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CISG CASE PRESENTATION

China 29 November 2002 CIETAC Arbitration proceeding (Toothbrush case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/021129c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20021129 (29 November 2002)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2002/11

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: Russian Federation and PRC (respondent)

GOODS INVOLVED: Toothbrushes


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 53

Classification of issues using UNCITRAL classification code numbers:

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

Descriptors: Price

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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)

Queen Mary Case Translation Programme

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

Toothbrush case (29 November, 2002)

Translation [*] by Zheng Xie [**]

Edited by Meihua Xu [***]

The China International Economic and Trade Arbitration Commission (hereafter, the "Arbitration Commission") accepted this case (Case number: G_____) according to:

   -    The arbitration clause in Sales Confirmation No. 21HYXF-0701 signed by Claimant [Seller], Xinxiang __ Trade Company, and Respondent [Buyer], __ International USA Inc., on 1 July 2001; and
 
   -    The written arbitration application submitted by [Seller] on 6 February 2002.

The Arbitration Rules of China's International Economic and Trade Arbitration Commission [hereafter, the Arbitration Rules], which took effect on 1 October 2000, apply to this case.

After the [Seller] completed the necessary arbitration application procedure, the Secretariat of the Arbitration Commission sent the Arbitration Notice No. (2002) CIETEC __ and the appendixes to the [Buyer] by express mail on 22 March 2002. The acknowledgement receipt issued by the express delivery company shows that the [Buyer] received the aforesaid documents on 1 April 2002.

The [Seller] appointed Mr. __ as its arbitrator. Because the [Buyer] did not appoint an arbitrator within the period stipulated by the Arbitration Rules, the Chairman of the Arbitration Commission appointed Mr.__ as the arbitrator for the [Buyer]. Because the parties did not jointly appoint or authorize the Chairman of the Arbitration Commission to appoint the presiding arbitrator, the Chairman appointed the presiding arbitrator according to the Arbitration Rules. The above three arbitrators formed the Arbitration Tribunal on 24 May 2002 to hear this case. On the same day, the Secretariat sent the notice of the formation of the Arbitration Tribunal No. (2002) CIETEC__ to the [Buyer] by express mail. The acknowledgement receipt issued by the express delivery company shows that the [Buyer] received the aforesaid documents on 4 June 2002.

After discussing with the Secretariat, the Arbitration Tribunal decided to hold the court session in Beijing on 3 September 2002. The Secretariat sent the notice of the court session No. (2002) CIETEC___ to the [Buyer] by express mail. The acknowledgement receipt issued by the express delivery company shows that the [Buyer] received the aforesaid documents on 12 June 2002.

After carefully reviewing the [Seller]'s written application and the evidentiary documents attached, the Arbitration Tribunal held the court session in Beijing on 3 September 2002. The [Seller]'s representative attended the court session. The [Buyer] did not send any representative to the court session. According to Article 43 of the Arbitration Rules, the Arbitration Tribunal heard this case by default.

The [Seller] submitted supplementary documents to the Arbitration Tribunal after the court session. The Secretariat sent the [Seller]'s supplementary documents to the [Buyer] by express mail and required the [Buyer] to submit any comments or objections before 31 October 2002. The [Buyer] did not submit any response, comments or objections to the documents which it received.

This case is completed. According to Article 42 of the Arbitration Rules and based on the information collected at the court session and the written documents, the Arbitration Tribunal handed down the award by default.

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

FACTS

The [Seller]'s position

On 1 July 2002, the [Seller] and the [Buyer] signed Sales Confirmation No. 21HYXF-0701 (hereafter, the "Contract".) The Contract provides for the purchase of toothbrushes by the [Buyer] from the [Seller] for the price of US $103.304. The Contract states:

Inspection term: The description of the quality, quantity and weight in the certificate issued by China Commodities Inspection Co. or the [Seller] shall be the basis for negotiation.

After signing the Contract, on 13 August the [Buyer], through C and H West Merchandizing, Inc., applied to United National Bank, Monterey Park, California, U.S.A. to issue irrevocable L/C No. 501229 with 90 days' duration of validity. The inspection term stipulated in the L/C was "Certificate of inspection in duplicate issued and signed by Rober S.K. HSU of applicant whose signature must be verified by and confirmed by the issuing bank."

After receiving the L/C, the [Seller] shipped the goods to the United States through Qingdao Bonded Zone __ International Trade Company, but the [Buyer] did not make the payment for the documents. Then, after the parties' negotiation, the [Buyer] provided two letters of guarantee (L/G) on 21 August and 28 September, respectively, and the parties agreed that the [Seller] would release the B/L by wireless transfer to the [Buyer] and the [Buyer] shall unconditionally make the payment to the [Seller]'s export agent without any restriction of the issuer's credit, the inspection agency in the United States or any third party before 12 November.

However, after the [Seller] released the B/L by wireless transfer, the [Buyer] refused to make the payment. It is the [Seller]'s position that, because the [Seller] performed its duty under the Contract, the [Buyer] should perform its duty to make the payment.

