Russia 17 July 2001 Arbitration proceeding 419/1995 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010717r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 419/1995
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Germany (claimant)
BUYER'S COUNTRY: United Kingdom (respondent)
GOODS INVOLVED: Goods
APPLICATION OF CISG: Yes [Article 1(1)(b)]
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. 18 [122-125]
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 In the absence of the parties' agreement to the contrary, where a commercial enterprise of one of the parties to the contract for the international sale of goods is located in a CISG Contracting State, the parties' relationships under the contract are governed by the CISG and by German law as a subsidiary statute because German law should apply as the law of the seller's State in accordance with the conflict of laws provision.
1.2 The price recovered from the Respondent [Buyer] exceeds that stated in the contract because the Tribunal took into account the [Buyer]'s letter in which he agreed [to the increase of the price]. (The letter was submitted by the Claimant [Seller]). The Tribunal ignored the [Buyer]'s statement that such agreement was procured under duress on the part of the [Seller] because the [Buyer] failed to present any evidence in support of such allegation.
1.3 The [Seller]'s failure to use a letter of credit opened by the [Buyer] does not preclude his right to claim payment for the goods delivered under the contract.
1.4 Taking into consideration that the [Buyer] failed to observe the Rules of the Tribunal in connection with the counterclaims and claims brought for the purpose of offsetting [the debts], the Tribunal did not consider the [Buyer]'s claims to recover his losses suffered as a result of the [Seller]'s failure to duly perform his obligations under the contract in controversy.
1.5 The Tribunal did not consider the [Buyer]'s arguments concerning the circumstances related to the performance of other contracts between the same parties because [such arguments] are not relevant to the contract in controversy.
2. FACTS AND PLEADINGS
[Seller], a German firm, brought a claim against Respondent [Buyer], a U.K. firm, based on the contract for the international sale of goods made by the parties on 21 March 1995. The claim was brought in connection with the [Buyer]'s failure to pay for the goods delivered. The [Seller]'s claims included: the price of the goods delivered and annual interest for the use of his funds. (The [Seller] dropped the last claim at the proceeding). The [Buyer] objected to the claims. In particular, he argued that:
|-||The [Seller] failed to use a letter of credit opened by the [Buyer];|
|-||The [Seller] breached several provisions in the contract and [this breach] resulted in the [Buyer]'s losses;|
|-||The price of goods was increased without fulfilling the promises made by the [Seller].|
Besides, the [Buyer] stated that, while performing other contracts between the same parties, the [Seller] committed serious breaches resulted in substantial losses. The [Buyer] qualified his claims under other contracts as a counterclaim but failed to pay arbitration fees in connection with it. In response to the inquiry of the Tribunal's Secretary [in connection with the fees], the [Buyer] stated that [the claims] represented mere explanations in connection with the claims brought against him.
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 Clause 4 of the contract.
3.2 The parties to the contract failed to provide for the law applicable to their relationships not settled in the contract.
Pursuant to Article 13 of the Rules of the Tribunal, the applicable law shall be determined by the Tribunal based on the conflict of law provision that it finds applicable.
Article 166 of the USSR Principles of Civil Law 1991 provides for the application of the law of the State, where the seller has its main place of business, to the disputes following from sale contracts. In the present case, it is the law of the Federative Republic of Germany. Since Germany is a CISG Contracting State, when arbitrating the present case, the Tribunal should apply the provisions of the CISG. Issues not expressly settled in the CISG should be resolved in accordance with the rules of German law based on Article 7(2) CISG.
3.3 When resolving the issue of the [Buyer]'s absence at the proceeding, the Tribunal ascertained that the [Buyer] received the claim and documents enclosed. A receipt of a courier service dated 9 February 1996 evidences this fact. It is also [circumstantially] evidenced by the [Buyer]'s communications with the Tribunal in connection with the appointment of an arbiter (see letters of 27 February 1996, 10 December 1997, etc.). The [Buyer] [also] sent his objections to the claim on 26 January 1998.
At the same time, the notices of hearing dated 23 March 2001 and 15 May 2001, which were sent to the same [Buyer]'s address by courier mail, were returned to the Tribunal as undelivered.
All the steps taken by the [Seller] in order to find a different address of the [Buyer] produced no results.
Article 3 of the Russian Federation Law "On International Commercial Arbitration" sets forth that a written communication is deemed to be received if it was sent to the last known address of a commercial enterprise, its permanent address or by certified mail to the addressee or by any other method providing for the registration of an attempt to deliver such a communication.
The notice of the hearing of 15 May 2001 was sent to the [Buyer] by a courier mail to his known address. Earlier, the [Buyer] received letters from the Tribunal at that address. Thus, the [Buyer] is deemed to be duly notified of the time and place of the hearing. Therefore, the Tribunal concluded based on both Article 3 of the said Law and Article 28(2) of the Rules of the Tribunal that the [Buyer]'s failure to appear at the proceeding did not preclude the arbitration of the case and the rendering of an award.
3.4 When arbitrating the case on the merits, the Tribunal considered that in June 1995 the [Seller] delivered the goods in the quantity stated in the claim. The copies of railroad bills in the materials of the case evidence the fact of delivery.
In his letter of 10 May 1995, the [Buyer] confirmed that the price was increased. In the reply to the claim of 26 January 1998, the [Buyer] argued that the price was increased but that [the increase was procured] under duress on the part of the [Seller].
The Tribunal did not find any evidence [of duress] in the materials of the case. Therefore, the Tribunal finds that, when computing the amount of claim, the [Seller] was entitled to base [his computation] on the price increased by agreement of the parties.
The [Buyer]'s arguments in connection with the performance of the contracts of 23 May, 24 June, 27 June and 4 August 1994 cannot be taken into consideration by the Tribunal when arbitrating the present dispute because they are not relevant to the contract in controversy.
Losses suffered by the [Buyer] in connection with the [Seller]'s failure to fulfill the terms of the contract in controversy also cannot be reviewed by the Tribunal as a claim to offset [the debt] because based on Article 33(2) of the Rules of the Tribunal both a claim and a counterclaim shall meet the same requirements. Thus, in accordance with Article 18(2) of the Rules of the Tribunal, arbitration fees should have been paid in advance. Until the arbitration fees are paid, there can be no arbitration of the claim.
For the above stated reasons and taking into consideration that the [Buyer] received the goods delivered under the contract as well as based on Articles 53 and 62 CISG, the Tribunal concludes that the [Buyer] should pay to the [Seller] the price of the goods delivered.
3.5 Pursuant to Article 6(1) of the Regulations of Arbitration Fees and Expenses, the Respondent [Buyer] should reimburse the arbitration fees paid by the Claimant [Seller].
* This is a translation of data on Proceeding 419/1995, dated 17 July 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. 18 [122-125].
All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Germany is referred to as [Seller] and Respondent of the United Kingdom 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