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CISG CASE PRESENTATION

Russia 25 June 2001 Arbitration Court [Appellate Court] for the Moscow Region [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010625r1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20010625 (25 June 2001)

JURISDICTION: Russian Federation

TRIBUNAL: Federal Arbitration Court for the Moscow Region

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: KG-A40/3057-01

CASE NAME: DB Gas and Oil ApS v. JSC Novoil

CASE HISTORY: 1st instance Arbitration Court for the City of Moscow (A40-43159/00-25-97) 5 February 2001; 2d instance Appellate Division of the Arbitration Court for the City of Moscow (A40-43159/00-25-97) 10 April 2001 [reversed and remanded (lower courts had not applied the Convention)]; 4th instance Arbitration Court for the City of Moscow 6 August 2001; 5th instance Arbitration Court for the Moscow Region (KG-A40/6314-01) 8 November 2001 [reversing in part]

SELLER'S COUNTRY: Russia (defendant)

BUYER'S COUNTRY: Denmark (plaintiff)

GOODS INVOLVED: Crude oil


Classification of issues present

APPLICATION OF CISG: Yes, parties from Contracting States; contract silent on choice of law; law of Contracting State appropriate

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 7(2)

Classification of issues using UNCITRAL classification code numbers:

6B [Implied agreement to apply Convention];

7C22 ; 7C23 [Gap-filling: recourse to general principles on which Convention is based: Gap-filling by domestic law]

Descriptors: Choice of law ; Gap-filling

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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 Region of the Russian Federation
Case No. KG-A40/3057-01 of 25 June 2001

Translation by Yelena Kalika [*]

On reviewing the cassational complaint of "DB Gas and Oil ApS" (Denmark) on the decision of 5 February 2001 and the resolution issued by the Appellate Division of the Arbitration Court for the City of Moscow on 10 April 2001 on case No. A40-43159/00-25-97, the Federal Arbitration Court for the Moscow Region has found:

The company "DB Gas and Oil ApS" (Denmark) filed a complaint with the arbitration court for the city of Moscow seeking damages in the amount of [US] $125,992,449 (or the equivalent of the sum in RuR [Russian rubles] at the rate of the Central Bank of the Russian Federation on the day of payment). The said amount includes the plaintiff's damages followed from a breach of a contract of 23 March 1999 for the sale of crude oil and the liquidated damages.

Before the court heard the case, the plaintiff had increased the amount of damages sought up to [US] $153,291,840.

In its decision of 5 February 2001 on case No. A40-43159/00-25-97, the Arbitration Court for the City of Moscow denied the claim.

In its resolution of 10 April 2001, the Appellate Division of the Arbitration Court for the City of Moscow affirmed the decision of the lower court (Case No. A40-43159/00-25-97, 5 February 2001).

In the cassational complaint on the decision of 5 February /2001 and on the resolution issued by the Appellate Division of the Arbitration Court for the City of Moscow on 10 April 2001 on case No. A40-43159/00-25-97, the plaintiff requests to reverse the mentioned judicial acts and argues that the material and procedural law were applied incorrectly. The plaintiff also asks the court to uphold the claim stated in the original complaint.

In an answer to the cassational claim, the defendant requests to affirm the above mentioned judicial acts as lawful and reasonable arguing that the reasoning of the cassational claim is wrongful.

In a hearing held by the cassational court, the plaintiff has repeated the reasoning stated in the cassational claim. The defendant objected to a cassational claim on the same grounds as stated in a reply.

After reviewing the materials of the case and discussing the reasoning of the cassational complaint and the answer, and on hearing the arguments of the plaintiff and defendant, the cassational court has concluded that the contested judicial acts shall be reversed for the following reasons.

As follows from the materials of the case and determined by the lower court, the parties' companies are located in different States. Therefore the transaction for the sale of goods is an international transaction. The court below determined that in a contract concluded by the parties there was no provision on the applicable law. The court concluded that, according to Article 166 of the Principles of the Civil Legislation, and in the absence of the parties' agreement on the applicable law, the law of the seller's State would apply. As stated in the contract, the Russian party was a seller. Consequently, the law of the Russian Federation would apply.

This conclusion of the court below is incorrect. Taking into account that pursuant to Article 15(4) of the Constitution of the Russian Federation the principles and norms of the international law, as well as the international treaties of the Russian Federation, shall be part of its legal system, in the absence of the parties' agreement on the applicable law and when an international transaction is involved, the court shall, first of all, determine whether the relationships between the parties are governed by an international treaty. Taking into consideration that the parties to a deal are the Danish and Russian firms and that both Denmark and Russia are the members of the United Nations Convention on Contracts for the International Sale of goods 1980 (the Vienna Convention), when resolving the dispute the court below should have applied the provisions of the mentioned international treaty. Pursuant to Article 7(2) of the said Convention, 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. The relevant conflict rules determining the applicable material law should be applied only when it is impossible to resolve a dispute by applying the Convention.

Therefore, the court below and the Appellate Division incorrectly determined the applicable law. Consequently, they incorrectly applied the material law. Thus, pursuant to Article 176(1) of the Arbitration Procedural Code of the Russian Federation the judicial acts shall be reversed and the case shall be remanded.

In the new hearing on the case, the court shall take the above mentioned reasoning into account and resolve the dispute by applying the correct material and procedural law.

On the grounds of Articles 171, 174-177 of the Arbitration Procedural Code of the Russian Federation, the Federal Arbitration Court for the Moscow Region holds:

The decision of 5 February 2001 and the resolution issued by the Appellate Division of the Arbitration Court for the City of Moscow on 10 April 2001 on case No. A40-43159/00-25-97 are reversed. The case is remanded to the trial court.


FOOTNOTE

* 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.

All translations should be verified by cross-checking against the original text.

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Pace Law School Institute of International Commercial Law - Last updated May 30, 2003
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