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Copy of Unidroit Principles

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on 13 November 2013

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Transcript of Copy of Unidroit Principles

UNIDROIT Principles of International Commercial Contracts 2010
What are the Advantages?
They are truly neutral and give no advantage to either party

Further Advantages
No need to have Principles adopted by a given jurisdiction – more easily and readily available for use
What are the UNIDROIT Principles?
They Represent a non-binding codification or "restatement" of the general part of international contract law
UNIDROIT
As demonstrated by the extensive body of case law & bibliography reported in the UNILEX database, the UNIDROIT Principles continue to be well received generally and have not given rise to any significant difficulties of application

Soft law instrument
Henry Deeb Gabriel, “UNIDROIT Principles as a source for global sales law” Villanova Law Review Vol.58 p.661 2013

Advantages
Prepared by experts worldwide representing all major legal systems and available in nearly all major international languages
Important Principles
Freedom of contract - basic principle of international trade – protected by Article 1.1 of the Principles

They constitute a significant step towards universal harmonisation of contract law
Parliamentary supremacy respected - Article 1.4 states that mandatory domestic and international rules prevail over the Principles

Fundamental principles of good faith and fair dealing are respected - Article 1.7 states that each party must act in accordance with good faith and fair dealing in international trade
Eckart Brödermann,
“The impact of the UNIDROIT Principles on International
Contract & Arbitration Practice –
the experience of a German Lawyer”
Unif. L. Rev. 2011 589-612

The UNIDROIT Principles are often a useful tool in contract negotiations – helpful in overcoming legal barriers

Can be used most conveniently in connection with an arbitration clause, they can also be used in combination with a jurisdiction clause providing for the jurisdiction of a national court
Simple and ready-to-use tool which makes it easy to draft contracts efficiently

Provide good academic teaching material and are well suited to in-house training as a teaching authority – to be used as a product of comparative research

Advantages of soft law instruments
over conventions and treaties:

Non-binding general principles can achieve the goal of uniform/harmonised law – less necessity to accommodate various legal traditions/domestic laws

May be adopted in part/whole – flexibility for an easier basis for adoption in court/arbitration because there is less conflict between the international and domestic law as there would be in the case of binding convention

Designed for use worldwide and can be applied regardless of legal traditions and economic and social conditions
Not necessary to harmonise the entirety of any specific jurisdiction/international convention such as the CISG – without internal pressure to conform drafters able to pick provisions selectively among many sources to meet a specific need & provides for systematic reflection on what should be the best result

Preparation of international commercial law conventions & treaties can be a long process due to the search for common principles & reconciliation of established principles from different legal systems & traditions – UNIDROIT Principles viewed as neutral contract law principles in that they reflect a balance of interests & have not been formulated by any government
Soft law are not subject to the lengthy process of ratification that can hold up enforcement for years

Flexible guidance for tribunals – soft law instruments have been widely used by courts & arbitrations as a basis for forging new legal rules as well as interpreting existing ones

Roy Goode, “Communication
on
European Contract Law”

It has been suggested that soft law instruments, such as the Principles, have been successful precisely because:

“They are not binding, have not been influenced by governments & do not pose any threat to national legal systems…they are designed to be a unifying influence & a resource, but it is left to legislatures, courts & arbitral tribunals to decide to what extent they assist in the solution of problems”

What are the Disadvantages?
Henry Deeb Gabriel, “UNIDROIT Principles as a source for global sales law” Villanova Law Review Vol.58 p.661 2013

Disadvantages of soft law instruments over conventions and treaties:

Inability to meet the need for certainty of enforcement - conventions and treaties have the advantage of instant uniformity & enforceability – use of soft law (UNIDROIT Principles) is not self-enforcing, but rather requires some domestic law for its enforcement = could lead to uncertainty because the parties may not know in advance whether the governing terms of the agreement will be enforced according to their express wishes

Soft law instruments have not been tested in the political process
convention has some attractiveness over the Principles because it would be vetted in the political process & therefore it may reflect concerns that might not have surfaced/been articulated in the more isolated drafting process of the Principles
– representative government will have a strong sense of what is in their best interests & these interest will be strongly argued, debated & lobbied during the drafting process – this process of vetting, compromise & ultimate acceptance usually reflects instruments that are acceptable to the various constituencies & therefore are likely to result in a wide acceptance

Purpose of the Principles
The Unidroit Principles of International Commercial Contracts are designed as a neutral contract instrument to facilitate international business.

The introduction of the Unidroit Principles has also given new life to the debate on whether or not non-state norms can be used as a choice of law in international contracts
Preamble
These Principles set forth general rules for international commercial contracts.
They shall be applied when the parties have agreed that their contract be governed by them.(*)
They may be applied when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like.
They may be applied when the parties have not chosen any law to govern their contract.
They may be used to interpret or supplement international uniform law instruments. They may be used to interpret or supplement domestic law.
They may serve as a model for national and international legislators.

