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CISG CASE PRESENTATION

China 28 May 2002 CIETAC Arbitration proceeding (Headwear case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020528c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20020528 (28 May 2002)

JURISDICTION: Arbitration ; China

TRIBUNAL: China International Economic and Trade Arbitration Commission [CIETAC] (PRC)

JUDGE(S): Wang Shengchang (Chief Arbitrator), Liu Wenjie and Zhou Xiaoyan (Arbitrators)

DATABASE ASSIGNED DOCKET NUMBER: CISG/2004/31

CASE NAME: Guang Dong Light Headgear Factory Co., Ltd. v. ACI International Inc.

CASE HISTORY: 2d instance U.S. District Court, Kansas 28 September 2007 and U.S. District Court Kansas 28 April 2008

SELLER'S COUNTRY: People's Republic of China (claimant)

BUYER'S COUNTRY: United States (respondent)

GOODS INVOLVED: Headwear


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 25 ; 53 ; 74 ; 78

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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 (Chinese): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

China International Economic & Trade Arbitration Commission
CIETAC (PRC) Arbitration Award

Headwear case [28 May 2002]

Translation [*] published in U.S. court record [**]

  1. Facts of the Case
  2. Opinions of the Arbitration Tribunal
  3. The Award

[...]

According to the Arbitration Clause of 14 Contracts on Purchase and Sale of Caps numbered 20 ROK128, etc. signed by and between the claimant Guang Dong Light Headgear Factory Co., Ltd. (hereinafter referred to as the [Seller]) and ACI International Inc. (hereinafter referred to as the [Buyer]) from the period of August 2000 to January 2001 and the application for arbitration by the [Seller] filed on December 4, 2001, China International Economic and Trade Arbitration Commission (formerly called Foreign Economic and Trade Arbitration Commission of China Council for the Promotion of International Trade, now called China International Economic and Trade Arbitration Commission (hereinafter referred to as the Arbitration Commission) has accepted the case of arbitration for disputes under the above mentioned contracts. The Case number is G20010386.

The Arbitration Rules of the Arbitration Commission (hereinafter referred to as "the Arbitration Rules") effective on October 1, 2000 shall apply to the procedure of this case.

The Secretariat Bureau of the Arbitration Commission served the [Buyer] by EMS on December 7, 2001 the Arbitration Notice, the Application for Arbitration and its annexes filed by the [Seller] as well as the Arbitration Rules of the Arbitration Commission and the List of Arbitrators and requested the [Buyer] to select arbitrators and submit its statement of defense in time and the [Buyer] signed for receipt of all of the above-mentioned arbitration documents on December 17, 2001.

The [Seller] entrusted the director of the Arbitration Commission and appointed Mr. Liu Wenjie as an arbitrator of this case. Since the [Buyer] did not select or entrust the director of the Arbitration Commission to appoint an arbitrator before the prescribed deadline, the latter appointed Ms. Zhou Xiaoyan as an arbitrator of this case in accordance with the provisions of Article Twenty-six of the Arbitration Rules. Since both parties did not jointly select or jointly entrust the director of the Arbitration to appoint the chief arbitrator, the latter appointed Mr. Wang Shengchang as the chief arbitrator of the case in accordance with the provisions of Article Twenty-four of the Arbitration Rules. On January 15, 2002, the above-mentioned three arbitrators jointly formed the Arbitration Tribunal to hear this case. On the same day upon consultation with the Secretariat Bureau of the Arbitration Commission, the Arbitration Tribunal decided to hear this case in Beijing on February 28, 2002.

On February 28, 2002, the Arbitration Tribunal heard the case in Beijing as scheduled. The [Seller] appointed an attorney-in-fact to appear before the tribunal and the [Buyer] did not appear. The Arbitration Tribunal heard the case by default in accordance with the provisions of Article Forty-Two of the Arbitration Rules. The attorney-in-fact of the [Seller] gave a presentation of the facts of the case at the hearing and answered the questions raised by the Arbitration Tribunal. After the hearing, the [Seller] submitted supplementary materials. The Secretariat Bureau of the Arbitration Commission forwarded the supplementary materials filed by the [Seller] to the [Buyer] and notified it that it might still file a written statement of defense. The [Buyer], however, did not submit any written material at all.

Now the case has wound up and upon the written materials at hand and the facts found at the hearing, the Arbitration tribunal made this award through panel discussion.

