Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography

CISG CASE PRESENTATION

China 16 July 2002 CIETAC Arbitration proceeding (Diesel oil case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020716c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20020716 (16 July 2002)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2002/06

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Singapore (claimant)

BUYER'S COUNTRY: People’s Republic of China (respondent)

GOODS INVOLVED: Diesel oil


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 78

Classification of issues using UNCITRAL classification code numbers:

53A [Obligation of buyer to pay price of goods]

78B [Rate of interest]

Descriptors: Price ; Interest

Go to Case Table of Contents

Editorial remarks

Go to Case Table of Contents

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

Go to Case Table of Contents
Case text (English translation)

Queen Mary Case Translation Programme

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

Diesel oil case (16 July 2002)

Translation [*] by Meihua Xu [**]

Edited by Zheng Xie [***]

-   Particulars of the proceeding
-   Facts and position of the parties
-   Opinion of the Arbitration Tribunal
-   Award

PARTICULARS OF THE PROCEEDING

The China International Economic and Trade Arbitration Commission (hereafter, the "Arbitration Commission") accepted the case (Case Number: R...) according to:

   -    The arbitration clause in Sales Contract No. CON99JZ1059 signed by Claimant [Seller], Singapore __ Enterprise Pte. Ltd., and Respondent [Buyer], China Xiamen __ Company on 6 August 1999; and
 
   -   The written arbitration application submitted by [Seller] on 23 March 2002.

The Arbitration Rules of the Arbitration Commission (hereafter, the "Arbitration Rules"), which became effective on 1 October 2000, apply to this case.

On 25 March 2002, the Secretariat of the Arbitration Commission sent the arbitration notice and the attached documents to the parties. On the same day, the Arbitration Commission forwarded the property preservation petition submitted by the [Seller] to the Intermediate People's Court of Fujian Province, and on 27 March 2002, the Intermediate People's Court of Fujian Province issued a (2002) Xia Jing Bao Zi No. 1 Civil Decision, preserving the [Buyer]'s property.

The [Seller] appointed Ms. Wei, Qingyang as its arbitrator and the [Buyer] appointed Mr. Zhao, Xianglin as its arbitrator. Because the two parties failed to jointly appoint a Presiding Arbitrator, according to Article 24 of the Arbitration Rules, the Chairman of the Arbitration Commission appointed Mr. Wei as the Presiding Arbitrator. On 25 April 2002, the aforesaid three arbitrators formed the Arbitration Tribunal to hear this case.

The [Buyer] failed to submit a written defense within the time stipulated in the Arbitration Rules and in the arbitration notice.

On 31 May 2002, the Arbitration Tribunal held a court session in Beijing. Both parties sent agents to attend. The Arbitration Tribunal heard the parties' statements on the facts of this case and allegations, and both parties answered the Tribunal's questions.

Based on the schedule made by the Arbitration Tribunal at the court session, the two parties were asked to submit any supplementary material by 15 June 2002. The [Seller] submitted supplementary material within the stipulated time; however, the [Buyer] did not submit any written material.

The Secretariat of the Arbitration Commission forwarded the supplementary material submitted by the [Seller] to the [Buyer], informing the [Buyer] that it should submit its opinion, if any, in writing by 2 July 2002. However, the [Buyer] did not submit any material within the stipulated time, and its agent confirmed orally that no written material had been submitted by the [Buyer].

This case has been concluded and the Arbitration Tribunal handed down this award within the time stipulated in the Arbitration Rules based on the written material submitted by the [Seller] and the court session.

The following are the facts, the Tribunal's opinion and award.

FACTS

On 6 August 1999, the [Buyer] and the [Seller] signed Sales Contract No. CON99JZ1059 (hereafter, the "Contract") with the following terms:

   -    Goods: The [Buyer] is to purchase 5,000 tons of 0# Diesel oil from the [Seller] (5% more or less );
     Price: US $175/ton, CIF Xiamen;
   - Delivery period: 10 August 1999 to 20 August 1999;
   - Quality: See attached quality specifications;
   -    Payment: Based on the [Seller]'s invoice and packing list, the [Buyer] shall pay the entire price of the goods by T/T to the bank designated by the [Seller] within twenty days (including the NOR date) after receiving the NOR (Notice of Readiness: a notice indicating that the ship has arrived and the goods are ready to be unloaded - note by the Arbitration Tribunal) ... If the [Buyer] fails to do so, it shall pay interest on the delayed payment at the preferential loan interest rate of Bank of America plus 2%.

