An agreement was made between the parties relating to the exportation of Bulgarian goods obtained by Respondent for countertrade purposes to cover supplies to be made in Bulgaria by a company belonging to the same group as Claimant. Respondent was to be paid commission on sums credited to a bank account in payment of the Bulgarian exports. Claimant asserts that no payment had been made into the bank account, that an order had not been honoured (thereby forcing it to purchase replacement goods), and that Respondent had never repaid it interest unduly collected on payments it had made in advance. The sole Arbitrator begins with two interlocutory questions: his jurisdiction and the applicable law. He considers that the arbitration clause contained in the initial agreement between the parties may be extended to the subsequent sales contracts made pursuant to such agreement, since, in his view, the latter is a framework agreement. As far as the law applicable to the merits is concerned, he rules out lex mercatoria and the <b>Unidroit Principles</b> and decides that French law is applicable. This being so, he considers that the United Nations Convention on Contracts for the International Sale of Goods should be applied in the first place. As regards the merits, and in the face of a situation complicated by lack of clarity and coherence in the documents, the Arbitrator proceeds to qualify the relationship between the parties. He finds that, although the agreement did not contain any precise obligations which, if unperformed, could justify sanctions, at the performance stage Respondent had made an undertaking which it had failed to fulfil. The Arbitrator determines the sum due by Respondent as a result of such failure. Next, he dismisses the request for compensation to cover non-payment of a 'premium' and then considers whether Claimant is entitled to damages for alleged unperformed orders. Lastly, he refuses to order the refunding of interest on a payment made in advance, owing to lack of proof. The Arbitrator considers he has jurisdiction to fix the amount of interest due on the sums contained in the Award and refers to the average interbank rate, applying 5% to the debt in Swiss francs and 8% to that in US dollars. The arbitration costs are halved between the two parties.

<i>With respect to the applicable law:</i>

'The arbitration clause does not specify the substantive law that the arbitrator has to apply. It is therefore up to the arbitrator to determine this, as stated, moreover, in point D10 of the Terms of Reference.

The Claimant has covered this question in its Brief and, more specifically, has argued that, in absence of any reference to a specific national law, the demands are based on the universally acknowledged principles of international commerce, allowing the arbitrator to pronounce his decision in the light of the so-called "lex mercatoria", a kind of codification of which can be found in the principles of international commercial contracts drawn up by Unidroit. Otherwise, in the event that reference needs to be made to a national law, French law has to be applied, given that the Agreement between X and Y has become an integral part of the Accord and the application of French law is explicitly provided in said Agreement . . .

The undersigned arbitrator is not convinced of the applicability of the so-called lex mercatoria. While acknowledging the authoritativeness of the school of thought that has posited the existence of such an unwritten and supranational law, based on principles and usages generally accepted by players in international commerce (the so-called mercatores), and although aware that there have even been awards in international commercial arbitration where explicit reference is made to lex mercatoria, the undersigned arbitrator sides with the other school of thought that does not believe in the existence of lex mercatoria and which firmly believes that the search for a law that can be applied to a contractual relationship must necessarily lead to the identification of a national law. This is all the more so since, in accordance with the provisions of Article 13.3 of the ICC Rules (consistent with the provisions of Article VII of the Geneva Convention of 1961), the arbitrator, barring any indication by the parties, is required to apply the law that is applicable on the basis of the rules of conflict that he considers to be appropriate.

Whereas, on the one hand, the parties maintain their freedom of choice regarding the legal regulation of their relationship, on the other hand, failing the expression of such choice, the power of the arbitrator is not to choose the applicable law in a direct way, but is limited to identifying the rule of conflict that he considers to be the most appropriate and on the basis of which, in an indirect way, the determination of the applicable law will be made. This means that, by proceeding in this manner (as is his precise duty), the arbitrator necessarily arrives at the designation of a specific national legal system.

Notwithstanding this, the arbitrator must in all events take account not only of the contractual stipulations, but also of trade usages (as provided for in Article 13.5 of the ICC Rules). In other words, precisely due to their general acceptance by the mercatores community, trade usages can be considered to be tacitly acknowledged by the parties in their contractual relationship. Such usages incorporate the contractual regulation of the relationship, though without excluding the need to identify the relevant legislative framework.

With regard to the Principles drawn up by Unidroit, it is quite true that these may be considered as a kind of codification of the lex mercatoria, but once again these are the results of highly commendable work of academic research and comparison, as well as the reflection of an increasingly eager aspiration to arrive, as it were, at a globalization of legal thinking, though without attributing any binding value to such Principles. (*)

(*) The Introduction to the Principles states that: ". . . the Governing Council is fully conscious of the fact that the Principles, which do not involve the endorsement of Governments, are not a binding instrument".

This means that the Unidroit Principles could certainly be used for reference by the parties involved for the voluntary regulation of their contractual relationship, in addition to helping the arbitrator in confirming the existence of particular trade usages, but they cannot constitute a normative body in themselves that can be considered as an applicable supranational law to replace a national law, at least as long as the arbitrator is required to identify the applicable law by choosing the rule of conflict that he considers most appropriate, in accordance with the provisions laid down by the international conventions and as provided for in the rules of arbitration within the scope of which he operates. (**)

(**) The Preamble to the Principles states that: "Parties who wish to adopt the Principles as the rules applicable to their contract would however be well advised to combine the reference to the Principles with an arbitration agreement."

However, it is feasible to accept the Claimant's second argument regarding the applicability of French law, the moment the parties have declared such Agreement, in which the application of French law is explicitly provided, to be an "integral part" of their Accord. It is up to the arbitrator to find out whether and to what extent the parties have an intent with regard to the applicable law, even when an explicit choice is not apparent. The arbitrator replaces the parties in the search for an applicable law only when no "indication" whatsoever has been expressed by the parties in this respect (Article 13.3 of the ICC Rules), which precisely means that it is up to the arbitrator to discover the intent of the parties, wherever possible, also by means of elements pointing to an implicit intent. In our case it is therefore possible to assume that, having incorporated the Agreement into the Accord, the parties have implicitly expressed their wish to submit their contractual relationship to the same system of law (French law) as that to which the Agreement was explicitly subject.

It has to be mentioned, however, that since most claims are based on alleged breaches of contract for the supply of goods, the arbitrator must first of all apply the United Nations Convention on Contracts for the International Sales of Goods adopted in Vienna on 11 April 1980 (hereinafter the "Vienna Convention" or "CISG"), making reference to all the conditions that, in this particular case, make it applicable on the basis of the provisions in Article 1 [of said Convention] and more precisely:

the sale of goods, that is, the subject of the contract;

the international nature of the relationship, given that the parties have their business centres in different countries;

accession to the CISG by the two countries (Switzerland and Liechtenstein) where the parties are based and (should it be necessary);

France's accession to the CISG, given that French law is considered applicable.'