Introduction

Of the various ways in which the UNIDROIT Principles of International Commercial Contracts 1 have so far been used in practice, their role as a means of interpreting and supplementing the law governing the contract - be it an internal domestic law or an international uniform law - is proving to be particularly important. Over half of the court decisions and arbitral awards reported in UNILEX that refer in one way or another to the UNIDROIT Principles do so for this purpose.2

Yet, at least with respect to the use of the UNIDROIT Principles for a proper interpretation of the otherwise applicable domestic law, the drafters did not anticipate this at all. The statement in the Preamble according to which '[the Principles] may provide a solution to an issue raised when it proves impossible to establish the relevant rule of the applicable law', was intended to cover only those cases where it is extremely difficult, if not impossible, to determine the content of the applicable law because of the special character of the legal sources and/or the cost of access to them. 3 The possibility that even where the applicable law is highly developed and easily accessible the UNIDROIT Principles could be used to ensure its interpretation in conformity with internationally accepted standards, let alone fill in gaps, was not discussed at all or rejected on account of the allegedly all-embracing nature of domestic law. 4

By contrast, the use of the UNIDROIT Principles as a means of interpreting and supplementing international uniform law had from the outset been considered as one of their most important functions. The Preamble expressly states that '[the Principles] may be used to interpret or supplement international uniform law instruments'. Interestingly enough, the Principles of European Contract Law, while in other respects very similar to the UNIDROIT Principles, do not expressly contemplate such a use on account of their regional scope. 5[Page30:]

In this paper, I shall first give examples of individual provisions of the UNIDROIT Principles which may serve as a means of interpreting or supplementing important uniform law instruments (I). I shall then briefly discuss the theoretical justification for using the UNIDROIT Principles for this purpose (II). Finally, I shall analyse the role which the UNIDROIT Principles play in this respect in actual arbitration practice (III).

I. The UNIDROIT Principles as a means of interpreting and supplementing international uniform law instruments: some examples

The use of the UNIDROIT Principles as a possible means of interpretation and gap-filling has so far been discussed by legal scholars mainly with respect to the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG). 6 This comes as no surprise. Notwithstanding their differing scope of application - international commercial contracts in general for the former; international sales contracts for the latter - the two instruments deal with many of the same issues concerning contract formation, interpretation, performance, non-performance and remedies. Yet, since the provisions contained in the UNIDROIT Principles are in general more comprehensive and detailed, they may in many cases provide an answer to ambiguities or gaps in CISG.

Of the provisions of the UNIDROIT Principles which might serve to clarify rather ambiguous provisions of CISG, reference has been made to article 7.1.4(2), which states that the right to cure is not precluded by notice of termination, in connection with article 48 CISG; article 7.1.7(4), which expressly indicates the remedies not affected by the occurrence of an impediment preventing a party from performance, in connection with article 79(5) CISG; and article 7.3.1(2), which specifies the factors to be taken into account for the determination of whether or not there has been a fundamental breach of contract, in connection with article 25 CISG. 7

As for the provisions of the UNIDROIT Principles to be used to fill veritable gaps in CISG, reference has been made to article 1.7 on the general duty of the parties to act in good faith and articles 2.15 and 2.16 on, respectively, negotiation in bad faith and breach of a duty of confidentiality; 8 article 2.22 providing for a 'knockout' in the event of a so-called battle of forms; 9 article 6.1.6(1)(a) stating the general principle according to which a monetary obligation is to be performed at the obligee's place of business; articles 6.1.7, 6.1.8 and 6.1.9, which provide an answer to the questions, likewise not expressly settled in CISG, of whether, and if so under what conditions, the seller is entitled to pay by cheque or by other similar instruments, or by a transfer of funds, and in which currency payment is to be made; article 7.4.9(1) and (2) on the time from which the right to interest accrues and the rate of interest to be applied; and article 7.4.12 on the currency in which to assess damages. 10

The use of the UNIDROIT Principles as a tool for interpretation has been discussed also with respect to the 1956 Convention on the Contract for the International Carriage of Goods by Road (CMR). [Page31:]