The facts of this case, the opinion of the Arbitration Tribunal and the award are respectively given as follows.

FACTS OF THE CASE

The [Seller] alleged:

That the two parties to this case started international trade through China Pearl International Trade Co., Ltd. (hereinafter referred as "the Pearl Company") since 1992. All the purchases for goods in China by the [Buyer] are operated by the Pearl Company and all the expenses including those incurred in the transportation of the goods, ORC fee, customs declaration fee and other miscellaneous expenses are paid by the Pearl Company. The [Seller] is responsible for the manufacture of the products, the provision of the export documents and the certificate of quota of imported textiles. The channel for payment of goods is that the [Buyer] pays the money for the contracts to the account of the Pearl Company in Hong Kong first and then the latter transfers it to the account of the Seller. In 1999, the two parties agreed to change the payment mode of OA/30 days they had agreed into OA/90 days. In 2000, the [Buyer] began to be in arrears. As of April 30, 2001, there were 14 contracts with payment in arrears and the total value of these contracts amounted to USD 244,880.77. After the [Seller] sent many faxes to press for payment, Mr. Chris, president of the [Buyer], guaranteed to pay of all the amount in arrears in 2001 but has not fully paid it till today.

On February 17, 2001, the two parties signed No. 21RQK041 Contract. Before and after the signing o;f that contract, Mr. Chris, president of the [Buyer] once again made the guarantee to pay off the amount in arrears by fax and e-mail; but avoided to talk about the payment plan and made no further payment after a symbolic payment of USD 9,900.00. Believing that the [Buyer] would not fulfill its obligation of payment under No. 21RQK041 Contract, the [Seller] had a friendly consultation with the [Buyer] and the Pearl Company and agreed to cancel the said contract in consensus. On April 17, 2001, the [Seller] signed directly with the US client Paramount Company No. 21RQK041A Contract, according to which the money for goods should be paid to the [Seller] directly by Paramount Company. Because Paramount Company entrusted the [Buyer] to take charge of affairs such as the transport arrangement for this contract and the customs clearance in the United States, etc., the [Seller] received USD 100,080.00 as the amount for the goods under the contract, which include: USD 29,700.00 in total for the expenses of customs clearance fee, transportation fee, tax, profit and commission, which should be paid to the [Buyer]. At present, the said amount is still detained on the account of the [Seller] for the time being.

Therefore, the [Seller] files the requests for arbitration as follows:

   1.   That the [Buyer] pay to the [Seller] the amount in arrears for goods under the 14 contracts USD 244,880.77 (including the transport fee and commission of the Pearl Company USD 24,874.60);
 
   2.   That the [Buyer] pay to the [Seller] the overdue interest for goods USD 15,228.23;
 
   3.   That the arbitration fee of this case shall be borne by the [Buyer].

After the Arbitration Tribunal heard the case on February 28, 2002, the [Seller] filed an Application for Change of Requests for Arbitration on March 6, 2002, in which the requests for arbitration have been changed as follows:

   1.   That the [Buyer] pay to the [Seller] the amount in arrears for goods under the 14 contacts USD 205,280.77 (from the total value of the 14 contracts USD 244,880.77 deducts the [Buyer] already paid USD 9,900.00 and the money such as the customs clearance fee the [Buyer] should have collected for No. 21RQK041A Contract USD 29,700.00, including the transport fee and commission of the Pearl Company USD 24,874.60);
 
   2.   That the [Buyer] pay to the [Seller] the overdue interest for the amount in arrears for goods USD 12,109.73;
 
   3.   That the arbitration fee of this case shall be borne by the [Buyer].

2. OPINIONS OF THE ARBITRATION TRIBUNAL

(1) On the applicable law to this case

The parties to this case did not stipulate the applicable law for disputes in the contract. The Arbitral Tribunal holds that since the countries of business places of both parties are signatories to the United Nations Convention on Contracts for the International Sale of Goods and both parties did not expressly exclude the application of the convention, the relevant provisions of the said convention shall apply to this case.

(2) On the performance and breach liabilities of the 14 contracts involved in this case

The [Seller] alleges that it has fulfilled all the obligations for the delivery of goods under the 14 cap sales and purchase contracts No. 10ROK128, etc. The [Buyer] has not made any comment or refutation against this.

