Pursuant to a distribution agreement, Respondents granted Claimant 1 an exclusive right to distribute certain of Respondent's products in the markets of Singapore, Malaysia, the Philippines and Thailand. The contract was terminated by an agreement signed by Respondents and Claimant 2 acting on its own and Claimant 1's behalf. The termination agreement expressly refers to the main agreement with respect to disputes regarding its interpretation or validity. A dispute arose in connection with the interpretation of Article 1 of the termination agreement providing for repurchase of Claimants' inventory by Respondents on the basis of Respondents' invoiced prices stated in Belgian francs. The parties agree to the price being paid in Singaporean dollars, converted from Belgian francs, but disagree on the exchange rate to be used. Claimants argue for the application of the exchange rate in force when the inventory was initially purchased and Respondents for that in force at the date of the termination. The sole Arbitrator holds that the exchange rate for the conversion of the Singaporean dollars into Belgian francs is the rate at the date when the payment was due under the termination agreement. In so doing, he refers to the principle of nominalism, upheld by Swiss case law and scholarly opinion and by the <b>Unidroit Principles</b> (Article 6.1.9(3)). Since this corresponds to what Respondents had already paid, Claimants' request for application of the rate at the date the inventory was initially purchased is rejected. Arbitration costs and Respondents' normal legal fees are to be borne by Claimant.

<i>With respect to the applicable law and principles of contractual interpretation:</i>

'The determination of the exchange rate to be applied to Claimant's claim under Art.1 of the Termination Agreement requires interpretation of said stipulation under the applicable law.

The parties have agreed that the choice of law clause contained in Art. 36 of the Distribution Agreement and referring to the laws of Switzerland as the governing law of their contract shall also be applicable to the Termination Agreement. This agreement constitutes a valid choice of law clause and, according to the wording of Art. 36 of the Distribution Agreement, also applies to the interpretation of the contracts.

Under Swiss law, contract interpretation is governed by Art. 1 and 18 of the Swiss Code of Obligations (Obligationenrecht) in connection with Art. 1, Sec. 2 of the Swiss Civil Code (Zivilgesetzbuch). These provisions require the Arbitrator to look first for corresponding intentions of the parties as expressed in the contractual stipulations (Swiss Federal Tribunal BGE 105 II 16; 111 II 457; Guhl, Das Schweizerische Obligationenrecht, 8th ed. 1991, at 97). If no such natural consensus can be discerned, the Arbitrator has to look for the parties' implied or normative consensus. Towards this end the Arbitrator has to discern what reasonable parties acting in good faith must have expressed as their common intentions at the moment of conclusion of the contract . . . The principle of good faith thus establishes a "presumption of reasonableness" to be followed by the Arbitrator in his task of construing the contractual provision in dispute. Starting from the wording of the contractual stipulation this objective interpretation has to take into account not only the conduct of the parties before and after the conclusion of the contract but also the purpose of the contract and of previous contracts concluded between the same parties and the economic context in which it was concluded . . .'

<i>With respect to the exchange rate agreed upon by the parties:</i>

'In answering this question one has to focus again on Art. 1(c) of the Termination Agreement. It must be determined whether this provision can be considered to contain an implied currency clause, fixing the date of conversion to the date of the individual purchase of each item of inventory. Since such a will is not expressed on the face of said provision, one has to apply the principles of objective interpretation as outlined . . . above.

Every attempt that tries to give Art. 1(c) of the Termination Agreement such a broad meaning has to take into account the principle of nominalism. This principle provides that absent a specific provision in the agreement of the parties each debtor has to pay a monetary debt at its nominal value. Therefore, without any special agreement, each party carries the risk of currency depreciation. The principle of nominalism is a general principle of transnational law. It is laid down not only in Swiss court decisions and doctrinal writings . . . but also in Art. 6.1.9(3) of the Unidroit Principles of International Commercial Contracts, allowing the obligor to make payment of a money debt expressed in a currency other than that of the place for payment in the currency of that place "at the rate of exchange prevailing there when payment is due" (Unidroit (ed.), Principles of International Commercial Contracts, 1994, at 127). As a consequence of this general principle of law, international arbitral tribunals are very reluctant to intervene into a contract because of inflation and currency depreciation in the absence of a specific currency depreciation clause . . .

This principle sets high standards for the Claimant who, according to the general principles of actori incumbit probatio, carries the burden of proof for a specific currency clause contained in the agreement of the parties. The Tribunal is not convinced that Art. 1(c) of the Termination Agreement contains such a currency clause. . . .'