts of substantive unification of commercial law enshrine developed models of regulation of the parties’ conduct in cross-border negotiations. The main legal means to balance the position of the counterparties is the institution of the pre-contractual liability based on the principle of good faith. (4) Both in European law and in Russian law, the conflict-of-law issue is resolved through a combination of non-contractual qualification of the pre-contractual relations and the complex nature of regulation involving the consecutive use of contractual and tort-based connecting factors. (4) Where there is inequality, conflict-of-laws must provide for an equitable solution to situations where the choice of law applicable to each of the contracting parties is not truly free, including permitting a deviation from the principle of autonomy of will. (5) In the absence of parties’ choice of applicable law, the list of criteria for establishing the closest connection between the pre-contractual legal relation and the competent legal order should be expanded: the court should be able to consider the law of the future contractual obligations’ place of performance and the law governing other related contracts.

Examining the Breadth and Conformity with Global Standards of Vietnamese Courts’ Exclusive Jurisdiction in International Commercial Contracts Pertaining to Immovable Property Within Vietnam

Examining the Breadth and Conformity with Global Standards of Vietnamese Courts’ Exclusive Jurisdiction in International Commercial Contracts Pertaining to Immovable Property Within Vietnam

Islamic finance dispute resolutions in the English courts: past experience and an outlook for the future

PurposeThis paper explores the experience of “Shari’a” as non-state law in the English courts through a historical analysis of past Islamic finance dispute resolutions (IFDRs). This paper aims to propose a conceivable scenario relating to the law applicable in international commercial contracts in the English courts with the emergence of the Hague Principles 2015.Design/methodology/approachThis paper addresses several issues that have been raised in English case law: doubts about the legal nature of “Shari’a” as non-state law; the limits placed on freedom of choice of “Shari’a” law by the application of a single legal system; and the distinction between application of law and incorporation by reference of “Shari’a” in IFDRs. The paper then analyses the conformity of “Shari’a” with the provisions now used to resolve Islamic finance disputes (trade and investment) in the English courts, using an empirical analysis of The Accounting and Auditing Organization for Islamic Financial Institutions standards.FindingsThe paper provides that, in theory, “Shari’a” standards could play a significant role in IFDRs after Brexit, even though a gap persists in practice because the Hague Principles 2015 have not yet been adopted by the English legal system.Research limitations/implicationsThe study focuses on the English courts and shows how the IFDRs could be resolved with the emergence of Hague Principles 2015 in the post-Brexit era.Originality/valueTo the best of the author’s knowledge, this paper appears to be the first paper to provide a conceivable scenario relating to the future of the IFDRs in the English courts.

Tacit Choice of Law in International Commercial Contracts. An Analysis of Future Instruments of Developmental Organisations

This article examines the various regional and supranational organisations of emerging countries that could benefit from a codification of private international law rules. They include the Organisation for the Harmonisation of Business Law in Africa (OHADA), the African Union (AU) and the Association of Southeast Asian Nations (ASEAN). In addition, the article analyses the envisaged instruments that may be especially relevant in the context of the abovementioned organisations. These include the Preliminary Draft Uniform Act on the Law of Obligations in the OHADA Region, the proposed African Principles on the Law Applicable to International Commercial Contracts and the Asian Principles of Private International Law. More specifically, the article focusses on the provisions regarding the determination of the law applicable, particularly those rules relating to a tacit choice of law in international commercial contracts.

ВЗАИМОДЕЙСТВИЕ МЕЖДУНАРОДНЫХ СТРОИТЕЛЬНЫХ КОНТРАКТОВ И ДОГОВОРОВ ОБ ИНВЕСТИЦИЯХ: ВОЗМОЖНОСТИ ДЛЯ ГАРМОНИЗАЦИИ КОММЕРЧЕСКИХ И ОБЩЕСТВЕННЫХ ИНТЕРЕСОВ

The article analyzes the interaction of the provisions of international construction contracts and bilateral investment treaties. The aim of the study is to identify opportunities for harmonizing commercial and public interests through model contractual clauses. The results can serve as a reference point for reforming norms and practices in the field of cross-border infrastructure. Opportunities for integrating commercial and government priorities in the areas of stabilization, arbitration, insurance, and information disclosure are being explored. Innovative provisions of standard contracts are proposed, designed to harmonize the interests of investors, the state, and society. The texts of model international construction contracts, bilateral investment treaties, multilateral conventions, scientific publications on private international investment and construction law, etc. were used as materials. The article used such methods as comparative legal analysis of provisions of contracts and agreements, system analysis of interrelationships between commercial and public-law norms, content analysis of scientific publications and expert sources, and analysis of the arbitration practice of resolving disputes from contracts and agreements. The integrated approach allowed for a comprehensive review of the interaction of international commercial contracts and investment agreements and the development of recommendations for their harmonization in the interests of all parties.

