Russia 11 February 2002 Arbitration proceeding 271/2001 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020211r2.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 271/2001
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (claimant)
BUYER'S COUNTRY: Lithuania (respondent)
GOODS INVOLVED: Goods
APPLICATION OF CISG: Yes
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. 39 [242-245]
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 partially incorrectly stated name of the arbitral tribunal does not preclude the Tribunal's competence. It was taken into consideration that the tribunal named in the arbitration clause was renamed the International Commercial Arbitral Tribunal and that the actions of the parties evidenced their intention to arbitrate their dispute at the Tribunal.
1.2 Since the parties to the contract for the international sale of goods are located in CISG Contracting States and since the parties did not exclude its application, the Tribunal concluded that the parties' relationships are governed by the CISG. Based on the Russian conflict of laws provision, [the parties' relationships] are also subsidiary governed by Russian law.
1.3 The [Seller]'s claim to recover from the Respondent [Buyer] the unpaid portion of the price of goods was sustained. The [Buyer]'s argument that the [Seller] committed a breach of contract causing damages to the [Buyer] was not taken into account due to the [Buyer]'s failure both to present evidence of that fact and to file a counterclaim.
2. FACTS AND PLEADINGS
[Seller], a Russian firm, brought a claim against Respondent [Buyer], a Lithuanian-Polish-Hungarian joint stock company located in Lithuania, in connection with partial non-payment for the goods delivered in September-November 2000 under the contract for the international sale of goods of 21 January 2000. The [Seller]'s claims included: the sum in arrears as well as arbitration fees and attorney's fees. The [Buyer] denied the allegations. He argued that the [Seller] violated [the [Buyer]'s] exclusive right under the contract to sell the said goods in Lithuania and Hungary. The [Buyer] argued that his losses [that resulted from such a breach] exceeded the amount of the advance payment. Thus, the [Seller] should pay [to the Buyer] the difference between the damages and the unpaid price of the goods. In the [Seller]'s opinion, the [Buyer]'s arguments had no merit since deliveries to other Lithuanian firms were made in March 2001 whereas the last delivery to the [Buyer] was made in November 2000. The [Seller] informed the Tribunal that he was fined by the Russian customs authorities due to his failure to timely deposit the hard currency proceeds received from the [Buyer] within the set period of time. [The amount of penalties constituted] 100% of the sum not received from the [Buyer].
3. TRIBUNAL’S REASONING
The tribunal's award contained the following main points.
3.1 Clause 7 of the contract of 21 January 2000 contains a provision stating that all disputes and disagreements which may arise out of the contract or in connection with it shall be arbitrated at the Arbitration Court at the Russian Chamber of Commerce and Industry in accordance with its Rules. By 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 is a permanent arbitral tribunal. It carries out its activities based on the Russian Federation Law "On the International Commercial Arbitration."
Although the arbitration clause contains a name of the arbitral tribunal that is not exactly correct, the [Seller] brought his claim to the Tribunal. The [Buyer] failed to contest the Tribunal's competence in his reply to the claim. Thus, by their actions, the parties confirmed their intention to turn to the Tribunal. For the above stated reasons and based on Article 16 of the Russian Federation Law "On the International Commercial Arbitration", the Tribunal finds that it has competence to arbitrate the present dispute.
3.2 The materials of the case contain a receipt evidencing that on 28 December 2001 the [Buyer] received notice [that the hearing would take place on] 11 February 2002. The Tribunal received no motions from the [Buyer] concerning the circumstances precluding the arbitration of the dispute. Therefore, based on Article 28(2) of the Tribunal's Rules, the Tribunal finds it possible to arbitrate the case in the absence of the [Buyer].
3.3 Turning to the issue of the applicable law, the Tribunal noted that although the contract of 21 January 2000 contained no provision on the applicable law, the [Seller] stated in the claim that the parties did not exclude the CISG in the contract. The [Buyer] did not contest [this position] in his reply to the claim. Taking into account that both parties are located in different States, which had been CISG Contracting States as of the date of the contract, the Tribunal is of the opinion that the CISG should apply to the parties' relationships. Issues not settled in the CISG should be governed by Russian law based on Article 166 of the USSR Principles of Civil Law 1991. [Article 166] sets forth that, where there is an international commercial transaction, a sales contract shall be governed by the law of the seller's country.
3.4 The materials of the case evidence that the [Seller] delivered to the [Buyer] the goods for a sum stated in the claim. The price of the goods was only partially paid. In his fax message of 27 January 2001, the [Buyer] acknowledged his debt. He also pointed out that he was going to pay off the debt in February-March 2001. The materials of the case do not support the [Buyer]'s assertion, which was made in his reply to the claim, that, when [the [Seller]] delivered goods to other Lithuanian firms, he breached the provision in the contract that gave the [Buyer] an exclusive right to sell the goods in Lithuania and Hungary. The [Buyer] alleged that he suffered losses as a result [of that breach] and, thus, refused to pay the sum in arrears to the [Seller]. Besides, the Tribunal took into consideration that the [Buyer] failed to file a counterclaim.
Taking into consideration the said circumstances and based on the provisions of the contract and Article 53 CISG, the Tribunal is of the opinion that the [Seller]'s claim to recover the sum in arrears should be sustained. [Article 53 CISG] sets forth the buyer's duty to pay for the goods.
3.5 In connection with the [Seller]'s claims to recover his attorney's fees in the amount stated in the materials of the case, the Tribunal found such expenses reasonable. The Tribunal is of the opinion that, pursuant to Article 9 of the Regulations on arbitration fees and expenses, this claim should be sustained. [The said Regulations] are an appendix to the Tribunal's rules.
3.6 Pursuant to Article 6(1) of the Regulations on arbitration fees and expenses, the arbitration fees must be paid by the party against whom the award was rendered. Therefore, the [Buyer] must reimburse arbitration fees to the [Seller].
3.7 The [Buyer]'s counterclaims stated in his reply to the claim were not arbitrated because the [Buyer] failed to file a counterclaim and to pay arbitration fees as required in Article 33(2) of the Tribunal's Rules.
* This is a translation of data on Proceeding 171/2001, dated 11 February 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. 39 [242-245].
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 [Seller] and Respondent of Lithuania 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