Russia 22 January 2002 Arbitration proceeding 60/2001 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020122r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 60/2001
CASE HISTORY: Unavailable
SELLER'S COUNTRY: United States (claimant)
BUYER'S COUNTRY: Ukraine (respondent)
GOODS INVOLVED: Goods
APPLICATION OF CISG: Yes [Choice of Russian law as applicable substantive law = choice of CISG]
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. 33 [207-213]
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 The Respondent [Buyer]'s motion to adjourn the hearing of the case was denied due to [Buyer]'s failure to submit any evidence of a good cause to make such a motion.
1.2 Discrepancies in the arbitration clause regarding the name of the tribunal chosen by the parties to arbitrate disputes do not preclude the Tribunal [from arbitrating the dispute] because there are no doubts that the parties meant to choose the Tribunal and because none of them objects to the Tribunal's competence.
1.3 The parties' choice of Russian law as the applicable substantive law entails the application of Russian law as subsidiary law, taking into consideration that the parties are located in CISG Contracting States (USA and Ukraine). Therefore, the CISG governs the relationships between the parties as the main statute.
1.4 The sum of the main debt was recovered from the [Buyer] in the amount stated in the verification statement signed by both parties. The [Seller]'s claim to recover the main debt in excess of the amount stated in the verification statement was denied.
1.5 When apportioning between the parties the arbitration expenses paid by the Claimant [Seller], the Tribunal considered the following circumstances. The [Seller] brought a claim to recover the main debt in an amount substantially greater than the sum stated in the parties' verification statement on the date preceding the date of claim. At the proceeding the [Seller] reduced the amount of the claim. Therefore, the [Seller] should pay arbitration expenses in proportion to the claim denied.
2. FACTS AND PLEADINGS
[Seller], a U.S. firm, brought the claim against [Buyer], a Ukrainian firm, based on the contract for the international sale of goods made by the parties on 30 December 1998. The claim was brought in connection with partial nonpayment for the goods delivered by the Seller. The [Buyer] has submitted no explanations but moved to adjourn the proceeding arguing that it is necessary to finish the ongoing verification of payments between the parties.
3. TRIBUNAL'S REASONING
The Tribunal's award contained the following main points.
3.1 When reviewing the possibility of arbitration of the dispute in the absence of the [Buyer]'s representatives, the Tribunal ascertained that on 25 July 2001 the [Buyer] received the claim (see the receipt issued by a courier service in the materials of the case). The Tribunal's Secretary suggested in the accompanying letter of 11 July 2001 that the [Buyer] either appoint an arbiter and alternate arbiter or request the Tribunal's Chairman to appoint arbiters within 30 days after [Buyer]'s receiving the letter. It was also suggested that the [Buyer] submit a written answer to the claim within 45 days.
However, the [Buyer]' failed to either appoint arbiters or to request the Chairman of the Tribunal to appoint arbiters within the period stated. Nor did the [Buyer] submit any explanations in connection with the claim.
Notice on the date, time and place of the arbitration was sent to the [Buyer] on 19 November 2001. The [Buyer] received that notice on 18 December 2001 (see the receipt issued by a courier service in the materials of the case).
Several hours before the proceeding held on 22 January 2002 began, the [Buyer] sent a motion by fax requesting the Tribunal to adjourn the proceeding due to the parties' mutual verification of the payments under the contract. The [Seller]'s representative objected to the motions because the parties had already signed a verification statement on 25 December 2001 and no other verification was taking place at the time of the proceeding. The [Seller]'s representative also argued that the adjournment of the proceeding would entail an unreasonable delay.
Taking into consideration that the [Buyer] had taken no actions and expressed no interest in the proceeding for a long time, i.e., until 22 January 2002, and that the [Buyer]'s motion was not supported by any evidence that the verification of payments between the parties was taking place, the Tribunal found it not possible to sustain the [Buyer]'s motion to adjourn the proceeding.
In accordance with Article 28(2) of the Tribunal's Rules, a party's failure to appear at the proceeding, when such party was duly notified of the date, time and place of the proceeding, does not preclude the arbitration of the dispute and the rendering of an award unless the absent party made a written motion to adjourn the proceeding for a good cause shown. Since the Tribunal found the [Buyer]'s motion unreasonable and since the materials of the case are sufficient to arbitrate the dispute on the merits, the Tribunal took into consideration the [Seller]'s position on the matter and found it possible to arbitrate the dispute in the absence of the [Buyer]'s representatives.
3.2 It follows from the materials of the case that the [Seller] is a firm incorporated as a limited liability company in the State of Florida, USA. The [Buyer] is a Ukrainian firm incorporated as a private joint stock company in the city of Kiev, Ukraine. Therefore, the parties to the present dispute are entities located in different States. In this connection and since the place of arbitration is the City of Moscow, Russian Federation, the Tribunal is of the opinion that it has to apply the Russian Federation Law on International Commercial Arbitration in order to determine whether it has competence to arbitrate the present dispute.
