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CISG CASE PRESENTATION

Russia 25 September 2001 High Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010925r1.html]

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

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Case identification

DATE OF DECISION: 20010925 (25 September 2001)

JURISDICTION: Russian Federation

TRIBUNAL: Vysshi Arbitrazhnyi Sud Rossyiskoi Federatsii [High Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation]

[Russia has two types of State courts for private law disputes: Courts of general jurisdiction (also called "People's Courts") and economic courts (also called "Arbitration Courts"). The above is the official title of the top judicial authority of the Arbitration Courts.]

JUDGE(S): V.F. Yakovlev (Chairman)

CASE NUMBER/DOCKET NUMBER: Resolution No. 8508/00

CASE NAME: Cooperative League of the USA v. Department of Baked Products and Industry with the Administration of the Khabarovsk Region

CASE HISTORY: Earlier instances: Decision of 9 February 2000 and Appellate Resolution of the Arbitration Court for the Khabarovsk Region (A73-7610/4-99) 6 June 2000 [reversed]

SELLER'S COUNTRY: United States (plaintiff)

BUYER'S COUNTRY: Russian Federation (defendant)

GOODS INVOLVED: Corn


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Reference to Articles 59 ; 62

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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)

Queen Mary Case Translation Programme

Legal Resolution No. 8508/00
of the Presidium of the Supreme Arbitration Court of the Russian Federation

25 September 2001

Translation by Yelena Kalika [*]

Translation edited by Mykhaylo Danylko [**]

The Presidium of the Supreme Arbitration Court of the Russian Federation has reviewed the protest of the Deputy Chairman of the Supreme Arbitration Court of the Russian Federation against the Judgment of 9 February 2000 and the Decree of the Appellate Division of the Arbitration Court for the Khabarovsk Region of 6 June 2000 in re case No. A73-7610/4-99.

After hearing and discussing the report of the judge, the Presidium has found the following.

The Cooperative League of the USA ("the League") filed a lawsuit to the Arbitration Court of the Khabarovsk Region against the Department of Baked Products and Baked Industry of the Administration of the Khabarovsk Region ("the Department") seeking recovery of the debt in the amount of RuR [Russian rubles] 26,262,186.86 (for the purchase of coarse corn) and RuR 1,313,109.27 (penalty for the delay of payment).

Before the judgment was entered, the plaintiff, pursuant to rule set forth in Article 37 of the Russian Federation Code of Arbitration Procedure, had changed his claims sought by increasing the amount of debt to RuR 29,144,126.33 and raising the penalty for payment delay to RuR 1,457,206.27.

In its judgment of 9 February 2000, the court granted the plaintiff's claims in part. The defendant was ordered to pay the debt in the amount of RuR 27,012,940.64 and the penalty in the amount of RuR 1,350,647.03. The rest of the claim was denied.

By its order entered on 6 June 2002 the Appellate Division reversed the judgment and dismissed the plaintiff's claims.

It has been suggested in the protest of the Deputy Chairman of the Russian Federation Supreme Arbitration Court that the above mentioned judicial acts should be reversed and the case should be remanded to the trial department of the Arbitration Court for the Khabarovsk Region.

It is the opinion of the Presidium that the protest shall be upheld for the following reasons.

As follows from the materials of the case, the League and the Department concluded contract No. 1 of 16 February 1996 in accordance to which the League shipped 15,503 tons of corn for a total value of [US] $2,561,013 to the Department.

The defendant did not pay for the goods received, but transferred the goods to third parties and informed the plaintiff of transfer to the third parties of the duty to pay for the goods on the third parties. The third parties only partially paid the debt, hence, the League filed the current lawsuit with the arbitration court.

When dismissing the claims of plaintiff, the Appellate Division pointed that the League could not be a plaintiff because the owner of the delivered corn was the United States Department of Agriculture. Delivery of the goods was made under the United States Government "Food for Progress" program and the money received from the sale of the corn was to be used within the above mentioned program.

These conclusions of the Appellate Division are not based on the materials of the case.

In accordance with the agreement OSGM-FCC-118-6/175-00 of 28 December 1995 concluded between the U.S. Government and the League, the U.S. Government gratuitously transferred the corn to the League. The U.S. Government and the U.S. Department of Agriculture retained only control over the proper use of the specified forage.

Under the terms of the agreement of 16 February 1996, the payments for the corn are to be made to the account of the League, and termination of the "Food for Progress" program could not deny plaintiff's right to claim such payments.

The conclusion of the court that the defendant was not liable to pay for the corn since he had informed the League that the duty to pay had passed to the third parties is unlawful.

The obligations to deliver the corn and to pay for it arose for the parties from the contract for the international sale of goods.

In accordance with Articles 59 and 62 of the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 11 April 1980), the buyer must pay the price [specified] in the contract.

Pursuant to Article 516 of the Russian Federation Civil Code the duty to pay for the goods is also imposed on the buyer, a party to the contract.

As to the judgment of the trial court that granted the plaintiff's claims, the arbitration [trial] court did not take into attention the following circumstances.

Pursuant to Article 125(1) of the Russian Federation Civil Code the state authorities can -- within the limits of the state power and their competence established in the laws determining their status -- buy and exercise personal and property and other rights and obligations on behalf of the subjects of the Russian Federation.

As follows from the materials of the case, the Department was established in order to coordinate the bakeries, mills and other types of baking and corn-processing enterprises in the Khabarovsk Region.

The shipment of the corn was made for the needs of the Khabarovsk Region. The conclusion of the contract in controversy had been preceded by the signing of the memorandum of intentions by the parties to the lawsuit and by the Administration of the Khabarovsk Region of 25 August 1995, as well as by signing of the agreement on joint cooperation of 7 February 1997. Both these documents stated the general principles of cooperation in order to perform the "Food for Progress" program and to assist the improvement of the agricultural and food-processing sector of the region. In this case, the Department could act as a state authority authorized by a subject of the Russian Federation to conclude the contract in controversy.

Therefore, the judicial decisions were made without due in-depth investigation of all the circumstances of the case and with violations of the norms of material law, and, thus, they should be reversed and the case should be remanded for a new trial.

On remand, the trial court should also decide whether the relevant financial authority on behalf of the subject of the Russian Federation should be called to take part in the proceedings.

On the above mentioned grounds and pursuant to Articles 187-189 of the Russian Federation Code of Arbitration Procedure, the Presidium of the Supreme Arbitration Court ordered:the reversal of the judgment of 9 February 2000 and the Decree of Appellate Division of the Arbitration Court for the Khabarovsk Region of 6 June 2000 in re case No. A73-7610/4-99.

The case is remanded to the trial division of the Arbitration Court for the Khabarovsk Region.

Chairman of the Supreme Arbitration Court
of the Russian Federation
 
V.F. Yakovlev


FOOTNOTES

* 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.

** Mykhaylo Danylko is a Partner with the law firm Danylko, Kushnir, Soltys & Yakymyak, Attorneys & Counselors at Law, Kiev, Ukraine <http://www.dksylaw.com>. He holds a Masters of Laws (European Studies Program) from the Law School of International Science and Technology University, Kiev, Ukraine (July 2000); a Master of Management in Business of the Business School of International Science and Technology University (June 2002); and has received his LL.M. in International and Comparative Law at the Pace University School of Law.

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Pace Law School Institute of International Commercial Law - Last updated May 17, 2004
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