The parties entered into agreements aimed at developing Respondent into an efficient cement producer with a firm position in the export market. Claimant accused Respondent of violating the text and spirit of their agreements. After presenting the parties' claims, the Arbitral Tribunal discussed the question of the applicable law, which led it to make reference to the <b>Unidroit Principles</b>. No further reference was made to the Principles or "relevant trade usages" later in the award.

Applicable law

'[1] According to article 17 of the Rules, the primary source of the law applicable to the merits of the dispute is determined by the will of the parties. In article 5 of the Export Company Agreement, as well as in article 4 of the AEER [Agreement on Exclusive Export Rights, Upgrading of the Plant and Delivery of Cement], the parties have agreed that: "This agreement is governed by Lithuanian law." This choice of law clause has been interpreted as providing that Lithuanian law is to govern both the formation of the contract and the rights and duties of the parties arising from the contract as well. Throughout the proceedings the choice of Lithuanian law has not been disputed by the parties. (Claimant has expressly confirmed that the applicable law is Lithuanian and Respondents have impliedly confirmed this choice by invoking the provisions of the respective Lithuanian laws and arguing their applicability.)

[2] In its closing arguments Claimant has expressed the view that it is legitimate to look to the Unidroit Principles of International Commercial Contracts and the Principles of European Contract Law as a source of usage, customs and practice and that they are to be relied on when interpretation of the law is necessary in order to determine the parties' rights and obligations. Article 17 of the Rules confirms reliance on trade usage: "In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages." Both sets of principles represent the latest codification of international commercial trade usages. However, unless expressly incorporated by agreement between the parties, which they are not, they are not of mandatory but only of persuasive nature. Therefore, when necessary, the Tribunal refers in this Award to "the relevant trade usages" and such reference includes, but is not limited to, the Unidroit Principles and Principles of European Contract Law.'