The role and scope of applying the general provisions of the Unidroit Principles of International Commercial Contracts to foreign investment contracts

Abstract The general provisions of Chapter 1 of the Unidroit Principles of International Commercial Contracts (PICC) are mostly the fundamental legal principles governing these contracts. Based on the nature and character of foreign investment contracts, the role and scope of applying these principles to such contracts are different and limited compared to other international commercial contracts. Research findings show that, except for the principle of consensuality, other general principles incorporated in the aforementioned chapter apply to foreign investment contracts, albeit with certain limitations and sometimes significant differences. The mandatory economic regulations of the host State override the rules of the PICC and fall outside the scope of the principle of exclusion or modification by the parties. Usage, except in limited cases, is not considered a source of contract interpretation, and the establishment of a contractual practice in this context is rare. Finally, recommendations have been proposed to enhance the PICC as well as the project of the ‘Principles of International Commercial Contracts and Investment Contracts’. These include recommendations on the principle of consensuality of contracts, the binding character of contracts, the principle of the priority of mandatory rules over the PICC rules, and the principle of exclusion or modification by the parties.