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CISG CASE PRESENTATION

China 10 December 2003 CIETAC Arbitration proceeding (Agricultural tools case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/031210c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20031210 (10 December 2003)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2003/04

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: United States (claimant)

GOODS INVOLVED: Agricultural tools


UNCITRAL case abstract

PEOPLE'S REPUBLIC OF CHINA: China International Economic & Trade
Arbitration Commission [CIETAC] 10 December 2003 (Agricultural tools case)

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/120]
CLOUT abstract no. 1164

Reproduced with permission of UNCITRAL

Abstract prepared by Ashraf Shannak

The claimant (buyer), a United States (U.S.) company, entered into a contract with the respondent (seller), a Chinese company, to buy agriculture picks. Such picks were listed in the U.S. as dumped products. There were only a few Chinese companies whose picks products were exempted from the anti-dumping duty imposed by U.S. customs and the seller’s company was one of them. As a result of that exemption, and based on confirmation from the seller’s manager to the buyer that the seller was familiar with the procedures for exporting picks to the U.S. market, the buyer contracted with the seller. U.S. government procedures called for the filing of an application for anti-dumping review by providing relevant documents within a certain period. After three years of receiving the picks, the buyer received notice from the U.S. customs imposing a 98.77 per cent anti-dumping duty and interest because of not filing the application for review within the time required, and that it was the seller’s obligation to file such an application. The buyer paid the amount and asked the seller for reimbursement, which the seller refused. The buyer applied for arbitration.

The parties had not stipulated the applicable law in their contract. Since the parties had their place of business in two Contracting States of the CISG, and they had not excluded the application of the Convention, the Arbitration Tribunal regarded the CISG as the applicable law according to Articles 1 and 6 of the Convention.

The Tribunal found that the seller had failed to file the application for the U.S. customs authorities on time as agreed between the parties, and that the seller should have been familiar with the procedure, given it had followed it several times before. This had been the practice between the seller and the buyer. Further, filing the application for review was an obligation of the seller. The Arbitration Tribunal did not accept the seller’s argument that filing the application was not a precondition for the conclusion of the contract and that the seller had the right to choose whether or not to file the application afterwards. According to the Tribunal, if the seller could not follow such a procedure it would not be able to have buyers import its products to the U.S. The seller’s experience of exporting to the U.S. market was the main reason the buyer entered into the contract.

The seller further defended that the buyer had not sent notice of the ship’s arrival date. The Arbitration Tribunal stated that the “anti-dumping duty and interest were imposed on the goods … because of the seller’s ignorance and mistakes, which has nothing to do with the buyer’s failure to inform of the arrival date of the ship”. There was no obligation on the buyer to send a notice of the ship’s arrival date to the seller because the contract stipulated a CFR (Cost and Freight) delivery and according to INCOTERMS 2000 the buyer had no such obligation of a notice. Moreover, the contract did not provide that such a notice would be sent and there was no business practice that the buyer should inform the seller about the date of arrival.

The Tribunal held that there was sufficient time for the seller to file the application with U.S. customs within the required time, and, accordingly, it awarded damages to the buyer.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 9 ; 74 [Also cited Article 6 ]

Classification of issues using UNCITRAL classification code numbers:

9C [Practices established by the parties];

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

Descriptors: Usages and practices ; Damages ; Foreseeability of damages

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

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

Agricultural tools case (10 December 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. 99TAC-F59184C signed by Claimant [Buyer], America __ Co., Inc., and Respondent [Seller], China Tianjin __ Import & Export Company, on 9 December 1999; and
 
   -  The written arbitration application submitted by [Buyer] on 8 August 2003.

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

Since the disputed amount is less than renminbi [RMB] 500,000, pursuant to the Arbitration Rules, this case is qualified to apply the summary procedure, and related provisions in the Arbitration Rules shall be applied when there is no stipulation in the summary procedure.

On 8 September 2003, the Secretariat of the Arbitration Commission sent the arbitration notice and the attachment to both parties via express mail.

Because the parties failed to jointly appoint or ask the Chairman of the Arbitration Commission to appoint the Presiding Arbitrator, According to Article 65 of the Arbitration Rules, the Chairman of the Arbitration Commission appointed __ as the Presiding Arbitrator on 28 September 2003 to form the Arbitration Tribunal to hear this case. Later, the Secretariat of the Arbitration Commission informed the parties of the formation of the Arbitration Tribunal, to which neither party raised objection.

