Russia 25 May 2001 Arbitration proceeding 191/2000 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010525r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 191/2000
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (claimant)
BUYER'S COUNTRY: France (respondent)
GOODS INVOLVED: Goods
APPLICATION OF CISG: Yes
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. 15 [103-106]
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 Since the parties' commercial enterprises are located in CISG Contracting States (Russia and France), the parties' relationships are governed by the CISG and Russian law as subsidiary law pursuant to the conflict of laws provision of Russian law.
1.2 The Respondent [Buyer] did not make a claim as to the quality of goods as required in the contract. In accordance with the contract, he waived the right to bring such a claim. The Tribunal found that the [Buyer]'s unilateral reduction of the price of goods and, thus, only a partial payment for the goods was not reasonable.
2. FACTS AND PLEADING
[Seller], a Russian firm brought a claim against [Buyer], a French firm, in connection with partial nonpayment for the goods delivered Ex-Works under the contract for the international sale of goods made by the parties on 26 August 1997. The [Seller]'s claims included: the recovery of the unpaid price and shipping expenses. It followed from the parties' correspondence that the [Buyer] retained part of the price of the goods based on the [allegedly] unsatisfactory quality of the goods.
3. TRIBUNAL'S REASONING
The Tribunal's award contained the following main points.
3.1 The Tribunal's competence to arbitrate the present dispute follows from the arbitration clause in the contract. In accordance with the arbitration clause, all disputes and disagreements that may arise from the present contract or in connection with it shall be resolved by arbitration and not by the court. [The arbitration forum] shall be the Arbitration Court at the Russian Federation Chamber of Commerce and Industry in Moscow. The arbitration proceeding shall be conducted in accordance with the Rules of the said tribunal or its successor in rights.
By Resolution of the Russian Federation Supreme Council of 7 July 1993, the Arbitration Court at the Russian Federation Chamber of Commerce and Industry was renamed the International Commercial Arbitration Tribunal at the Russian Federation Chamber of Commerce and Industry (the Tribunal). Therefore, the claim was brought with the proper tribunal.
The arbiters also ascertain that the dispute between the parties concerns contractual relationships arising out of an international commercial transaction. The [Buyer]'s commercial enterprise is located abroad. Therefore, the present dispute falls within the list of disputes that may be arbitrated by the Tribunal pursuant to the Russian Federation Law "On International Commercial Arbitration" and the Tribunal's Rules.
That the [Seller] filed his claim with the Tribunal evidences that the parties indeed intended that their possible disputes be arbitrated by the Tribunal.
For the above reasons and in accordance with Article 16 of the Russian Federation Law "On International Commercial Arbitration", the Tribunal found it had competence to arbitrate the present dispute.
The panel was composed in accordance with the Tribunal's Rules. No objections to the Tribunal's composition were made.
3.2 After reviewing the issue of the [Buyer]'s absence at the proceeding, the Tribunal found the following. The claim was sent to the [Buyer] in the letter No. 1800-191/3621 and was received by him. The Tribunal mailed the notice stating the date of the hearing to the [Buyer] on 6 April 2001. The notice was received by the [Buyer] as evidenced by a postal receipt.
Pursuant to Article 28(2) of the Tribunal's Rules, a party's absence at the proceeding, where such party was duly notified of the time and place of the proceeding, does not preclude the arbitration of the dispute and the rendering of an award. For the above stated reasons and pursuant to Article 28(2) of the Rules, the Tribunal found it possible to arbitrate the dispute in the absence of the [Buyer].
3.3 As to the law governing the relationships between the parties in this case, the Tribunal found that both in the contract and in the amendments to it the parties failed to choose the applicable law.
Pursuant to Article 28 of the Russian Federation Law "On International Commercial Arbitration", if the parties fail to choose the applicable law, the arbitration tribunal shall determine the applicable law based on the conflict of laws provision that it deems to be applicable. In accordance with Article 28 mentioned above, the Tribunal found that the conflict of laws provision stated in Article 166(1) of the USSR Principles of Civil Law 1991 should apply. In accordance with Article 166(1), a sale contract shall be governed by the law of the seller's country, i.e., by the law of the Russian Federation.
Pursuant to Article 7 of the Russian Federation Civil Code, international treaties of the Russian Federation are a component part of the Russian substantive law. International treaties supercede domestic civil laws. Based on the said Article, the parties' relationships arising in connection with this contract are governed by the CISG. The provisions of the Russian Federation Civil Code govern issues not settled in or only partially settled in the CISG.
3.4 Turning to the merits of the [Seller]'s claims, the Tribunal found that, in accordance with the contracts made by the parties, in December 1997 the [Seller] delivered the goods to the [Buyer]. The [Buyer]'s partial payment resulted in this claim. The [Seller] submitted the following documents evidencing the fact of shipment: an international waybill, customs declarations and invoices. The Tribunal is of the opinion that the [Seller] established the fact of his full performance of obligations under the contract.
However, the [Buyer], in violation of his contractual obligations, failed to fully pay the price of goods. The [Buyer] claimed that the goods delivered were of unsatisfactory quality. The [Buyer], therefore, unilaterally retained a part of the price of goods. However, in accordance with the contract between the parties, any claims as to the quality of the goods should be brought only within 60 days from the date of delivery and must be supported by a certificate issued by a disinterested competent organization. If the buyer fails to bring a claim within the said period of time, he waives his right to bring such claim. The [Buyer] did not submit the certificate evidencing his damages, i.e., he failed to bring a claim as to the quality of the goods in the manner required by the contract. Besides, in accordance to the terms of the contract between the parties, the [Buyer] had no right to unilaterally reduce the price of goods.
In such circumstances, the Tribunal finds that the [Seller]'s demand of payment for the goods delivered is just and reasonable pursuant to Article 53, 61 and 62 CISG.
However, the [Seller] failed to properly issue Invoice No. 311 because he mistakenly stated a higher price for one unit of goods delivered Ex-Works. In such circumstances, the Tribunal believes that the [Seller]'s claim of the payment for the goods delivered should be sustained based on the price per unit stated in Appendix No. 3 to the contract.
In Appendix No. 3 to the contract, the parties set forth the Ex-Works term of delivery. In accordance with INCOTERMS, when parties choose this term of delivery, the buyer must pay shipping expenses. In such circumstances, the Tribunal believes that the [Seller]'s claim of shipping expenses should be sustained in full.
3.5 Since the [Buyer]'s failure to fulfill his obligations under the contract resulted in the [Seller]'s bringing this claim with the Tribunal and since the [Seller]'s main claim was partially sustained, the Tribunal places arbitration expenses on the [Buyer] in proportion to the claims sustained (see Article 6(1) of the Regulations on arbitration fees and expenses).
* This is a translation of the award in proceeding 191/2000, dated 24 May 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. 15 [103-106]. 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 France 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