Title

IX.1 - Basic rule

Content

No. IX.1 - Basic rule

(a) If a party is unjustifiably enriched (enriched party) without any legal ground, 

i)

through performance by another, or

ii)

in any other manner,

at the expense of another party (disadvantaged party), the enriched party is bound to render restitution to the disadvantaged party.

(b) Enrichments which are transferable must be restored in natura. Enrichments which are non-transferable must be restored by paying the sum of money equal to the value of the enrichment to be determined according to the contractually agreed price or market price, including full compensation for the use (usufruct) of the subject matter of the enrichment.

Commentary

1 The Principle provides the basic rule for the restoration of an unjustified enrichment. Such enrichment may arise out of performance by one party, e.g. under an invalid contract (Subsection (a) i)), or the taking or using of an item or value without the consent of the party who is entitled to the taking or using of that item (Subsection (a) ii)). In both cases, the enrichment is unjustified if there is no legal ground which justifies the performance (e.g. a valid contract which obliges the party to perform) or the taking or using (e.g. a legal right to take or use).

2 The enrichment may constitute any kind of benefit by the enriched party. The enrichment of the party against whom the claim is raised must correspond to the disadvantage of the party who claims the restitution of the unjust enrichment. In the scenario envisaged in Subsection (a) i) this will be the parties to the contract. In the scenario envisaged in Subsection (a) ii) the parties need not have a prior legal relationship with each other.

3 Subsection (b) provides for the consequence of an unjust enrichment which meets the requirements established by Subsection (a). These consequences depend on whether the item which constitutes the enrichment is transferable or not. In the first case, the enriched party must re-transfer the item to the disadvantaged party. In the second case, the enriched party must pay to the disadvantaged party the objective value of the item to be calculated according to the criteria listed in Subsection (b).

4 The enriched party is not liable to restore the enrichment if it has a defense or disenrichment.

References

Doctrine

Fouchard, Philippe, L'Arbitrage Commercial International, Paris 1965

Bishop, R. Doak, International Arbitration of Petroleum Disputes: The Development of a Lex Petrolea, YCA 1998, at 1131 et seq.Black, Henry Campell, Black's Law Dictionary, 6th ed., St. Paul 1990Brunetti, Maurizio, The Lex Mercatoria in Practice: The Experience of the Iran- United States Claims Tribunal, in: (2002) 18 Arb. Int., 355 et seq.Clive, Eric, Towards a European Civil Code (Third Edition) - Unjustified Enrichment, in: Hartkamp, Arthur / Hesslink Martijn / Hodius, Ewoud / Joustra, Carla / du Perron, Edgar / Veldmann, Muriel, Towards a European civil code, Nijmegen 2004, at 585#Crook, John R., Applicable Law In International Commercial Arbitration: The Iran-US-Claims Tribunal Experience, 83 AJIL 1989, at 278 et seq.Dalhuisen, Jan H. - Legal Orders and Their Manifestation: The Operation of the International Commercial and Financial Legal Order and Its Lex Mercatoria, (2006) 24 Berk J Intl L  129.Dasser, Felix, Internationale Schiedsgerichte und Lex Mercatoria, Zürich 1989Dickstein, Michael E., Revitalizing the International Law Governing Concession Agreements, 5/6 Int’l Tax & Bus.Lawy. 1987/88, at 54 et seq.Domingo, Ortega, Rodriguez-Antolin, Zambrana, Principios de Derecho Global, Navarra, 2006Englard, Izhak, Restitution of Benefits Conferred without Obligation, in: David/ Schlechtriem (eds.), International Encyclopedia of Comparative Law, Bd. X, Tübingen 1991, at 5-1 et seq.Esser, Josef, Grundsatz und Norm in der richterlichen Fortbildung des Privatrechts, 4th ed., Tübingen 1990Gallo, Paolo, Unjust Enrichment: A Comparative Analysis, 40 Am.J.Comp.L. 1992, at 431 et seq.Goff, Robert/ Jones, Gareth, The Law of Restitution, 4th ed., London 1994Guggenheim, Paul, Lehrbuch des Völkerrechts, Basel 1948Hutchison, Dale (Ed.) / Pretorius, Chris (Ed.),  The Law of Contract in South Africa, Oxford University Press Southern Africa, 2018J. von Staudinger Kommentar zum Bürgerlichen Gesetzbuch, Buch 2, Recht der Schuldverhältnisse, §§ 812-822, 13th ed. by Werner Lorenz, Berlin 1994Jenks, Edward et al., A Digest of English Civil Law, London, Sydney, Calcutta, Winnipeg, Wellington 1921.Knapp, Viktor, Die ungerechtfertigte Bereicherung in den Rechten der europäischen sozialistischen Länder, in: Festschrift Zweigert, Tübingen 1981, at 465 et seq.Lodder, Andrew, Enrichment in the Law of Unjust Enrichment and RestitutionMächtel, Florian, The Defence of "Change of Position" in English and German Law of Unjust Enrichment, German Law Journal Vol. 5 No. 1 - 1 January 2004, available at: http://www.germanlawjournal.comMarty, Gabriel/ Raynaud, Pierre, Droit Civil II/1, ParisMeier, Sonja, Bereicherungsanspruch, Dreipersonenverhältnis und Wegfall der Bereicherung im englischen Recht, 1 ZEuP 1993, at 365 et seq.Note, General Principles of Law in International Commercial Arbitration, 101 Harv.L.Rev. 1987/88, at 1816 et seq.Nussbaum, Arthur, The Arbitration Between the Lena Goldfields, Ltd. and the Soviet Government, 36 Cornell Law Quarterly 1950/51, at 31 et seq.Omalu, Mirian Kene, Precontractual Agreements in the energy and natural resources industries - legal implications and basis for liability (civil law, common law and islamic law), in Journal of Business Law, 2000, Jul, 303-331Ripert, Georges, Les Règles du Droit Civil Applicables aux Rapports Internationaux (Contribution à l'Etude des Principes Généraux du Droit Visés au Statut de la Cour Permanente de Justice Internationale), 44 Rec.Cours 1933-II, at 569 et seq.Schlechtriem, Peter, Restitution und Bereicherungsausgleich in Europa, Band I (2000).Schmitz, Stephan, Allgemeine Rechtsgrundsätze in der Rechtsprechung des Iran-United States Claims Tribunal, Frankfurt a.M., Berlin, Bern 1992Schulze, Reiner, Gemeineuropäisches Privatrecht und Rechtsgeschichte, in: Müller-Graff (ed.), Gemeinsames Privatrecht in der Europäischen Gemeinschaft, Baden-Baden 1993, at 71 et seq.Seybold, Martin, Die ungerechtfertigte Bereicherung auf internationaler Ebene- Eine rechtsvergleichende Analyse für die Rechtspraxis im internationalen Wirtschaftsrecht, Baden-Baden 2004Strohbach, Heinz, Spezielle Probleme, in: Ak.St.Rwiss. (ed.), Grundzüge einer wissenschaftlichen Konzeption des allgemeinen Teils der rechtlichen Regelung internationaler Wirtschaftsbeziehungen zwischen den Organisationen der Mitgliedsländer des des RGW, Potsdam-Babelsberg 1986, at 55 et seq.Van Kooten, Hugo Jan, Restituierechtelijke gevolgen van ongeoorloofde overeenkomsen (Restitionary Consequences og Illegal Contracts), at 329 et seq.van Kooten, Hugo Jan, Restitutierechteljke gevolgen van ongeoorloofde overeenkomsten, 2002, at p. 338 et seq.Wühler, Norbert, Application of General Principles of Law, in van den Berg (ed.), Planning efficient Arbitration Proceedings - The Law Applicable in International Arbitration, p. 553 et seq.Zimmermann, Reinhard, Unjust Enrichment: The Modern Civilian Approach, 15 Oxford Journal of Legal Studies 1995, at 403 et seq.Zweigert, Konrad/ Kötz, Hein, Einführung in die Rechtsvergleichung auf dem Gebiete des Privatrechts, 3rd ed., Tübingen 1996.

