Serbia 25 May 2001 Foreign Trade Arbitration Court attached to the Yugoslav Chamber of Commerce in Belgrade, Serbia (Berries case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010525sb.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: T-15/01
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Yugoslavia (Serbia) (claimant)
BUYER'S COUNTRY: Netherlands (respondent)
GOODS INVOLVED: Raspberries, blackberries and blueberries
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:
8B ; 8C4 [Interpretation of party's statement or other conduct: interpretation based on objective standards; Conduct subsequent to agreement: resale of goods when not otherwise authorized to do so regarded as intent to accept goods]; 35A ; 35C1 [Conformity of goods to contract: quality, quantity and description required by contract; Exception to seller's liability for non-conformity: buyer's knowledge of non-conformity at time of contracting]; 78B [Rate of interest]; 86A11 Duty of buyer who has received goods and intends to reject (obligation to take reasonable care to preserve goods): deposit in warehouse]; 88A1 [Authority of party obliged to preserve the goods to resell]
8B ; 8C4 [Interpretation of party's statement or other conduct: interpretation based on objective standards; Conduct subsequent to agreement: resale of goods when not otherwise authorized to do so regarded as intent to accept goods];
35A ; 35C1 [Conformity of goods to contract: quality, quantity and description required by contract; Exception to seller's liability for non-conformity: buyer's knowledge of non-conformity at time of contracting];
78B [Rate of interest];
86A11 Duty of buyer who has received goods and intends to reject (obligation to take reasonable care to preserve goods): deposit in warehouse];
88A1 [Authority of party obliged to preserve the goods to resell]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
Serbian: Summary of award prepared by Mirjana Cukavac, Secretary of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce, and published in the journal Arbitraza no. 1 (2001) 94-95
CITATIONS TO TEXT OF DECISION
Original language (Serbian): Click here for case text
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
Serbian:  Vladimir Pavić, Milena Djordjević, Primena Becke konvencije u arbitraznoj praksi Spoljnotrgovinske arbitraze pri Privrednoj komori Srbije, Pravo i privreda br. 5-8/2008, cited at at pp. 580, 583 and 590.Go to Case Table of Contents
Queen Mary Case Translation Programme
Award of 25 May 2001 [Proceedings No. T - 15/01]
Translation [*] by Ugljesa Grusić, LL.M.
Edited by Dr. Vladimir Pavić, Milena Djordjević, LL.M. [**]
Claimant (Yugoslavia/Serbia) [Seller] v. Respondent (The Netherlands) [Buyer]
FACTS OF THE CASE
The dispute arose from a sales contract concluded on 14 November 2000. Under the terms of the Contract, the [Seller] was obliged to sell to the [Buyer] a certain quantity of raspberries, blackberries and blueberries, namely:
|-||2,000 kg of raspberries for the total price of Deutsche Mark [DEM] 6,400;|
|-||2,500 kg of "grish" raspberries for the total price of DEM 5,500;|
|-||3,000 kg of deep frozen blackberries for the total price of DEM 5,100; and|
|-||15,000 kg of blueberries for the total price of DEM 63,550.|
Therefore, the total contractual price was DEM 80,550. Among other things, it was agreed that:
|-||The qualitative and quantitative inspection of the goods would take place at the warehouse of the buyer;|
|-||The goods should be delivered by 30 June 2001; and|
|-||The payment would be made sixty days after the date the goods cleared export customs.|
On 15 November 2000 the following goods were shipped and cleared customs: 2,002 kg of "grish" raspberries, 2,000 kg of blackberries and 15,250 kg of blueberries.
|-||On the same day, the seller sent Invoice No. 028-1/2000, for the amount of DEM 70,329.40, in accordance with the contractual price of DEM 4.1 for one kg of blueberries,
DEM 2.2 for one kg of "grish" raspberries and EUR 1.70 for one kg of blackberries.
|-||After five days, on 20 November 2000, the [Buyer] sent a notice to the [Seller] informing
the [Seller] that the quality of the blueberries is satisfactory, but that the goods have too
many stems and too much impurity, requesting the [Seller] to suggest whether the goods
should be cleaned in the Netherlands, or whether something else should be done. A report
from the cold-storage warehouse was enclosed, which stated that the goods had less than
1% of admixtures, that there were "too many stems and too much impurity".
|-||On 13 December 2000, the [Seller] informed the [Buyer] that [Seller] wishes to have the
disputed goods placed at the [Buyer]'s disposal, and requested [Buyer] to pay the
remainder of the price, after deducting the storage expenses.
|-||The [Buyer] delivered an expense report on 31 December 2000, after which the [Seller]
requested the [Buyer] to either pay the entire price of the goods or to return the goods.
