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CISG CASE PRESENTATION

Russia 24 August 2000 Arbitration Court [Appellate Court] for the Moscow Region [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000824r1.html]

Primary source(s) of information for case presentation: Alexandre Muranov

Case Table of Contents


Case identification

DATE OF DECISION: 20000824 (24 August 2000)

JURISDICTION: Russian Federation

TRIBUNAL: Federal Arbitration Court for the Moscow Region (Cassation Instance]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: KG-A40/3632-00

CASE NAME: Grafimex GmbH v. Agency Delta Print Limited

CASE HISTORY: 1st instance Arbitration Court for the City of Moscow (A40-7400/00-25-24) 27 April 2000; 2d instance Appellate Division of the Arbitration Court for the City of Moscow 26 June 2000

SELLER'S COUNTRY: Germany (claimant)

BUYER'S COUNTRY: [-] (respondent)

GOODS INVOLVED: Equipment


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7(2) ; 25 ; 30 ; 53 ; 74 ; 78

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): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Federal Arbitration Court for the Moscow Circuit

Case No. KG-A40/3632-00 of 24 August 2000

Translation [*] by Yelena Kalika [**]

Resolution
of Cassation Board on lawfulness and reasonableness of decision of Arbitration Court

The Claimant "Grafimex GmbH" of Germany [Seller] commenced an action with the Arbitration Court for the City of Moscow. The action was brought against Respondent "Agency Delta Print Limited" [Buyer] to recover a debt for equipment delivered in the amount of Deutsche Mark [DM] 20,000.00 (Russian Rubles [RuR] 291,600.00), interest for the use of other's monetary funds in the amount of DM 6,133.30 (RuR 89,423.50), and losses in the amount of DM 2,090.66 (RuR 30,881.82) representing the fees paid to the Private Joint Stock Company "DAKT-Consulting" for legal services and representation in court.

By the decision of the Arbitration Court for the City of Moscow of 27 April 2000 on case No. A40-7400/00-25-24, the claim was sustained in the part of recovery of DM 20,000.00 of the debt, and of DM 1,419.57 for the use of other's monetary funds. The rest of the claim was denied.

By the resolution of the Appellate Division of the Arbitration Court for the City of Moscow of 26 June 2000 the decision of the court of 27 April 2000 on case No. A40-7400/00-25-24 was upheld.

In his Cassation Complaint in connection with the decision of 27 April 2000 and resolution of the Appellate Division of the Arbitration Court for the City of Moscow of 26 June 2000 on case No. A40-7400/00-25-24 the Respondent [buyer] asks the court to reverse the said judicial acts as made with violations of the rules of procedural law.

There has been no reply to the Cassation Complaint.

At the hearing held by the Cassation Board, the [Buyer]'s representative supported the arguments stated in the Cassation Complaint. The [Seller]'s representative did not appear at the hearing. The [Seller] had been duly notified of the time and place of the Cassation Proceeding.

After reviewing the materials of the case and discussing the arguments stated in the Cassation Complaint and after hearing the arguments made by the [Buyer]'s representative, the Cassation Board came to the following conclusion.

It follows from the materials of the case and it has been established by the court that the dispute arose out of the delivery contract No. 446/08-98 of 12 August 1998 made by the German firm "GRAFIMEX GmbH" [Seller] and "Agency Delta Print Limited" [Buyer]. The parties failed to state the law applicable to their relationships in case of any dispute. In such case the applicable law shall be determined by the court.

Article 1(1) CISG provides that this Convention applies to contracts of sale of goods between parties whose commercial enterprises are located in different States. Since such enterprises are the parties to the contract in controversy, when resolving the dispute, the provisions of the said Convention should have been taken into account.

Article 7(2) CISG provides that questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

Article 30 CISG provides that the seller must deliver the goods, hand over any documents relating to them and transfer the right to property in the goods, as required by the contract and this Convention.

Article 53 CISG provides that the buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention.

Since it follows from the materials of the case, has been established by the court and is not denied by the [Buyer] that the [Seller] did make delivery and since the payment for the goods by the [Buyer] has not been proved, the decision of the court in the part sustaining the claim to recover the main debt is correct, notwithstanding the incorrect reference to the CISG Articles which govern this issue. The incorrect application of the rules of law in this case (i.e., the court's reference to Article 25 CISG) did not entail the incorrect decision and cannot serve as a ground for reversal of a judicial act.

Article 78 CISG provides that if a party delayed in payment of the price, the other party is entitled to interest on the sum in arrears. However the Convention does not set forth the procedure for recovering of interest (i.e., annual interest rate and a method, place and time of its calculation).

Article 74 CISG provides that damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach. Thus, the Convention sets forth the principle of compensation for losses. However, the Convention does not define losses suffered by the other party in connection with the case.

Taking the above into consideration, the court should have determined that the relationships between the parties were governed not only by the CISG, but also by national laws which govern questions not settled in the Convention. In order to determine which national law applied, the court should have turned to the conflict of laws provisions referring to the substantive law.

In accordance with Article 166 of the USSR Principles of Civil Law, in the absence of the parties' agreement on the applicable law, the law of the State, where the seller was incorporated, resides or has its main place of business, shall apply.

Since in the relationships in controversy the seller was a German firm, when resolving the dispute, the court should have applied German law and not Article 395 of the Russian Federation Civil Code. As to the [Seller]'s claim to recover his losses suffered in connection with the case (i.e., legal fees), such issue should have also been resolved in accordance with German law. The application of Russian law by the court in this case was not reasonable. Therefore, the decision and resolution of the Appellate Division in the part granting interest for the use of other's monetary funds and rejecting the recovery of losses should be reversed. The case in this part should be remanded.

As to the arguments stated in the Cassation Complaint, the Cassation Board thinks it is necessary to point out the following.

In the materials of the case there are notices evidencing that all the correspondence sent to the Respondent [Buyer] by the court was received by him (p. 33, 37). In the materials of the case there are no documents evidencing that the Claimant [Seller] knew of the change of the [Buyer]'s address. The fact of not receiving of correspondence by the [Buyer] has not been rebutted. Therefore, his reference to the unduly notification should be denied.

The [Buyer]'s argument that the court should have stated the reasons for refusing to sustain his motion to refer the dispute to arbitration should be taken into account since in the present case, by unreasonably dismissing such motion, the court violated Article 87 of the Russian Federation Arbitration Procedure Code.

On remand, the court should take the above into consideration, resolve the claim in connection with recovery of interest for the use of other's monetary funds and losses in connection with retaining a legal counsel by the Claimant [Seller] in accordance with the relevant provisions of substantive law. The court should also state grounds for its rejection to refer the case to arbitration.

For the foregoing reasons and pursuant to articles 171, 174-177 of the Russian Federation Arbitration Procedure Code, the Federal Arbitration Court for the Moscow Circuit

HOLDS:

The decision of 27 April 2000 and resolution of the Appellate Division of the Arbitration Court for the City of Moscow of 26 June 2000 on case No. A40-7400/00-25-24 in the part allowing recovery of DM 20,000.00 of the main debt is sustained. The rest of the decision and resolution of the Arbitration Court for the City of Moscow is reversed. The case in that part is remanded to the lower court.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation Claimant Grafimex GmbH of Germany is referred to as [Seller] and Respondent Agency Delta Print Limited is referred to as [Buyer]. Amounts in the currency of Germany (Deutsch Mark) are indicated as [DM]; amounts in the currency of Russia (Rubles) are indicated as [RuR].

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

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Pace Law School Institute of International Commercial Law - Last updated February 25, 2004
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