Implied jurisdiction agreements in international commercial contracts: a global comparative perspective

This article examines the principles of implied jurisdiction agreements and their validity on a global scale. While the existing scholarly literature primarily focuses on express jurisdiction agreements, this study addresses the evident lack of scholarly research works on implied jurisdiction agreements. As such, it contributes to an understanding of implied jurisdiction agreements, providing valuable insights into their practical implications for international commercial contracts. The paper’s central question is whether implied jurisdiction agreements are globally valid and should be enforced. To answer this question, the article explores primary and secondary sources from various jurisdictions around the world, including common law, civil law, and mixed legal systems, together with insights from experts in commercial conflict of laws. The paper argues for a cautious approach to the validity of implied jurisdiction agreements, highlighting their potential complexities and uncertainties. It contends that such agreements may lead to needless jurisdictional controversies and distract from the emerging global consensus on international jurisdiction grounds. Given these considerations, the paper concludes that promoting clear and explicit jurisdiction agreements, as supported by the extant international legal frameworks, such as the Hague Conventions of 2005 and 2019, the EU Brussels Ia Regulation, and the Lugano Convention, would provide a more predictable basis for resolving cross-border disputes.

(Анти)санкционные оговорки в международных коммерческих контрактах

The article provides analysis of sanctions clauses in international commercial contracts. Such clauses are intended to regulate actions of the parties in the event of sanctions and corresponding legal consequences. In comparison to classic force majeure clauses sanctions clauses have a number of advantages and may serve several interrelated purposes, including securing compliance by the parties with mandatory rules that impose restrictions on certain economic activity, adaptation of the contract to new circumstances in the event of economic sanctions, regulation of termination of the contract, as well as the distribution of risks and costs incurred by the parties in connection with this. The authors explore the structure of sanctions clauses and their provisions, which cause difficulties in practice, diverse approaches to determining the scope of sanctions clauses in the context of extraterritorial sanctions and blocking statutes, different threshold for sanctions risks that activate the clause, spectrum of options to secure adaptation of contract provisions depending on the specifics of the sanctions regimes, standards of due care and endeavours that are expected from parties in the context of sanctions, conditions for termination of contracts and possibilities for the distribution of costs incurred, including the payment of indemnity. The article also discusses validity of sanctions clauses, their relationship with overriding mandatory rules and norms preventing circumvention of the law, considers the risks of asymmetric and disparity provisions. Particular emphasis is placed on the relationship of sanctions clauses with other sections of international contracts, in particular applicable law and dispute resolution clauses.

Structure and principles of international commercial contracts

The presented article describes in detail the main conditions, content, obligations of the seller and the buyer, according to the concluded international commercial contracts. International commercial agreements mediate the international business activities of the parties and differ from similar internal transactions, as well as transactions that, although complicated by a foreign element, are concluded with the participation of the consumer. The first stage refers to the period of the emergence of medieval law as a law merchant, representing a set of international trade customs that regulated the political community of merchants who traveled from port to port and from fair to fair. The second stage was marked by the emergence of national legal systems under the influence of the understanding of law as a national phenomenon and the approval of the idea of national sovereignty. The modern third stage, was marked by a movement from national isolation to universal unification, which allowed, on the basis of multilateral negotiations, to develop and adopt uniform legal norms.

Through the normative prism: a critical appraisal of the PICC’s provisions on anticipatory non-performance

Abstract The position of the Unidroit Principles of International Commercial Contracts (PICC) as a potential unifying influence and resource within the global competitive market for law is indelibly linked to the justifiability and desirability of the black letter rules embodied in the instrument. This article critically analyses the PICC’s provisions on anticipatory non-performance using two common law-oriented normative paradigms: economic efficiency and relational norms. It argues that the PICC’s remedial scheme for anticipatory non-performance satisfies the normative prescriptions of economic analysis of law in that the self-help measures available represent majoritarian default rules and facilitate early mitigation of loss, thereby maximizing the parties’ net exchange surplus. Furthermore, the article contends that the PICC’s remedial scheme is sensitive to the relational nature of commercial contracts such that it fosters the parties’ commitment, communication, cooperation, and trust, which are vital values in developing and maintaining relational assets.