Court Decisions

A & A Metal Buildings v I-S, Inc., 274 N.W.2d 183Apache Corporation and Snyder Oil Corporation v MDU Resources Froup, Inc., 603 N.W.2d 891D.C. Trautman Company v. Fargo Excavationg Company, Inc. and Royal Jewelers, Inc.,  380 N.W.2d 644Dunlop Pneumatic Tyre Co., Ltd. v. New Garage and Motor, Ltd., [1915] A.C. 79George F. Opp, d/b/a Opp Well Drillings & Supplies v. Ethel Matzke et. al., 559 N.W.2d 837.Julia Callano and Frank Callano v Oakwood Park Homes Corp., 219 A.2d 332Kleinwort Benson Ltd. v. Lincoln City Council et al. [1999] 2 A.C. 349Lipkin Gorman v. Karpnale Ltd. [1991] A.C. 548.Midland Diesel Service & Engine Company v. Siverston, 307 N.W.2d 555Moses v. Macferlan [1760], 97 Eng. Rep. 676 (2 Burr. 1005)Robert B. Reich v. Continental Casualty Company et al., 33 F.3d 754Westdeutsche Landesbank Girozentrale v. Islington London Borough Council, (1996) A.C. 669

National Legislation

Allgemeines Bürgerliches Gesetzbuch - Austrian Civil CodeBürgerliches Gesetzbuch - German Civil CodeCivil Code of the People's Republic of China (2020)Civil Code Québec 1991Czechoslovak International Trade CodeEthiopian Civil CodeFrench Civil Code 2016French Code Civil 1804Indonesian Civil Code (excerpts)Italian Codice CivileLouisiana Civil Code 2015Nieuw Burgerlijk Wetboek - New Netherlands Civil Code ( Dutch Civil Code )Philippines Republic Act 386 (Civil Code)Russian Civil CodeSaudi Arabia Civil Transactions Law - Royal Decree No. M/191, June 18, 2023, official translationSchweizer Obligationenrecht - Swiss Law of ObligationsThe Indian Contract Act, 1872 (Act no. 9 of 1872)

International Legislation

Fontaine, Marcel, OHADA Uniform Act On Contract Law Preliminary Draft

Arbitral Awards

ICC Award No. 11307 of 2003, YCA 2008, 24 et seq.Iran-US Claims Tribunal, Buckamier v. The Islamic Republic of Iran et al., YCA 1993, at 296 et seq.Iran-US Claims Tribunal, Isaiah v. Bank Mellat, 2 IRAN-U.S. C.T.R., at 232 et seq.Iran-US Claims Tribunal, Sea-Land Services, Inc. v. Iran, 6 IRAN-U.S. C.T.R., at 149 et seq.Iran-US Claims Tribunal, Ultrasystems, Inc. v. Iran, 2 IRAN-U.S. C.T.R., at 100 et seq.Lena Goldfields v. Soviet Government, Award of 2nd Sept 1930, German original text previously unpublished; English translation: 36 Cornell Law Quarterly (1950/1951), at 42 et seq.

Model Laws

Principles of Latin American Contract Law (PLACL)