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CISG CASE PRESENTATION

Serbia 24 September 2001 Foreign Trade Arbitration Court attached to the Yugoslav Chamber of Commerce in Belgrade, Serbia (Plums and mushrooms case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010924sb.html]

Primary source(s) of information for case presentation: Text of award

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Case identification

DATE OF DECISION: 20010924 (24 September 2001)

JURISDICTION: Arbitration ; Serbia

TRIBUNAL: Foreign Trade Arbitration Court attached to the Yugoslav Chamber of Commerce in Belgrade, Serbia

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: T-3/01

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Yugoslavia (Serbia) (Claimant)

BUYER'S COUNTRY: Germany (Respondent)

GOODS INVOLVED: Plums and mushroom


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 54 ; 57 ; 59 ; 78

Classification of issues using UNCITRAL classification code numbers:

54A [Obligation to pay includes enabling steps];

57A [In absence of agreement, payment at seller's place of business (art. 57(1)(a)];

59B [No need for request by seller or other formality];

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Payment, place of ; Interest

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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 (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) 89-92

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Serbian: [2008] Vladimir Pavic / Milena Djordjevic, Primena Becke konvencije u arbitraznoj praksi Spoljnotrgovinske arbitraze pri Privrednoj komori Srbije, Pravo i privreda br. 5-8/2008, cited at pp. 574 and 611.

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Case text (English translation)

Queen Mary Case Translation Programme

Foreign Trade Court of Arbitration
attached to the Yugoslav Chamber of Commerce in Belgrade

Award of 24 September 2001 [Proceedings No. T - 3/01]

Abstract prepared by Mirjana Cukavac, Secretary of the Foreign Trade
Court of Arbitration attached to the Serbian Chamber of Commerce and
Published in Serbian in the journal Arbitraza No. 1 (2001) 89-92

Translation [*] by Jovana Stevovic
Edited by Dr. Vladimir Pavic, Milena Djordjevic, LL.M. [**]

Claimant of Yugoslavia [Seller] vs. Respondent of Germany [Buyer]

In the summer of 2000 the Seller and the Buyer concluded two contracts for the export of various Yugoslav agricultural products on an EXW [city in Serbia] (Franco producer) basis. According to the first contract, the Seller delivered a certain amount of plums to the Buyer who did not pay for them. The Buyer retained one part of the delivery, while it returned the other part of the delivery within 5-6 days without making objections whereupon a significant amount of goods were ruined and the Seller suffered damages. In accordance with the second contract, the Seller delivered fresh mushrooms which the Buyer accepted without making objections, however, failed to pay for them.

The Seller requested the payment of the sale price and claimed damages with accrued interest. The Buyer, even though it was duly informed of the proceedings, did not respond to the claim and failed to further participate in the arbitral proceedings. After considering the evidence, the Sole Arbitrator granted the Seller's claim.

From the statement of reasons

Application of the substantive law

The Sole Arbitrator determined that the Parties did not designate the applicable substantive or procedural law which is to be applied before the Court of Arbitration. Stating that this is a common situation before the Court of Arbitration which in no way undermines the validity of the arbitral clause regarding jurisdiction of the Court of Arbitration in a dispute between the parties, the Sole Arbitrator applied the appropriate conflict of law rules pursuant to Article 46 paragraph 2 of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (hereinafter the Rules). By applying the conflict of law rules the Sole Arbitrator determined the applicable substantive law which should be applied in the present case.

Considering that Article 46 paragraph 2 of the Rules is based on Article VII of The European Convention on the International Commercial Arbitration of 1961 which was ratified by both Yugoslavia and Germany (by Yugoslavia on 25 September 1963, and by Germany on 27 October 1964), the Sole Arbitrator has concluded that almost all of the conflict of law rules indicate that the Yugoslavian conflict of law rules should be applied. The foremost indication of this is the principle lex loci venditoris (the law of the seller's country) - a connection point which is most commonly used in modern codifications and international conventions, having in mind the provisions of a contract and the commercial customs which can be applied to the dispute at hand.

In the application of the aforementioned principle, keeping in mind the contract between the Parties and the place of delivery (Yugoslavia), the Sole Arbitrator found that the law of the seller i.e., the Yugoslavian substantive law should be applied to the present dispute.

In further determination of the regulations which comprise the Yugoslavian substantive law to be applied in the current dispute, the Sole Arbitrator decided that the UN Convention on Contracts for the International Sale of Goods (Vienna 11 April 1980, hereinafter: the Vienna Convention), which was ratified by Yugoslavia on 27 March 1985 (according to the depositary information and the information of the Federal Ministry of Foreign Affairs source: evidence X.10 International Sale of Goods, p. 428) should be primarily applied. The Vienna Convention was applied in the present dispute between the Parties regarding the matters covered by it; on all other matters, the Sole Arbitrator applied the provisions of the Yugoslavian Law on Contracts and Torts (Official Gazette of SFRY no 29/78 with later amendments, hereinafter: the LCT).