The Arbitration Tribunal reviewed the following evidences the [Seller] has provided:

      1. The written evidences such as Sales Contracts, the Customs Declarations for Exported Goods, Cancellation after Verification, the Marine Bills of Lading and the Export Textiles Licenses / Commercial Invoices involved in the 14 contracts;

      2. The audit Confirmation produced by C.B. Wong & Certified Public Accountants Accounting Firm on entrustment of the Pearl Company;

      3. The Statement made by the Pearl Company in the form of a letter to the [Seller] on the issue of debts on November 22, 2001;

      4. The numerous letters and cables on pressings for payment and payments issues between the two parties since July 6, 2000;

      5. The fax to the [Buyer] from the [Seller] on November 13, 2001 concerning the expenses receivable by the former under No. 21RQK041A Contract;

      6. Other evidences

After careful reading of these evidences, the Arbitration Tribunal holds that the said evidences are objective, relevant and legal and may corroborate each other, therefore, they should be accepted. The fact that the [Buyer] has neither submitted any defense against the above-mentioned evidences nor provided any contrary evidences shall not have any effect on the Arbitration Tribunal to make its judgment on the basis of the evidences available. The Arbitration Tribunal holds that the foregoing evidences are sufficient enough to affirm that the [Seller] has fully fulfilled its obligation for delivery of goods under the 14 contracts involved in this case. Meanwhile, by receiving the contract goods without timely payment for them, the [Buyer] has violated the provisions of Articles Twenty-five and Fifty-three of the United Nations Convention on Contract for the International Sales of goods and shall bear the liabilities for breach of contract. In accordance with the provisions of Articles Seventy-four and Seventy-eight of above-mentioned Convention, the [Seller] has the right to recourse the payment for goods and to claim the corresponding interest.

(3) On the requests for arbitration of the [Seller]

The first request for arbitration of the [Seller] is payment for the amount in arrears for the goods of USD 205,280.77 by the [Buyer]. The Arbitration Tribunal holds that it is reasonable for the [Seller] to calculate the money due with a formula to deduct the amount for goods the [Buyer] has paid and the money it should pay to the latter under No. 21RQK041A Contract. The transport fee and commission of the Pearl Company are included in the total amount of the contracts and the specific use of the money does not affect the request for payment of the total amount of the contracts by the [Seller] since the 14 contracts involved in this case are all signed directly by and between the [Seller] and the [Buyer]. Therefore, this request is supported by this tribunal.

The second request for arbitration of the [Seller] is for payment of the loan interest for the amount in arrears for goods of USD 12,109.73 by the [Buyer]. The [Seller] submitted the Detailed List of the Interest Calculation for this. The Arbitration Tribunal holds it is in conformity with the provisions of the United Nations Convention on Contacts for the International Sales of Goods for the [Seller] to calculate the interest at the annual interest rates respectively of 7.875% and 6.8125% on the basis of the respective contract amount of the 14 contracts as of November 30, 2001 for which it is supported by the Arbitration Tribunal.

(4) On the arbitration fee of this case

The Arbitration Tribunal holds that all the arbitration fee for this case shall be borne by the [Buyer].

3. THE AWARD

   1.   The [Buyer] pays the [Seller] the amount in arrears for goods USD 205,280.77;
 
   2.   The [Buyer] pays the [Seller] the loan interest for the amount in arrears for goods USD 12,109.73;
 
   3.   The arbitration fee for this case RMB 73,973.00 shall be entirely borne by the [Buyer]. The [Seller] has paid RMB 73,973.00 in advance to the Arbitration Commission, which strikes a balance with the arbitration fee and therefore, the [Buyer] shall indemnify the [Seller] RMB 73,973.00;
 
   4.   The money the [Buyer] shall pay to the [Seller] mentioned above shall be fully paid by the former to the latter within 45 days from the date of this award.

This award is final.

Chief Arbitrator: Wang Schenchang, Arbitrator: Lin Wenjie, Arbitrator: Zhou Xiaoyan


FOOTNOTES

* The source of this translated text is the document entitled authenticated original award attached as Exhibit B to the Notice of Application for Order Confirming Foreign Arbitral Award filed by [Seller] In the Matter of the Arbitration between [Seller] and [Buyer] before the United States District Court, Kansas, Civil Action, File No. 03-4165-JAR, August 19, 2003.

** All translations should be verified by cross-checking against the original text. For purposes of this presentation of the award, Claimant of the People's Republic of China is referred to as [Seller] and Respondent of the United States is referred to as [Buyer].

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Pace Law School Institute of International Commercial Law - Last updated July 14, 2008
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