The use of non-state rules as guidelines for the interpretation of national law

Codified non-state rules are used to interpret and supplement domestic law, often as general principles of law or accepted commercial law doctrine. On the UNILEX database there are 198 cases where the UPICC arc applied as means for supplementing or interpreting domestic law and 92 cases where they are applied to confirm that the solution in domestic law is in conformity with international standards.^[1] As there are 476 cases in total on UNILEX it is clear the leading usage of the UPICC is to interpret the applicable domestic law. This is even more striking as the pre-amble to the 1994 edition of the UNIDROIT Principles did not anticipate this way of using the UPICC and makes no mention of it. The 2004 version of the pre-amble was updated to include that they may be used to interpret or supplement domestic law. The initiative for using the UPICC in this way started in courts and arbitral tribunals. The majority of the cases where the UPICC are used to interpret domestic law stem from Russia (35 cases), Spain (20), the Ukraine (16), Paraguay (16), Lithuania (14), and Australia (13).

The Court of appeal of Grenoble in Société Harper Robinson v Société Internationale de Maintenance et de Réalisations Industrielle applied French law and supplemented its considerations with reference to the UNIDROIT Principles. An American company and a French company entered into a contract regarding the transportation of machinery from the US to France. The packaging was faulty and damaged the equipment. The contract contained a liability clause, which read that the carrier would compensate any loss owning to defective performance. The incorporated standard term specified that the liability of the carrier was limited to S50 per shipment and thus conflicted with the liability clause. The court stated that in case of such contradiction a principle of international commercial law is that the term which is not the standard term should prevail and it then quoted the UPICC art 2.21 as evidence of this principle and that furthermore the clause should be constructed against who is relying on it (art. 4.6.) The court thus used the UPICC as general principles of international commercial law. Even though French law was applicable to the contract, the fact that it was an international dispute compelled the court to rely on the UPICC.

Codified non-state rules can be used for gap filling purposes. In a domestic dispute the Paraguayan judge referred to the UPICC as a ‘complementary law’ and applied among others Art. 5.1.3, which establishes a duty of cooperation between the parties.^[2] The court stated that Paraguayan law does not officially recognise a duty of cooperation but this falls within the good faith principle that is recognised in Paraguayan law

The UPICC are also used and show that domestic law and international commercial law principles propagate the same solution. In a case before the ICC the tribunal referred to the UNIDROIT Principles as ‘a useful source for establishing general rules for international commercial contracts’ and consequently used the UPICC to demonstrate that these and the applicable New York law came to the same conclusion. The court used the UPICC to show that national and international legal practices arc aligned. The Supreme Court of Paraguay used Articles 5.1.1 and 5.1.2 of the UPICC (on implied and express contractual terms) to confirm similar principles in the applicable domestic Paraguayan law. When the law offers several possible interpretations the court might use the UPICC to justify why they picked a particular solution.

Are other codified non-state rules used for this purpose? The PECL have been applied in this way; often in conjunction with the UPICC.³¹ The UPICC and the PECL were first published within a year of each other and in those earlier years they are often used together. Later cases refer more frequently solely to the UNIDROIT Principles. This is a logical consequence of how the PECL have developed into a work that is used more by scholars and legislators than by practitioners. Nevertheless, there are examples of cases where the PECL are used to interpret domestic contract law, especially in the European context.³² They are sometimes even cited outside Europe, for instance by a court in Paraguay alongside the UPICC.³³

In 2008 the High Commercial Court of Ukraine issued an Official Note stating that the Incoterms, the UCP, and the 1994 edition of the UNIDROIT Principles enshrine trade customs under Ukrainian law.³⁴ Since the publication of this note multiple cases in the Ukraine have referred to these instruments (especially the UPICC) as international trade usages, customary law, and general principles of commercial law.³⁵ Most of the cases concern domestic con-

• 31 The Unilex database does not keep traek of PECL cases specifically but does mention cases where the PECL are used alongside the UNIDROIT Principles to supplement or interpret domestic law. There is no similar database for solely the PECL so it is difficult to determine how often these are used independently from the UPICC.
• 32 See for instance, Carlos Vendrell Cervantes, ‘Application of the Principles of European Contract Law’ (2008) 16 Zeitschrift für Europäisches Privatrecht 534, where the author analyses a number of decisions ofSpanish courts that used the PECL to interpret domestic contract law, as a doctrinal authoritative guide, or as point of comparison.

See also Danny Bush, ‘The Principles of European Contract Law before the Supreme Court of the Netherlands’ (2008) 16 Zeitschrift für Europäisches Privatrecht 549, which analyses the use of the PECL in courts in the Netherlands.

33 Tribunal de Apelación en lo Civil y Comercial de Asunción, Sindulfo Ruiz Pavetti v. Alaria Esther Recalde de Aliendre y Policarpo Ramón Aliendre, 17-10-2016.

Available at: http://www.unilex.infb/principles/case/2105.

