## Facts

- An Italian supplier and a South Korean buyer entered a “Supply and Purchase Agreement” dated November 11, 1976.
- The agreement combined (i) an exclusive grant to use the supplier’s technical know-how in the Republic of Korea and (ii) a long-term supply of raw materials for production in Korea.
- The contract contained an ICC arbitration clause but did not specify governing substantive law.
- Performance occurred partly in Italy and partly in Korea; the arbitration seat was The Hague, and a sole arbitrator was appointed.
- During the contract’s life, the original Italian contracting entity merged into the claimant; the buyer accepted succession subject to contrary evidence.
- The buyer sought a preliminary award declaring the contract unenforceable under Korean public law, citing antitrust, price, and fair-trade regulations.

## Issues

1. Whether the Italian claimant was the legal successor to the original Italian contracting party for purposes of the arbitration.
2. In the absence of a choice-of-law clause, what law governed the parties’ contract.
3. Whether the contract was unenforceable based on alleged contraventions of Korean public law (competition, price, and fair-trade rules), warranting a preliminary declaration.

## Decision

- The arbitrator held that the claimant was the legal successor to its predecessor for purposes of the arbitration.
- The arbitrator determined that Korean private law governed the contract, applying a closest-connection (“centre of gravity”) analysis.
- The arbitrator dismissed the request for a preliminary declaration that the contract was unenforceable under Korean public law.
- The arbitrator ordered the proceedings to continue to the merits.

## Legal Principles

- When parties have not chosen the applicable substantive law, an arbitral tribunal may select the governing law using a closest-connection (“centre of gravity”) method based on the contract’s overall characteristics and principal place of economic performance.
- Contract characterization matters for conflicts analysis; a hybrid know-how/license-and-supply arrangement may be connected most strongly to the place where exclusive exploitation and production occur.
- A party invoking domestic public-law norms to defeat contract enforceability bears a practical burden to show that such rules require non-enforcement; absent sufficient support, a tribunal may decline to grant a preliminary declaration terminating enforceability and proceed to merits determinations.
- Corporate succession by merger may be recognized in arbitration where continuity is shown and no concrete contrary evidence defeats the successor’s standing.

## Conclusion

The tribunal confirmed the claimant’s standing as successor by merger, selected Korean private law as the governing law using a closest-connection analysis centered on the agreement’s functional performance in Korea, and rejected a preliminary attempt to bar enforcement based on alleged Korean public-law violations, directing the arbitration to continue.


Preliminary Award in ICC Case No. 4132, 10 Y.B. Com. Arb. 49 (1985)