Thus it has been argued that article 21 CMR dealing with the case in which the goods are sent on a 'cash on delivery' basis should be read in the light of article 6.1.7 of the UNIDROIT Principles, so as to include, in addition to cash payment, 'any form used in the ordinary course of business at the place for payment', primarily cheques. 11 Moreover, article 1.7 of the UNIDROIT Principles stating the parties' duty to act in good faith and article 2.18 on written modification clauses have been invoked in order to prevent the carrier from relying, vis-à-vis the sender, on article 24 CMR, according to which the special value of the goods must be declared in the consignment note, if the carrier, on the basis of an oral declaration by the sender, has accepted payment by the latter of a surcharge. 12 Again, article 7.4.9(1) of the UNIDROIT Principles, stating that the aggrieved party is entitled to interest from the time payment is due to the time of payment, may serve to supplement article 27(1) CMR, which fixes only the time as of which, but not until which, interest accrues. 13 Likewise, article 6.1.9(3) of the UNIDROIT Principles, according to which payment in the currency of the place for payment is to be made according to the applicable rate of exchange prevailing there when the payment is due, has been considered to confirm that, also for the purpose of article 27(2) CMR, what matters is the time and place where payment was due, not the time and place of actual payment. 14 Finally, it has been argued that since CMR is silent with respect to the carrier's secondary obligations once it has accepted the goods, the provisions of the UNIDROIT Principles relating to performance and to damages, as contained in chapter 5 and chapter 7, section 4, respectively, may provide a solution where the carrier for instance delivers the goods earlier than agreed in the contract, thereby creating difficulties for the consignee, or gives the sender wrong information concerning the itinerary to be followed in the course of transportation, etc. 15

Similarly, with respect to the 1924 Brussels Convention for the Unification of Certain Rules relating to Bills of Lading (Hague Rules), it has been argued that article 3(8) of this convention should be interpreted in the light of the UNIDROIT Principles' articles 3.16 on partial avoidance and 4.5 stating that contract terms shall be interpreted so as to give effect to all the terms rather than to deprive some of them of effect, so as to justify the conclusion that the invalidity of contract terms excluding or limiting the maritime carrier's liability does not imply the invalidity of the contract in its entirety or of any other of its provisions. 16 Moreover, the UNIDROIT Principles' articles 5.4 and 5.5 on the distinction between a duty to achieve a specific result and a duty of best efforts and article 5.6 on the determination of the quality of a performance could provide useful criteria for the precise determination of the 'due diligence' which the maritime carrier must exercise under article 3(1) of the Hague Rules (or of the 'reasonableness' test to be applied with respect to the measures which the carrier must take in accordance with article 5(1) of the Hamburg Rules). 17

II. The UNIDROIT Principles as a means of interpreting and supplementing international uniform law instruments: theoretical justification

Since the UNIDROIT Principles have not been adopted in the form of an international treaty nor incorporated as such in any domestic law, the question [Page32:] remains as to how their use as a means of interpreting and supplementing other international uniform law instruments can be justified.

Obviously, no problems arise where the parties have included in their contract an express reference to the UNIDROIT Principles for this purpose. An example of such a reference may be found in article 14 of the Model Contract for the International Commercial Sale of Perishable Goods adopted by the International Trade Centre UNCTAD/WTO in 1999 and which states:

In so far as any matters are not covered by the foregoing provisions, this Contract is governed by the following, in descending order of precedence: The United Nations Convention on Contracts for the International Sale of Goods, the UNIDROIT Principles of International Commercial Contracts, and for matters not dealt with in the above-mentioned texts, the law applicable at ___________ or, in the absence of a choice of law, the law applicable at the Seller's place of business through which this Contract is to be performed.

By virtue of the parties' reference, the UNIDROIT Principles are applicable even with respect to issues falling outside the scope of the uniform law instrument in question and irrespective of whether the individual provisions invoked are an expression of the general principles underlying that instrument.

However, given the non-binding nature of the UNIDROIT Principles, the impact of the parties' reference is likely to vary depending on whether the case is referred to a domestic court or an arbitral tribunal.

Domestic courts will tend to consider it as a mere agreement to incorporate the UNIDROIT Principles into the contract and to determine the law governing that contract on the basis of their own conflict-of-law rules. 18 As a result, they will apply the UNIDROIT Principles only to the extent that the latter do not affect the provisions of the proper law from which the parties may not derogate. This may be the case, for instance, with the rules on contracting on the basis of standard terms 19 or those on public permission requirements. 20 On the other hand, the rules relating to validity 21 or intervention by courts in cases of hardship 22 will be applied only to the extent that they do not run counter to the corresponding provisions of the applicable domestic law.

By contrast, arbitrators, who are not necessarily bound to base their decisions on a particular domestic law, may well apply the UNIDROIT Principles not merely as terms incorporated in the contract but as 'rules of law' governing the contract, together with the applicable uniform law instrument, irrespective of whether or not they are consistent with the particular domestic law otherwise applicable. 23 The only mandatory rules arbitrators may take into account, to give their decisions every chance of being effective and enforceable, are those which claim to be applicable irrespective of the law otherwise governing the contract ('lois d'application nécessaire'). The combined application of the mandatory rules in question and the UNIDROIT Principles should generally not give rise to any real conflict, as the subject matter of each will be different. 24

What however is the situation when parties have not expressly referred to the UNIDROIT Principles? Article 7 CISG expressly states that '[i]n the interpretation of this Convention regard is to be had to its international character and to the need to promote uniformity in its application . . .' and that '[q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based . . .'. Similar expressions are to be found also in other recent [Page33:] international conventions. 25 Yet even in the absence of any specific language to this effect, it is nowadays widely recognized that international uniform law instruments should be interpreted and supplemented according to autonomous and internationally uniform principles and that recourse to domestic law should only be a last resort. 26 As rightly observed, there is a clear trend away from positive law ('Depositivierung') insofar as the strict legal rules of domestic law are increasingly being supplanted by non-binding principles and rules of supranational origin. 27

In the past, such autonomous principles and rules had to be found by the judges and arbitrators themselves on an ad hoc basis. Now, however, we have the UNIDROIT Principles. Can they be used for this purpose and, if so, to what extent? Legal scholarly opinion is divided.

