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

CISG CASE PRESENTATION

China 7 July 2003 CIETAC Arbitration proceeding (Stroller and diaper case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030707c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20030707 (7 July 2003)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2003/18

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: Unavailable (respondent)

GOODS INVOLVED: Strollers and diapers


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles Articles 74 ; 78 [Also cited: Articles 14 ; 53 ; 54 ; 61 ]

Classification of issues using UNCITRAL classification code numbers:

74A [General rules for measuring damages: loss suffered as consequence of breach];

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Damages ; 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

Stroller and diaper case (7 July 2003)

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: G...) according to:

   -    The arbitration clause in Sales Contract No. P- ST980601 (hereafter, the "Contract") signed by Claimant [Seller], China Qingdao __ Import & Export Company, and Respondent [Buyer], __ Inc., on 1 January 1998; and
 
   -  The written arbitration application submitted by the [Seller] on 2 December 2002.

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

On 16 January 2003, the Secretariat of the Arbitration Commission sent to the [Buyer] the arbitration notice, the [Seller]'s arbitration application and the attachment, the Arbitration Rules, and the arbitrators' name list, and asked the [Buyer] to appoint an arbitrator and submit its response within the stipulated time. On 24 January 2003, the express mail company delivered the aforesaid documents to the [Buyer], but the [Buyer] refused to accept the documents. The express mail company left the documents at the [Buyer]'s address. According to Article 87 of the Arbitration Rules, the arbitration documents in this case have been effectively delivered.

The [Seller] appointed __ as its arbitrator. Because the [Buyer] failed to appoint or ask the Chairman of the Arbitration Commission to appoint an arbitrator within the stipulated time, according to Article 26 of the Arbitration Rules, the Chairman of the Arbitration Commission appointed __ as the [Buyer]'s arbitrator. Because the parties failed to jointly appoint or ask the Chairman of the Arbitration Commission to appoint a Presiding Arbitrator, according to Article 24 of the Arbitration Rules, the Chairman of the Arbitration Commission appointed __ as the Presiding Arbitrator. On 3 March 2003, these three arbitrators formed the Arbitration Tribunal to hear this case.

On 6 March 2003, after discussing with the Secretariat of the Arbitration Commission, the Arbitration Tribunal scheduled a court session on 10 April 2003 in Beijing.

On that date, the Arbitration Tribunal held the court session in Beijing. The [Seller] sent its arbitration agent to attend the court session; however, the [Buyer] was absent. According to Article 42 of the Arbitration Rules, the Arbitration Tribunal heard this case by default.

At the court session, the arbitration agent of the [Seller] made statements on the facts of this case and answered the Arbitration Tribunal's questions. After the court session, the [Seller] submitted supplementary documents. The Secretariat of the Arbitration Commission forwarded the aforesaid documents to the [Buyer], informing the [Buyer] that it could submit a written response or request a second court session; however, the [Buyer] did not make any response.

The [Buyer] has not submitted any written response.

This case has been concluded and the Arbitration Tribunal handed down this award based on the submitted written material and the facts ascertained at the court session.

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

FACTS AND POSITION OF THE PARTIES

[Seller]'s position

The [Seller] alleged:

On 1 January 1998, the two parties signed the Contract in this case by which the [Seller] was to sell strollers and diapers to the [Buyer] on the following terms:

   -    The [Seller] shall deliver the goods to the [Buyer] from Ningbo port China to the port designated by the [Buyer] according to the [Buyer]'s purchase order;
 
   -    Payment: by D/P (this was later modified to that the [Buyer] shall pay 20% of the price within seven days after the conclusion of the Contract, and pay the remaining 80% by D/P);
 
   -    Delivery term: FOB;
 
   -    Shipping fee: The sea transportation fee shall be paid by the [Seller] in advance for the [Buyer].

The first two purchase orders were performed smoothly. On 28 October 1998, the [Buyer] faxed the third purchase order No. BM98-0530. Based on this purchase order, the [Seller] delivered with goods with the value of US $95,625 to the [Buyer] .

A number of corresponding faxes and the letter sent by the [Seller] to the Bank of China show that the [Seller] has fulfilled its obligation to deliver the goods, but the [Buyer] is still refusing to pay the price of the goods and the shipping fee paid by the [Seller] for it , which has severely violated the relevant provisions of the CISG and the Law of the PRC on Contracts Involving Foreign Interest.

In accordance with Articles 74 and 78 of the CISG, the [Seller] asks the Arbitration Tribunal to rule that:

   (1)   The [Buyer] shall pay to the [Seller] the price in arrears of US $95,625 and the shipping fee of US $4,850;
 
   (2)   The [Buyer] shall pay the breach fee for delayed payment of US $24,350 (based on the bank loan interest rate at the same time);
 
   (3)   The [Buyer] shall pay the [Seller]'s attorneys' fee of renminbi [RMB] 24,350
 
   (4)   The [Buyer] shall pay the arbitration fee.

The [Seller] also submitted the Contract in this case, relevant purchase orders and invoices, and issuing /receiving payment receipts, documentation of the shipping fee paid by the [Seller], and many corresponding faxes to prove the facts of the business transaction in this case.

OPINION OF THE ARBITRATION TRIBUNAL

1. Applicable law

The parties did not stipulate the applicable law in the Contract. The Arbitration Tribunal deems that because the places of business of the parties are both in Contracting States of the CISG, and because the parties did not exclude the application of the CISG, the CISG shall therefore be applied.

2. The effectiveness of the Contract

On 1 January 1998, the two parties in this case signed Contract No. ST980601 in Qingdao, with the following terms:

   -    The [Seller] is to deliver the goods from Ningbo port, China to the port designated by the [Buyer] based on the [Buyer]'s purchase order;
 
   -    Payment: [Buyer] shall pay 20% of the price within seven days after the conclusion of the Contract, and pay the remaining 80% by D/P (documents against payment);
 
   -    Delivery: FOB;
 
   -    Shipping fee: [Seller] shall make this payment in advance for the [Buyer].

