Russia 17 September 2003 Arbitration proceeding 24/2003 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030917r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 24/2003
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (claimant)
BUYER'S COUNTRY: Germany (respondent)
GOODS INVOLVED: Unavailable
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
6A [Choice of law: selection of law of Contracting State equals choice of CISG law of that State]; 78B [Rate of Interest]
6A [Choice of law: selection of law of Contracting State equals choice of CISG law of that State];
78B [Rate of Interest]
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. 31 [186-190]
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
Russian Federation arbitration proceeding 24/2003 of 17 September 2003
Translation [*] by Yelena Kalika [**]
1. SUMMARY OF RULING
1.1 That the parties chose Russian civil law as the applicable law does not preclude the applicability of the CISG which is an international treaty signed by the States where the commercial enterprises of the parties to the contract for the international sale of goods are located. Russian substantive law shall apply as subsidiary law.
1.2 When determining the amount of annual interest in connection with the debt calculated in foreign currency, the Tribunal took into account the information on median interest rates for short-term loans issued in hard currency since the creditor was a Russian firm. [This information was] published in "Vestnik Banka Rossii" ["The Bank of Russia News"].
2. FACTS AND PLEADINGS
The claim was brought by [Seller], a Russian firm, against Respondent [Buyer], a German firm, in connection with non-payment for the goods delivered under a contract for the international sale of goods which was made by the parties on 25 June 2002. The [Seller]'s claims included the payment of the sum in arrears, annual interest for the delay in payment as well as arbitration fees paid.
The [Buyer] has failed to present any explanations in connection with the claims. No representatives of the [Buyer] have appeared before the Tribunal.
3. TRIBUNAL'S REASONING
The award rendered by the Tribunal contained the following main points.
3.1 As to the issue of failure of the representatives of the [Buyer] to appear at the proceeding held by the Tribunal, the Tribunal ascertained that on 7 July 2003 the [Buyer] received notice stating that the hearing would be held on 10 September 2003. This fact is evidenced by a receipt issued by a courier service contained in the materials of the case. In accordance with Articles 12(5) and 28(2) of the Rules of the Tribunal, a party's failure to appear at the proceeding, where such party was duly notified of the time, date and place of the proceeding, does not preclude the arbitration of the case on the merits and the rendering of an award, unless the non-appearing party made a written motion to adjourn the hearing for a good cause shown. Since the [Buyer] was duly notified of the time and place of the hearing and since he made no motions to adjourn the hearing and since the materials of the case are sufficient to arbitrate the dispute on the merits, the Tribunal took into account the position of the [Seller]'s representatives on this issue and found it possible to arbitrate the dispute in the absence of the representatives of the [Buyer].
3.2 The second paragraph of Article 11 of the contract of 25 June 2002 provides the following: "All disputes, disagreements and claims arising from the present contract or in connection with it, including the ones concerning its performance, violation, termination or invalidity, shall be arbitrated by the Tribunal in accordance with its Rules.
In accordance with Article 2 of the Regulations on the Tribunal, which is Appendix 1 to the Russian Federation Law "On International Commercial Arbitration", any disputes following from contractual or other civil relationships arising out of international commercial transactions may be submitted for the arbitration by the Tribunal, if a commercial enterprise of at least one party to the dispute is located abroad.
Since the present dispute arose out of an international commercial transaction between the parties located in different States (Russia and Germany), and since there is a written agreement between the parties to arbitrate disputes related to the contract at the Tribunal, the Tribunal finds that it is competent to arbitrate the present dispute based on Article 7 of the above mentioned Russian Federation Law "On International Commercial Arbitration".
3.3 Turning to the issue of the applicable law, the Tribunal finds that, pursuant to the third paragraph of Article 11 of the contract of 25 June 2002, the parties chose the civil laws of the Russian Federation as the applicable law.
This clause in the contract does not exclude the applicability of the CISG. Pursuant to Article 7 of the Russian Federation Civil Code, [the CISG] takes priority as an international treaty to which both Russia and Germany -- i.e., the States where commercial enterprises of the parties to the dispute are located -- are Contracting States (see Article 1(1)(a) CISG).
