Andrew Tetley welcomes Prof. Dr. Eckart Brödermann, Managing Partner of Brödermann Jahn (Hamburg), to discuss the UNIDROIT Principles. The conversation delves into Eckart’s long-standing connection with these Principles, his authoritative commentary on them, and his practical experience applying them in business and arbitration. The discussion also touches on the benefits of the Principles and offers a glimpse into Eckart’s life beyond the law.

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Transcript: 

Intro: Hello and welcome to Arbitral Insights, a podcast series brought to you by our International Arbitration Practice lawyers here at Reed Smith. I'm Peter Rosher, Global Head of Reed Smith's International Arbitration Practice. I hope you enjoy the industry commentary, insights and anecdotes we share with you in the course of this series, wherever in the world you are. If you have any questions about any of the topics discussed, please do contact our speakers. And with that, let's get started.

Andrew: Good morning. I'm Andrew Tetley, a partner at Reed Smith in the Paris office. Welcome back to Arbitral Insights. I'm joined today by Eckart Brödermann, who is a professor in Hamburg, long-time involvement in arbitration, and founding partner of his law firm in Hamburg, Brödermann Jahn. The subject that we will be touching on in some depth is the UNIDROIT Principles of International Commercial Contracts, but also hopefully getting to know a little bit more about Eckart for those Music. of you who know him, learning something new, and for those of you who don't, learning about him from scratch. So welcome, Eckart, and thank you for giving your time over for this podcast.

Eckart: Thank you so much. Good morning.

Andrew: Let's start with a short introduction. So tell us a little bit about your background and your association with the UNIDROIT principles of international commercial contracts.

Eckart: My background, in a nutshell, at age 18, I left Germany. I spent four years in your beautiful city of Paris. DEUG, licence, maitrise fully studied in Paris, then moved on to Harvard. At that time, Germany wouldn't recognize any title from Paris. And Harvard said, I don't care whether you studied in Germany or in Paris. So I spent my time there where I started focusing on Chinese law, East Asian Legal Studies program. Thereafter, took the New York Bar, worked in a large law firm in Washington, D.C., Steptoe & Johnson. At age 24, decided what to do at age 40. I don't have any education in my home country, so I went back and started studying for the third time. Since my second studies, I financed everything myself, including loans to finance Harvard, and I always worked part-time in the legal business to finance all that. And ever since, I'm working, I'm loving the law, and I'm giving full speed. But, of course, I learned that the same thing you learn in one country happens to be wrong in the other country. You also learn that the problems of the people and of the companies are all over similar. In the end, we want to realize our dreams, we want to build business, we want to realize business plans, and for that we need tools. And I always have been both on the contracting side and on the arbitration side. Arbitration, I got to grow with the Iran Claims Tribunal in the early 80s and the UNCITRAL Rules. So, with that said, how did I bump into the UNIDROIT principles? In the beginning, I was, as many possibly in the audience have never heard about that, it starts with the word UNIDROIT. UNIDROIT is an abbreviation. It's a French abbreviation for the international organization called International Institute for the Unification of Private Law. And that in French, Institut pour l'Université de Droit, Privé, c'est Unidroit. So in 2001, I was in an arbitration in Switzerland. Huge stuff about orbital slots, relationship to several countries. I kind of also fell into that case as second counsel in the beginning. The case was fired out of Asia, and somewhere on a plane ride from the Caribbean back to Europe, I convinced the later client that it would be good to have not only a criminal lawyer from the Philippines, but maybe also an arbitration expert to join that arbitration. We had a great arbitration. I told him how many millions he would be likely to get. We got that in the end. But we argued under English law, because his company was from Anguilla, and the contract said something to English law, and I think we could have won it. The other side, though, the other side decided to argue in favor of Swiss law, arguing it would be also neutral, which of course is probably nonsense, because having been neutral in World War II has nothing to do with whether the law itself is neutral. And so we had those two argumentation lines and the pathological, so sick, choice of law clause. And it was the arbitrator, the arbitration tribunal, who came forward and said, why under these circumstances don't you consider to agree on the UNIDROIT principles with something really neutral? And that is something which happened to me over my lifetime more than once. And I've heard that anecdote also from a number of colleagues.

Andrew: You mean tribunals and tribunals suggesting the UNIDROIT principles over clashes of applicable law.

Eckart: Absolutely.

Andrew: This has happened to you on more than one occasion then.

Eckart: Yeah. And to join on neutral ground, in one instance, it was in an arbitration before the Chinese European Arbitration Center. You know, that's something I set up between 2004 and 2008, along with many colleagues in the Hamburg Bar. Today it's called the Asian European Arbitration Center here in Hamburg, focusing on arbitration with Asia. There in Article 35 we even explicitly foresee the option to either choose the state law or the UNIDROIT principles, of course, the CSG. And people decided, yeah, and under those circumstances, we decided to actually agree on the UNIDROIT principles. In the third arbitration I was even the other party, I was counsel and the defendant proposed the UNIDROIT principles instead of the chosen Chinese law. And we said, okay, okay, we agree it's not so much at stake, not so huge figures. So basically, everybody wanted to resolve this efficiently. And from an ex-post perspective today, I know today, which I didn't know then, that about 47.6% or so, according to some statistics of Chinese contract law, is based on the UNIDROIT principles. So basically, in a nutshell, the UNIDROIT principles are general principles of law and really neutral, and this is why we found out we could agree. We had three days in Switzerland. They gave us three days. I had, of course, an English solicitor on the team, who is today a well-known barrister in London, and we analyzed from the civil and common law perspective, and really, in the end, it's not the law that matters. In the end, in that case, it was a case of damages. It's more about quantum, how you convince the arbitrator. It's the facts that count. No llaw gives you any amount. In the English approach, you have this Harley versus Baxendale approach. Is it too remote? That's a test. In French, the test is, is it foreseeable? And from a German perspective, is it adequate? Yeah, the link between the causation and the harm. So whatever it is, you need to convince the arbitrators. So we decided to accept that offer from the Arbitral Tribunal.

Andrew: Excellent. Well, I mean, obviously, this was your first experience or exposure to the principles. And this was some 20, 25 years ago. Tell us a little bit more about what you've been doing. I mean, you've remained engaged with these principles, literally, ever since. And you're known in this space for that and written commentary on it and a very readable book that's in its second edition now. What keeps you interested in the principles? I mean, how much time do you spend in the principles in your day-to-day these days, as opposed to working on either German law or other applicable laws? I mean, how much time do you spend and how much in the arbitration, how much in transactions? How is it in your daily practice?

Eckart: It has always been there. Since 2004, we won this arbitration and the Asian client was so happy that we reinvested all the money which he earned from a foreign state who was on the other side. And we settled in the end and got part in cash and part in satellite rights. So I made a lot of transponder lease contracts under the UNIDROIT principles in different countries, in East Europe, in France, in Germany, in Asia, in the Caribbean. So I got to start working with them. And it's easy. I mean, they are not longer than a normal complex English contract, I think 26 pages or so, if you read all the 211 principles, they're an easy read, they're deliberately written as general rules, and in English, including famous professors like Professor Farnsworth from America, Roy Goode from England, so a number of famous brains, and brains around the globe, but they're easy to read, easy to understand.

Andrew: They certainly are. I mean, I was lucky to be in Hamburg, as you know, your invitation for the 30th anniversary of the principles this year. And the sort of roundtables that we were doing was illustrating that they're easy to understand, easy to get hold of. And, you know, they are being used. Maybe you could tell us a little bit more about who's using them, the reasons for using them, for those who may be listening who might have heard of the UNIDROIT principles but have never actually had any practical experience of them.

Eck