In regard to the claim for interest, the Sole Arbitrator applied the practice of this Court of Arbitration in regards to the interest rate by following the principle: curus curiae est lex curiae (the practice of the court is the law of the court) and, in regards to the basis for the interest, it applied the provisions of the Vienna Convention and the LCT.

The obligation to pay the debt

Based on the previous written evidence, the Sole Arbitrator has determined that the Seller fulfilled its obligations in accordance with the mentioned contracts on time and in the manner the Parties agreed upon. The Buyer did not dispute the fact nor did it try to prove in any way that it paid for the goods or that it in an appropriate manner gave notice of any sort.

Pursuant to Article 54 of the Vienna Convention, the buyer's principle obligation is to pay the price which includes taking steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made. In the application of Articles 57 and 59 of the Vienna Convention, the Sole Arbitrator concluded that the Buyer was obliged to pay the price at the Seller's place of business - in the present case, Claimant's place of business, without the need for the Seller to place a request or undertake any other formalities.

Such an obligation on the part of the Buyer is also provided in Article 516 of the LCT.

The application of the abovementioned provisions, and foremost the Vienna Convention - which is primarily and directly applied if the conditions for its application are met, which is not disputed here - and whose primary application is based on the widely accepted principle: pacta sunt servanda and Article 27 of the Vienna Convention on the Law of Treaties (23 May 1969) ratified by Germany on 21 July 1987 and by Yugoslavia on 27 August 1970 (the depositary information - source: Chapter XXIII. Law of Treaties, p. 811), the Seller's claim is founded and it has been proved that the main debt amounts to ... for four shipments of freshly cooled plums in the amount of ... net weight, for which no notice of defects was made.

As far as the second delivery of ... kg of freshly cooled plums in the amount of ... Deutsche Mark [DM], which the Buyer returned 5-6 days after the delivery to the Seller without giving any notice and which have in the meantime become ruined due to ripening in the transport, the Sole Arbitrator has read the commercial invoice no. ... of 16 August 2000, JCCI ... - 16 August 2000 CCI [city in Serbia] and CMR 260201, the commercial invoice of the Seller ... of 14 August 2000; CMR of the same date and JCI .../14 August 2000, and has determined that the Seller has sent the contracted quantity of plums in the amount of ... DM in the agreed time period and that the export duty for the goods has been paid within the period provided in the contract.

It is the Seller's position that the fact that this amount of plums was returned after a few days of delivery without any notice and ruined does not relieve the Buyer of the obligation to pay due to the fact that the goods were delivered on time, and were of the quality required by the contract, and accompanied with the necessary documents and based on the contracted parity. The Sole Arbitrator agrees with this position: the Buyer did not send notice of defects, and returned the goods for no stated reason; the Buyer's primary obligation to pay the price remains in effect, based on the abovementioned legal reasoning ...

Interest

After reading and evaluating the abovementioned evidence under VII/1., the Sole Arbitrator has found that the Buyer was late with the payment of the main debt which has been awarded to the Seller and that the Buyer has not complied with the terms of the contract between the Parties by not paying within 60 days from the time of export customs clearance - as was agreed in the contract, and has not given the Court of Arbitration any evidence to prove that Buyer has in any other way paid for the delivered goods.

Pursuant to Article 78 of the Vienna Convention, the Sole Arbitrator has found that the Seller is entitled to interest on the amounts due that the Buyer has not paid. The same obligation is provided in Article 278 of the LCT, obliging the debtor to pay a default interest on the main debt at the interest rate determined by the federal law. At the time of the conclusion of the contracts between the Parties, the Law on the Default Interest Rate (Official Gazette of SR Yugoslavia no. 24/94) was in force. It provided for a 6% yearly interest rate for claims in foreign currencies payable to individuals abroad. This law was superseded by the Law on the Default Interest Rate which was adopted and published in Official Gazette of SR Yugoslavia no 9/2001 (which was enforced on 3 March 2001). According to this law, the debtor is also obliged to pay an amount of interest for late payment or delay in payment, which is determined according to the "conformed method''. The Sole Arbitrator has found that this method is unfavorable for the Buyer and that the classical method of calculating interest according to a fixed yearly rate is more favorable. In accordance with the practice of this Court of Arbitration in applying the 6% yearly interest rate for all disputes with a foreign element, and having in mind that the previous law also provided a 6% interest rate, and that therefore the Parties could have and should have had this provision in mind at the time of the conclusion of the contract, the Sole Arbitrator has pursuant to the abovementioned regulations in this part of the statement of reasons and in accordance with the practice of this Court of Arbitration, determined a yearly interest rate of 6% and concluded - as in section I.b. of this decision).


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Yugoslavia / Serbia is referred to as [Seller] and Respondent of Germany is referred to as [Buyer].

** Jovana Stevovic is a student at the University of Belgrade Faculty of Law. Dr. Vladimir Pavic is an Assistant Professor in Private International Law and Arbitration, and Milena Djordjevic, LL.M. (U. of Pittsburgh) is a Lecturer in International Commercial Law at the University of Belgrade Faculty of Law.

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Pace Law School Institute of International Commercial Law - Last updated May 1, 2009
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