Contrat de vente entre un acheteur du Transkei (demandeur) et un vendeur autrichien (défendeur) / Tribunal arbitral siégeant en Suisse / Droit applicable au fond / Contrat stipulant que le droit suisse est applicable /Art. 13(3) du Règlement CCI / Application des règles de conflit suisses, loi fédérale suisse de d.i.p., Art. 116, 176, 187 / L'art. 3 de la Convention de La Haye de juin 1955 ne s'applique qu'en l'absence de choix des parties

'The contracts provide that "[i]n case of litigation relating to the present contract, only the Swiss law is applicable". The Partial Award has considered and determined the impact of this provision on the issues it resolved. The Tribunal now needs to address its impact on the merits of the dispute before it. In doing this, the Tribunal must first determine the precise scope and content of this provision. It must then decide to what extent this choice of law clause can displace otherwise applicable law.

Defendant has contended that all this clause does is to declare Swiss law applicable to litigation: "Outside of the context of litigation the clause has no vocation."

The choice of law clause appears in the very same Article that provides for arbitration. This context renders it appropriate to read litigation as encompassing arbitration. This reading is also supported by the circumstance that it would make little sense to provide for the application of Swiss law in litigation, but not in arbitration that might lead to litigation. This can hardly have been in the contemplation of the parties.

Once "litigation" is read as encompassing "arbitration", this clause's impact is clear. It directs

the arbitrators to apply Swiss law. Significantly, this provision does not provide that Swiss law is applicable to litigation, i.e. arbitration, but that Swiss law applies "[i]n case of litigation [i.e., arbitration]". Consequently, the direction to the arbitrators is to apply Swiss law without any qualification or limitation.

This does not necessarily mean that the Tribunal must apply Swiss law to all issues before it. For the extent to which consequence is given to the parties' choice of law depends on the choice of law rules the Tribunal is to apply.

Article 13(3) of the ICC Rules authorizes the arbitrators to refer to the conflicts of law rule they deem appropriate only in the absence of a contractual choice of applicable law. As a consequence, in order to determine to what extent consequence should be given to the parties' choice of law, the Tribunal must apply the applicable choice of law rule without reference to the ICC Rules.

In the case at hand, Zurich, Switzerland, is the seat of the arbitration. It would therefore appear appropriate to apply in this context the conflict of law rules contained in applicable Swiss statutes. The applicable Swiss law is contained in Article 176 of the Swiss Federal Law on Private International Law of January 1, 1989 ["IPRG"], which provides that the provisions on international arbitration in Chapter 12 apply to arbitral tribunals with their seat in Switzerland when at least one of the parties, at the time of conclusion of the arbitration clause, did not have its domicile or residence in Switzerland.

The applicable Swiss statute will therefore determine in the first instance to what extent the parties' choice of law will be honored. Article 187 (1) of the IPRG provides that the arbitral tribunal must resolve the dispute in accordance with the law chosen by the parties. But there is an exception to that general rule. It is provided by Article 19 (1) of the IPRG. According to this Article, the otherwise applicable law may in certain circumstances be displaced by mandatory law of another state. Whether this provision can find application in the case at hand will be considered below . . .

The Defendant has also argued that a contractual choice of law clause must share the fate of the contract in which it is embodied. Accordingly, if the contract in which the clause is embodied is invalid, the contractual choice of law falls with it. As stated by the Defendant, "[t]here is no 'severability doctrine' in respect of choice of law clauses". The Tribunal need not rule upon this contention, since it finds the contracts at issue here perfectly valid and enforceable. However, it may also be noted, although superfluously, that, in the Tribunal's judgment, the same arguments that justify the severability doctrine in relation to arbitration clauses may equally justify finding a choice of law clause to be severable.

Finally, the Defendant has argued that the choice of law clause was obtained by undue influence and is therefore unenforceable. This argument is based on the contention that the Claimant dictated the terms of the contracts and that the Defendant's officials, because they had been bribed and corrupted, "merely signed without regard to the contents of the proposed understandings".

The Tribunal also rejects this argument. It is based on the unproven premise that the Defendant's officials were bribed and corrupted.

Equally to be rejected is the Defendant's contention that, according to Article 118 of the IPRG, international sales of goods are governed by the 1955 Hague Convention on the Law Applicable to International Sales of Goods and that Article 3 of that Convention refers to the law of the buyer. This contention fails, because Article 3 of the Convention provides specifically that it applies only in the absence of a valid contractual choice of law. Furthermore, Article 116 of the IPRG confirms the generally prevailing rule that contracts are governed by the law chosen by the parties.

The Swiss law relating to contracts of sale is contained in Articles 184-236 of the Swiss Code of Obligations and The Hague Convention of June 15, 1955, on the Law applicable to International Sales of Goods, effective in Switzerland as of October 27, 1972. The latter Convention contains only choice of law provisions.'