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CISG CASE PRESENTATION

China 23 May 2000 CIETAC Arbitration proceeding (Stainless steel case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000523c1.html]

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

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Case identification

DATE OF DECISION: 20000523 (23 May 2000)

JURISDICTION: Arbitration ; China

TRIBUNAL: China International Economic & Trade Arbitration Commission [CIETAC] (PRC)

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2000/11

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Republic of Korea (respondent)

BUYER'S COUNTRY: People's Republic of China (claimant)

GOODS INVOLVED: Stainless steel


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 29(1)

Classification of issues using UNCITRAL classification code numbers:

29A [Parties by agreement may modify or terminate the contract]

Descriptors: Modification of contract

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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 (Chinese): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

China International Economic & Trade Arbitration Commission
CIETAC (PRC) Arbitration Award

Stainless steel case (23 May 2000)

Translation [*] by Meihua Xu [**]

Edited by John Zhu [***]

The China International Economic and Trade Arbitration Commission Shenzhen Sub-Commission (hereafter, the "Shenzhen Sub-Commission") accepted the case on 23 November 1999 according to:

   -   The arbitration clause in the sales contract signed by Claimant [Buyer], China __ Import & Export Company, and Respondent [Seller], Korea __ Company; and
 
   -   The written arbitration application submitted by [Buyer].

On the same day of the acceptance of this case, the Shenzhen Sub-Commission sent to the [Seller] by express mail the arbitration notice, the [Buyer]'s arbitration application, the Arbitration Rules of the Arbitration Commission (which became effective on 10 May 1998, hereafter, the "Arbitration Rules"), the arbitration fee list, and the list of arbitrators. Corresponding documents were sent to the [Buyer] as well.

The [Buyer] appointed Mr. H as its arbitrator, the [Seller] appointed Mr. G as its arbitrator, and the two parties jointly appointed Mr. X as the Presiding Arbitrator. The aforesaid three arbitrators formed the Arbitration Tribunal to hear this case on 11 January 2000. The Arbitration Tribunal formation notices have been sent to the two parties.

The Secretariat of the Shenzhen Sub-Commission decided to hold a court session on 25 February 2000, and the court session notices were sent to both parties.

The agents of the [Buyer] and the [Seller] attended the court session. Neither party had any objection to the formation of the Arbitration Tribunal, the status and authorization of the agent of the other party, and the Arbitration Rules applied. The Arbitration Tribunal heard the statements of the agents of both parties, their verifications on relevant evidence, and arguments, and investigated related facts.

The [Seller] submitted its defense on 11 January 2000 prior to the court session, alleging that the [Buyer] was not the holder of the title to the deposit of renminbi [RMB] 500,000, of which SD Company had the ownership, and that the deposit was beyond the scope of the arbitration. therefore, the Arbitration Tribunal should neither process nor rule on this matter.

The [Seller] reasoned that:

   -    It had a creditor and guarantor relationship with SD Company;
 
   -    The dispute between them should be settled by laws regulating security or guarantees; and that
 
   -    For the dispute between the [Buyer] and the [Seller], on the other hand, the United Nations Convention on Contracts for the International Sales of Goods (hereafter, the "CISG") should apply.
 
   -    Since there is an arbitration clause in the Contract between the [Buyer] and the [Seller], there is nothing to prevent the Shenzhen Sub-Commission from accepting and processing the dispute between them, however, the Shenzhen Sub-Commission has no jurisdiction over the dispute between the [Seller] and SD Company.
 
   -    In other words, the Arbitration Tribunal has no jurisdiction over the dispute over the deposit.

At the court session, the [Seller] re-stated this position.

In accordance with the Arbitration Rules, the Arbitration Tribunal asked the Arbitration Commission to rule on this jurisdiction issue. Based on the written evidence provided by the two parties and after investigations, the Arbitration Commission held that the deposit of RMB 500,000 was incurred in connection with the performance of the Contract. Therefore, it was within the scope of the arbitration clause and the Arbitration Tribunal should decide whether or not the [Buyer]'s claims are acceptable. On 10 May 2000, the Arbitration Commission made (200X) Mao Zhong Zi No. __ Decision, concluding that the deposit of RMB 500,000 is within the scope of arbitration clause in this case, and that the Shenzhen Sub-Commission has jurisdiction over this issue.

After the court session, the two parties submitted "counter arguments" and "final statements", respectively, within the stipulated time.