On the one hand, there are those who categorically deny such a possibility, not only on account of the private and non-binding nature of the UNIDROIT Principles, but also, at least with respect to instruments adopted prior to the publication of the UNIDROIT Principles, on the basis of the rather formalistic argument that, coming later, the latter could in no case be of relevance to the former. 28 On the other hand, there are those who definitely assert the possibility of using the UNIDROIT Principles as a means of interpreting and supplementing international uniform law instruments on the ground that they represent 'general principles of international commercial contracts' and as such, without further qualification, meet the requirements of article 31(3) of the Vienna Convention on the Law of Treaties or, more specifically, article 7(1) and (2) CISG. 29

The correct solution appears to lie between the two extremes. In other words, there can be little doubt that in general the UNIDROIT Principles may well be used to interpret or supplement instruments of international law, even if these were adopted prior to the Principles, as is the case with CISG, CMR and the Hague Rules. The only conditions which need to be satisfied are that the issue at stake falls within the scope of the respective convention 30 and that the relevant provisions of the UNIDROIT Principles can be considered an expression of - to use the language of article 7(2) CISG - the 'general principles on which [the convention] is based'. 31

III. The UNIDROIT Principles as a means of interpreting and supplementing international uniform law instruments: actual arbitration practice

Turning to actual arbitration practice, first some statistics. All the arbitral awards reported in UNILEX which refer to the UNIDROIT Principles as a means of [Page34:] interpreting and supplementing international uniform law instruments do so with respect to CISG. 32 Although their number has been increasing over the years, these awards still represent a minority. Indeed, almost half of the awards reported in the latest edition of UNILEX, which in applying CISG addressed a problem of interpretation or gap-filling, took the traditional approach, i.e resorted to a particular domestic law applicable by virtue of the relevant rules of private international law. Furthermore, even some of the decisions that opted for an autonomous approach chose to rely exclusively on the general principles underlying CISG rather than refer to the UNIDROIT Principles. 33

Surprisingly, only in a few cases has the application of the individual provisions of the UNIDROIT Principles been justified on the ground that they could be considered an expression of a general principle underlying also CISG. Thus, in two awards of the International Court of Arbitration of the Federal Chamber of Commerce of Vienna - SCH 4318 and SCH 4366 of 15 June 1994 34 - the sole arbitrator, faced with the question of the applicable interest rate left open by article 78 CISG, applied article 7.4.9(2) of the UNIDROIT Principles, according to which the applicable rate of interest is the average bank short-term lending rate to prime borrowers prevailing at the place for payment for the currency of payment, on the ground that this rule could be considered an expression of the general principle of full compensation underlying both the UNIDROIT Principles and CISG:

. . . In international legal writings and case law to date it is disputed whether the question is outside the scope of the Convention - with the result that the interest rate is to be determined according to the domestic law applicable on the basis of the relevant conflict of laws rules . . . - or whether there is a true gap in the Convention within the meaning of Article 7(2) so that the applicable interest rate should possibly be determined autonomously in conformity with the general principles underlying the Convention . . . This second view is to be preferred, not least because immediate recourse to a particular domestic law may lead to results incompatible with the very right to interests as stated in Art. 78 CISG, at least in cases where the law in question expressly prohibits the payment of interest. One of the general legal principles underlying the CISG is the requirement of 'full compensation' of the loss caused (cf. Art. 74 of the CISG). It follows that in the event of failure to pay a monetary debt, the creditor, who as a business person must be expected to resort to bank credit as a result of the delay in payment, should therefore be entitled to interest at the rate commonly practised in its country with respect to the currency of payment, i.e. the currency of the creditor's country or any other foreign currency agreed upon by the parties (cf. Art. 7.4.9 of the UNIDROIT Principles) . . .

