In 2000, a German company (Claimant) entered into a contract to purchase cement from a Thai company (Respondent). The applicable law was determined by the arbitral tribunal as set forth below.

'Clause 18 of the Contract provides (first sentence) that: "The parties hereby agree that Swiss internal law shall be applicable to this contract . . .".

As the choice of law is in the present case not restricted by a mandatory provision of the national law of the parties or by the one of the place of arbitration, there is no reason to disregard the choice of the parties in respect of the applicable law.

The scope of Swiss law must however still be determined in view of the limitation of the applicable law to the Swiss internal law. Obviously, the parties have excluded the Swiss rules on conflict of laws. However, since the dispute arose in a matter of sale of goods, one should examine whether the UN Convention on the International Sales of Goods (CISG or the Convention) to which Switzerland is a party shall apply. The inclusion of CISG as integral part of Swiss law is undisputed. The courts must apply its provisions to the same extent as the internal law and not as a foreign law (Pierre Tercier, Les contrats spéciaux, 2003, N° 13 37). The Sole Arbitrator will therefore apply the CISG as part of Swiss internal law.

In addition, the parties have also explicitly referred to Incoterms 1990 as follows (Clause 18 para 2) : "In so far as applicable and to the extent, in which they do not contravene with the terms hereof Incoterms 1990 shall apply."

The Incoterms published by the ICC have codified the usage of the international trade. Swiss courts apply them as trade usage. Consequently and to the extent that they are relevant, the Incoterms 1990 will apply.'