Issues not settled in the CISG shall be governed by Russian substantive law as subsidiary law.
3.4 After reviewing the [Seller]'s claim to recover from the [Buyer] the sum of the principal debt, the Tribunal finds that, in accordance with the terms of the contract of 25 June 2002, the [Seller] delivered to the [Buyer] the goods for the total value sought by the [Seller]. [The delivery] is evidenced by the receipts issued by the transportation company on 31 July 2002, 11 August 2002, 7 September 2002 as well as by the customs declarations dated 31 July 2002, 11 August 2002, and 7 September 2002 and by the receipts issued by a forwarding company as proof that it received the goods (FCR).
The [Buyer] has not honored the invoices issued by the [Seller] for the goods delivered.
Notwithstanding the [Seller]'s numerous claims (See claim No. 1-8-4-13 of 15 October 2002 and pre-arbitration reminder No. 1-8-2-53 of 16 December 2002), the [Buyer] has not paid for the goods delivered.
When evaluating such actions of the [Buyer], the Tribunal views them as a unilateral refusal to fulfill an obligation to pay for the goods delivered which is set forth both in the contract and in the law.
The Tribunal also took into account that the [Buyer] failed to submit a reply to the claim. Nor did he contest either the merits or the amount of the claims, although he had every opportunity to do so.
For the above stated reasons and based on Articles 53, 54, 61 and 62 CISG, the Tribunal finds reasonable the [Seller]'s claim to recover the sum of the principal debt from the [Buyer]. The Tribunal sustains [this] claim in full.
3.5 After reviewing the [Seller]'s claim to recover from the [Buyer] annual interest for the delay in payment and taking into account that Article 78 CISG does not set forth the interest rate, the Tribunal applies Article 395 of the Russian Federation Civil Code to the relationships at issue. [Article 395] is being applied as subsidiary law.
In accordance with Article 395 of the Russian Federation Civil Code, in case of using another's funds as a result of a delay in payment, interest must be paid on the sum of such funds used.
If a creditor is a legal entity, the interest rate shall be determined based on the bank interest rate in the place of creditor on the date when the monetary obligation or any relevant part of it was to be performed.
According to the explanation contained in Clause 52 of the Resolution No. 6/8 of 1 July 1996 issued by the Plenum of the Russian Federation Supreme Court and High Arbitration Court, when a [monetary obligation] is stated in foreign currency and when there is no official bank interest rate on loans issued in hard currency on the date when the monetary obligation was to be performed in the place of creditor, such interest rate shall be determined based on the publications in the official media concerning the median bank interest rate on short-term loans in hard currency in the place of creditor.
The [Seller] has presented the calculation of interest for the periods from 15 August 2002, 24 August 2002 and 21 September 2002 to 24 January 2003 at the rate of 10.5% annually. The Tribunal finds reasonable the periods of delay [stated].
Taking into account that when calculating annual interest, the [Seller] used the information published in "Vestnik Banka Rossii" ["The Bank of Russia News"] -- which is the official publication of the Bank of Russia pursuant to Article 7 of the Russian Federation Federal Law No. 86-FZ of 10 July 2002 "On the Central Bank of Russia (Bank of Russia)" -- and in accordance with Article 78 CISG and Article 395 of the Russian Federation Civil Code, the Tribunal grants the [Seller]'s claim of annual interest for the delay in payment from the [Buyer]. [The claim is granted] in the amount sought by the [Seller].
3.6 After reviewing the [Seller]'s claim to recover from the [Buyer] the arbitration fees paid by the [Seller], the Tribunal finds reasonable to recover [such fees] from the [Buyer] based on Article 6(1) of the Regulations on arbitration fees and expenses (Appendix to the Rules of the Tribunal). [According to Article 6(1)], arbitration fees shall be paid by the party against whom the award is rendered.
* This is a translation of data on Proceeding 24/2003, dated 17 September 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. 31 [186-190].
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 Germany 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