The following are the facts, the Tribunal's opinion and the award.

I. FACTS

On 9 July 1999, the [Buyer] and the [Seller] signed a sales contract in Beijing (hereafter, the "Contract") with the following terms:

Goods: 800 tons of stainless steel in various specifications (10% more or less loading is allowed);

Price: US $1,265,682.00, CNF FO (China) Qingdao;

Payment terms: A L/C should be opened within 14 July 1999 in favor of the [Seller] through the top four biggest banks in China. ["within 14 July 1999" should be interpreted as "on or before 14 July 1999" - note by the Arbitration Tribunal], otherwise, this order will be cancelled automatically;

Arbitration clause: Article 16 of the Contract stipulates that any dispute arising out of or in connection with the performance of the Contract shall be submitted to the Arbitration Commission to be settled based on the Arbitration Rules.

The [Buyer] alleges that as entrusted by Guangzhou SD Metal Company (hereafter, "SD Company"), it signed the Contract with the [Seller]. After the conclusion of the Contract, a dispute arose during the performance of the Contract, and the [Buyer] filed the arbitration application with Shenzhen Sub-Commission, asking the Shenzhen Sub-Commission to rule that:

  1. [Seller] shall return RMB 500,000, the L/C issuance deposit, paid by SD Company;

  2. [Seller] shall pay interest on the aforesaid deposit from three days after the issuance of the L/C to the actual payment day; and

  3. [Seller] shall pay the arbitration fee for this case.

POSITION OF THE PARTIES

[Buyer]'s position

The [Buyer] makes the following statement:

After the conclusion of the Contract, the [Buyer] was unable to issue the L/C within the stipulated time because of the pressure on time. In order to protect its credibility, the [Buyer] asked SD Company to pay RMB 500,000 as a L/C issuance deposit, asking the [Seller] to continue to accept the effectiveness of the Contract. On 14 July 1999, SD Company provided to the [Seller]'s Beijing office a money order, series number IXIII00100282, for RMB 500,000 and the [Seller] issued a receipt, promising to refund the deposit within three business days after receiving the L/C under the Contract. Later, on 30 July, Qingdao F Business Company (hereafter, "F Company") issued L/C No. 380LC990430 for US $600,388.00 with the [Seller] as the beneficiary. It was stipulated in the L/C that the [Seller] shall issue an invoice in accordance with the following requirements:

   -    Contract number shall be included in the business invoice issued by the [Seller];
   -    Contract number and "Qingdao" shall be included in the shipping marks;
   -    The quantity is 400 tons.

After receiving this L/C, the [Seller] raised no objections to the Contract requirements or the inconsistency that the [Buyer] asked a delivery of only 400 tons, and [Seller] performed the Contract in accordance with this L/C. The aforesaid facts indicate that the [Buyer] modified the Contract through the L/C after the deadline for issuing the L/C had expired, and that the [Seller] confirmed the effectiveness of the modified Contract.

However, with ulterior motives, the [Seller] sent a letter to SD Company on September 1999, alleging that at the time of providing the deposit, SD Company had promised to issue a L/C for the full amount within three business days, and that SD Company had violated the Contract and the promise to issue the L/C, causing damages to the [Seller]'s business reputation, therefore, the [Seller] would not return the deposit and reserves the right to claim compensation, etc,.

Regarding this, the [Buyer] alleges that:

First, the Contract is still effective after 14 July 1999 not because of the L/C issuance deposit, but because the two parties confirmed the effectiveness of the Contract by actual performance;

Second, the L/C issuance was between the [Buyer] and the [Seller], and without the [Buyer]'s authorization, SD Company had no right to promise that the [Buyer] would issue a L/C within three business days after paying the deposit;

Third, as a party to an import contract, the [Buyer] has never promised that it would issue the L/C within three days after paying the deposit; the [Seller]'s aforesaid allegation was untrue;

Fourth, as one party of the Contract, the [Buyer] has never promised to issue a L/C for the full amount of the Contract, and the [Seller] failed to raise objection to the L/C, which was for a delivery of 400 tons;

Fifth, since SD Company was not a party to this Contract, there was no issue of contract violation; therefore, the [Seller]'s refusal to return the deposit to SD Company had no basis, and the [Buyer] did not breach the Contract during the contract performance.

