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CISG CASE PRESENTATION

Ukraine 31 October 2002 Tribunal of International Commercial Arbitration, Ukrainian Chamber of Commerce & Trade [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/021031u5.html]

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

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Case identification

DATE OF DECISION: 20021031 (31 October 2002)

JURISDICTION: Arbitration ; Ukraine

TRIBUNAL: Tribunal of International Commercial Arbitration, Ukrainian Chamber of Commerce & Trade

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Unavailable

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Ukraine (claimant)

BUYER'S COUNTRY: Belarus (respondent)

GOODS INVOLVED: [-]


Classification of issues present

APPLICATION OF CISG:

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 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 (Russian): Gazeta "Advocatura", No. 11(19), 3 June 2004

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Tribunal of International Commercial Arbitration at the
Ukrainian Chamber of Commerce and Trade

Decision of 31 October 2002

Translation [*] by Mykhaylo Danylko [**]

Since there was a ruling of by Gomel City [Belarus] Court of Commercial Arbitration in a case involving the bankruptcy of the debtor in another arbitration, the Tribunal of International Commercial Arbitration at the Ukrainian Chamber of Commerce and Trade (Tribunal) did not put the obligation on the [Buyer] to pay the debt to [Seller], but instead granted the [Seller] the right to recover the debt along with 3 percent annual interest on the delayed sum, and also compensation of the arbitration fees.

The Tribunal heard on 31 October 2002 the case arising from the action of the Claimant Ukrainian company [Seller] against Respondent Belarusian company [Buyer] to recover $4,863.75 of debt, including $4,850.40 of the principal debt and $13.75 in annual interest.

The legal ground for arbitration of the case by the Tribunal is Clause 10 of Contract #15/596 of 20 March 2001, according to which:

"In the event that any disputes or misunderstandings arise from or in connection with the contract, the parties will settle them by their negotiations and searching ways of eliminating the disputes. If disputes and misunderstandings cannot be settled by mutual negotiations and mutual understanding, the disputes should be settled by the Tribunal in accordance with the Rules of Tribunal".

Having reviewed the materials of the case and having heard the explanations of the [Seller]'s representatives, the Tribunal found:

According to Contract #15/596 concluded between the parties on 20 March 2001, the [Seller] took an obligation to sell, and the [Buyer] to buy goods, manufactured by the [Seller] for the total sum of $51,600.00.

According to the terms of Contract #15/596, the shipment of the goods should be made by the [Seller] within ten days from the day of receiving the advance payment.

In the course of performance of Contract #15/596, on 18 December 2001 the [Seller] shipped the goods to the [Buyer] for the sum of $4,850.40.

The [Buyer] accepted the goods, but failed to pay [Seller] the price for the goods. Therefore, the [Seller] on 21 May 2002 mailed his claim to the [Buyer], in which he proposed that [Buyer] make payment in a ten-day term in the sum of $4,850.40 of the principal debt and $60.62 of annual interest.

In the response to the claim of 21 May 2002, the [Buyer] informed that the claim was reviewed and guaranteed to make payment for the received goods by 15 June 2002.

Since the [Buyer] did not pay, the [Seller] on 4 July 2002 filed an action before the Tribunal to recover from the [Buyer] $4,863.75, including $4,850.40 of the principal debt and $13.75 in annual interest.

The action proceeded to arbitration by the decision of the Head of the Tribunal of 4 July 2002.

Having received copies of the action materials, the [Buyer] mailed to the Tribunal a letter of 28 August 2002, in which he informed, that in accordance to the Law of Belarus on Economic Insolvency (Bankruptcy) the claims of the creditors, and also claims to recover debts should be settled within the framework of the specified Law.

The Gomel City Court of Commercial Arbitration had started an arbitration on 1 July 2002 on the basis of Art. 41 of the mentioned Law of Belarus, in confirmation of which the [Buyer] presented a copy of a [Court] ruling of 1 July 2002. Also, the [Buyer] informed that the creditor's claims filed by the [Seller] in the sum of $5,050.00 and 4,966.00 Ukrainian Hryvnas are included in the register of creditor's claims.