The [Buyer] insisted on attempting to sell the goods at the best price and to appropriately
reduce the amount due to the [Seller].
|-||On 17 January 2001, the [Buyer] informed the [Seller] that [Buyer] would like to sell the goods to a German customer at the price of DEM 3.6 per kg, to which the [Seller] objected in a letter of 18 January 2001, stating that it was out of the question to sell the goods at less than the contracted price, i.e., at less than EUR 4.1 per kg.
|-||By letter of 20 January 2001, the [Seller] reconfirmed its position pointing out that a
previous buyer was interested in the goods, and that this buyer was ready to pay an even
|-||Despite this warning, the [Buyer] sold the goods to the German customer at a price of DEM 3.6 per kg, and informed the [Seller] in a letter of 30 January 2001 that the goods would be promptly paid for.|
So far, the [Buyer] paid to the [Seller] DEM 42,404.40, namely, DEM 17,404.40 on 23 March 2001, another DEM 25.000 on 19 April 2001, i.e., DEM 42.402,40 in total. The [Seller] thereby claims:
|-||The amount of DEM 27,925, as the difference between the invoiced price and the paid amount;|
|-||Interest of 6% annually (on the unpaid portion of the price as of 15 January 2001 until final payment, and on the paid portion of the price until the date these sums were paid); and|
|-||The costs of the arbitration proceedings.|
STATEMENT OF REASONS
Before deciding on the merits, the arbitrator assessed the jurisdiction of the arbitration and the composition of the tribunal. Pursuant to Article 1.1.(1) of the Rules of the Foreign Trade Court of Arbitration attached to the Yugoslav Chamber of Commerce (hereinafter the Rules), jurisdiction of the arbitration can be agreed upon for settlement of disputes arising from international business relations. This dispute arose from an international business transaction between a Yugoslav company and a Dutch company. Since the [Buyer] failed to submit an Answer to the Statement of Claim, the Board of the Foreign Trade Court of Arbitration determined that the arbitration agreement is contained among the documents submitted by the [Seller], in accordance with Article 15(1) of the Rules. The arbitration agreement is contained in the Export Contract of 14 November 2000, which prescribes "Arbitration: YCC". This provision is clear and unambiguous enough to indicate the jurisdiction of the Foreign Trade Court of Arbitration attached to the YCC, Yugoslav Chamber of Commerce.
Composition of the Tribunal
Since the value of the dispute is DEM 27,925, a tribunal with a sole arbitrator is competent for settling the dispute. This results from the application of Article 26(1) of the Rules, which prescribes that a sole arbitrator is to settle disputes whose value is less than US $70,000. Since the parties failed to reach an agreement on a person to act as a sole arbitrator, the Chairman of the Arbitration Court appointed _____ as sole arbitrator, pursuant to Article 27(3) of the Rules (decision of 24 December 2001).
Since the parties failed to reach an agreement on the applicable substantive law in their Contract, Article 46(2) of the Rules prescribes that the Arbitration Tribunal is to apply the law indicated by the conflict of law rules that the sole arbitrator deems most appropriate.
|-||In this case, the primary source of law is the United Nations Convention on Contracts for
the International Sale of Goods (Vienna Convention), which came into force in Yugoslavia
on 27 April 1992, and in the Netherlands on 1 January 1992. Pursuant to Article 1(1)(a)
of the Convention, it is to be applied to contracts of sale of goods between parties whose
places of business are in different Contracting States, which is the case here.
|-||Yugoslav law shall be applicable for all questions not regulated by the Convention, being the law of the country in which the seller has its seat (Yugoslav conflict of law rules, contained in Article 19 of the Law on Resolution of Conflict of Law with Provisions of other Countries, point to this law).|
Delivery of Statement of Claim to the [Buyer]
Pursuant to Article 25(1) of the Rules, the Statement of Claim was properly delivered to the [Buyer] by registered mail (on 12 October 2001). The [Buyer] failed to submit an Answer to the Statement of Claim. The Decision of 25 December 2001 on the appointment of sole arbitrator was sent to the [Buyer] on 9 January 2002, but the [Buyer] rejected receipt of it. A summon to the hearings was sent on 14 February 2002 by DHL, but the [Buyer] rejected receipt of it too. In both cases, the delivery is to be considered valid, in accordance with Article 25(2) of the Rules. Therefore, the sole arbitrator acknowledges that the [Buyer] was properly notified and that, despite this fact, the [Buyer] failed to respond to the notice.
After having received the blueberries, the [Buyer] notified the [Seller] of the alleged non-conformity of the delivered goods. The report of an employee at the Dutch cold-storage warehouse indicated that the goods had 1% of admixtures. The [Buyer] could not have been unaware of the situation with respect to admixtures at the time of conclusion of the contract, considering the fact that it was Mr. X, the intermediary in this transaction, who, after having inspected the goods, informed the [Buyer] by letter sent by fax on 18 September 2000, that the goods were of good quality and that there was less than 1% of admixtures. The [Buyer] was aware of the quality of the goods at the time of conclusion of the contract. Therefore, the [Seller] delivered conforming goods within the meaning of Article 35(1) of the Convention, and stated in all of its letters (of 17, 18 and 20 January 2001) that the goods were conforming.
