THE NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

Project Synopsis

Topic: Applicability of the UNIDROIT Principles of International

Commercial Contracts

Subject: International Trade Law

Submitted to: Submitted by:

Ms. Monika Raje Tejas Sateesha Hinder

(Faculty, International Trade Law) (2018BALLB69)

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Introduction

The purpose of UNIDROIT Principles is to provide a set of rules which can be applied to all
types of international commercial contracts. These rules are intended to create an equal and
fair situation for both parties, and are suitable for the needs and fast progress of international
commercial relations.

The UNIDROIT Principles were prepared by a study group consisting of lawyers, judges and
other officers who are experts in the fields of contract and international commercial law, and
who represent different systems of law and socio-economy.

The UNIDROIT Principles include fair provisions which balance the rights and obligations of
both parties to the contract since they were not prepared to protect the interests of a certain
sector. The UNIDROIT Principles abstained from using terminology which is unique to a
certain system of law and thus, ensure that the parties are placed at an equal legal level.
Similarly, the UNIDROIT Principles were not prepared only for a certain type of contract,
but aim to regulate the law of contracts in general. Thus, the UNIDROIT Principles are
flexible in nature and adaptable to the special circumstances of the contractual relationship
and the various interests of the parties. This flexibility also ensures that the UNIDROIT
Principles can be easily adapted to the constant and fast technical and economic changes that
occur in the field of international commerce. The UNIDROIT Principles did not adopt the
solutions accepted by most of the countries (common core approach); but adopted more
suitable solutions for cross border commercial relations (better rule approach).

Statement of Problem

The incorporation of the UNIDROIT Principles into international commercial contracts, or

choice of them as the applicable law to a contract, is not very widespread among the
international business community, the reason for which maybe the scepticism concerning the
application of the UNIDROIT Principles by national courts, and even by the arbitral
tribunals.

Hypothesis

The UNIDROIT Principles are not a rigid and limitative legal source but instead leave
considerable room for flexibility, either to accommodate specific provisions to further
individual parties’ interest in their private dealings, or to promote national trade and

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economic policies, which in-turn makes the Principles a unique tool to be adapted into any
contract and arguably protect the parties’ just expectations arising from their contract.

Research Methodology

The adopted method of research is the Doctrinal Method.

Objectives

1. To discuss the barriers erected by traditional theories of contract law;

2. To understand the attitude taken by national lawyers when applying uniform law and
enquires how this attitude is formed;
3. To understand why the aforesaid attitude provides an obstacle to the success of
uniform law and considers ways in which it could be changed;
4. To analyse how seemingly opposite positions in the modern and traditional theory of
private international law can be reconciled and considers the ways in which uniform
contract law can be applied within a domestic law context as lex contractus.

Research Questions

1. How are the UNIDROIT Principles applied where they are explicitly chosen as
applicable law by the parties in their agreements?
2. Whether or not the UNIDROIT Principles could be used as applicable law where the
parties have not made any express choice of law in their agreement?
3. Can the points of resistance and gaps in interpretation identified be tackled by
developing an autonomous methodology of interpretation of transnational contract
principles?
4. What is the reason behind the limited usage of the Principles?

Review of Literature

1. Bruno Zeller, The UNIDROIT Principles of Contract Law: Is There Room for
Their Inclusion into Domestic Contracts?, Journal of Law and Commerce
26(1&2) (2006-07): This paper is not concerned how the Principles have influenced
arbitral decisions or how transplantation will affect domestic contract law. Nor is this
paper concerned with cross border transactions. Of interest is only the effect an
express inclusion of the Principles or just some provisions would have on a domestic
contract. This paper is merely an exploration of possibilities in contracting which has

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 been brought about by taking a different view on contractual obligations. This view is
based on comparative work which has mainly concentrated on legal principles to be
applied in international trade but as argued can also be extended to domestic
situations.
2. Maren Heidemann, Methodology of uniform contract law: The UNIDROIT
principles in international legal doctrine and practice, (Jan. 2007): This study
examines uniform contract law in legal methodology and considers the barriers which
exist toward it in modern nation states. It explores ways in which these barriers can be
overcome and considers whether it is thereby possible to create a specific
methodology of international contract law. Through exploring these three areas, this
thesis intends to distinguish and analyse the main obstacles to the application of
uniform contract law.
3. Giuditta Cordero-Moss and Daniel Behn, The relevance of the UNIDROIT
Principles in Investment Arbitration, University of Oslo (2015): This article aims at
ascertaining the role and relevance of the UNIDROIT Principles of International
Commercial Contracts (PICC) in investment arbitration. A sub-set of these
international arbitrations arise in the context of investment disputes; and while many
of the rules governing the applicable law to this sub-set are similar to commercial
arbitration, there are also key distinctions. This article looks specifically at the sources
that regulate which law is applicable in investment arbitration in general. An analysis
of these sources will show that, to varying degrees, investment arbitration is open to
the application of sources such as ‘rules of law’ and international law, independently
or in combination with national law. Using a comprehensives set of investment
arbitration cases referencing the PICC, this article assesses to what extent the PICC
have been or may be used as ‘rules of law’ that govern the dispute, as a source of
international law, as corroboration of international law, as corroboration of national
law or as a correction of national law.

Chapterization

1. Introduction
2. The UNIROIT Principles and Contract Law
3. Application of UNIDROIT Principles as the Applicable Law chosen by Parties
4. Application of UNIDROIT Principles In The Absence of Choice of Law by Parties
5. Common but differential applications in arbitrable and non-arbitrable disputes

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6. Conclusion