The [Seller] filed the arbitration application with the Arbitration Commission and requests the Arbitration Tribunal make the following award:

The [Buyer] should be required to pay the contract price, i.e., US $103,304 and the interest for the delayed period, and the arbitration fee and the [Seller]'s other resonable expenses, such as the traveling expenses, incurred for this arbitration.

The [Buyer] did not file a response.

THE ARBITRATION TRIBUNAL'S OPINION

The applicable law

The parties did not stipulate the applicable law in the Contract. Because the countries where the parties' business places are located are Contracting States of the United Nations Convention on Contracts for the International Sale of Goods (1980) (CISG), the Arbitration Tribunal holds that the CISG applies to this case.

The facts and the liability for breach of the Contract

The Arbitration Tribunal ascertains the following facts:

1. On 1 July 2002 the [Seller] and the [Buyer] signed Sales Confirmation No. 21HYXF-0701. This is a Contract for the purchase of toothbrushes by the [Buyer] from the [Seller] that includes that following terms:

Name and specification: Xiao She Tou 203, Children 202, Tan Li Wang 201;
Contract price: US $103,304;
Inspection term: The description of the quality, quantity and weight in the certificate issued by China Commodities Inspection Co. or the [Seller] shall be the basis for negotiation.
Payment term: L/C.

2. After signing the Contract, on 13 August 2001 the [Buyer] through C and H West Merchandizing, Inc applied to United National Bank, Monterey Park, California, U.S.A. to issue irrevocable L/C No. 501229 with Qingdao Bonded Zone __ International Trade Company, the [Seller]'s export agent, as the beneficiary, and with 90 days' duration of validity. The L/C contained stipulations on the commercial invoice, the packing list and the B/L, etc. The inspection term stipulated in the L/C was "Certificate of inspection in duplicate issued and signed by Rober S.K. HSU of applicant whose signature must be verified by and confirmed by issuing bank."

3. On 22 August 2001, the [Buyer] issued a GUARANTEE CERTIFICATE, (i.e., the letter of guarantee issued on 21 August as the [Seller] alleged). The letter of guarantee states:

"... Because there is no branch of Rober S.K. HSU in China, the beneficiary cannot offer the 'Certificate of Inspection' required by the above L/C ... We hereby confirm that we accept the documents offered by the beneficiary without the 'Certificate of Inspection' of the above L/C... If the issuing bank refuses to pay to the beneficiary for the above reason, we guarantee that we will accordingly remit the amount US $103,304.00 for the goods within the available time of the above L/C."

4. On 31 August, 2001, the goods were shipped to the [Buyer] by the ship __ Sandra of U.S. __ Express Inc.

5. The certificate of guarantee signed by the [Seller] and the [Buyer] on 29 September 2001 (i.e., the letter of guarantee issued on August 28 as the [Seller] alleged) confirmed that the goods arrived at the port, and stated that in the spirit of friendly cooperation, the [Seller] and its export agent agreed to release the documents to the [Buyer] without payment. The [Buyer] promised to unconditionally make the payment of US $103,304 before 12 November 2001 to the specified account of the [Seller]'s export agent without any restriction of the issuer's credit, the inspection agency in the United States or any third party.

The Arbitration Tribunal finds that the [Seller], in accordance with the certificate of guarantee, released the B/L to the [Buyer] by wireless transfer, and delivered the goods to the [Buyer], and the [Seller] performed its duty under the Contract, but the [Buyer] did not make the payment. As to the [Seller]'s claims, the [Buyer] neither submitted any documents to deny, nor did the Arbitration Tribunal find any evidence to prove that the [Seller]'s performance did not conform to the Contract.

Based on the above, the Arbitration Tribunal holds that the Contract in this case is the expression of the parties' agreement, conforms to the CISG, and is binding on both parties. The [Seller] performed its duty under the Contract, but the [Buyer] did not make the payment. Thus, the [Buyer] shall be liable for the breach. The Arbitration Tribunal sustains the [Seller]'s claim for the contract price, i.e., US $103,304. Although the [Seller] also claims for interest, it neither alleged the period for calculating the interest nor provided the applicable interest rate. Thus, the Arbitration Tribunal does not sustain the [Seller]'s claim for interest. As to the [Seller]'s traveling expenses, because the [Seller] neither specified the amount nor provided any evidence, the Arbitration Tribunal does not sustain the [Seller]'s claim for traveling expenses. The [Buyer] shall, however, bear the entire arbitration fee.

AWARD

  1. The [Buyer] shall pay the [Seller] the contract price of US $103,304;

  2. The [Seller]'s other claims are dismissed;

  3. The arbitration fee is RMB 40,010, which the [Buyer] shall pay. The [Seller] has paid for the above arbitration fee, so the [Buyer] shall reimburse the [Seller] for RMB 40,010 in order to compensate the [Seller] for the prepaid arbitration fee.

The [Buyer] shall pay the above amounts within 30 day after this award is handed down; otherwise, interest shall be added at annual interest rate of 6%.

This is the final award.

THE PRESIDING ARBITRATOR
THE ARBITRATOR
THE ARBITRATOR

29 November 2002


FOOTNOTES

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

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

*** 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 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.

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Pace Law School Institute of International Commercial Law - Last updated February 11, 2008
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