The [Seller] delivered the goods on time and the carrier issued a NOR at 19:45 on 14 August 1999, which was received by the [Buyer] at 10:15 a.m. on 15 August 1999.

The [Buyer] failed to make payment even after the deadline. The [Seller] had sent letters repeatedly urging the [Seller] to make the payment without any result. Therefore, the [Seller] filed this arbitration application with the Arbitration Commission.

The [Seller] asks the Arbitration Tribunal to rule that:

  1. The [Buyer] shall immediately pay US $913,987.90 plus interest calculated from 3 September 1999 to the day of actual payment (the interest rate shall be the bank loan interest rate of Bank of America plus 2%, i.e., an annual interest rate of 10.5%);

  2. The [Buyer] shall bear US $10,000, including but not limited to the [Seller]'s attorneys' fee, traveling fee and other expenses for recovering the payment; and

  3. The [Buyer] shall bear the entire arbitration fee and the cost for property preservation.

The [Buyer] did not submit any written defense. However, the agent of the [Buyer] attended the court session on 31 May 2002. At the court session, the [Buyer] alleged that there was an Xiamen Yuanhua smuggling case at the end of 1999 and all of the documents of the [Buyer] were sealed. The person who was in charge of the Contract was convicted. The [Buyer] was unable to verify the truthfulness of the Contract. The agent of the [Buyer] indicated that there was such a business transaction, but stated that he knew nothing in detail.

The [Buyer] has indicated that it was going to raise objection to the arbitration clause in the Contract with the Second Intermediate People's Court of the PRC. However, the Arbitration Tribunal has not received the notice issued by the aforesaid court.

The [Seller] submitted the Contract and the B/L to prove the existence and the performance of the Contract.

OPINION OF THE ARBITRATION TRIBUNAL

1. Applicable law

Because the countries in which the places of business of the [Buyer] and the [Seller] are located, China and Singapore, are Contracting States of the CISG, the CISG shall be the applicable law.

2. Contract performance

The [Seller] provided a copy of the Contract and the (2002) Xia Lu Zheng Zi No. 526 Notary issued by Fujian Province Xiamen City Lujiang Notary Office to prove that the copy of the Contract is consistent with the original.

Except for the [Buyer]'s statement that it was unable to verify the truthfulness of the Contract, the [Buyer] did not raise objection to the authenticity of the [Buyer]'s company seal. On 29 March 2002, the [Buyer] asked the Xiamen Intermediate People's Court of Fujian Province to review its (2002) Xia Jing Bao Zi No.1 Civil Decision. However, at that time, the [Buyer] did not deny the Contract it entered into with the [Seller]; the [Buyer] alleged that it was unable to make payment to the [Seller] because its assets were frozen and detained by the relevant government agency.

By virtue of the aforesaid, the Arbitration Tribunal rules that the Contract in this case is true and valid.

In order to perform the Contract it entered into with the [Buyer], the [Seller] signed a sales contract with X Trade Company (hereafter, "X Company"), instructing X Company to deliver the goods to Xiamen. This is evidenced by the contract between the [Seller] and X Company.

The [Seller] also submitted a NOR issued by __ Tankers (Pte.) Ltd. on 14 August 1999, which proves that the goods were delivered in Xiamen on 14 August 1999. The [Buyer] received this NOR on 15 August 1999.

The [Buyer] neither raised objection to the aforesaid evidence, nor did [Buyer] mention any inconsistency between the [Seller]'s actual performance and the Contract.

The Arbitration Tribunal holds that the aforesaid evidence provided by the [Seller] can prove that the [Seller] has delivered the contract goods to the [Buyer] in accordance with the Contract and that [Seller] has fulfilled its contract obligations.