The Secretariat of the Arbitration Commission had scheduled a court session on 27 October 2003. Both parties requested a postponement and the court session was postponed to 11 November 2003. Before the court session, the Secretariat of the Arbitration Commission sent notices to both parties, requesting them to bring the original evidence to the court session for verification.

On 11 November 2003, the Arbitration Tribunal held a court session in Beijing. Both parties sent agents to attend. The [Seller] submitted its defense prior to the court session. The Secretariat of the Arbitration Commission handed it over to the [Buyer]. The two parties confirmed the material forwarded by the Secretariat of the Arbitration Commission, answered the Arbitration Tribunal's questions, and presented arguments and verifications.

As to the [Seller]'s name, the Arbitration Tribunal notes that in the [Buyer]'s arbitration application, the [Seller]'s name was indicated as "Tianjin __ Import & Export Group Company"; however, in the [Seller]'s defense and the entrustment letter received by the Arbitration Tribunal on 11 November 2003, it was indicated as "Tianjin __ Import & Export Company." On 24 November 2003, the Secretariat of the Arbitration Commission sent letters to the two parties, requesting them to explain the relationship between "Tianjin __ Import & Export Group Company" and "Tianjin __ Import & Export Company" with supporting evidence.

On 24 November 2004, the [Seller] replied via fax, stating:

"Due to a change in the structure of the company, on 12 November 2001, based on Official Document No. (2001) 16 issued by the Tianjin Municipality People's Government Economic Structure Reformation Office and Tianjin Economic and Trade Commission, approval was granted for our company to change its name from the original "Tianjin __ Import & Export Group Company" to "Tianjin __ Import & Export Company."

Together with the fax, the [Seller] submitted copies of the aforesaid document and its business license with the registered name, "Tianjin __ Import & Export Company".

On 25 November 2003, the Secretariat of the Arbitration Commission faxed the aforesaid document and the attachment submitted by the [Seller] to the [Buyer], requesting it to confirm the [Seller]'s name in writing. On the same day, the [Buyer] replied to the Arbitration Commission, alleging, "we have received the documents regarding the change of the [Seller]'s name, and we agree to and accept this change."

On 21 November 2003, the Secretariat of the Arbitration Commission received the [Buyer]'s representation statement dated 18 November 2003 and on 25 November 2003, the Secretariat of the Arbitration Commission received the [Seller]'s defense dated 11 November 2003. Later, the Secretariat of the Arbitration Commission forwarded the aforesaid documents to each party, respectively, requesting the two parties to submit opinions within the stipulated time.

On 1 December 2003, the Secretariat of the Arbitration Commission received the representation statement submitted by the [Seller]; on 2 December 2003, the Secretariat of the Arbitration Commission received the [Buyer]'s "supplementary defense and evidence regarding the dispute under the Contract." Both parties made statements and submitted written verification on the supplementary material submitted by the opposite party after the court session. These documents were forwarded by the Secretariat of the Arbitration Commission to each party, respectively.

This case has been concluded. The Arbitration Tribunal handed down this award based on the facts confirmed at the court session, the written material submitted by the two parties, and the relevant law.

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

I. FACTS (POSITION OF THE PARTIES)

[Buyer]'s position

The [Buyer] alleges that:

On 9 December 1999, the [Buyer] and the [Seller] signed Contract No. 99TAC-F59184C (hereafter, the "Contract") for the sale of agricultural picks. Since such picks from China were listed in the United States as dumped products, there were only a few companies whose picks were exempted from anti-dumping duty. According to the U.S. regulations, picks, which are exported to the U.S. in each transaction, are to be reviewed each year. If there is any problem during the review, a 98.7% anti-dumping duty and interest will be imposed.

The [Seller] had nine years of experience in filing review applications and was familiar with the entire procedure and each requirement and the consequence of failing to apply for review. In addition, when the two parties were negotiating their Contract, the [Seller] mentioned that it had once made a mistake in filing its application with the U.S. Department of Commerce (hereafter, the "DOC") and suffered severe losses. Because of [Seller]'s familiarity with the procedure, the [Buyer] chose to purchase the goods from the [Seller].

The goods under the Contract in this case left Tinajin port on 13 January 2000 and arrived at the destination port in the U.S. on 31 January 2003. On 31 January 2003, the [Buyer] filed its U.S. customs declaration and the U.S. customs decided not to impose anti-dumping duty according to the regulations. Those goods passed through customs smoothly.

