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CISG CASE PRESENTATION

Russia 20 March 2002 High Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020320r1.html]

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

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Case identification

DATE OF DECISION: 20020320 (20 March 2002)

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. 6134/01

CASE NAME: Tumensky fanerny kombinat v. Dor-Bat and Demirel Inshaat, Taakhut, Tigaret the Sanay Limited Shikerty

CASE HISTORY: 1st instance Decision of 4 December 2000; 2d instance Appellate Division of the Arbitration Court for the Tumen District (A70-3129/23-2000) 14 May 2001; affirmed at 3d instance Federal Arbitration Court for the Western Siberia Region 28 June 2001 [reversed]

SELLER'S COUNTRY: Russian Federation (plaintiff)

BUYER'S COUNTRY: [-]

GOODS INVOLVED: Birch plywood


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 12 ; 96

Classification of issues using UNCITRAL classification code numbers:

12A [Declaration by State preserving domestic formal requirements: effect of reservation under article 96 rejecting article 11]

Descriptors: Formal requirements

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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

Resolution No. 6134/01
of the Presidium of the Supreme Arbitration Court of the Russian Federation

20 March 2002

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 on the Decision of 4 December 2000, the Resolution of 14 May 2001 of the Appellate Division of the Arbitration Court for the Tumen District in re case No. A70-3129/23-2000, and the Resolution of the Federal Arbitration Court for the Western Siberia Region of 28 June 2001 on the same case.

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

The public held corporation "Tumensky fanerny kombinat" [seller] filed a lawsuit against the limited liability company "[buyer] Dor-Bat" and the limited liability company "Demirel Inshaat, Taakhut, Tidgaret ve Sanay Limited Shikerty" ("[buyer] the Firm"). The action was commenced with the Arbitration Court for the Tumen region. [Seller] sought to recover jointly from [buyers] a debt of a payment for the goods shipped and costs of insurance of the shipment for a total amount of [US] $120,029.94.

The claim for damages was granted by the Decision of 4 December 2000 in part of the amount of the debt in the sum of [US] $112,200. The court denied the rest of the claim.

The Appellate Division affirmed the decision of the Lower Court by resolution dated 14 May 2001.

On 28 June 2001, the Federal Arbitration Court for the Western Siberia Region affirmed both the decision of the Lower Court and the resolution of the Appellate Division.

In protest, the Deputy Chairman of the Supreme Arbitration Court argues that the said judicial acts should be reversed and the case remanded for new trial.

The Presidium is of opinion that the protest should be granted on the following grounds.

As follows from the materials of the case, on 1 May 1997 the [seller] and "[buyer] Dor-Bat" concluded contract No. TP-792/5-97-501. In accordance with the contract, the seller agreed to manufacture and sell birch plywood to the buyer, and the buyer agreed to pay for the goods.

During May-June 1997 the buyer had exported 376,476 sq. meters of plywood.

Later the same parties concluded the contract No. 53 of 14 January 1998. In accordance with that contract, the [seller] agreed to deliver the plywood to "[buyer] Dor-Bat"; and the buyer agreed to accept the goods and pay in accordance with the terms stated in contract No. TP-792/5-97-501 of 1 May 1997. Provision 3 of the contract dated 14 January 1998 stated that "[buyer] the Firm" was obliged to buy the goods (376,476 sq. meters) from the seller and pay the cost to the [seller] by delivering to the manufacturer other consumer goods.

On 10 February 1998, the [seller] and "[buyer] Dor-Bat" signed an amendment to contract No. TP-792/5-97-501. In accordance with the amendment, "[buyer] Dor-Bat" was obliged to deliver 204 sq. meters of plywood, which was received from the [seller], to "[buyer] the Firm". 172.476 sq. meters of plywood was to set-off the transportation and custom payments made by "[buyer] Dor-Bat". Provision 3 of the amendment to the contract stated that "Dor-Bat" was relieved from any obligations and liability to the [seller] under Contract No. TP-792/5-97-501.

