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CISG CASE PRESENTATION

Russia 16 June 2003 Arbitration proceeding 164/2001 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030616r2.html]

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

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Case identification

DATE OF DECISION: 20030616 (16 June 2003)

JURISDICTION: Arbitration ; Russian Federation

TRIBUNAL: Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 164/2001

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (respondent)

BUYER'S COUNTRY: Russian Federation (claimant)

GOODS INVOLVED: [-]


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 49 ; 51 ; 74 ; 81

Classification of issues using UNCITRAL classification code numbers:

49A1 [Buyer's right to avoid contract (grounds for avoidance): fundamental breach of contract];

51B [Delivery or conformity of only part of goods (avoidance as to entire contract): buyer only permitted to avoid part of contract];

74B [Outer limits of damages (as possible consequence of breach): causal connection not established];

81B2 [Contract clauses not terminated by avoidance: clauses on rights of parties consequent upon avoidance]

Descriptors: Avoidance ; Damages

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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): M.G. Rozenberg, Praktika Mezhdunarodnogo kommercheskogo arbitrazhnogo suda pri TPP RF za 2003 g./Sost. [Arbitration decisions rendered by the International Commercial Tribunal at the Russian Federation Chamber of Commerce and Industry in 2003], published by "Statut" (2004), Case No. 20 [119-122].

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

Russian Federation arbitration proceeding 164/2001 of 16 June 2003

Translation [*] by Yelena Kalika [**]

1. SUMMARY OF RULING

     1.1 Where there was an unclear provision in the arbitration clause of a contract, the Tribunal found it had competence to arbitrate the present dispute after establishing the intent of the parties.

     1.2 Since the commercial enterprises of the parties were located in CISG Contracting States, the provisions of the CISG were applied when resolving the present dispute.

     1.3 It was found that the [Buyer]'s claim to declare the contract avoided did not require the Tribunal's resolution as the termination of the contract had already taken place in accordance with the CISG when the Claimant [Buyer] notified the Respondent [Seller] [of such termination] and where the [Buyer] had supportable reasons [to do so].

     1.4 A portion of the goods had been delivered; a portion of the goods had not been delivered. Based on the terms of the contract and evidence presented by the [Buyer], the Tribunal granted the [Buyer]'s claim for refund of the sum paid for the goods not delivered and to apply contractual penalties for the delay in delivery. However, the Tribunal denied the [Buyer]'s claim to recover from the [Seller] the price of the goods that had been delivered. The Tribunal also denied recovery of damages for which the [Buyer] failed to present evidence of causal connection with the [Seller]'s actions.

2. FACTS AND PLEADINGS

A Russian company brought a claim against a German company in connection with non-delivery of the goods for which the [Buyer] paid in accordance with the contract for the international sale of goods made on 3 April 2001. According to the [Buyer], the [Seller] made a delayed delivery of a portion of the goods based on documents forged by him. The [Seller] then presented [the forged documents] to the bank and withdrew the amount set in the contract from the Letter of Credit opened by the [Buyer]. [The amount withdrawn] related to the delivery which was to be made on 25 June 2001. When the delay in delivery exceeded two months, in accordance with the terms of the contract, the [Buyer] sent the [Seller] notice in which he informed the [Seller] that the contract was declared avoided.

The [Buyer]'s claims included:

   -    Termination of the contract,
   -    Recovery from the [Seller] of the entire amount paid to him,
   -    Recovery of contractual penalties for the delay in delivery,
   -    Damages sustained by the [Buyer],
   -    Legal expenses.

The [Seller] declined the notice of the hearing. A receipt issued by a carrier service is enclosed with the materials of the case. The [Seller] also failed to make any explanations concerning the claims.

3. TRIBUNAL'S REASONING

The Tribunal's award contained the following main points.

     3.1 As to the Tribunal's competence to arbitrate the present dispute, the Tribunal ascertained that in Clause 14.2 of the contract the parties agreed to submit disputes "for arbitration to the International Commercial Tribunal at the Chamber of Commerce and Industry in Moscow." In this arbitration clause the parties failed to specify which Chamber of Commerce and Industry in Moscow they meant. However, notwithstanding such lack of clarity, in Tribunal's opinion, the parties intended to submit disputes to the Tribunal because the only tribunal in Moscow called "the International Commercial Tribunal" is located at the Russian Federation Chamber of Commerce and Industry.