Clauses 13.2 and 13.3 of Appendix No. 1 to the Contract No. 03-553/98 made by the [Seller] and [Buyer] on 30 December 1998 state:
"In case the parties are unable to reach a mutual decision, any disputes, disagreements or claims following from or in connection with either the present contract or its violation, cancellation or invalidity shall be arbitrated by the Moscow Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry in the city of Moscow in accordance with its rules and the substantive laws of Russia. The place of arbitration shall be Moscow, Russian Federation."
The Tribunal is of the opinion that the existing discrepancy in the name of the arbitration tribunal does not raise any doubts that, when making the present contract, the parties intended the International Commercial Arbitration Tribunal at the Russian Federation Chamber of Commerce and Industry [as their arbitration tribunal]. The Russian Federation Chamber of Commerce and Industry has only one international commercial arbitration tribunal which name contains the words "commercial arbitration court", i.e., the present Tribunal. Therefore, the Tribunal is of the opinion that, when drafting the arbitration clause, the parties meant to choose the Tribunal.
In accordance with clause 2 of the Regulations of the Tribunal, the Tribunal can arbitrate disputes arising out of contractual or other legal relationships in connection with international commercial transactions or other kinds of international economic relationships if the commercial enterprise of at least one of the parties is located abroad.
Taking into consideration that the present dispute arose out of an international commercial transaction, the parties to which are located in different States, that the parties did not object as to the Tribunal's competence, and that the parties made a written agreement to arbitrate disputes arising in connection with the contract at the Tribunal, the Tribunal finds that it has competence to fully arbitrate the present dispute between the parties based on Article 7 of the above mentioned Russian Federation Law on International Commercial Arbitration.
3.3 Turning to the issue of the applicable law, the Tribunal found that, in accordance with clause 13.2 of Appendix No. 1 to the Contract of 30 December 1998, the parties chose Russian law as the applicable substantive law.
Since the materials of the case contain no evidence that this provision is invalid, the Tribunal finds it possible to apply the CISG when arbitrating the dispute on the merits and when determining the rights and obligations of the parties under the contract because, pursuant to Article 15 of the Russian Federation Constitution and Article 7 of the Russian Federation Civil Code, international treaties are a component part of the Russian Federation legal system. [The same result follows from] Article 1(1)(a) CISG. Issues not settled in the CISG shall be governed by the Russian substantive law as subsidiary law.
3.4 Based on the contents of the contract, the Tribunal came to the conclusion that there was no evidence of the contract's invalidity and that there were reasons to view the contract as a contract for the international sale of goods, i.e., an international commercial transaction giving the parties certain rights and obligations.
3.5 When reviewing the [Seller]'s claims, the Tribunal came to the following conclusions.
After reviewing the [Seller]'s claim on the merits, the Tribunal found that, in accordance with the terms of the contract and amendments to it for the period from 1 January to 31 August 1999, the [Seller] delivered the goods to the [Buyer] in the quantity evidenced by the notices of acceptance of 15 February 1999, 11 March 1999, 21 April 1999, 12 May 1999, 14 June 1999, 14 July 1999 and 14 September 1999, as well as by the verification statement of 10 January 2000 regarding the quantity of the goods delivered. The [Seller] has submitted these documents to the Tribunal.
Notwithstanding the [Seller]'s demands for payments (see the claim of 2 August 2000), the [Buyer] only partially paid for the goods delivered. As follows from the [Seller]'s explanations, payments for the goods were made partially in money and partially by counter deliveries of goods.
The [Buyer]'s indebtedness to the [Seller] is evidenced by the verification statement of 25 December 2001 signed by the parties' representatives and sealed with the official seals of the parties' enterprises. The verification statement stated the sum of the debt. In the materials of the case, there is no evidence that the verification statement is invalid.
Evaluating such actions of the [Buyer], the Tribunal finds it possible to view them as a unilateral refusal to perform his contractual obligation to fully pay for the goods received.
The Tribunal also took into account that the [Buyer] did not submit an answer to the claim with the Tribunal. Nor did the [Buyer] object to the merits or to the amount of the claim, although he had an opportunity to do so.
For the above stated reasons and pursuant to Articles 53, 59, 61, 62 CISG, the Tribunal finds the [Seller]'s claims reasonable and sustains them in the amount stated in the parties' verification statement of 25 December 2001.
3.6 When filing the claim, the [Seller] paid arbitration fees based on the amount sought in accordance with Article 3(1), (4), and (6) of the Regulations on the arbitration fees and expenses.
The Tribunal sustained the claim in a reduced amount.
In accordance with Article 6(2) of the Regulations on the arbitration fees and expenses, arbitration fees should be paid by the [Buyer] in proportion to the claim sustained. The [Seller] must pay arbitration fees in proportion to the claims denied.
* This is a translation of the award in proceeding 60/2001, dated 22 January 2002, 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. 33 [207-213]. All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the United States is referred to as [Seller] and Respondent of the Ukraine 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