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CISG CASE PRESENTATION

Russia 24 January 2002 Arbitration proceeding 27/2001 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020124r1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20020124 (24 January 2002)

JURISDICTION: Arbitration ; Russian Federation

TRIBUNAL: Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 27/2001

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Hungary (respondent)

BUYER'S COUNTRY: Russian Federation (claimant)

GOODS INVOLVED: Goods


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 31 ; 34 [Also cited: Articles 30 ; 53 ; 60 ]

Classification of issues using UNCITRAL classification code numbers:

31A [Delivery of the goods and handing over of documents (place for delivery): contracts involving carriage of goods];

34A [Seller's obligation to hand over documents relating to the goods]

Descriptors: Delivery ; Incoterms

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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): Rozenberg, Praktika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (2001-2002) No. 34 [214-219]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 234

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Russian Federation arbitration proceeding 27/2001 of 24 January 2002

Translation [*] by Yelena Kalika [**]

1.  SUMMARY OF RULING

     1.1 The reference in the arbitration clause to the previous name of the Tribunal does not preclude the Tribunal's competence to arbitrate the dispute. That the parties do not object to the Tribunal's competence is also evidenced by their participation in the proceeding.

     1.2 Since the commercial enterprises of the parties to the contract for the international sale of goods are located in CISG Contracting States (Russia and Hungary), their relationships are governed by the CISG.

     1.3 Taking into consideration that the parties agreed that the goods would be delivered CIP place of destination in Russia in accordance with INCOTERMS-90, the Tribunal found that the Respondent [Seller], who handed over the goods to a carrier to be delivered to the point of destination stated in the contract and who duly handed over the documentation relating to the goods to the Claimant [Buyer]'s representative, fully performed his obligations under the contract, CISG and INCOTERMS-90. The seller does not bear the risk of loss. In accordance with the INCOTERMS-90, any formalities required to import the goods in the country of destination (including customs formalities) as well as any expenses in connection with carrying out such formalities are placed on the buyer.

     1.4 Taking into consideration that, pursuant to the INCOTERMS-90, the seller fulfills its obligations to deliver goods CIP [place of destination] when the goods are handed over to the carrier to be delivered to the place of destination and taking into consideration that the seller fulfilled this obligation within the period stated in the contract, the seller did not delay delivery and there are no grounds to impose penalty on him for the delay in delivery as set forth in the contract. In such circumstances, the seller cannot be held liable for the delay of goods during the transportation.

2.  FACTS AND PLEADINGS

[Buyer], a Russian firm, brought the claim against [Seller], a Hungarian firm based on the contract for the international sale of goods made by the parties on 12 October 1999. The claim was brought because the [Buyer], who made a 100% advance payment for the goods to be delivered CIP place of destination in Russia as required by the contract, did not receive the goods. The goods were delayed during the transportation and kept at a customs warehouse at a transit point in Russia. The [Buyer] demanded a refund of the payment for the goods as well as penalties for the delay in delivery. In the [Buyer]'s opinion, his claims are reasonable since the [Seller] failed to make a delivery to the place of destination stated in the contract. The [Seller] contested the [Buyer]'s claim. The [Seller] argued that he duly fulfilled all the obligations under the contract.

3.  TRIBUNAL'S REASONING

The Tribunal's award contained the following main points.

     3.1 As to the Tribunal's competence to arbitrate the present dispute, the Tribunal found the following. The contract between the parties states that disputes regarding the fulfillment of its terms shall be arbitrated by the Arbitration Court at the Russia Chamber of Commerce and Industry. By the resolution of the Russian Federation Supreme Council of 7 July 1993 the Arbitration Court at the Russian Federation Chamber of Commerce and Industry was renamed the International Commercial Arbitration Tribunal at the Russian Federation Chamber of Commerce and Industry (the Tribunal). Thus, the claim was filed with a proper arbitration tribunal.

The arbiters also ascertain that the dispute between the parties concerns contractual relationships arising out of international commercial transactions. [In addition,] the [Seller]'s enterprise is located abroad. Therefore, the present dispute falls within the list of disputes which, pursuant to the Russian Federation Law "On International Commercial Arbitration" and the Tribunal's Rules, can be arbitrated by the Tribunal. That the [Buyer] filed his claim with the Tribunal, that the [Seller] sent his answer to the claim to the Tribunal as well as that the parties' representatives were present at the proceeding held on 24 January 2002 evidence that the parties indeed intended that their possible disputes be arbitrated at the Tribunal in the city of Moscow. For the above stated reasons and pursuant to Article 16 of the Russian Federation Law "On International Commercial Arbitration", the Tribunal found that it had competence to arbitrate the present dispute.

The Tribunal's panel was formed in accordance with the Tribunal's Rules. The parties made no objections to the composition of the panel.

     3.2 As to the issue of the applicable law, the Tribunal ascertained that the dispute arose out of the contract made by parties whose commercial enterprises were located in Hungary and the Russian Federation. Since both of these States are CISG Contracting States, pursuant to Article 1(1)(a) CISG, the CISG should apply in determining the parties' rights and obligations.