The same question of the applicable interest rate was addressed in two other awards and likewise settled by reference to article 7.4.9 of the UNIDROIT Principles, albeit with more succinct justification. 35 In the award of December 1996 in ICC case 8769, the relevant passage reads: 36

Claimant is entitled to interest on the sums awarded pursuant to Art. 78 of the Vienna Convention. Art. 78 Vienna Convention does not specify a particular interest rate. The sole Arbitrator considers it appropriate to apply a commercially reasonable interest rate (see Art. 7.4.9 subs. 2 UNIDROIT Principles),

while the award of 1995 in ICC case 8128 states: 37

Article 78 of the Convention does not refer to rate of interest . . . It is acknowledged that it is possible to apply, in conjunction with article 78 of the Convention, an international rate of interest such as the London interbank offered rate, LIBOR. [The UNIDROIT Principles], in article 7.4.9(2), provide that the rate of interest corresponds to the average rate of interest applied by leading banks for short-term loans. This [Page35:] corresponds to article 4.507(1) of the Principles of European Contract Law . . . The arbitrator considers it justified to apply to the dispute identical rules contained in the UNIDROIT Principles and the Principles of European Contract Law as general principles within the meaning of article 7(2) of the Convention. 38

There are other awards which, without further explanation, equate the UNIDROIT Principles in their entirety with the general principles underlying CISG and so justify the application of individual provisions of the UNIDROIT Principles to interpret or supplement CISG.

Thus, for instance, in the award of December 1997 in ICC case 8817, 39 the arbitral tribunal, stating that on the basis of article 13(3) of the 1988 ICC Rules of Arbitration it would apply 'the provisions of [CISG] and its general principles, now contained in the UNIDROIT Principles of International Commercial Contracts', referred to both articles 9(1) CISG and 1.8 of the UNIDROIT Principles in order to justify the binding force of a course of dealing established between the parties, and to articles 77 CISG and 7.4.8 of the UNIDROIT Principles in order to establish the aggrieved party's duty to mitigate the harm.

Another example is ICC case 8547. Here, the contract was not governed by CISG but by the 1964 Hague Uniform Laws on the International Sale of Goods (ULIS) and on the Formation of Contracts for the International Sale of Goods (ULF), which the parties had expressly chosen as the applicable law. After stating in general terms that

[i]n so far as . . . ULIS and ULF did not cover all questions . . . the Arbitral Tribunal felt it appropriate to turn to the UNIDROIT Principles which provide useful complement to fill the lacuna and allow to find proper solutions . . .,

the arbitral tribunal based its decision on the main issue at stake (whether the buyer had the right to stop payment because of the non-conformity of the goods delivered) on article 7.1.3 of the UNIDROIT Principles:

Although the degree of non-conformity of goods has not been proven, it was the Defendant's right to suspend payment after raising the exceptio non adempleti contractus . . . This is not expressly stated in ULIS, but follows from the general principles of law referred to in article 17 ULIS. According to article 7.1.3 UNIDROIT Principles a party may withhold its performance until performance has been effected by the other party. Thus the above reasoning is in accordance with these principles of law. 40

Some awards go even further and apply the UNIDROIT Principles not merely as general principles underlying CISG but because - as emphatically stated - they reflect 'a world-wide consensus in most of the basic matters of contract law'.

Thus, in the award of March 1998 in ICC case 9117, one of the issues at stake was the precise effect to be given to a so-called merger clause contained in an international sales contract. The arbitral tribunal referred first of all to article 8 CISG, but, since this provision gave no definite answer, applied article 2.17 of the UNIDROIT Principles arguing that:

it may be noted that the effects and the significance of a merger clause are also reflected in Article 2.[1]7 of the 1994 UNIDROIT Principles of International Commercial Contracts. Although this Tribunal did not determine that the UNIDROIT Principles shall directly be applied, it is nevertheless informative to refer to them because they are said to reflect a world-wide consensus in most of the basic matters of contract law . . . 41[Page36:]

The reference to the UNIDROIT Principles is all the more noteworthy since in the same award the arbitral tribunal had earlier ruled that gaps in CISG would be filled by applying the law of the Russian Federation as the law of the country where the party performing the most characteristic performance (i.e. the seller) had its place of business. 42

Two awards of the International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation provide further illustrations of such broad relevance attributed to the UNIDROIT Principles. 43 In the first case (award 229/1996 of 5 June 1997), the main issue at stake was the validity of a contractual clause providing for an amount to be paid by the buyer as a penalty in the event of late payment. In response to the buyer's claim that the stipulated amount was excessive, and in the absence of any relevant provision in CISG, the arbitral tribunal applied article 7.4.13(2) of the UNIDROIT Principles and reduced the penalty to a reasonable amount. To justify its reference to the UNIDROIT Principles, the arbitral tribunal not only cited the Preamble where it states that '[the UNIDROIT Principles] may be used to interpret and supplement international uniform law instruments', but pointed out too that the UNIDROIT Principles were applicable also by virtue of article 9(2) CISG, since 'they reflect usages of which the parties knew or ought to have known and which are widely known in international trade'. In the second case (award 302/1997 of 27 July 1999) the dispute similarly centred on the question of validity. The buyer brought a claim for damages on account of the seller's failure to perform. In response, the seller objected that the person who had entered into the contract on its behalf lacked the authority to do so. Deciding in favour of the buyer, the arbitral tribunal found that the seller had invoked the invalidity of the contract too late, namely not until the arbitral proceedings, years after the conclusion of the contract. In support of its finding, the arbitral tribunal expressly referred to article 3.15 of the UNIDROIT Principles, according to which notice of avoidance must be given to the other party within a reasonable time after the avoiding party knew or ought to have known the relevant facts, and again justified the application of the UNIDROIT Principles on the ground that they were 'gradually gaining the status of internationally recognized trade usages'.