On 5 September 2002, the Tribunal sent to [Seller] a copy of [Buyer]'s letter with a proposal to present his comments concerning the mentioned letter.

On 23 September 2002, the Tribunal received [Seller]'s letter of 19 September 2002, in which he asked to review and grant the claims, having informed that:

   -     As the result of a tax audit there was established a violation during calculation of payments in foreign currency, particularly, non-receipt of payment from [Buyer] for the exported goods, for which a penalty of 4,955.75 Ukrainian Hryvnas was put on [Seller];
 
   -     The application for inclusion of [Seller] into the register of claims of creditors of [Buyer] along with the confirming documents of 25 July 2002, was sent to [Buyer];
 
   -     The [Seller] included into the claims against the [Buyer] the principal debt in the sum of $4,850.40, the losses [Seller[ suffered as he had to pay the registration fees for filing the statement of action in the sum of $200.00, and the penalty in the sum of 4,955.00 Ukrainian Hryvnas, that has to be paid to the State of Ukraine; in total $5,050.40 and 4,955.00 Ukrainian Hryvnas.
 
   -     On 1 August 2002, the [Seller] received the notification from the [Buyer]'s trustee on inclusion of his claims into the register of claims of the creditors of the fifth chain.

On 21 October 2002, the Tribunal received the letter of [Buyer] of 17 October 2002 in which he informed that according to Law of Belarus on Economic Insolvency (Bankruptcy), the creditor's claims filed by [Seller] were included in the register of claims of creditors and will be granted in the order of chain.

At the hearing of the Tribunal, the representative of [Seller], taking into account the decision of 1 July 2002 of the Gomel City Court of Commercial Arbitration in a proceeding on another arbitration of a case of bankruptcy of the [Buyer], changed the [Seller]'s claims and asked the Tribunal to grant the [Seller] the right to recover from the [Buyer] the sum of the principal debt in the amount of $4,850.40, with 3 percent annual interest on the delayed sum amounting to $13.75, and expenses incurred in connection with payment of the registration and arbitration fees in the sum of $600.00.

Taking into account that:

1. On 20 March 2001, the parties concluded the Contract #15/596. There was no agreement between the parties as to the governing law of the contract.

By virtue of Art. 6 of the Law of Ukraine on Foreign Business Activity, if there is no agreement by the parties on the law applicable to their international sales contract, the law applicable to the contract is the law of the country where the seller is established and has its main place of business. Since, in Contract # 15/596 of 20 March 2002, the [Seller] is a Ukrainian company, which is established and has its main place of business in Ukraine, the substantive law of Ukraine is the law applicable to the parties' contract.

2. In a course of performance of the contract, the [Seller] on 18 December 2001 shipped to the [Buyer] the goods, agreed by the parties for the sum of $4,850.40, which is confirmed by the railway bill of lading #29027793, by the cargo custom declaration #40102/1/000836 and by the invoice #659 of 18 December 2001, on which there are the stamps of Ukrainian Customs.

3. According to the terms of Contract #15/596, the shipment of the goods should be made within 10 days from the day of receiving of the advance payment. The [Seller] on 18 December 2001 shipped the goods without the advance payment; thus, by virtue of Art. 165 of the Ukrainian Soviet Socialistic Republic Civil Code, the debtor had to perform the obligation to pay the price for the goods received in a seven-day term from the date of presenting the claims by the creditor, if the obligation of the immediate performance does not follow from the law, contract or from the merits of the obligation.

Since in the accordance with clause 6.1 of the contract, each lot of the shipped goods should be accompanied with a package of the documents, among which specified the invoice, the seven-day term, set by Art. 165 of the Ukrainian Soviet Socialistic Republic Civil Code, is estimated from the moment the [Buyer] received the goods that were shipped by [Seller] on 18 December 2001, and the invoice # 659 of 18 December 2001, accompanying the goods.

4. The [Buyer] accepted the goods, but failed to pay their price to [Seller] in the term established by Art. 165 of the Ukrainian Soviet Socialistic Republic Civil Code.

