A Brief Overview of Unidroit Principles of International Commercial Contracts (PICC) 2010

The Principles of International Commercial Contracts (“PICC” or the “Principles”) of 2010 is a document prepared by the UNIDROIT that intends to assist in harmonization of international law of commercial contracts.

Abdülkadir Güzeloğlu & Tarık Kurban

UNIDROIT (Institut International pour l’Unification du Droit Privé) is an international organization that aims to harmonize of private international law. Its projects include, among many, drafting international conventions and model laws. As of 2017, UNIDROIT has more than 60-member states, including Turkey.

The Principles of International Commercial Contracts (“PICC” or the “Principles”) of 2010 is a document prepared by the UNIDROIT that intends to assist in harmonization of international law of commercial contracts.

Unlike binding instruments which are applicable if the relevant contract falls within their scope and the parties have not excluded their application, e.g. 1980 United Nations Convention on Contracts for the International Sale of Goods (“the CISG”), the PICC, being a “soft-law” instrument, offers a greater range of possibilities.

Purpose of the PICC

The Preamble of the PICC states that the Principles set forth general rules for international commercial contracts.

The “International” Character of Contracts

According to the commentary section of the Preamble of the Principles, the international contracts are the contracts that exclude only those situations where no international element at all is involve, such as where all the relevant element of the contract in question are connected with one country only.

The Application of the Principles

In the Preamble the possible implementations of the PICC are indicated as follows:

•The Principles shall be applied when the parties have agreed that their contract to be governed by them.

•The Principles may be applied when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like.

•The Principles may be applied when the parties have not chosen any law to govern their contract.

•The Principles may be used to interpret or supplement international uniform law instruments.

•The Principles may be used to interpret or supplement domestic law. They may serve as a model for national and international legislators.

Implementation of the PICC to International Contracts

One of the main ideas behind the PICC is that parties can adopt to indicate more precisely in what way they desire the UNIDROIT Principles to be used during the performance of the contract or when a dispute arises.

There are four main methods for implementation of the PICC in to a contract.  The parties should choose one of the below in accordance with their ultimate purpose.

i. The Parties can choose the UNIDROIT Principles as the rules of law governing the contract.

ii. The parties can decide to incorporate the UNIDROIT Principles as terms of the contract.

iii. The parties can refer to the UNIDROIT Principles to interpret and supplement the CISG when the latter is chosen by the parties, or,

iv. The parties can refer to the UNIDROIT Principles to interpret and supplement the applicable domestic law, including any international uniform law instrument incorporated into that law.

In order to decide which method more suitable with the purposes of the parties, the parties should have comprehensive knowledge of the advantages and disadvantages of each of abovementioned.

Apart from the implementation method, parties should specify the execution moment of the UNIDROIT Principles. The parties can choose one of two different execution moments in accordance to their objective, one for inclusion in the contract (“pre-dispute use”) and one for use after a dispute has arisen (“post-dispute use”).

A pre-dispute arbitration agreement is an agreement made by parties with a seperate agreement or with an arbitration clause that installed in the main contract before any issues or problems arise. However, post-dispute arbitration agreement is made after the an issue that could lead to litigation has arisen. The parties submit the case to binding arbitration instead of file lawsuit before the courts.

The parties can adapt the Principles in their contract in accordance with their aims and demands by choosing one of the above-mentioned options by their desire. Due to flexibility and other entailing options concerning drafting process of contracts an increasing number of users prefer implementing UNIDROIT Principles of International Commercial Contracts to their contracts.

Should you have any other questions or inquiries about International Trade LawCorporate Law and International Arbitration, you may reach us at info@guzeloglu.legal for more information on

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