The last two awards applied the UNIDROIT Principles not to fill internal gaps in CISG but to find a solution to questions outside its scope. From using the UNIDROIT Principles in this way it is but a short step to applying them in conjunction with CISG as a sort of lex mercatoria, even where CISG is not applicable at all.

Thus, in ICC case 8502, 44 where the contract was not governed by CISG since the seller had its place of business in a non-contracting state, on the basis of article 13(3) and (5) of the 1988 ICC Rules of Arbitration the arbitral tribunal nonetheless decided to 'refer . . . to the provisions of the 1980 Vienna Convention on Contracts for the International Sale of Goods . . . or to the Principles of International Commercial Contracts enacted by UNIDROIT, as evidencing admitted practices under international trade law'. In actual fact, it applied both articles 76 CISG and 7.4.6 of the UNIDROIT Principles in support of the buyer's right to damages up to the difference between the contract price and the relevant market price.

Similarly, the October 1998 award in ICC case 9333, 45 which concerned an international service contract governed by Swiss law, acknowledged the right to interest not only on the basis of article 104 of the Swiss Code of Obligations, but also by invoking [Page37:]

international trade usages, as reflected inter alia in the United Nations Convention on Contracts for the International Sale of Goods . . . or the UNIDROIT Principles of International Commercial Contracts.

Further examples are found in two ICC awards dealing with settlement agreements relating to international sales contracts. In case 8908, 46 the applicable law was Italian law. In demonstrating that a modified acceptance amounts to a counter-offer which may be tacitly accepted by the original offeror, the arbitral tribunal referred not only to article 1326(5) of the Italian Civil Code but also to article 19 CISG and article 2.11 of the UNIDROIT Principles, which it described as 'normative texts that can be considered helpful in the interpretation of all contracts of an international nature'. In the interim award of February 1999 in case 9474, 47 both parties having accepted the arbitral tribunal's proposal to apply 'the general standards and rules of international contracts', the arbitral tribunal stated that

[a]lthough it is generally recognized that [CISG] embodies universal principles applicable in international contracts . . . [t]here are other recent documents that express the general standards and rules of commercial law, in particular the Principles of European Contract Law and the UNIDROIT Principles of Commercial Contracts.

It in actual fact applied articles 3.5, 3.8 and 7.3.2 of the UNIDROIT Principles with respect to possible fraud and mistake when concluding the contract and the time allowed for giving notice of defects.

Finally, mention may be made of ICC case 7819, 48 where the validity of an international sales contract subject to Brazilian law was questioned on account of the fact that there was no express determination of the price. The arbitral tribunal upheld the contract and, without even mentioning the relevant provisions of Brazilian law, simply stated that

. . . sales in which the price has not been previously set are common in international trade, as shown by the Vienna Convention of 11 April 1980 on the International Sale of Goods (art. 55) and the UNIDROIT Principles of International Commercial Contracts (art. 5.7). 49

Conclusions

In the light of the foregoing remarks, it is fair to say that the use of the UNIDROIT Principles as a means of interpreting or supplementing CISG and similar international uniform law instruments is not only widely discussed among legal scholars, but is also becoming more and more frequent in actual arbitration practice.

Interestingly enough, despite scholarly doubts and reservations, arbitrators seem in general not too troubled by theoretical justifications when resorting to the UNIDROIT Principles for this purpose. They rarely indulge in lengthy explanations and, if they do so, more often than not they give reasons which come close to a petitio principii, such as that the UNIDROIT Principles as a whole represent general principles underlying the relevant uniform law instruments or express 'a world-wide consensus in most of the basic matters of contract law'.

Far more important however is the fact that the use of the individual provisions of the UNIDROIT Principles as a tool for interpretation has generally led to positive results. This is not surprising where the UNIDROIT Principles have been invoked merely to confirm a solution already expressly provided for in CISG. It is less obvious in other cases - which are the majority - where the UNIDROIT Principles [Page38:] have been used to justify one of several possible interpretations under CISG, let alone settle questions not dealt with at all in CISG.