In April 2000, according to the U.S. regulations, the goods should be reviewed. At that time, the [Seller] informed the [Buyer] that it had already filed a review application with the relevant agencies in the U.S. And when the [Buyer] inquired on this for the second time, the [Seller] replied that "the entire deliveries have been declared, don't worry." However, in April 2003, the [Buyer] received a notice from the relevant U.S. agency, stating that due to the [Seller]'s failure to file the application with the U.S. agency, review was impossible, and this case had to be processed separately imposing a 98.77% anti-dumping duty and interest, totaling US $12,636.99.

The [Buyer] immediately contacted the [Seller] and the [Seller] replied, "The goods delivered by the ship on 13 January 2000 and the goods delivered after that have been declared, no need to worry." Later, the [Buyer] requested the [Seller] to fax to it the application material or the documents to prove that the [Seller] had filed the application. The [Seller] sent a letter to Mr. __ in [Seller]'s office in America asking him to fax the aforesaid material to the [Buyer]. However, Mr. __ replied:

"This transaction should have been declared in the ninth review conducted from 1 February 1999 to 31 January 2000, and the application material for the ninth review should have been submitted during the period of February 2000 to May 2000. However, your department failed to submit. ... It was not until May 2000, when the DOC processed the tenth review, that this case was discovered. At that time, we did not know that the goods which arrived on 31 January 2000 should have been declared in the ninth review until our clients informed us. As matters now stand, this transaction was not included in the tenth review and the final decision of the ninth has been made, which means this transaction cannot be put back into the ninth review. Therefore, the DOC has made a decision to impose the China-wide duty rate of 98.77% plus interest. Your clients shall pay the aforesaid anti-dumping duty and interest, for which you should be liable. ..."

However, Mr. Liu Chunyuan, the employee of the [Seller], alleged that it was the [Seller]'s representative office in the U.S. which forgot to file the application, and mistakenly applied for the tenth review, which caused the problem in this case. Regardless, it is the [Buyer]'s position that, no matter whether it was a failure of the [Seller]'s representative office in the U.S. or its office in Tianjin, it was the [Seller]'s mistake. Because the [Seller] was unable to provide evidence showing that it had filed the application before the deadline stipulated by the U.S. customs, in order to mitigate the loss and avoid further penalty, the [Buyer] paid the aforesaid duty and interest with the agreement of the [Seller]. Later, the [Buyer] sent a letter to the [Seller] on 11 April 2003 informing of the situation and claiming for compensation. The [Seller] only agreed to try to apply for the next review, but failed to respond to the compensation issue. Moreover, the [Seller] denied that it had promised the [Buyer] to make compensation. Later, the [Buyer] contacted the [Seller] repeatedly with no result. Therefore, the [Buyer] filed this arbitration application, requesting the Arbitration Tribunal to rule that:

  1. The [Seller] shall compensate the [Buyer] for the loss of US $12,636.99, which was caused by the [Seller]'s mistake;
  2. The [Seller] shall bear the case processing fee and traveling fee of RMB 10,000;
  3. [Seller] shall bear the entire arbitration fee.

[Seller]'s defense

Regarding the [Buyer]'s aforesaid statement and arbitration claims, the [Seller] presents the following defense:

1. Following the instructions of the DOC, the U.S. customs imposed an anti-dumping duty on the [Buyer], who is the importer in this case. Based on the U.S. law, the importer is obligated to pay the anti-dumping duty. In the instant case, as the importer, the [Buyer] has paid the duty to the U.S. customs, which indicated that the [Buyer] was the person to pay the anti-dumping duty;

2. It is true that during the eighth review (from 1 February 1998 to 31 January 1999) of picks exported to the U.S. conducted by the U.S. DOC, only a 1.00% anti-dumping duty was imposed on the [Seller]; however, this was not a precondition for the two parties to conclude the Contract. In fact, during the negotiation and discussion process prior to the conclusion of the Contract, the two parties had never discussed the anti-dumping duty issue. The [Buyer] had never inquired aboout anything regarding this issue and the [Seller] had never promised and was unable to promise or guarantee anything to the [Buyer]. As a professional trade company specializing in exports, the [Buyer] should have been aware that each year the U.S. government conducts a review on the products which it has investigated and confirmed as dumped products, and determines the anti-dumping duty accordingly.