3. [Buyer]'s contract obligations and its responsibility and liability for the breach

In accordance with the Contract, the [Buyer] should have made payment by T/T to the [Seller] within twenty days after receiving the NOR. The NOR provided by the [Seller] indicated that the [Buyer] has received this notice, so it should have made payment within twenty days after 14 August 1999. The [Seller] alleged that the [Buyer] failed to make payment in accordance with the Contract, which the [Buyer] did not deny. In its petition for review sent to Xiamen Intermediate People's Court, the [Buyer] admitted the fact that it failed to make payment.

Pursuant to the schedule made by the Arbitration Tribunal at the court session, the two parties were solicited to submit any supplementary material by 15 June 2002. The [Seller] submitted its supplementary material within the stipulated period; however, the [Buyer] did not submit any written material.

The contract obligation of the [Buyer] is to accept the goods and make payment to the [Seller]. The [Seller] has performed its obligation to deliver the goods. However, the [Buyer] neither performed its obligation to make payment, nor did it provide any defense of an exemption of payment. The [Seller] requested the [Buyer] to pay US $913,987.90, which is in accordance with the contract price and the quantity of the goods actually delivered by the [Seller]. Therefore, the Arbitration Tribunal sustains the [Seller]'s claim to have the [Buyer] pay the aforesaid amount.

The [Buyer] failed to make payment within the stipulated time, and breached the Contract. Therefore, according to the CISG and the stipulations in the Contract, the [Buyer] shall be liable for its breach and shall bear the interest on the delayed payment.

Article 9 of the Contract stipulates that the [Buyer] shall pay interest on the delayed payment based on the annual interest rate of bank loan of Bank of America plus 2%. The [Seller] alleged that its preferential annual loan interest rate is 8.5%; therefore, the [Buyer] should pay the interest at the annual interest rate of 10.5%.

Because the [Seller] failed to provide evidence to prove that the preferential annual loan interest rate was 8.5% at that time, considering the bank interest rate at the same time, the floating interest rate, and the facts in this case, the Arbitration Tribunal deems that it is reasonable that the [Buyer] shall pay the interest at an the annual interest rate of 7%.

The [Seller] asks the [Buyer] to pay its attorneys' fee, traveling fee and other expenses, totaling US $10,000. The Arbitration Tribunal notes that because the dispute in this case was caused by the [Buyer]'s breach, the [Buyer] should bear the expenses incurred by the [Seller] for recovering the price for the goods in this case. However, the [Seller] failed to provide evidence showing that the aforesaid expenses have been actually incurred. Therefore, this claim of the [Seller] is not sustained.

Because the [Buyer] caused the dispute in this case and the [Seller] has no fault, the Arbitration Tribunal rules that the [Buyer] shall bear the entire arbitration fee.

The [Seller] also asked the [Buyer] to pay the property preservation fee. The Arbitration Tribunal holds that this issue shall be determined by the court, which granted the preservation order. Therefore, the Arbitration Tribunal will not make a decision on this.

III. THE AWARD

The Arbitration Tribunal rules that:

   (1)     [Buyer] shall pay US $913,987.90 to the [Seller];
 
   (2)     [Buyer] shall pay the interest on the aforesaid amount calculated from 3 September 1999 to the day of actual payment at the annual interest rate of 7%;
 
   (3)     The arbitration fee for this case is US $26,220, which shall be borne by the [Buyer] entirely. The [Seller] has paid the aforesaid amount in advance; therefore, the [Buyer] shall pay US $26,220 to the [Seller];
 
   (4)     [Seller]'s other claims are dismissed.

This is the final award.

PRESIDING ARBITRATOR
ARBITRATOR
ARBITRATOR

16 July 2002 in Beijing


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the Singapore is referred to as [Seller] and Respondent of the People's Republic of China is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [US $].

** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of a Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

*** Zheng Xie, LL.M. Washington University in St. Louis, LL.M., BA in Economics, University of International Business and Economics, Beijing.

Go to Case Table of Contents
Pace Law School Institute of International Commercial Law - Last updated December 11, 2007
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography