Russia 12 August 2003 Arbitration proceeding 176/2002 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030812r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 176/2002
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (claimant)
BUYER'S COUNTRY: Cyprus (respondent)
GOODS INVOLVED: [-]
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
53A [Buyer's obligations: obligation to pay price of goods]
53A [Buyer's obligations: obligation to pay price of goods]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
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. 28 [158-160]
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
Translation [*] by Yelena Kalika [**]
1. SUMMARY OF RULING
1.1 Where one of the parties to a contract for the international sale of goods was located in a State which was not a CISG Contracting State, it was found that the CISG governed the relationships of the parties under this contract since it was set forth in the contract that Russian substantive laws should be applied.
1.2 The amount of damages [calculated pursuant to the penalty clause contained in the contract] were clearly disproportional to the consequences of the breach of [Buyer]'s obligation. However, the [Seller] only claimed a lesser, reduced amount of damages. The Tribunal granted the [Seller]'s claim of damages in the amount sought by the [Seller].
2. FACTS AND PLEADINGS
Claimant [Seller], a Russian firm, brought a claim against a Respondent [Buyer], a Cypriot firm, in connection with non-payment for the goods delivered under a contract for the international sale of goods made by the parties on 24 December 1999. The [Seller]'s claims included the recovery of the sum in arrears, contractual penalties for the delay in payment and arbitration fees paid.
The [Buyer] failed to make any objections in connection with the claim. Nor did his representative appear at the hearing.
3. TRIBUNAL'S REASONING
The award rendered by the Tribunal contained the following main points.
3.1 The competence of the Tribunal to arbitrate the present dispute follows from Clause 10.1 of the contract of 24 December 1999 in which the parties set forth that disputes and disagreements in connection with the contract should be submitted for arbitration to the International Commercial Tribunal at the Chamber of Commerce and Industry of Russia (Moscow) and that the decision of the Tribunal would be final for both parties.
Pursuant to Article 1 of the Rules of the Tribunal, the Tribunal finds itself competent to arbitrate the present dispute.
3.2 The parties chose Russian substantive laws as the law governing their disputes and disagreements under the contract (see Clause 10.1 of the contract). This provision does not exclude the application of international treaties of the Russian Federation. Pursuant to Article 15 of the Russian Federation Constitution and Article 7 of the Russian Federation Civil Code, international treaties of the Russian Federation are a component part of Russia's legal system. Therefore, the CISG governs the relationships between the parties.
3.3 When reviewing the case on the merits, the Tribunal found that the [Seller] fully performed his obligations under the contract as evidenced by the materials of the case, i.e., customs declarations, international waybills, railroad waybills, certificates of origin and certificates of quality of goods. [Such documents] fully prove the fact of delivery. These documents contain references to the contract, certain specifications and amendments to the contract containing the name, brand and quantity of the goods delivered, as well as the price of goods, country of destination and date of delivery. The information contained in the shipping documents, specifications and amendments is identical.
In accordance with Article 53 CISG, it is a buyer's primary obligation to pay the price for the goods delivered to him.
The [Buyer] failed to submit evidence denying the [Seller]'s claims in connection with non-payment for the goods that the [Buyer] received.
In such circumstances, the Tribunal is of the opinion that the [Seller]'s claim to recover the sum in arrears from the [Buyer] should be granted.
3.4 Clause 9.1 of the contract, grants the [Seller] the right to recover from the [Buyer] penalties for the delay in payment of the price of goods in the amount of 300% of the sum in arrears. However, based on the principle of proportionality of liability to the consequences of a breach of one's obligation, the [Seller] agreed to reduce the amount of penalties to 3% of the price of the goods delivered. [This reduction was done] by analogy to similar contracts between the same parties.
3.5 In accordance with Article 6(1) of the Regulations on arbitration expenses and fees (see Appendix to the Rules of the Tribunal), the arbitration fees paid by the [Seller] should be reimbursed by the [Buyer].
* This is a translation of data on Proceeding 176/2002, dated 12 August 2003, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, reported in Rozenberg ed., Arb. Praktika (2003) No. 28 [158-160].
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 [Seller] and Respondent of Cyprus is referred to as [Buyer].
** 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.Go to Case Table of Contents