UNCITRAL 2012 Digest of Case Law on the Model Law on ...

a production plant, sales/marketing base, 15 distribution,
transport, or the place where the financial and administrative
functions <strong>of</strong> the business are carried out. Ascertaining the
place <strong>of</strong> business may be difficult if a respondent refuses to
disclose its own identity or its place <strong>of</strong> business. 16
Place where a substantial part <strong>of</strong> the obligations
is to be performed—paragraph (3)(b)(ii)
4. Article 1 (3)(b) and (3)(c) broadens the notion <strong>of</strong> internationality.
Paragraph (3)(b)(ii) refers to the “place where
a substantial part <strong>of</strong> the obligations <strong>of</strong> the commercial relationship
is to be performed”. In interpreting that phrase, a
Hong Kong court clarified that the place where the breach
<strong>of</strong> obligations occurred was not a relevant consideration. 17
5. Courts have held that, in cases concerning agreements
for the sale <strong>of</strong> goods, the place <strong>of</strong> delivery and acceptance
<strong>of</strong> goods 18 or <strong>of</strong> transfer <strong>of</strong> risks and loading operations 19
should be considered as the place where a substantial part
<strong>of</strong> the obligations was performed. In cases involving agreements
between parties having their place <strong>of</strong> business in the
same jurisdiction, the arbitration was considered international
because goods were to be transported between ports,
and it was considered that the place where a substantial
part <strong>of</strong> the obligations was undertaken was situated outside
the jurisdiction. 20 While the courts in the cases referred to
in this paragraph appeared to have generally interpreted the
term “a substantial part” <strong>of</strong> the obligations to mean “most
<strong>of</strong>” the obligations, one court took a different approach and
considered that so long as some substantial activities were
performed outside the place <strong>of</strong> business <strong>of</strong> one <strong>of</strong> the parties,
the arbitration could be considered as international. 21
Part one. <strong>Digest</strong> <strong>of</strong> case law 9
Place with closest nexus to the subject-matter
<strong>of</strong> the dispute—paragraph (3)(b)(ii)
6. It has been held that even where both parties had their
places <strong>of</strong> business in the same State and the agreement was
governed by the law <strong>of</strong> that State, if the place <strong>of</strong> substantial
performance <strong>of</strong> the contract and the place with which the
subject matter <strong>of</strong> the dispute was most closely connected
were in different States, the arbitration agreement would
still fall within the meaning <strong>of</strong> “international” under paragraph
(3)(b)(ii). 22 In an agreement for the design <strong>of</strong> a project,
a court concluded that, even though the parties’ places
<strong>of</strong> business were in the same State, the arbitration was still
international because the agreement provided that the overall
supervision and development <strong>of</strong> the project was to be
carried out in another State and, therefore, was most closely
connected with that State. 23
“Commercial”—footnote to paragraph (1)
7. The Model <strong>Law</strong> does not provide a strict definition
<strong>of</strong> the term “commercial”. The footnote to article 1 (1)
calls for “a wide interpretation” and <strong>of</strong>fers an illustrative
and open-ended list <strong>of</strong> relationships that might be
described as commercial in nature, “whether contractual
or not”. 24 The purpose <strong>of</strong> the footnote is to circumvent
any technical difficulty that may arise, for example, in
determining which transactions should be governed by a
specific body <strong>of</strong> “commercial law” that may exist in
some legal systems. Several decisions have indeed
adopted this approach by providing that the term “commercial”
should be construed broadly having regard to
manifold activities which form an integral part <strong>of</strong>
15 McDowell Valley Vineyards, Inc. v. Sabaté USA Inc., District Court, California, United States <strong>of</strong> America, 2 November 2005, [2005]
WL 2893848 (N.D. Cal. 2005), where the term “place <strong>of</strong> business” is interpreted in the context <strong>of</strong> article 1 <strong>of</strong> the United Nations
Convention on Contracts for the International Sale <strong>of</strong> Goods (Vienna, 1980).
16 CLOUT case No. 601 [China Ocean Shipping Co., Owners <strong>of</strong> the M/V. Fu Ning Hai v. Whistler International Ltd., Charters <strong>of</strong> the
M/V. Fu Ning Hai, High Court—Court <strong>of</strong> First Instance, Hong Kong Special Administrative Region <strong>of</strong> China, 24 May 1999], [1999]
HKCFI 693, also available on the Internet at http://www.hklii.hk/eng/hk/cases/hkcfi/1999/655.html.
17 CLOUT case No. 20 [Fung Sang Trading Limited v. Kai Sun Sea Products and Food Company Limited, High Court—Court <strong>of</strong> First
Instance, Hong Kong, 29 October 1991], [1991] HKCFI 190, also available on the Internet at http://www.hklii.hk/eng/hk/cases/
hkcfi/1991/190.html.
18 CLOUT case No. 20 [Fung Sang Trading Limited v. Kai Sun Sea Products and Food Company Limited, High Court—Court <strong>of</strong> First
Instance, Hong Kong, 29 October 1991], [1991] HKCFI 190, also available on the Internet at http://www.hklii.hk/eng/hk/cases/
hkcfi/1991/190.html; CLOUT case No. 58 [Ananda Non-Ferrous Metals Ltd. v. China Resources Metal and Minerals Co. Ltd., High
Court—Court <strong>of</strong> First Instance, Hong Kong, 12 July 1993], [1993] HKCFI 136, also available on the Internet at: http://www.hklii.hk/
eng/hk/cases/hkcfi/1993/136.html; CLOUT case No. 75 [China Resources Metal and Minerals Co. Ltd. v. Ananda Non-Ferrous Metals
Ltd., High Court—Court <strong>of</strong> First Instance, Hong Kong, 7 July 1994], [1994] HKCFI 198], also available on the Internet at http://www.
hklii.hk/eng/hk/cases/hkcfi/1994/198.html.
19 CLOUT case No. 208 [Vanol Far East Marketing Pte. Ltd. v. Hin Leong Trading Pte. Ltd., High Court, Singapore, 27 May 1996].
20 CLOUT case No. 39 [Katran Shipping Co. Ltd. v. Kenven Transportation Ltd., High Court—Court <strong>of</strong> First Instance, Hong Kong,
29 June 1992], [1992] HKCFI 173, also available on the Internet at http://www.hklii.hk/eng/hk/cases/hkcfi/1992/173.html; CLOUT case
No. 706 [Fustar Chemicals Ltd. v. Sinochem Liaoning Hong Kong Ltd., High Court—Court <strong>of</strong> First Instance, Hong Kong, 5 June 1996],
[1996] 2 HKC 407.
21 Mitsui Engineering and Shipbuilding Co. Ltd. v. PSA Corp, Keppel Engineering Pte. Ltd., High Court, Singapore, [(2003) 1 SLR
446].
22 CLOUT case No. 208 [Vanol Far East Marketing Pte. Ltd. v. Hin Leong Trading Pte. Ltd., High Court, Singapore, 27 May 1996].
23 CLOUT case No. 108 [D. Heung & Associates, Architects & Engineers v. Pacific Enterprises (Holdings) Company Limited, High
Court—Court <strong>of</strong> First Instance, Hong Kong, 4 May 1995].
24 A/CN.9/264, Analytical commentary on draft text <strong>of</strong> a model law on international commercial arbitration, under article 1, paras. 16-21,
available on the <strong>UNCITRAL</strong> website at http://www.uncitral.org/uncitral/en/commission/sessions/18th.html.