[Seller]'s position

Regarding the [Buyer]'s claims and statement, the [Seller] submitted the following defense:

  1. The [Buyer] has no title to the deposit of RMB 500,000, therefore, it has no right to ask for the refund of this deposit. The deposit is owned by SD Company. The whole process of the contract performance indicates that except for the Contract, the [Buyer] had no contact with the [Seller] by letter. The [Seller] was discussing contract performance with SD Company and F Company and the [Buyer] was even unaware of the deposit.

  2. The RMB 500,000 deposit is beyond the scope of arbitration. The [Buyer] and the [Seller] have an international sales legal relationship; therefore, the CISG shall apply to disputes associated with it. However, the relationship between the [Seller] and SD Company was that of a creditor and guarantor, which is a separate legal relationship. Therefore, laws regarding security or guarantees shall be applied to that.

  3. The [Buyer] has only partially performed the Contract. This constitutes a contract violation. The [Seller] reserves the right to file a counterclaim

  4. The supplementary evidence -- a letter sent by the [Buyer] to SD Company on 9 July 1999, provided by the [Buyer] after the arbitration application -- was forged. In this letter, the [Buyer] alleged that the deadline for issuing the L/C expired due to financial difficulty, and asked SD Company to pay a security deposit. It is the [Seller]'s position that it was irrational that this letter was issued on the same day as the day of the conclusion of the Contract. The [Seller] was unaware that the [Buyer] was unable to issue the L/C due to financial difficulty and did not ask for a deposit.

THE PARTIES' MAIN DISPUTES, OPINIONS AND REASONS

1. The origin, nature, and ownership of the deposit

The [Seller] alleges that the [Buyer] forged the letter sent to SD Company, lying that the letter was written on 9 July 1999. The following are the content of this letter:

"After signing the Contract for importing stainless steel from Korea __ Company ([Seller]) as entrusted by you, the deadline for issuing the L/C has expired. Due to sudden financial difficulty, and because the deadline for L/C issuance has expired, the [Seller] is asking for a deposit of RMB 500,000 or more to continue to perform the Contract, therefore, please pay RMB 500,000 as a deposit for issuing the L/C to the [Seller]'s Beijing Office on our behalf."

The [Buyer] explained this letter, alleging that at the beginning of July 1999, it was discussing the import of stainless steel with SD Company, and on 8 July the two parties concluded an import agency contract. On 9 July, Mr. Yu of [Seller]'s Beijing Office delivered to the [Buyer] in Qingdao a copy of the Contract, which had been signed and sealed by the [Seller]. The sales department of the [Buyer] did not know of the financial difficulty until after signing the Contract. The same as asking F Company to issue the L/C, the [Buyer] asked SD Company's help to pay the deposit. The inconsistency between the expression in the letter that "the deadline for issuing the L/C has expired" and the date of the letter, 9 July, was because the [Buyer] wrote the aforesaid letter after confirming that SD Company had paid the deposit. The date of the letter was not included at that time; Mr. Sun of SD Company added the date later.

The [Buyer] alleges that the aforesaid letter was supplied afterward for the convenience of the company's internal procedure. This deposit was a guarantee for the performance of the Contract. The [Seller] issued a receipt on 14 July 1999, which indicated that the [Seller] had accepted the guarantee, and that a security contract, security agreement, or a security clause was established when the [Seller] issued the receipt. The basis and purpose for the deposit were for the Contract, and it has factual and legal connections with the Contract. If it is regarded as a security clause, then it is part of the Contract, i.e., a clause of the Contract. The [Buyer] argues that it is the owner of the deposit, and that SD Company only paid the deposit on behalf of the [Buyer].

The [Seller] counter argues that the deposit is owned by SD Company, and that the [Buyer] has no right to it because:

   -    SD Company paid the deposit directly to the [Seller] and the [Seller] issued the receipt to SD Company;
 
   -    Prior to the payment of the deposit, the [Buyer] had never negotiated with the [Seller] orally or by written documents to make the deposit a condition not to cancel the Contract and, after paying the deposit, the [Buyer] did not ask for a receipt;
 
   -    There is no evidence showing that the [Seller] should have known that the [Buyer] has the right to the deposit;
 
   -    The [Buyer] alleges in its statement that "since SD Company is not a party in the Contract, there is no issue of its contract violation, therefore, the [Seller]'s refusal to return the deposit paid by SD Company has no basis." This indicated that the [Buyer] clearly expressed that it had no title to the deposit.