After having rejected the delivery of the goods, the buyer was obliged to take the goods into possession on behalf of the seller and to incur all reasonable expenses for preserving the goods, in accordance with Article 86 of the Convention. The seller indicated to the buyer on 13 December 2000 that it was ready to reimburse the [Buyer] for these expenses, namely the expenses of keeping and warehousing the blueberries. At the same time the seller requested the goods back. Therefore, the Dutch company could not have exercised the right of sale under Article 88 of the Convention, since this right is only available in situations where the other party unreasonably delays to take possession of the goods, to take it back or to pay the storage expenses. Since the buyer nevertheless sold the goods, [Buyer] could have done that only in the capacity of their owner, and [Buyer] could have become the owner only upon accepting the delivery and receiving the goods. A reasonable person, in the meaning of Article 8(2) of the Convention, would interpret this sale of goods to a third person, despite the seller's protest and his unambiguous readiness to take the goods back and pay for storage expenses, as an act which indicated that the delivery of the goods had been accepted and that the goods had been received.
The [Buyer]'s indication that "an agreement has been reached to sell the goods at the best price" in the letter of 17 January 2001 is totally contrary to the specific instructions of the seller not to sell the goods, but to have them returned or the invoiced price paid, in [Seller]'s letters of 17 and 18 January 2001. The seller only agreed to have the goods sold at a price higher than the contractual one.
Since the seller performed its obligation to timely deliver conforming goods, and since the buyer received the delivery of the goods, the buyer was obliged to pay the price pursuant to the contract; the buyer, however, constantly delayed the payment. Considering that the goods were delivered on 15 November 2000, the payment had to be made by 15 January 2001. In addition to DEM 27,925.00 which the buyer did not pay at all, the remaining amount of the sum owed was paid with delay, namely the amount of DEM 17,404,00 was paid on 23 March 2001, and the additional DEM 25,000.00 as late as 19 April 2001. Therefore, besides DEM 27,925.00, the [Seller] is entitled to interest as of the moment when the [Buyer] should have made the payment until the moment of payment, in accordance with Article 78 of the Convention and Articles 324(1) and 277(1) of the Law of Obligations [of the Republic of Serbia].
Currency of payment
Considering that the DEM was replaced by the EURO on 1 January 2002, the amounts due under the contract are converted into the new currency at the fixed exchange rate of DEM 1.9557 for one EUR, determined by the European Central Bank in Frankfurt.
Costs of proceedings
Pursuant to Article 149(1) of the Code of Civil Procedure [of the Republic of Serbia], a losing party is obliged to compensate the other party for its expenses. Therefore, the [Buyer] is obliged to pay the [Seller] RSD 95,760, namely RSD 73,680 for the costs of the arbitration, RSD 7,500 for writing of the Statement of Claim and its translation into German, RSD 5,500 for writing of the two written submissions, RSD 2,000 for representation in the proceedings, RSD 1,080 for travel expenses and RSD 2,000 for compensation for the lawyer working outside her office.
On 24 May 2001, on the basis of the above-mentioned, the sole arbitrator made the following
The [Seller]'s claim is granted and the [Buyer] is ordered to pay to the [Seller]:
1) The amount of EUR 14,278.77 with interest of 6% annually as of 15 January 2001 until the final payment, within fifteen days from the day receipt of the Award;
2) Interest of 6% annually on the amount of EUR 8,899.32 as of 15 January 2001 until 23 March 2001, within fifteen days from the day of receipt of the Award;
3) Interest of 6% annually on the amount of EUR 12,783.15 as of 15 January 2001 until 9 April 2001, within fifteen days from the day receipt of the Award;
4) Compensation of the costs of proceedings in the amount of RSD 95,760.00, within fifteen days from the day receipt of the Award.
Pursuant to Article 478(1) of the Law on Civil Proceedings (Article 54(1) of the Rules), this Award is final and is not subject to appeal. It has the force of a final court decision.
In Belgrade, 25 May 2001
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Serbia is referred to as [Seller] and Respondent of The Netherlands is referred to as [Buyer].
** Ugljesa Grusić, LL.M. (U. of Nottingham) is a Doctorate student at the University of Belgrade Faculty of Law. Dr. Vladimir Pavić is an Assistant Professor in Private International Law and Arbitration, and Milena Djordjević, LL.M. (U. of Pittsburgh) is a Lecturer in International Commercial Law at the University of Belgrade Faculty of Law.Go to Case Table of Contents