According to Article 14 of the CISG, the Contract is legally valid and binding on the parties.

3. The performance of the Contract and the determination of responsibility

The [Seller]'s main obligation is to deliver conforming goods to the [Buyer] and the [Buyer]'s main obligation is to make payment to the [Seller].

The Arbitration Tribunal ascertained the following facts based on the evidence submitted by the [Seller] and the court session:

   (1)  The [Buyer] and the [Seller] entered into an international sale of goods contract for the sale of strollers and diapers, and the [Seller] has delivered the goods to the destination port based on the [Buyer]'s purchase order.
 
   (2)  After the first two purchase orders were performed smoothly, on 28 October 1998, the [Buyer] faxed the third purchase order No. BM98-0530 to the [Seller] for purchase of the goods at a price of US $95,625. Based on this purchase order, the [Seller] delivered the goods with a value of US $95,625 to ___ Rio de Janeiro, Brazil, as designated by the [Buyer]. As corroborated by a number of corresponding faxes between the two parties and the letter issued by the [Seller] to Bank of China, the [Seller] has fulfilled its obligation to deliver the goods.
 
   (3)   The faxes sent by the [Seller] to Liu, Yi , an employer of the [Buyer] from 2 December 1998 to 25 May 1999 and the reply with comments issued on 30 October 1998 show that the [Buyer] confirmed the third purchase order and has received the goods, but the [Buyer] failed to make payment for this purchase order and the shipping fee paid by the [Seller] in advance, which has breached [Buyer]'s obligation to make payment under the Contract.

Based on the aforesaid facts, the Arbitration Tribunal notes that after the conclusion of the Contract, the first two contracts were completely performed without any problem and that pursuant to Article 5, the payment term in the Contract, on 10 July 1998, the [Buyer] paid the price and the shipping fee for the first and the second deliveries. Based on the third purchase order faxed by the [Buyer] on 28 October 1998, the [Seller] delivered goods with the value of US $95,625 to ___ Rio de Janeiro, Brazil as designated by the [Buyer]. The evidence shows that the [Seller] has fulfilled its obligation to deliver the goods. The [Buyer] has confirmed the third purchase order and has received the goods, but it failed to make payment for the price of the goods and the shipping fee paid by the [Seller] in advance. The [Buyer] has breached its obligation to make payment under the Contract.

4. The [Seller]'s arbitration claims

Article 53 of the CISG stipulates:

"The [Buyer] must pay the price for the goods and take delivery of them as required by the contract and this Convention."

Article 54 of the CISG states:

"The [Buyer]'s obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or nay laws and regulations to enable payment to be made."

Article 61 of the CISG states:

"(1) If the [Buyer] fails to perform any of his obligations under the contract or this Convention, the [Seller] may:

(a) exercise the rights provided in articles 62 to 65;
(b) claim damages as provided in articles 74 to 77."

According to the aforesaid stipulations and the sales agreement between the parties, the Arbitration Tribunal holds that the [Seller] is entitled to have the [Buyer] pay the price under the purchase order and compensate for the loss of the [Seller], so the [Seller]'s claim to request the [Buyer] to pay US $95,625 shall be sustained. Pursuant to the provision in the Contract that the [Seller] shall pay the shipping fee in advance for the [Buyer], the [Seller]'s claim to request the [Buyer] pay the shipping fee of US $4,850 is also supported. However, the [Seller] only provided evidence to prove the shipping fee for the first two deliveries, but did not prove the shipping fee for the third delivery, US $4,850; therefore, the Arbitration Tribunal does not sustain this claim of the [Seller] to have the [Buyer] pay the shipping fee for the third delivery of US $4,850.

The [Buyer] has not paid the price for the goods, so the [Seller] requests the [Buyer] to pay abreach of contract fee for delayed payment of US $24,350. The Arbitration Tribunal notes that the two parties failed to reach an agreement on a contract breach fee. Therefore, this claim of the [Seller] lacks contractual basis and is not sustained.

As to the arbitration fee and the [Seller]'s attorneys' fee, after examining the evidence provided by the [Seller], the Arbitration Tribunal holds that the [Buyer] shall bear the [Seller]'s attorneys' fee of RMB 79,081.88 according to Article 59 of the Arbitration Rules.

The [Seller] shall bear 20% of the arbitration fee and the [Buyer] shall bear 80%.

III. THE AWARD

Based on the above, the Arbitration Tribunal rules that:

   (1)   [Buyer] shall make the payment in arrears of US $95,625;
 
   (2)   [Buyer] shall pay the [Seller]'s attorneys' fee of RMB 79,081.88;
 
   (3)   The arbitration fee in this case is RMB 37,837, of which the [Seller] shall bear 20%, i.e., RMB 7,567.40, and the [Buyer] shall bear 80%, i.e., RMB 30,269.60; the [Seller] has paid RMB 37,837 to the Arbitration Commission in advance, which offsets the entire arbitration fee, so the [Buyer] shall pay RMB 30,269.60 to the [Seller];
 
   (4)   [Seller]'s other claims are dismissed;
 
   (5)   [Buyer] shall pay the aforesaid items 1, 2, and 3 within 30 days of this award.

This is the final award. It shall take effect from the day of this award.

PRESIDING ARBITRATOR: ___; ARBITRATOR: ___

7 July 2003 in Beijing


FOOTNOTES

* For purposes of this translation, Claimant of the People's Republic of China is referred to as [Seller] and Respondent 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 (renminbi) are indicated as [RMB].

** 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 18, 2007
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography