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CISG CASE PRESENTATION

Russia 17 January 2000 Arbitration proceeding 28/1998 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000117r1.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISION: 20000117 (17 January 2000)

JURISDICTION: Arbitration ; Russian Federation

TRIBUNAL: Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 28/1998

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Russian Federation (claimant)

BUYER'S COUNTRY: Bahamas (respondent)

GOODS INVOLVED: Goods


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(b)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 9 ; 53 ; 54

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Russian): Rozenberg, Practika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (1999-2000) No. 37 [174-176]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Djakhongir Saidov, 7 Vindobona Journal of International Commercial Law and Arbitration (1/2003) 1-62 at nn.94, 156

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Case text (English translation)

Queen Mary Case Translation Programme

Russian Federation arbitration proceeding 28/1998 of 17 January 2000

Translation [*] by Mykhaylo Danylko [**]

Translation edited by Yelena Kalika [***]

1. SUMMARY OF RULING

     1.1 The Vienna Convention 1980 [UN Convention on Contracts for the International Sale of Goods (1980), hereinafter CISG] was applied to the dispute between the parties, pursuant to the parties' agreement that their relations are governed by the Russian law.

     1.2 Whereas the person signed the amendment to the contract that altered its provisions was duly authorized by the respective party to the contract, the buyer's assertions of invalidity of such alterations on the basis that this person was not employed by the [buyer] do not carry any legal force.

     1.3 Taking into consideration the practice established between the parties on performance of their obligations under the contract and in accordance with Article 9 CISG, the Tribunal of International Commercial Arbitration at the Chamber of Commerce & Industry of the Russian Federation (hereinafter Tribunal) came to the conclusion that seller had the right to allot at his discretion the money received as payment for the goods shipped under two contracts without referring to under which contract the money has been received.

2. FACTS AND PLEADINGS

This action was brought by [seller], a Russian company, against [buyer], a company with location in the Bahamas, in connection with partial payment for the goods shipped under the contract concluded between the parties on 27 November 1995.

     2.1 [Buyer's counterclaim]

The [buyer] contested [seller]'s claim on the basis that:

Besides this, the [buyer] asserted breaches by the [seller] in the performance of the contract; thus, the [buyer] brought a counterclaim which was withdrawn during the proceedings.

3. TRIBUNAL'S REASONING

The ruling of the Tribunal contained the following main points.

     3.1 [Jurisdiction competence of the Tribunal]

The competence of the Tribunal to arbitrate the dispute is directly stipulated in the arbitration clause of the contract.

     3.2 [Applicable law]

Since the parties at the time of conclusion of the contract chose the law of the Russian Federation to be applicable to their relations under the contract, the dispute arising herein from the parties' relations, otherwise not settled by the contract provisions, should be governed by the CISG (the Russian Federation has been a Contracting State to the CISG since 1991) pursuant to the provisions of Article 15 of the Russian Federation Constitution which provide that the CISG is a component part of the legal system of the Russian Federation, and also pursuant to Article 1(1)(b) CISG. The Russian Federation Civil Code rules of law should be applied as subsidiary law.

     3.3 [The merits of the case]

After considering the merits of the claims, the Tribunal found that the case materials confirmed that in 1996 the [seller] made the shipment of the quantity of goods specified in the statement of claim.

Clause 3 of the contract contained provision for the reduction of price for the goods according to which a discount should be applied if there is a breach of one of the quality requirements.

The parties in Amendment No.1 of 10 January 1996 to the contract have modified clause 3 of the contract; viz. they excluded the condition on application of the discount to the price for the goods.

Amendment No.1 of 10 January 1996 was signed on behalf of the [buyer] by the person acting under a power of attorney issued on 4 January 1996 by the [buyer]'s CEO.

Ruling that the power of attorney was duly executed, the Tribunal dismissed [buyer]'s assertions as to invalidity of the Amendment No.1 because it was signed by an unauthorized person. Therefore, the Tribunal recognized that the discount of the price for the goods was not agreed upon by the parties as a contractual provision.

After hearing the matter of the right of the [seller] to allot at its own discretion the money paid to his account under two contracts, the Tribunal came to the conclusion that in the course of dealing the parties had established between themselves the practice of settlement of payments in the following manner: either the [buyer] or third parties (ultimate buyers) used to wire various amounts to the account of the [seller] referring to neither the number of the contract nor the name of the goods.

On the following grounds and in accordance with Article 9 CISG, the Tribunal ruled that [seller] was entitled to allot at its discretion the money paid for the goods shipped under two contracts.

The [seller] set-off the amount received against the contract in dispute, and, therefore, the debt under this contract amounted to the sum claimed by [seller].

The [buyer] in its letter of 20 September 1996, in response to the [seller]'s complaint of 11 August 1996 notified about its consent to pay the debt by monthly installments commencing from October 1996, however this obligation was not fulfilled.

Pursuant to Article 53 CISG, the principal obligation of the buyer under the sales contract is to pay the price for the delivered goods. Moreover, under Article 54 CISG, a buyer's obligation to pay the price includes taking such steps as may be required to enable the payment to be made.

The Tribunal found that these obligations were not fulfilled by the [buyer], and, therefore the amount of debt claimed by the [seller] had to be recovered from the [buyer].

3.4 [Arbitration fees and expenses]

According to 6(1) of the Rules of the Tribunal on Arbitration Expenses and Fees (Annex to the Rules of Tribunal), the arbitration fees are to be imposed on the party against which the ruling of the Tribunal was granted; thus, the arbitration fees in the amount paid by the [seller] at the time of bringing the action should be recovered from the [buyer].


FOOTNOTES

* This is a translation of the award in Proceeding 28/1998, dated 17 January 2000, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, reported in: Rozenberg e. Arb. Praktika 1999-2000, No. 37 [174-176]. All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the Russian Federation is referred to as [seller]; Respondent of the Bahamas is referred to as [buyer].

** Mykhaylo Danylko is a Partner with the law firm Danylko, Kushnir, Soltys & Yakymyak, Attorneys & Counselors at Law, Kiev, Ukraine <http://www.dksylaw.com>. He holds a Masters of Laws (European Studies Program) from the Law School of International Science and Technology University, Kiev, Ukraine (July 2000); a Master of Management in Business of the Business School of International Science and Technology University (June 2002); and has received his LL.M. in International and Comparative Law at the Pace University School of Law. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

*** Yelena Kalika, a law student at the Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Mascow law firm, and is a Research Assistant at the Pace Institute of International Commercial Law.

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