Of course, the awards considered here are likely to be just a small sample of all the decisions in which the UNIDROIT Principles have been used to interpret or supplement CISG, or alternatively not used, whether intentionally or unintentionally. As long as these other awards remain unknown, one has to be content with such partial data. It can only be hoped that in the future the relevant information will be made more readily available.

1
Hereafter the UNIDROIT Principles or the Principles.

2
cf. UNILEX on CISG and UNIDROIT Principles: International Caselaw and Bibliography, www.unilex.info, containing 68 decisions in the form of abstracts and excerpts from the full texts (where available). For a printed version thereof, see M.J. Bonell, ed., The UNIDROIT Principles in Practice (Ardsley, N.Y.: Transnational, 2002) [forthcoming].

3
cf. comment to the Preamble, § 5.

4
For the discussions on this point within both the Working Group and the Governing Council of UNIDROIT, see Working Group for the Preparation of Principles for International Commercial Contracts, Summary Records of the meeting held in Miami 6-10 January 1992 (UNIDROIT 1992 P.C. - Misc. 18, 28-37) and Governing Council, 72d session, Rome, 15-18 June 1993 (UNIDROIT 1993 C.D. (72) 19, 20-23). On the importance of the use of the UNIDROIT Principles as a means of interpreting and supplementing domestic law in the light of early practical experience, see M.J. Bonell, 'The UNIDROIT Principles and Transnational Law' (2000) V Unif. L. Rev. 199 at 212ff; K.P. Berger, 'Von praktischen Nutzen der Rechtsvergleichung. Die "international brauchbare" Auslegung nationalen Rechts' in K.P. Berger et al., eds., Festschrift für Otto Sandrock zum 70. Geburtstag (Heidelberg: Recht und Wirtschaft, 2000), 55. See also F. Dessemontet, 'Use of the UNIDROIT Principles to Interpret and Supplement Domestic Law', hereinafter, pp. 39-50.

5
In turn, the Principles of European Contract Law, unlike the UNIDROIT Principles, claim to be applicable also when the parties have not chosen any system or rules of law to govern their contract (cf. art. 1:101(3)(b)).

6
For a recent and comprehensive study, see F. Burkart, Interpretatives Zusammenwirken von CISG und UNIDROIT Principles (Baden-Baden: Nomos, 2000).

7
For further references, see M.J. Bonell, An International Restatement of Contract Law: The UNIDROIT Principles of International Commercial Contracts, 2d ed. (Ardsley, NY: Transnational, 1997) at 76-77; F. Burkart, supra note 6 at 223ff.

8
For greater detail, see M.J. Bonell, 'Formation of Contracts and Precontractual Liability under the Vienna Convention on International Sale of Goods' in Formation of Contracts and Precontractual Liability (Paris: ICC Publishing, 1990 (ICC Publication No.440/9), 157 at 166ff. Critical E.A .Farnsworth, 'Duties of Good Faith and Fair Dealing under the UNIDROIT Principles, Relevant International Conventions, and National Laws' (1995) 3 Tulane Journal of International and Comparative Law 47 at 56, who points out that in the light of the legislative history of art. 7(1) CISG good faith cannot be considered a general principle underlying the Convention.

9
cf. F. Burkart, supra note 6 at 224-226.

10
For further references, see M.J. Bonell, supra note 7 at 77-82; F. Burkart, supra note 6 at 226-248.

11
cf. J. Basedow, Münchener Kommentar zum Handelsgesetzbuch, vol. 7 (Übereinkommen über den Beförderungsvertrag im Internationalen Straßengüterverkehr (CMR)), at 855ff, esp.1102-1103).

12
cf. J. Basedow, supra note 11 at 1142.

13
cf. J. Basedow, supra note 11 at 1163.

14
cf. J. Basedow, supra note 11 at 1167.

15
cf. J. Basedow, 'Die UNIDROIT-Prinzipien der Internationalen Handelsverträge und die Übereinkommen des einheitlichen Privatrechts' in Festschrift für Ulrich Drobnig zum siebzigsten Geburtstag (Tübingen: Mohr Siebeck, 1998), 19 at 31-32.

16
cf. S.M. Carbone, 'Principi dei contratti internazionali e norme di origine internazionale (con particolare riguardo al diritto uniforme)' in M.J. Bonell & F. Bonelli, eds., Contratti Commerciali Internazionali e Principi UNIDROIT (Milan: Guiffrè, 1997), 23 at 32-33, who recalls that such an interpretative approach is expressly provided for in art. 23(1) of the 1978 United Nations Convention on the Carriage of Goods by Sea ('Hamburg Rules').

17
cf. ibid.

18
For more on this point see. M.J. Bonell, supra note 7 at 180ff.

19
cf. arts. 2.19 and 2.22 of the UNIDROIT Principles.

20
cf. arts. 6.1.14 and 6.1.17 of the UNIDROIT Principles.

21
cf. ch. 3 of the UNIDROIT Principles.