     3.3 The dispute between the parties concerns division of obligations between the seller and buyer under their contract for the international sale of goods. In the [Buyer]'s opinion, the [Seller] failed to fulfill his obligations and did not deliver the goods to the place of destination agreed upon and [this circumstance] gives the [Buyer] the right to demand a refund of the price of goods paid by the [Buyer] in advance. Non-delivery of the goods resulted from failure to carry out customs formalities required to import the goods into the [Buyer]'s country.

Pursuant to Article 30 CISG, the seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and the CISG. Since the obligation to deliver is stated in Article 31 CISG in a dispositive rule, the Tribunal turned to the contract and found that the parties agreed that the delivery would be made CIP place of destination in Russia in accordance to the INCOTERMS-90.

It follows from the analysis of the obligations of the Respondent [Seller] and Claimant [Buyer] under the CIP term of the INCOTERMS-90 that, pursuant to clause A2 of this term, all the customs formalities in connection with exporting the goods are placed on the seller. The [Seller] duly fulfilled this obligation. The goods reached Moscow. However, the goods were not delivered to the place of destination.

Article 34 CISG sets forth the second obligation of the seller to hand over to the buyer the documents relating to the goods. Pursuant to Article 34, if the seller is bound to hand over documents relating to the goods, he must hand them over at the time and place and in the form required by the contract. As follows from the materials of the case and from the arguments made by the parties' representatives at the proceeding, the [Seller] fulfilled this obligation when he handed over an airway bill and other documents to the [Buyer]'s representative. [The representative] was authorized by the [Buyer] to assist in carrying out customs formalities required to import the goods and in delivering the goods to the place of destination agreed upon. [The [Buyer]] has submitted no evidence denying the fact that the [Seller] handed over to the [Buyer]'s representative the documents relating to the goods.

For the above stated reasons, the Tribunal comes to the conclusion that the Respondent [Seller] has fulfilled his obligations under the contract, CISG and INCOTERMS-90.

When evaluating the Claimant's obligations as a buyer under the contract for the international sale of goods, the Tribunal followed the provisions of Article 53 CISG which places on the buyer the obligation to pay the price for the goods and take delivery of them as required by the contract and the CISG. Pursuant to Article 60 CISG, the obligation to take delivery consists of buyer's doing all the acts which could reasonably be expected of him in order to enable the seller to make delivery and in buyer's taking over the goods.

The analysis of the Claimant [Buyer]'s obligations under the CIP (place of destination) term of INCOTERMS-90 demonstrates that, in accordance with clause B2 of this term, the obligations of the buyer include carrying out formalities required to import the goods. In the commentary to INCOTERMS-90, Jan Ramberg explained this rule as follows: the buyer must carry out all the requirements in connection with customs formalities required to import the goods; the buyer bears all the expenses and risks in connection with carrying out the stated formalities. (See Jan Ramberg, Commentary to the INCOTERMS-90. Published by MTP No. 461. M., 1998, pp. 125,134).

For the above stated reasons, the Tribunal comes to the conclusion that the obligation to carry out customs formalities to import the goods as well as any other actions in this connection was placed on the [Buyer]. Therefore, no reasons exist to impose liability on the [Seller] for failure to carry them out. Pursuant to Articles 30 and 34 CISG and taking into consideration the basic delivery term stated in the contract, the Tribunal ascertains that the [Seller] fulfilled his obligations and, thus, the [Buyer]'s demand for a refund of the price of the goods should be denied.

     3.4 As to the [Buyer]'s demand to impose penalties on the [Seller], the Tribunal ascertained that clause 5 of the contract set forth a 0.5% penalty for every day of delay in delivery or for failure to deliver the goods. As follows from the materials of the case and is not denied by the [Buyer], the [Seller] handed over the goods to the air shipping company on 26 January 2000. Since the [Seller] made a timely delivery, i.e., fulfilled the obligation, which was imposed on him in clause A4 of the CIP (place of delivery) term of the INCOTERMS-90, to hand the goods over to the carrier (or to the first carrier, if more than one carrier is involved) to be shipped to the place of destination within the period agreed upon, the Tribunal comes to the conclusion that there was no delay in delivery. Therefore, there are no reasons to impose a penalty on the [Seller] for failure to deliver the goods.

     3.5 As to the [Buyer]'s claim to recover arbitration fees from the [Seller], the Tribunal ascertained that the [Buyer] paid the said fees at the time when the claim was filed. Since the [Buyer]'s claims were denied, the [Buyer] must pay arbitration fees pursuant to Article 6(1) of the Regulations on Arbitration Fees and Expenses. Therefore, the [Buyer]'s claim to recover the said expenses from the [Seller] is denied.


FOOTNOTES

* This is a translation of the award in proceeding 27/2001, dated 24 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. 34 [214-219]. All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the Russian Federation is referred to as [Buyer] and Respondent of Hungary is referred to as [Seller].

** 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.

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Pace Law School Institute of International Commercial Law - Last updated February 16, 2007
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