5. The [Buyer] found the claims grounded, but informed that in accordance with the Law of Belarus on Economic Insolvency (Bankruptcy) the creditors' claim as well as the claims to recover the debt should be arbitrated within the framework of the specified Law.

Since 1 July 2002, the Gomel City Court of Commercial Arbitration on the basis of Art. 41 of the Law of Belarus On Economic Insolvency (Bankruptcy) has started an arbitration, in confirmation of which the [Buyer] presented a copy of the Court's decision of 1 July 2002, according to para. 10 of which from the day of rendering of this decision the claims of the creditors for obligations of the debtor are suspended; also suspended are the calculation of interest, penalties, fines and other economical (financial) sanctions to the debts of the debtor.

6. From the documents presented by the parties follows that in the register of the claims of [Buyer]'s creditors there are included the claims of [Seller] to recover the principal debt in the sum of $4,850.40, the losses [Seller] suffered as he had to pay the registration fees for filing the statement of action in the sum of $200.00, and the penalty for delay in return of foreign currency proceeds in the sum of 4,955.00 Ukrainian Hryvnas, paid to the State of Ukraine; in total $5,050.40 and 4,955.00 Ukrainian Hryvnas.

7. At the hearing of the Tribunal on 31 October 2002, the [Seller], taking into account the decision of 1 July 2002 of the Gomel City Court of Commercial Arbitration, changed the claims and asked the Tribunal to grant the [Seller] the right to recover from [Buyer] the sum of principal debt in the amount of $4,850.40, with 3 percent of annual interest from the delayed sum for the period from 1 June 2002 till 4 July 2002 consisting $13,75 and expenses incurred in connection with payment of registration and arbitration fees in the sum of $600.00.

8. The materials of the case confirm the grounds of [Seller]'s claim to grant him the right to recover from [Buyer] $4,850.40 of the principal debt, which the Tribunal granted.

9. The [Seller] also has a right to recover 3 percent of annual interest from the delayed sum on the basis of Art. 214 of the Ukrainian Soviet Socialistic Republic Civil Code, that should be calculated for the period: after expiration of seven days from the day of receiving of the goods by the [Buyer] to 1 July 2002, which is a date of rendering of decision in the case by the Gomel City Court of Commercial Arbitration of 1 July 2002.

The [Seller] filed a claim to grant him right to recover from [Buyer] the annual interest for 34 days of delay of performance of the financial obligation in the sum of $13.75 for the period from 1 June till 4 July 2002. On the assumption of the above mentioned, the Tribunal granted the claim to grant the [Seller] the right to recover from [Buyer] $13.75 of annual interest for 34 days of the delay of performance of financial obligation for the period from 28 May till 30 June 2002.

10. In connection with granting the claims in full sum as the [Seller] claimed, according to Art. 1 of the Rules of Tribunal on Arbitration Fees and Expenses, the arbitration fees paid by [Seller] in the sum equivalent to $600.00, are put on the party against which the judgment is rendered, i.e., against the [Buyer], thus should be recovered from him.

Guided by the terms of the contract #15/596 of 20 March 2001, Arts. 53, 78 of the UN Vienna Convention on Contracts of International Sale of Goods (CISG), Arts. 161,165, 214, 224 of the Ukrainian Soviet Socialistic Republic Civil Code, Art. 6 of the Law of Ukraine on Foreign Business Activity, Art. 31 of the Law of Ukraine on the Tribunal of International Commercial Arbitration, Art. 8(2), 8(4)-8(9) of the Rules of the Tribunal, Art. 1 of the Rules of Tribunal on Arbitration Fees and Expenses, the Tribunal decided:

--  to grant the [Seller] the right to recover from [Buyer] the sum $4.850,40 of the principal debt, $13.75 in annual interest and also compensation of arbitration fees.

The judgment is final.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Ukraine is referred to as [Seller] and Respondent of Belarus is referred to as [Buyer].

** 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 Master of Laws (European Studies Program) from the Law School of International Business Science and Technology University, Kiev, Ukraine (July 2000); a Master of Management in Business of the Business School of International Science and Technology University, Kiev, Ukraine (June 2002); and has received his LL.M. in International and Comparative Law at the Pace University School of Law.

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