2. Whether SD Company's position and the deposit are within the jurisdiction of the Arbitration Tribunal

[Seller]'s position

The [Seller] alleges that the deposit is owned by SD Company, and that the [Buyer] has no right to demand the return of property as to which it has no ownership. Therefore, the Arbitration Tribunal can neither process nor rule on the deposit issue. The CISG is applicable to this case. However, the [Seller] and SD Company have a creditor and guarantor relationship, to which the law applicable to security or guarantees should be applied. There are two different legal relationships among the three parties. Since there is an arbitration clause in the Contract in this case, there is nothing to prevent the Arbitration Tribunal from accepting an arbitration application filed by one of the two parties to that Contract. However, the [Seller] and SD Company did not sign a contract, nor did they reach an arbitration agreement afterwards, therefore, the Arbitration Tribunal has no jurisdiction over the deposit issue. There is no stipulation on deposit in the Contract between the [Buyer] and the [Seller]. This means that the deposit was not included in that Contract and that it was not a stipulated issue or content subject to arbitration.

[Buyer]'s position

The [Buyer] argues that a contract or an agreement can involve two or more legal relationships. Whether a legal relationship or a fact is an issue subject to arbitration depends on the stipulations in the arbitration clause. An arbitration clause can include within the scope of arbitration, issues or legal relationships beyond the contract. Based on the arbitration clause in the Contract, either of the two requirements is to be satisfied to determine whether a legal relationship or a fact is within the scope of the arbitration. One is whether the dispute has arisen out of the performance of the contract, the other is whether it is a dispute in connection with the contract. These two standards are applicable to modifications made after the conclusion of the contract.

The deposit was required during the performance of the Contract in order to guarantee the performance of the contract, and the [Seller]'s issuance of the receipt on 14 July 1999 was an indication to accept the guarantee provided by the [Buyer]. A security contract or agreement was established upon the issuance of the receipt. The security agreement is a stipulation in the Contract, which satisfies the requirement for constituting an arbitrable issue as provided in the arbitration clause. Therefore, the Arbitration Tribunal has jurisdiction over this issue.

The [Buyer] also alleges that SD Company is not a party in this case. The [Buyer] was unaware and had no way of knowing that SD Company had promised to issue the second L/C on 16 August 1999. Based on law, SD Company could not issue a L/C, therefore, its promise is invalid. It was improper for the [Seller] to have urged F Company but not the [Buyer] to issue the L/C. Only the [Buyer] is the subject of the Contract, and has the right to decide whether or not to open a L/C or the amount of the L/C. The [Seller] was not treating the [Buyer] as a party to the Contract, therefore, it should bear the consequences by itself.

3. Whether the contract performance was based on the modified contract and the time of the termination of the Contract

[Buyer]'s position

The [Buyer] alleges that SD Company paid the deposit to guarantee the issuance of the L/C, and that the [Seller] issued a receipt after receiving the deposit, promising to return the deposit within three business days after receiving the L/C for the full amount under the Contract.

On 30 July 1999, F Company issued L/C No. 386LC990430 with the [Seller] as the beneficiary, asking the [Seller] to deliver 400 tons of goods in accordance with the Contract. After receiving the L/C, the [Seller] did not raise objection to the delivery of only 400 tons of goods, but performed the Contract as required by the L/C. It is the [Buyer]'s position that the two parties modified the Contract through the L/C and performed obligations for the delivery of 400 tons of goods and the Contract should terminate at this time. And the [Seller] acknowledged that the Contract was terminated by the letter it sent on 2 September 1999.

[Seller]'s position

The [Seller] argues that the deposit was a guarantee for the issuance of the L/C for the full amount of the Contract, but not for half of the amount, which means it was a guarantee for purchasing 800 tons of goods, but not for 400 tons. At the beginning of August 1999, the [Seller] sent a letter to F Company, asking it to issue a second L/C for another 400 tons of goods, and on 5 August, F Company replied that it would issue the L/C as soon as possible. On 16 August, SD Company confirmed the issuance of the second L/C by written document, and on the same day, the [Seller] replied that after receiving the full amount of L/C under the Contract, it was to return the deposit to F Company's account as designated by SD Company. Both the [Seller] and SD Company agreed to fully perform the Contract, however, somehow the second L/C has not been issued. The [Buyer] has partially breached the Contract, causing severe economic loss to the [Seller], therefore, the [Buyer] should provide compensation for this.

On 2 September, the [Seller] sent a letter to SD Company, alleging that after repeatedly being urged by the [Seller], on 30 July, SD Company and the [Buyer] as entrusted by it issued a L/C only for half of the price of the Contract, which has violated the Contract and the promise to issue the L/C. Therefore, the [Seller] would not return the deposit and reserves the right to claim compensation from SD Company and the [Buyer].

4. [Seller]'s loss on resale of the goods

The [Seller] alleges that since the [Buyer] failed to fully perform the Contract by issuing the L/C only for 400 tons of goods, with the result that the [Seller] had to resell the remaining 440.39 tons of goods to a company in Iran on 8 September 1999, suffering a loss of US $106,134.00. This loss should be borne by the [Buyer]. Therefore, retaining the deposit of RMB 500,000 as compensation is reasonable.

IV. OPINION OF THE ARBITRATION TRIBUNAL

(1) Facts determined by the Arbitration Tribunal

After investigation conducted at the court session, the Arbitration Tribunal ascertained the following facts:

      1. The [Buyer] and the [Seller] signed the Contract in Beijing on 9 July 1999 for the purchase of 800 tons of stainless steel in various specifications.

      2. The [Buyer] and SD Company signed an import agency agreement on 8 July 1999 for the same goods in the same specifications as in the Contract. SD Company is the final client [end user] of the Contract goods. This has been confirmed by the two parties.

      3. On 14 July 1999, SD Company paid RMB 500,000 to the [Seller] by money order. The [Seller] issued a receipt to SD Company, which indicated that the two parties have confirmed that the deposit was paid for the performance of the Contract for 800 tons of goods.

      4. On 30 July 1999, F Company issued a L/C with the [Seller] as the beneficiary through China Agriculture Bank Qingdao Branch. It was indicated in the L/C that it was for US $600,388.00 for 400 tons of stainless steel in various specifications and that this L/C was issued for the Contract in this case. Therefore, the L/C was issued for the performance of the Contract.

      5. On 31 July 1999, the [Seller] issued an invoice and the delivered the goods to F Company in accordance with the L/C. The invoice and the B/L issued by the carrier on the next day indicated that the goods that were delivered were only 332.1 tons. However, the two parties did not have a dispute regarding this.

      6. The two parties did not send corresponding letters during the performance of the Contract.

      7. The [Seller] never mentioned that the goods which had been resold were the goods that it had purchased to perform the Contract in this case. Before the arbitration application, neither of the two parties mentioned that damages had been incurred in connection with the performance of the Contract.

(2) The applicable law

      1. The [Buyer] and [Seller] agreed that the CISG shall apply to the Contract for the international sale of goods between them.

      2. As to the RMB 500,000 deposit, the two parties quoted related stipulations in Chinese law orally or by written documents;

The parties' decision on applicable law is within the scope of party autonomy, which should be respected. Therefore, the Arbitration Tribunal holds that the CISG shall be applied, and that related Chinese law shall be applied when there is no stipulation in the CISG because the places for Contract formation, deposit payment, and arbitration are all in China.

(3) Opinions on certain issues

      1. Nature of the deposit and its ownership

      The Arbitration Tribunal notes that the [Buyer] asked SD Company to pay RMB 500,000 to the [Seller], so that the [Seller] would allow the delay on issuance of the L/C. Paying a deposit is one kind of security. The two parties failed to perform it in the form as required, for which they are equally liable. However, this does not affect the nature of the deposit. The performance of paying the deposit and accepting the deposit and corresponding documents has constituted a contract clause, which means an agreement on deposit has been added to the Contract.

Pursuant to Article 89 of the Security Law of the PRC, "after the debtor performs his obligation, the deposit shall either be retained as partial payment or be returned" and, the debtor shall have no right to demand the return of the deposit if the party paying the deposit defaults.

The [Seller] alleges that the [Buyer] has no right to demand the return of the deposit, raising that SD Company paid the deposit, and that the date of the letter, which was sent to ask SD Company to pay the deposit did not conform to the facts, therefore, it cannot be used as evidence.

The Arbitration Tribunal notes the explanation made by the [Buyer] regarding this issue and notes also that, after paying the deposit, SD Company sent a letter to the [Buyer] on 16 July 1999, confirming that it had paid the deposit on behalf of the [Buyer]. Therefore, the Arbitration Tribunal holds that it was the [Buyer] who provided the deposit.

