In 2001, a Romanian company (Claimant) contracted to sell paper to a UK company (Respondent). The sole arbitrator referred to the Incoterms rules when interpreting the contract's reference to 'international law' as the governing law.

'Article 14 of the Contract states: "the present Contract is governed by international law". It is clear that [Respondent], by executing the Contract, agreed that English law was not applicable. The issue is therefore the interpretation of the terms "international law".

The Contract is a sales contract entered into between two entities established in two different countries. Given the fact that they renounced during the negotiations to refer to a national law, the terms "international law" cannot refer to the portion of so-called private international law of a national law. Indeed, "private international law" as applied to international contracts consists of a set of rules of conflict of laws which help the judge or the arbitrator to determine the law applicable to the contract.

The Sole Arbitrator is persuaded that the parties wished to depart from a national system. They did not want to apply the private international law of an undetermined national legal system. The Sole Arbitrator agrees with Claimant that "international law" should be understood as international rules applicable to international contracts.

This complies with the terms of Articles 17-1 and 17-2 of the ICC Rules of Arbitration which authorize the parties or the arbitrator not to apply a national law to a contract.

Furthermore, the Sole Arbitrator notes that the parties implicitly referred in the Contract to the application of trade usages (Article 17-3 of the ICC Rules for Arbitration) such as Incoterms, by stating in article 3 "Price" and in the Addendum that the Contract price was in "USD M/T Ex works [Claimant] Constanta".

Accordingly, the Sole Arbitrator considers that the terms "international law" used by the parties refer to lex mercatoria and general principles of law applicable to international contractual obligations such as the ones arising out of the Contract. Such general principles are reflected in the UNIDROIT Principles of International Commercial Contracts which will be applied for the determination of the parties' respective claims in this arbitration.

As to the application of the PECL, i.e. principles established further to an initiative of the Commission of the European Union in order to harmonize private law within the State members of the European Union, the Sole Arbitrator notes that they constitute an academic research, at this stage not largely well-known to the international business community and are a preliminary step to the drafting of a future European Code of Contracts, not enacted yet. Claimant's claim for application of the PECL is therefore rejected.'