Russia 19 January 2001 Arbitration proceeding 129/2000 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010119r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 129/2000
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (claimant)
BUYER'S COUNTRY: Bulgaria (respondent)
GOODS INVOLVED: Goods
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Russian): Rozenberg, Praktika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (2001-2002) No. [42-44]
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
Translation [*] by Yelena Kalika [**]
1. SUMMARY OF RULING
1.1 Where the parties' commercial enterprises are located in CISG Contracting States, the parties' agreement that their disputes shall be governed by Russian law does not preclude the application of the CISG to their relationships based on Article 1(1)(a) CISG.
1.2 In the absence of the parties' agreement to do so, pursuant to the Rules of the Tribunal, counterclaims following from different contracts cannot be offset by each other even though these contracts contain identical arbitration clauses stating that disputes shall be arbitrated by the Tribunal.
2. FACTS AND PLEADINGS
[Seller], a Russian firm, brought a claim against Respondent [Buyer], a Bulgarian firm, in connection with a contract for the international sale of goods made by the parties on 15 October 1997. The claim resulted from the [Buyer]'s partial non-payment for the goods delivered to him. The [Buyer] objected to the claim. He argued that on the same date the same parties made a barter contract. When performing [this barter contract], the [Seller] became indebted to the [Buyer]. The sum of the debt was equal to the sum in arrears in the present dispute. The [Seller] rejected the [Buyer]'s suggestion to offset the counterclaims. The [Seller] argued he was [still] interested in going ahead with the barter transaction.
3. TRIBUNAL’S REASONING
The Tribunal's award contained the following main points.
3.1 Clause 10(2) of the contract in controversy provides that the parties agree that disputes arising out of the contract be arbitrated by the Tribunal. For the above stated reason and based on Article 1 of the Rules of the Tribunal, the Tribunal finds that it has competence to arbitrate the present dispute.
3.2 In connection with the [Buyer]'s failure to appear at the proceeding, the Tribunal ascertains that the claims and notice on the time and place of the proceeding were delivered to the [Buyer]. The [Buyer] submitted his objections to the claim but failed either to appear at the proceeding or to move that the case be adjourned. Taking these circumstances into consideration and based on Article 28(2) of the Rules of the Tribunal as well as on the [Seller]'s request to arbitrate the case in the absence of the [Buyer], the Tribunal concludes that it is possible to arbitrate the case in the absence of the [Buyer].
3.3 Turning to the issue of the applicable law, the Tribunal notes that in Clause 10(3) of the contract the parties agreed to apply Russian law when resolving disputes arising out of the contract. The Tribunal is of the opinion that, pursuant to Article 7(2) of the Russian Federation Civil Code, this provision in the contract does not preclude the application of the CISG to the present dispute. Thus, the CISG should apply because both the Russian Federation and Bulgaria had been CISG Contracting States as of the date of the contract. The commercial enterprises of the parties were located in the Russian Federation and Bulgaria (Article 1 CISG).
3.4 Upon review of the [Seller]'s claim, the Tribunal ascertains that the [Buyer] acknowledged his debt under the contract in controversy in the amount claimed. [The acknowledgement] was made in the [Buyer]'s letter of 6 June 1999 as well as in his objections to the claim. The [Buyer] suggested that this debt be offset by the [Seller]'s debt under the second (barter) contract made by the parties on the same date. The [Seller] rejected that suggestion because, in his opinion, the two contracts represented two independent transactions.
The Tribunal may not consider the [Buyer]'s suggestion to offset [the debts] because this suggestion contradicts the provisions of Article 33(1) of the Rules of the Tribunal according to which the [Buyer] may either file a counterclaim following from the same contract or make a claim following from the same contract for the purpose of offsetting [the debts]. In the present case, the claim was brought in connection with the first contract. However, the [Buyer] suggested offsetting the debts based on the second contract. Although both contracts contain the same arbitration clause, they are independent and unrelated contracts. The [simultaneous] arbitration of claims following from these contracts in this [single] proceeding would be possible only if both parties agreed and if the [Buyer] made a motion as required in the Rules.
Taking this circumstance into consideration and based on Article 53 CISG, according to which the buyer must pay the price of goods in accordance with the terms of the contract, the Tribunal is of the opinion that the claim of the sum in arrears is reasonable and should be sustained.
Since the parties agreed that a sole arbiter arbitrate the dispute, the arbitration fees should be reduced by 30% based on Article 4(1) of the Regulations on arbitration fees and expenses (i.e., the Appendix to the Rules of the Tribunal). The Tribunal holds that the Respondent [Buyer] must pay 70% of the arbitration fees. The Claimant [Seller] must pay 30% of the arbitration fees.
* This is a translation of data on Proceeding 129/2000, dated 19 January 2001, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, reported in Rozenberg ed., Arb. Praktika (2001-2002) No. 5 [42-44].
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] and Respondent of Bulgaria is referred to as [Buyer].
** Yelena Kalika, JD Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Moscow law firm, and is an Associate at the Pace Institute of International Commercial Law.Go to Case Table of Contents