• 34 Ralf Michaels, ‘The UNIDROIT Principles as Global Background Law,’ (2014) 19 Uniform Law Review 643; Official Note of the High Commercial Court of Ukraine No.01-8/211,07.04.2008.
• 35 For instance:

Specialized foreign trade company Progress, subsidiary company of the State Company Ukrspecexportv. Ministry of Economy of Ukraine Kyiv District Administrative Court 8/311

Cherkassy Branch of OJSC Kredobank i>. Individual entrepreneur 2 Chcrkasy Regional Commercial Court 02/2625;

Dnipropetrovsk company Dnepryanka v. Inter-state Tax Administration of Dnipropetrovsk city and Department, Dnipropetrovsk Regional Administrative Court, 2-a-10084/09/0470;

TOV Ukrainian commercial vehicles v. Department of Transport and Communications of Chernihiv City Council High Commercial Court of Ukraine, 7/72;

Arcada PP v. Hobotovske enterprise Krahmaloprodukt High Commercial Court of Ukraine 42/90-10;

Public utility company Housing Management of Kyiv city v.TOV Kyiv Telecommunication Networks Kyiv Commercial Court 5011-7/3803-2012;

OJSC Druzhkovskaya factory of metal products v. TOV Company Light-Tech High Commercial Court of Ukraine 5023/4701/12;

Poltava oblavtodor v. TOV Kontakt-K, Dnipropetrovsk Regional Commercial Court 904/4611/13 (abstracts can all be found on UNIILEX).

tracts rather than international ones, and the UPICC, Incoterms, and UCP are used to interpret the applicable domestic (Ukrainian) law. As an example, a regional commercial court in a dispute between two Ukrainian companies referred to the applicable articles of the Ukrainian Civil Code, and noted that these were of a general nature, and that as the High Commercial Court of Ukraine officially endorsed the UPICC it would apply these to interpret the law.^[3] This is one of several cases in which courts in the Ukraine apply the UPICC to interpret domestic law.

In an appeal to the Supreme Court regarding a decision where the UPICC were applied the respondent pointed out that the UPICC do not have binding force in Paraguay and therefore their application violated Paraguayan law. The Supreme Court stated that as the UPICC were applied as a complementary law and the rights of the parties under Paraguayan law had not been infringed the Court of Appeal had been correct in its application of the UPICC. The Supreme Court therefore recognised that transnational commercial law instruments can be used to interpret the law or to fill in gaps.

Codified non-state rules are thus used to interpret the law in both domestic and international contracts. The usage of codified non-state rules for this purpose is a new practice that mainly emerged with the publication of the UNIDROIT Principles. The CISG, the PECL, the UCP, and the Incoterms are all used for this purpose but the UPICC take the lead. They arc used as general principles of transnational commercial law or as accepted international commercial law practices.

• [1] http://www.unilex.info/principles/cases/article/102#article_102; Numbers date from June 2020. 2 There should not be a great value attached to the concrete numbers as the Unilex database is incomplete and the numbers will be higher in practice, especially given that arbitral awards are usually not published. 3 Société Harper Robinson v. Société internationale de maintenance et de réalisations industrielles, Cour d’Appel de Grenoble, January 1996. 4 'Qu’il est de principe, en droit du commerce international, que "en cas d’incompatibilité entre une clause qui ne l’est pas, cette dernière l’emporte” (Principes d’Unidroit, article 2.21) et que "en cas d’ambiguïté, les clauses d’un contrat s’interprètent de préférence contre celui qui les a proposées’ (Principes d’Unidroit, art. 4.6)’ http://www.unilex.info/case.cfmiid-633.
• [2] Tribunal de Apelación en lo Civil y Comercial de Asunción, Compañía de Petróleo y Asfalto (Compasa) c/ Petrobras Distribuidora S.A, 09-05-2016. Available at: http://www.unilex.info/principles/case/1958. 2 Michael Joachim Bonell and Ole Lando, ‘Future Prospects of the Unification of Contract Law in Europe and Worldwide’ (2013) 18 Uniform Law Review 17,21. 3 ICC Award No. 8540 1996 http://www.unilex.info/principles/case/644. 4 See also: François Dessemontet, ‘Use of the UNIDROIT Principles to Interpret and Supplement Domestic Law’ (2002) Supplement Special Bulletin de la Cour Internationale d’Arbitrage de la CCI 1,22 who notes ‘A consistent feature of most of the arbitral awards examined is that the arbitrators go to great lengths to show that the applicable domestic law and the Principles provide for identical solutions’Plus, article quotes several awards (a selection: Partial award of 4 September 1996 in ICC case 8540, UNIDROIT Cases No. 6; award of 17 December 1996, Court of Arbitration affiliated to the Economic Chamber and Agrarian Chamber of the Czech Republic, UNIDROIT Cases No. 8; award in an ad hoc arbitration in Helsinki, 1998, UNIDROIT Cases No. 15; preliminary award of 25 November 1994, Zurich Chamber of Commerce, UNI DROIT Cases No.16; award in ad hoc arbitration in Auckland, New Zealand, 1995, UNIDROIT Cases No. 17; final awarding ICC case 8240, (1999) 10:2 ICC ICArb. Bull. 60) Dessemontet notes: ‘Only a minority of the decisions studied (approximately 10 out of 40) mention that the Principles embody a solution divergent from the (sometimes unclear) domestic law.’ 5 Corte Suprema de Justicia, Engracia Marina Haywood de Balbuena y otro v. Empresa de Transporte Nueva Asunción S.A. y otro, 1074/2016, 04-08-2016 Available at: http://www.unilex.info/principles/case/2140.
• [3] FG Alpha )>. TOV NVF Sintal, Kharkiv Regional Commercial Court 35/118-08, 23 September 2009 http://www.unilex.info/case.cfmiidM739. 2 See also: TOV Ukrainian commercial vehicles v. Department of Transport and Communications of Chernihiv City Council High Commercial Court of Ukraine 7/72, 24 November 2010 http://www.unilex.info/case.cfmiidM707. 3 Corte Suprema de Justicia - Sala Civil y Comercial, Jorge Moises Etcheverry All v. Rosa Maria Ramona Etcheverry de Brizuela, 27-03-2017. 4 Parts of this discussion appeared before in Johanna Hoekstra, 'The Normative Influence of the UNIDROIT Principles of International Commercial Law on Courts’ (2019) 23 The Vindobona Journal of International Commercial Law and Arbitration 54.