Russia 28 November 2001 Arbitration proceeding 108/2001 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/011128r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 108/2001
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Germany (claimant)
BUYER'S COUNTRY: Russian Federation (respondent)
GOODS INVOLVED: Goods
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:
74A [General rules for measuring damages: loss suffered as consequence of breach]; 78B [Rate of interest]
74A [General rules for measuring damages: loss suffered as consequence of breach];
78B [Rate of interest]
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. 30 [176-179]
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
Translation [*] by Mykhaylo Danylko [**]
Translation edited by Yelena Kalika [***]
1. SUMMARY OF RULING
1.1 The Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry [hereinafter Tribunal] dismissed the Respondent [Buyer]'s objections to the competence of the Tribunal, as the arbitration clause of the contract provides for the right to bring claims to the Tribunal in the event the parties were unable to resolve their disputes in an amicable manner.
1.2 Since there was no agreement as to applicable law, the dispute was resolved based on the Vienna Convention 1980 [hereinafter CISG], taking into consideration that the places of business of the parties were in CISG Contracting States (Germany and Russia), as well as based on the rules of German law.
1.3 According to the Rules of Tribunal, the Tribunal held that the Respondent [Buyer] should prove the circumstances on which he based his objections to the merits of [Seller]'s claim. Since [Buyer] did not prove the fact that he paid off the debt, the sum of the principal debt was to be recovered from him.
1.4 Based on Art. 74 CISG, the Tribunal obligated the [Buyer] to compensate the [Seller] for losses arisen as a consequence of payment of interest on the loan issued by the bank, which [Seller] took because of the [Buyer]'s delay of payment. Also, based on Art. 78 CISG the Tribunal held that [Buyer] should pay annual interest in the amount determined according to para. 352 of the German Commercial Code.
1.5 The Tribunal left claims not covered by arbitration fees without consideration.
2. FACTS AND PLEADINGS
The action was brought by Claimant, a German company [Seller], against Respondent, a Russian company [Buyer], in connection with partial payment for the goods, delivered under an international sales contract concluded between the parties on 3 December 1997.
The [Seller] claimed payment of the debt, compensation of the losses arisen due to receiving of a bank loan in connection with delay of payment, recovery of annual interest for use of money, and compensation of arbitration and legal fees and expenses. In his statement of action, the [Seller], to ground his claims, referred to provisions of the CISG and German law, which in his opinion should be applied as a subsidiary law by virtue of the Russian rule of conflict of laws (Art. 166 of the Principles of Civil Law 1991 [hereinafter Principles]).
The [Buyer] challenged the competence of the Tribunal to arbitrate the dispute referring to the fact that it was governed by the agreement of the parties and that the arbitration clause of the contract provided for the right to refer to the Tribunal only the if a dispute could not be resolved by the parties in an amicable manner. The [Seller] contested the fact of conclusion of the agreement on amicable resolution of disputes between the parties.
Having reviewed the motion of [Buyer] to terminate the arbitration of the case, the Tribunal dismissed it in view of explanations of the [Buyer]'s representatives, who argued that their position was not on some procedural basis that might encumber the arbitration on the merits, but on the unreasonableness, in [Buyer]'s opinion, of the [Seller]'s claim to recover payment for the goods, since [Buyer] alleged that, by agreement of the parties of 22 December 1998, the settlement of payments was fully resolved between the parties. In this case, the issue of validity of the [Seller]'s claim should be examined during the arbitration of the dispute on the merits.
3. TRIBUNAL'S REASONING
The ruling of the Tribunal contained the following main points.
3.1 [Jurisdiction competence of the Tribunal]
Clause 8 of the parties' contract provides that if the parties are unable to resolve their dispute in an amicable manner, then the dispute should be referred for arbitration to the Tribunal in Moscow City.
On the basis of para. 1 of the Rules of Tribunal, the Tribunal found itself competent to arbitrate the present dispute.
3.2 [Merits of the case]
Having reviewed the disputes on the merits, the Tribunal found the claims of [Seller] to recover from [Buyer] the principal debt for the delivered goods as reasonable and that they should be granted on the basis of provisions of the contract and the CISG (Arts. 53 and 54). The [Buyer]'s arguments with reference to the parties' agreement of 22 December 1998 on the full settlement of payments for the goods could not be accepted on the following basis.
As follows from the language of the agreement, it is ascertained that the [Buyer] is not in debt since he made payment for the delivered goods. The Tribunal suggested that the [Buyer] should explain the meaning of the phrase "[t]he payments for the delivered goods are made in full", written in the agreement of 22 December 1998. [Buyer]'s representatives explained that according to this agreement, the [Buyer] factually had made the payments.
Taking into consideration that the [Seller] contested the existence of the agreement of 22 December 1998, the Tribunal found necessary that [Buyer] would prove the fact of making payments for the goods as it followed from the language of the agreement. In connection with the Tribunal's proposal to present evidence that such payments had been made, the representatives of [Buyer] responded that they did not have such evidence and thus could not present it to the Tribunal.
The Tribunal found reasonable the claim of [Seller] to compensate him for losses arisen in connection with payment of interest on the loan from the bank due to the delay of payment by [Buyer] since such losses were evidenced by relevant banking documents and should be granted on the basis of Art. 74 CISG.
The Tribunal also found reasonable the claim of [Seller] to recover interest according to Art. 78 CISG and para. 352 of the German Commerce Code since it was supported by relevant calculations and thus should be granted.
The Tribunal left without consideration the claims to recover annual interest in the amount of 9 percent of the principal debt from 1 June 2001 to the day of payment, and also 5 percent of the principal debt from 1 June 2001 to the day of payment since the arbitration fee in [connection with these claims] was not paid as required by para. 18 of the Rules of Tribunal.
The Tribunal found reasonable to grant the [Seller] the legal fees in the amount determined by the Tribunal on the basis of the principle of compensation of legal fees set forth in para. 9 of the Rules of Tribunal on Arbitration Fees and Expenses (Annex to the Rules of Tribunal).
Based on para. 6 of the Rules of Tribunal on Arbitration Fees and Expenses, the Tribunal placed on [Buyer] the arbitration and registration fees in the amount paid by [Seller] when the claim was filed.
* This is a translation of data on Proceeding 108/2001, dated 28 November 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. 30 [176-179].
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 Russian Federation is referred to as [Buyer].
** 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 Master of Laws (European Studies Program) from the Law School of International Business Science and Technology University, Kiev, Ukraine (July 2000); a Master of Management in Business of the Business School of International Science and Technology University, Kiev, Ukraine (June 2002); and has received his LL.M. in International and Comparative Law at the Pace University School of Law.
*** 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