Taking the above into consideration, the Tribunal applied Articles 1, 16 of the Russian Federation Law "On International Commercial Arbitration" and Articles 1(2), 1(3) and 1(5) of the Rules of the Tribunal and found itself competent to arbitrate the present dispute.

     3.2 After reviewing the issue of the [Seller]'s absence at the hearings held on 28 October 2002 and 9 April 2003, the Tribunal found that the materials of the case and notices on the time and place of the hearings were sent to the [Seller] by a carrier with a return receipt requested as required in Article 12(1) of the Rules of the Tribunal. The materials of the case and notices were sent to the [Seller]'s address stated in the contract. The General Consulate Service of the Federative Republic of Germany in Saint Petersburg confirmed that it was a valid address of the [Seller].

Pursuant to Article 3(1) of the Russian Federation Law "On International Commercial Arbitration" and Article 12(5) of the Rules of the Tribunal, any written message is considered to have been received if it was sent to the last known address of a commercial enterprise or addressee's mailing address by a certified letter or in any other means where an attempt to deliver [the message] is registered. In accordance with Article 25 of the Russian Federation Law "On International Commercial Arbitration" and Article 28(2) of the Rules of the Tribunal, a party's failure to appear at the hearing, where such party was duly notified of its time and place, does not preclude the arbitration and rendering of an award.

Thus, the Tribunal found it lawful to arbitrate the case in the absence of the representatives of the [Seller].

     3.3 After discussing the issue of the law governing the present dispute, the Tribunal concluded that, pursuant to Article 1(1)(a) CISG, this Convention applies to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States. Since both [Buyer]'s and [Seller]'s enterprises are located in Russia and Germany and both of these States are CISG Contracting States, the provisions of the CISG should be applied when resolving the present dispute.

     3.4 After reviewing the [Buyer]'s claim to declare the contract avoided, the Tribunal established that, since the [Buyer] had grounds to declare the contract avoided as set forth in Clause 4.2 of the contract and since he notified the [Seller] of [such avoidance], the termination of the contract had already taken place and no additional decision of the Tribunal was required. At the same time, the Tribunal ascertained that, in accordance with the general rule and pursuant to Article 81 CISG, avoidance of the contract does not affect any provision of the contract governing the rights and obligations of the parties consequent upon the avoidance of the contract.

     3.5 When reviewing the [Buyer]'s claim to recover from the [Seller] the entire sum paid for the goods, the Tribunal established that nonetheless a portion of the goods was indeed delivered by the [Seller] under the contract.

Taking the above into consideration, the Tribunal concluded that the [Buyer]'s claim in connection with recovery of his payment should be granted only in the part concerning the goods not delivered.

     3.6 The Tribunal found that the [Buyer]'s claim to recover penalties for the delay in delivery was supported by the contract and should be fully granted.

     3.7 After analyzing the [Buyer]'s claims to recover from the [Seller] damages sustained by the [Buyer] in connection with transportation and storage expenses, the Tribunal concluded that there was not sufficient proof [of such expenses] and no direct causal connection between such damages and the [Seller]'s actions could be established. Therefore, the Tribunal denied such claims.

     3.8 The Tribunal granted the [Buyer]'s claim to recover arbitration fees based on Article 6(2) of the Regulations on arbitration fees and expenses (see Appendix to the Rules of the Tribunal). Article 6(2) sets forth that if the claim is granted partially, the [Seller] must pay arbitration fees in proportion to the claims granted.


FOOTNOTES

* This is a translation of data on Proceeding 164/2001, dated 16 June 2003, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, reported in Rozenberg ed., Arb. Praktika (2004) No. 20 [119-122].

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

** Yelena Kalika, JD Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Moscow law firm, and is an Associate at the Pace Institute of International Commercial Law.

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Pace Law School Institute of International Commercial Law - Last updated September 19, 2005
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