Chapter 1: Definition, scope of application and interpretation
Chapter 2: Rights of account holder
Chapter 3: Transfer of intermediated securities
Chapter 4: Integrity of intermediated holding system
Chapter 5: Special provisions with respect to collateral transactions
Chapter 6: Transitional Provisions
Chapter 7: Final Provisions

Modernising, harmonizing and co-ordinating private and in particular commercial law as between States and groups of States

Commercial Law Principles and Policy - Nicholas Ryder, Maragret Griffiths and Lachmi Singh
Achievements
UNIDROIT has drawn up 11 Conventions, 2 Principles and 2 Model Laws

Membership
63 States

 Argentina 1972
 Australia 1973
 Austria 1948
 Belgium 1940
 Bolivia 1940
 Brazil 1940
 Bulgaria 1940
 Canada 1968
 Chile 1951
 China 1986
 Colombia 1940
 Croatia 1996
 Cuba 1940
Cyprus 1999
 Czech Republic 1993
 Denmark 1940
 Egypt 1951
 Estonia 2001
 Finland 1940
 France 1948
 Germany 1940
 Greece 1940

Holy Sea 1945
 Hungary 1940
 India 1950
 Indonesia 2009
 Iran 1951
 Iraq 1973
 Ireland 1940
 Israel 1954
 Italy 1940
 Japan 1954
 Latvia 2006
 Lithuania 2007
 Luxembourg 1951
Malta 1970
 Mexico 1940
 Netherlands 1940
 Nicaragua 1940
 Nigeria 1964
 Norway 1951
 Pakistan 1964
 Paraguay 1940
 Poland 1979
 Portugal 1949

 Romania 1940
 Russia 1990
 San Marino 1945
 Saudi Arabia 2009
 Serbia 2001
 Slovakia 1993
 Slovenia 1995
 South Africa 1971
 South Korea 1981
 Spain 1940
 Sweden 1940
 Switzerland 1940
 Tunisia 1980
 Turkey 1950
 United Kingdom 1948
 United States 1964
 Uruguay 1940
 Venezuela 1940

Background of UNIDROIT Convention
Expansion of cross-border securities transactions
Enlarging complexity of the intermediation chain
Structure of cross-border securities transactions
Multi-tier holding system with a chain of intermediaries ultimately connected to the CSD
Conventions
Convention relating to a Uniform Law on the International Sale of Goods (The Hague, 1964)
Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (The Hague, 1964)
International Convention on Travel Contracts (Brussels, 1970)
Convention on Agency in the International Sale of Goods (Geneva, 1983)
Unidroit Convention on International Financial Leasing (Ottawa, 1988)
Unidroit Convention on International Factoring (Ottawa, 1988)
UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects (Rome, 1995)
Convention on International Interests in Mobile Equipment (Cape Town, 2001) (including Protocols on Aircraft (2001) and Railway rolling stock (2007) and Space assets (2012)
Geneva Securities Convention (Geneva, 2009)
Solution (1) : Hague Convention
Hague Convention on the law applicable to certain rights in respect of Securities held with an intermediary
Final version : December 2002
Basic Purpose : update and unify conflict of laws principles
Issues of substantive law are not addressed Limited Solution?
Solution (2) : UNIDROIT Convention
(2002~)
UNIDROIT Convention on Substantive Rules regarding Intermediated Securities
Modenising and harmonizing substantive rules regarding cross-border intermediated securities holding and transaction
Framework and issues of substantive law at global market are comprehensively addressed
Contents
CHAPTER 1—GENERALPROVISIONS ARTICLE 1.1
(Freedom of contract)
(No form required)
(Binding character of contract)
(Mandatory rules)
(Exclusion or modification by the parties)
(Interpretation and supplementation of the Principles)
(Good faith and fair dealing)
(Inconsistent behaviour)
(Usages and practices)
(Notice)
(Definitions)

CHAPTER 2 — FORMATION AND AUTHORITY OF AGENTS
Including:
(Manner of formation)
(Definition of offer)
(Withdrawal of offer)
(Revocation of offer)
CHAPTER 3—VALIDITY
(Does not deal with lack of capacity.)
(Validity of mere agreement)
(Initial impossibility)
(Mandatory character of the provisions)
(Definition of mistake)

CHAPTER 4—INTERPRETATION
(Intention of the parties)
(Interpretation of statements and other conduct)
(Relevant circumstances)
(Reference to contract or statement as a whole)
(Contra proferentem rule)
CHAPTER 5 — CONTENT AND THIRD PARTY RIGHTS
(Express and implied obligations)
(Implied obligations)
(Co-operation between the parties)
(Duty to achieve a specific result. Duty of best efforts)
CHAPTER 6—PERFORMANCE
(Time of performance)
(Performance at one time or in instalments)
(Partial performance)
(Order of performance)
CHAPTER 7—NON-PERFORMANCE
(Non-performance defined)
(Interference by the other party)
(Withholding performance)
(Cure by non-performing party)
(Additional period for performance)
CHAPTER 8—SET-OFF ARTICLE 8.1
(Conditions of set-off)
(Foreign currency set-off)
(Set-off by notice)
(Content of notice)
CHAPTER 9 — ASSIGNMENT OF RIGHTS, TRANSFER OF OBLIGATIONS, ASSIGNMENT OF CONTRACTS
(Definitions)
(Exclusions)
(Assignability of non-monetary rights)
(Partial assignment)
(Future rights)
(Rights assigned without individual specification)
CHAPTER 10—LIMITATIONPERIODS
(Limitation periods)
(Modification of limitation periods by the parties)
(New limitation period by acknowledgement)

CHAPTER 11 — PLURALITY OF OBLIGORS AND OF OBLIGEES
(Presumption of joint and several obligations)
(Obligee’s rights against joint and several obligors)
(Availability of defences and rights of set-off)
(Effect of performance or set-off)
They are the product of some 14 years of work by leading experts in the field of comparative law and international trade law from around the world
The Principles set forth general rules governing international commercial contracts and unlike the CISG the principles are not confined to the international sale of goods
Full transcript