      2. Whether the L/C has modified the Contract and [Buyer]'s right to demand the return of the deposit

      On 30 July 1999, the [Buyer] entrusted F Company to issue a L/C for 400 tons of goods worth US $600,388.00 with the [Seller] as the beneficiary of the L/C. After receiving the L/C, the [Seller] neither asked for nor insisted on the modification of the L/C, nor did it ask the [Buyer] directly to issue the L/C for the remaining half of the goods, but performed the obligation to deliver the goods. Under this circumstance, whether the quantity of the Contract had been modified from the original 800 tons to 400 tons or whether the [Buyer] still had the obligation to issue the L/C for the other 400 tons of goods is one of the issues in dispute between the two parties.

The [Buyer] alleges that the two parties agreed to modify the quantity of the goods because the [Seller] failed to raise objection after receiving the L/C for 400 tons of goods and because the two parties performed the obligations for the delivery of 400 tons of goods. The Arbitration Tribunal does not accept this reasoning.

The Arbitration Tribunal notes that the receipt issued by the [Seller] after it received the RMB 500,000 deposit paid by SD Company indicated that "this is a deposit for 800 tons of goods under the Contract", and that "we would return the deposit within three business days after receiving the L/C under the Contract." Therefore, it should be deemed that the deposit was paid for 800 tons of goods under the Contract. The [Seller] delivered part of the goods based on the L/C for 400 tons of goods. This is not in conflict with the obligation that the [Buyer] shall issue another L/C for 400 tons of goods in accordance with the Contract or based on the agreement of the two parties that was reached when paying the deposit.

Article 29(1) of the CISG stipulates that "a contract may be modified or terminated by the mere agreement of the parties." And Article 28 of the Law of the People's Republic of China on Economic Contract Involving Foreign Interest also states that "a contract may be modified by the agreement of the parties." Even not to consider the fact that the [Seller] and SD Company were contacting each other for the issuance of another L/C, it should not be deemed that the [Buyer] and the [Seller] had reached an agreement on the modification of the quantity of the goods. Partial performance of the Contract should not be deemed as a modification of the quantity of the goods under the Contract.

The [Seller] alleges that it has suffered losses due to the [Buyer]'s breach of Contract, and that it should be compensated by retaining the entire deposit. The Arbitration Tribunal holds that the nature of the deposit has been deemed as security money. Therefore, the Arbitration Tribunal need only decide whether the deposit should be returned without considering the losses alleged by the [Seller].

Based on the above, the Arbitration Tribunal deems that since the RMB 500,000 deposit was paid for 800 tons of goods under the Contract, and the [Buyer] has issued the L/C for 400 tons of goods, the Contract has been performed partially. The deposit for part of the Contract which has been performed shall be returned, and as to the part which has not been performed, the [Buyer] has no right to demand the return of the deposit, therefore, the [Seller] shall return half of the amount of the deposit, i.e., RMB 250,000.

As to the [Buyer]'s claim on loss of the interest on the deposit, based on above analysis, the Arbitration Tribunal holds that the [Buyer] is entitled the interest on half of the deposit, i.e., RMB 250,000. This should be calculated from 2 September 1999, when the [Seller] sent the letter to SD Company, to 23 May 2000, for a total of 261 days at 6% annual interest rate, i.e., RMB 10,875.

The two parties shall bear the arbitration fee equally.

III. THE AWARD

Based on the aforesaid facts and the Arbitration Tribunal's opinion, the Tribunal rules that:

   (1)   [Seller] shall return RMB 250,000 to the [Buyer] within 30 days of this award;
 
   (2)   [Seller] shall pay the interest of RMB 10,875 to the [Buyer] within 30 days of this award;
 
   (3)   [Seller] and [Buyer] shall bear the arbitration fee equally.

This is the final award.

Presiding Arbitrator: ___

Arbitrator ___

23 May 2000 in Shenzhen


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the People's Republic of China is referred to as [Buyer] and Respondent of Korea is referred to as [Seller]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].

** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of a Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

*** John W. Zhu, LL.M. China University of Political Science and Law (National Graduate Scholarship); Bachelor of Law, Southwest University of Political Science and Law; Double Degree, English Literature, Sichuan International Studies University, Chongqing, China. Focus: International Economic Law.

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Pace Law School Institute of International Commercial Law - Last updated September 19, 2007
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