22
cf. art. 6.2.3 of the UNIDROIT Principles.

23
For further references see also M.J. Bonell, supra note 6 at 183ff; J.C. Wichard, 'Die Anwendung der UNIDROIT-Prinzipien für internationale Handelsverträge durch Schiedsgerichte und staatliche Gerichte' (1996) 60 RabelsZeitschrift 269; E. Gaillard & J. Savage, eds., Fouchard Gaillard Goldman On International Commercial Arbitration (The Hague: Kluwer, 1999) at 801ff esp. 816-817; F. Vischer, L. Huber & D. Oser, Internationales Vertragsrecht, 2d ed. (Bern: Stämpfli, 2000) at 156ff. On the role of the UNIDROIT Principles as 'soft' uniform law, see generally U. Drobnig, 'Vereinheitlichung von Zivilrecht durch soft law: neue Erfahrungen und Einsichten' in Aufbruch nach Europa - 75 Jahre Max-Planck-Institut für Privatrecht (2001), 745 at 753-755; C.N. Brower, 'The Privatization of Rules of Decision in International Commercial Contracts' in Law of International Business and Dispute Settlement in the 21st Century - Liber Amicorum Karl-Heinz Böckstiegel (2001), 111 at 118-123.

24
One of the few examples of potential conflict may be where arbitrators have to decide between the law of the place of payment imposing the payment in local currency and the different solution provided for in the UNIDROIT Principles that otherwise govern the contract.

25
See e.g. art. 18 of the 1980 Rome Convention on the Law Applicable to Contractual Obligations; art. 6(1) of the UNIDROIT Convention on Agency in the International Sale of Goods; art. 6(1) of the 1988 Ottawa Convention on International Financial Leasing; art. 4(1) of the 1988 Ottawa Convention on International Factoring; art. 14 of the 1991 United Nations Convention on the Liability of Operators of Transport Terminals in International Trade; art. 4 of the 1994 Inter-American Convention on the Law Applicable to International Contracts.

26
For further references see M.J. Bonell in C.M. Bianca & M.J. Bonell, eds., Commentary on the International Sales Law: The 1980 Vienna Sales Convention (Milan: Giuffrè, 1987), 72; J.O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3d ed. (The Hague: Kluwer, 1999) at 88; F. Ferrari in P. Schlechtriem, ed., Kommentar zum Einheitlichen UN-Kaufrecht - CISG, 3d ed. (Munich: Beck, 2000), 123.

27
See J. Basedow, 'Depositivierungstendenzen in der Rechtsprechung zum Internationalen ' in A. Heldrich & K.J. Hopt, eds., 50 Jahre Bundesgerichtshof. Festgabe aus der Wissenschaft, t. II (Handels- und Wirtschaftsrecht, Europäisches und Internationales Recht) (Munich: Beck, 2000), 777 at 785 ('Autonomous interpretation with a view to international harmonization has prevailed . . . this development can be seen as a move away from positive law and a reflection of its diminishing influence.').

28
See e.g. F. Sabourin, Quebec Report in M.J. Bonell, ed., A New Approach to International Commercial Contracts - The UNIDROIT Principles of International Commercial Contracts (XVth International Congress of Comparative Law, Bristol, 26 July-1 August 1998) (The Hague: Kluwer, 1999), 237 at 247-248; F. Ferrari, supra note 26 at 137-138.

29
See e.g. A.M. Garro, 'The Gap-Filling Role of the UNIDROIT Principles in International Sales Law: Some Comments on the Interplay between the Principles and CISG' (1995) 69 Tulane Law Review 1149 at 1152ff.; U. Magnus, 'Die allgemeinen Grundsätze im UN-Kaufrecht' (1995) 59 RabelsZeitschrift 469 at 492-493; J. Basedow, supra note 15 at 23-32.

30
On the distinction between so-called internal and external gaps, i.e. 'questions concerning matters governed by [the convention] which are not expressly settled in it', to use the words of art. 7(2) CISG, and questions which are outside the scope of the relevant uniform law instrument and as such directly governed by the otherwise applicable domestic law, see recently F. Burkart, supra note 5 at 106111 and 190-193. With respect to CISG, art. 4 expressly excludes the validity of the contract and its effect on the property in the goods, but other 'external' gaps include the capacity of the parties, the authority which one party may have conferred on a third person to conclude the contract on its behalf, limitation periods, etc. For examples of similar 'external' gaps in CMR, see J. Basedow, supra note 15 at 29.

31
See also P. Perales Viscasillas, 'UNIDROIT Principles of International Commercial Contracts: Sphere of Application and General Provisions' (1996) 13 Arizona Journal of International and Comparative Law 383 at 404; F. Burkart, supra note 6 at 214-219.

