In 1988, the parties entered into a distributorship agreement governed by Swedish law, pursuant to which the claimant, an Italian company, acquired exclusive rights to market in Italy products manufactured and supplied by the Swedish respondent. As part of the agreement, the claimant undertook to sell minimum quantities of the products and to inform the respondent if it became aware of any infringement of, or attack upon, the respondent's intellectual property rights in Italy. In 1995, the respondent announced its wish to terminate the agreement due to the claimant's failure to inform it of an infringement of the respondent's intellectual property rights in Italy. The parties nonetheless continued their business relationship until 1999, when the respondent informed the claimant of the termination of their cooperation due to insufficient sales of products. The claimant initiated arbitration proceedings, alleging the termination to be invalid and claiming damages for the violation of its rights. A general reference is made to the UNIDROIT Principles in the arbitral tribunal's discussion of the claimant's request for compensation for the unjustified termination of the agreement.

'[Claimant] is of the opinion that it is entitled to compensation for damages due to the unjustified termination by [Respondent] of the Agreement. [Claimant] submits that the 1999 Termination amounted to a breach of the Agreement in as much as it did not respect the notice period. [Claimant] submits that a determination of such notice period, which [Respondent] should have respected, should, in application of Swedish law, reflect the 11 years of relationship between the parties, but should not be inferior to six months.

[Claimant] claims for financial compensation of the damages suffered by [Respondent]'s breach of the Agreement on the following grounds:

a) loss of profit during the notice period non-respected in an amount of . . . per month of such non-respected notice period,i.e. . . . for a six months period;

b) loss of profit for orders issued prior to [the 1999 termination] and not honored by [Respondent], in an amount of . . .;

c) costs incurred for trade fairs and work-shops carried through by [Claimant] prior to the 1999 Termination and for which [Claimant] was deprived of the commercial return in terms of profits. [Claimant] claims . . . on that account;

d) lost goodwill due to the abrupt termination in an amount of . . .;

e) termination indemnity on the basis of EEC Council Directive 86/653 of December 18, 1986 in an amount of . . .;

f) repurchase of [Respondent] stock held by [Claimant] in an amount of . . .;

g) compensation for damaged trading image, arbitration costs including legal fees and expenses and punitive damages, all together in an amount of . . .;

h) [Claimant] claims interest on the sums above in the rate corresponding to the Official Discount Rate of the European Central Bank as of [the termination date].

[Claimant] raises all these claims on the basis of Swedish law (the EEC Council Directive 86/653 having been transposed into Swedish law). [Claimant] submits that the Swedish law on Commission Agents (law 1914:43) is applicable to it and that its damage claims should be determined on the basis of Article 51.1 of said law, which states:

1. If a proper period of notice has been disregarded when terminating a commission, the failing party shall indemnify the other party for its loss caused by the wrongful notification. The same shall apply when a definite commission is terminated before it is due to expire.

With respect to the length of the notice period, [Claimant] submits that on the basis of Swedish case law, the appropriate notice period for a long-term relation such as the one between [Claimant] and [Respondent] on the basis of the Agreement would be of twelve months.

Regarding its monetary claims, [Claimant] submits that they should be determined with due regard being given to Article 52.1 of the law on Commission Agents, which states:

1. If a Commission Agent has a commission of a long lasting basis, it shall be duly indemnified for any loss of investment, which the commission Agent cannot cover because of the termination of the commission, e.g. any investment in a building, a storeroom, machinery, transportation vehicles or any other investment of such a kind, which the Commission Agent has made because of the commission and as agreed between or in mutual understanding with the principal.

In addition, [Claimant] submits that due regard must also be given to general principles of Swedish contract law as such can be inferred from Article 67 of the Swedish Law on Sale of Goods (Law 1990:931), which states in its pertinent parts:

Indemnification upon breach of contract includes remuneration of costs, price differences, default of profit and other such direct and indirect cost caused by the breach. […]

An indirect loss is:

1. a loss which ensues through a diminished or declining production or turnover;

2. […]

3. any reduction of profit, which is caused by the loss of a contract with a third party or by the incorrect fulfillment of such a contract; or

4. any other similar loss if it was difficult to predict.

[…]

[Claimant] also invites the Arbitral Tribunal to make reference to general principles of international trade law such as the UNIDROIT Principles and equity.

. . . . . . . . .

The Arbitral Tribunal, in accordance with general principles of Swedish law on compensation of damages for breach of contract, holds that [Claimant] is entitled to be compensated for all damages including loss of profits it suffered due to [Respondent]'s breach of the Agreement. In this respect, Swedish law foresees that the victim of a breach of contract may claim to be put, in terms of financial compensation, in the same situation it would have been in if the breach had not occurred ("positive interest" or interest in correct performance). [Respondent], in its legal submissions in this respect, does not contest this very principle. The legal texts cited by [Claimant] do merely reflect in specific areas this wider principle under Swedish law. Given that the relation between the parties is neither one of simple sales contracts nor of a commission agency, but an exclusive distributorship, such general principle of Swedish law on compensations will guide the Arbitral Tribunal in its decision on the quantum of [Claimant]'s claims.'