On 11 February 1998 the [seller] sent to "[buyer] Dor-Bat" an amendment to contract No. 53 of 14 January 1998 which provided for the exclusion of Provisions 2.2 and 4.4 from that contract. (The provisions had established the duty of "[buyer] Dor-Bat" to pay for the plywood to the [seller] and determined the liability of "[buyer] Dor-Bat" to the [seller]).

After concluding the contract with "[buyer] the Firm" on 3 March 1998, "[buyer Dor-Bat" transferred 204 sq. meters of plywood received from the [seller] to "[buyer] the Firm".

When making a decision that the liability to pay for the goods had to be placed on "[buyer] the Firm", the courts in the three judicial instances concluded that the obligations of "[buyer] Dor-Bat" to the [seller] had been extinguished due to a novation of the contract pursuant to Articles 414 and 415 of the Civil Code of the Russian Federation.

However, when considering the mentioned agreements of the parties as a novation, the courts did not take into account the following circumstances.

As the parties have concluded contracts for the international sale of goods, the Vienna Convention on Contracts for the International Sale of Goods 1980 shall apply. As for the issues not settled in the Vienna Convention, pursuant to Article 166 of the Civil Law the applicable law shall be the law of the seller's country, i.e., Russian law.

Pursuant to Article 414(1) of the mentioned Code, one's obligation shall terminate when the parties agree to replace the original obligation between the parties with a new obligation between the same parties on either a different subject or method of performance.

There is no evidence in the facts of the case that one obligation was replaced with another. There is also no evidence of any new assumed obligations between the parties involving either a different subject or method of performance.

The modifications of and amendments to the contract of 14 January 1998 were drafted without "[buyer[ the Firm's" participation. This fact does not meet the requirements of Article 12 of the Vienna Convention, Article 165 of the Principles of Civil Law, and Articles 450 and 452 of the Civil Code of the Russian Federation.

Therefore, the courts below had no reason to view the terms of contract No. 53 of 14 January 1998 as modified in the part relieving "[buyer] Dor-Bat" from its liability and obligations to pay for the goods.

The courts' reasoning that, when terminating its obligations, "[buyer] Dor-Bat" secured its debt by paying the custom duties and transport expenses had no grounds.

Delivery of the plywood was made FCA Tumen (Incoterms-1990). This term means that a duty to pay for the carriage of the cargo from Tumen to Turkey and for the custom clearance of goods in Turkey was on "buyer Dor-Bat"). These costs were not included in the contract price of goods. Consequently, "[buyer] Dor-Bat" could not counter secure its debt since the carriage and custom clearance expenses were to be paid by "[buyer] Dor-Bat" and were not included in the price under the contract of sale.

On remand, the court below must take the mentioned circumstances into consideration in order to determine whether the modifications of and amendments to contracts No. TP-792/5-97-501 of 1 May 1997 and No. 53 of 14 January 1998 were legally binding. The court must also determine which one of the defendants ["buyer] Dor-Bat" or "[buyer] the Firm" is liable to the [seller), and in what amount, for the improper performance of obligations.

Since the decisions of the courts were reached without due investigation of the circumstances of the case and with violations of the norms of material law, they must be reversed and the case remanded for a new trial.

Therefore, on the grounds stated above and pursuant to Articles 187-189 of the Arbitration Procedural Code of the Russian Federation, the Presidium of the Supreme Arbitration Court of the Russian Federation holds:

The decision of 4 December 2000, the Resolution of 14 May 2001 of the Appellate Division of the Arbitration Court for the Tumen District on the case No. A70-3129/23-2000, and the Resolution of the Federal Arbitration Court for the Western Siberia Region of 28 June 2001 on the same case are reversed.

The case is remanded for a new trial to the Trial Division of the Arbitration Court for the Tumen District.

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


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this presentation, Plaintiff "Tumensky fanerny kombinat" is referred to as [seller]; Defendants "Dor-Bat" and "Demirel Inshaat, Taakhut, Tigaret the Sanay Limited Shikerty" are referred to respectively as "[buyer] Dor-Bat" and "[buyer] the Firm".

** 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.

*** 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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