32
For a decision of the Supreme Court of Venezuela referring to the UNIDROIT Principles to interpret the 1975 Inter-American Convention on Commercial Arbitration, see UNILEX/UNIDROIT Principles C.1997-8, www.unilex.info

33
cf. M.J.Bonell et al., eds., UNILEX - International Case Law & Bibliography on the United Nations Convention on Contracts for the International Sale of Goods (Ardsley, NY: Transnational, 2001) [hereinafter UNILEX /CISG] ad art. 7. See also www.unilex.info

34
For an English translation see UNILEX/CISG E.1994-13 and E.1994-14. For extracts from the original German, see (1995) 41 Recht der internationalen Wirtschaft 590 (Annot. P. Schlechtriem). For a succinct presentation in French, see I. Seidl-Hohenveldern (1995) 122 J.D.I. 1055-1056.

35
Professor Berger refers to yet another ICC award relevant in this respect, without however indicating either the award number or its date. In this case the amount payable was due in U.S. dollars but payable in Sweden. Following the guideline of the first alternative of article 7.4.9(2) of the UNIDROIT Principles, the arbitrators first tried to ascertain the prime rate for US dollar credits in Sweden as the place for payment. Swedish banks informed the tribunal that no such rate existed in Sweden, so the tribunal applied the prime rate applicable to US dollar credits issued in the United States as provided for by the second alternative of article 7.4.9(2). See K.P. Berger, 'The Lex Mercatoria Doctrine and the UNIDROIT Principles of International Commercial Contracts' (1997) 28 Law and Policy in International Business 943 at 983.

36
(1999) 10:2 ICC ICArb. Bull. 75.

37
(1996) 123 J.D.I. 1024 at 1027 [quotation translated from the French; original in German].

38
For other arbitral awards which, without expressly referring to article 7.4.9(2) of the UNIDROIT Principles, apply basically the same solution, i.e. resort to the prevailing bank rate of the currency of account, see UNILEX /CISG ad art. 78, www.unilex.info Domestic courts, on the other hand, generally prefer to determine the rate of interest according to the otherwise applicable domestic law, be it the law governing the contract or the law of the place of business of the creditor or the debtor: for further references see F. Burkart, supra note 6 at 227-231; UNILEX /CISG ad art. 78, www.unilex.info

39
(1999) 10:2 ICC ICArb. Bull. 75 [translation into English from original Spanish].

40
Final award of January 1999 in ICC case 8547, (2001) 12:2 ICC ICArb. Bull. 57 at 58-59. The solution adopted by the arbitral tribunal in this case is not totally convincing. Under both ULIS and CISG it is generally held that in the event of delivery of non-conforming goods the buyer may withhold the payment of the entire price only where the non-conformity amounts to a fundamental breach which would permit the avoidance of the contract, whereas in all other cases the buyer's right to withhold payment is limited to the amount that may be later recovered by resorting to the remedies of price reduction and damages: cf. D. Maskow in C.M. Bianca & M.J. Bonell, supra note 26 at 426-427; R. Herber & B. Czerwenka, Internationales Kaufrecht (Munich, 1991) at 260; P. Schlechtriem, Internationales UNKaufrecht (Tübingen: Mohr, 1996) at 115. This is also confirmed, although in general terms, in the comment to article 7.1.3 of the UNIDROIT Principles, which expressly states that where one party performs in part but not in full the other party is entitled to withhold performance only where in normal circumstances this is consonant with good faith.

41
(1999) 10:2 ICC ICArb. Bull. 96 at 100.

42
Ibid. at 99.

43
For abstracts of the two awards, see (2001) VI Unif. L. Rev., issue no. 3 [forthcoming].

44
Final award of November 1996 in ICC case 8502, (1999) 10:2 ICC ICArb. Bull. 72 at 73.

45
(1999) 10:2 ICC ICArb. Bull. 102 at 104 [original in French].

46
Final award of September 1998 in ICC case 8908, (1999) 10:2 ICC ICArb. Bull. 83 at 87 [translation into English from original Italian].

47
(2001) 12:2 ICC ICArb. Bull. 60 at 61-63.

48
Partial award of September 1999 in ICC case 7819, (2001) 12:2 ICC ICArb. Bull. 56 at 57 [original in French].

49
The reasoning may at first sight appear to be too simplistic. In addition to article 55 (which, apart from the opening sentence, in fact corresponds in substance to article 5.7 of the UNIDROIT Principles), CISG provides in article 14 that for an offer to be valid it must explicitly or implicitly fix the price, thereby giving rise to an on-going discussion as to how the two apparently conflicting provisions can be reconciled. However, it is fair to say that in international case law there is a clear tendency to uphold the validity of sales contracts even in the absence of a price provision by assuming somehow an 'implicit' determination of the price. For further references, see also P. Schlechtriem in P. Schlechtriem, supra note 26 at 182-186; UNILEX /CISG, ad arts. 14 and 55, www.unilex.info