Even though it was decided in the review conducted last year that a symbolic anti-dumping duty would be imposed on the goods, for those goods which have not been exported, how could the [Buyer] assume and confirm that the the same symbolic anti-dumping duty would be imposed on the goods in the review conducted by the DOC the next year? -- which means the anti-dumping duty would be equal to or lower than 1.00%? Moreover, the [Seller] is entitled to choose whether or not to apply for the annual review. Therefore, the [Buyer] should have been aware that an anti-dumping duty might be imposed on the goods under the Contract in this case by the U.S. and that it should bear that risk.

3. The [Seller] decided to apply for the ninth review on picks imported to the U.S. conducted by the U.S. DOC (from 1 February 1999 to 31 January 2000) and submitted materials accordingly. This was a cooperative assistance performed by the [Seller] in accordance with the procedures stipulated in the U.S. anti-dumping law, but not an obligation under the Contract in this case. In fact, in the ninth and the annual reviews conducted afterwards, the [Seller] performed its cooperative assistance by retaining attorneys in the U.S. and submitting the entire export documents regarding the goods under the Contract exported to the U.S. in the year of review, including the contracts and purchase orders, export receipts, packing lists, Bills of Lading, shipping fee invoices, assets and debt lists of the domestic manufacturers, profit and loss statements, gas, water, and electric bills without any omission or mistake.

It should be mentioned specifically that after a careful investigation, it was found that the contract goods in this case arrived at the port in the U.S. on 31 January 2000, which was the last day of the ninth review. Without being informed of the exact arrival date by the [Buyer], the [Seller] included the contract goods in this case in both the ninth and the tenth review applications. However, the DOC did not include the contract goods in this case in the ninth review, requesting the [Buyer] to pay anti-dumping duty and interest. This was not caused by the [Seller]. As a special duty imposed by the importing State, the [Buyer] should have foreseen and should bear that duty, which is not a loss as alleged by the [Buyer]; in addition, this duty has no direct or indirect connection with the cooperative assistance performed by the [Seller] with the DOC.

[Buyer]'s rebuttal

Regarding the [Seller]'s aforesaid defense, the [Buyer] makes the following arguments:

1. The [Seller] alleges that the anti-dumping duty was imposed on the [Buyer] because the DOC found that the contract goods in this case had not been reviewed; therefore, the [Seller] shall be exempted of liability.

This allegation of the [Seller] is completely wrong. The truth is that the anti-dumping duty was imposed on the [Buyer] three years after importing the goods because the [Seller] insisted that it had filed the application for review, but it actually failed to do so, with no other reasons. It was the [Seller]'s fault not to file the application because the [Seller] was one of the few companies which was exempt from the anti-dumping duty on the contract goods in this case and was required to apply for annual review conducted by the DOC. Because of this, the importers should not pay the anti-dumping duty.

The [Seller] alleges that it has performed its obligation during the ninth review and did nothing wrong; however, the fact is that the [Seller] miscalculated the time. The [Seller]'s allegation that the [Buyer] failed to inform the [Seller] of the arrival time of the goods has no basis.

The goods were delivered on 13 January 2000; the period for filing review application is from February to May, which is stipulated by the DOC. According to the [Seller]'s statement, it had filed the application on time, and the [Seller] had never inquired with the [Buyer] about the ship's arrival time. The [Seller]'s American office miscalculated the time, failing to apply for the ninth review, but applied for the tenth. In May 2002, when the DOC reviewed the tenth application, it was found that this transaction should have been filed for the ninth, not the tenth review, which was a misapplication. It was not until then that the [Seller]'s American office started to check when the goods arrived at the destination port and accused the [Seller]'s Tianjin office of failing to submit the material. Therefore, it can be concluded that the [Seller] caused the aforesaid damages and that the [Seller] should be liable.

2. In order to import the picks, the [Buyer] made careful investigations. Based on the public record of the U.S. customs and the investigations, and after confirming with the [Seller], the [Buyer] negotiated with Ms. __, the manager of the agriculture tools department of the [Seller], who introduced the procedure for exporting picks to the U.S. Meanwhile, she informed the [Buyer] that the [Seller] was required to file an export application for each transaction and that even though the quantity of picks the [Seller] exported to the U.S. was not so large, it was very troublesome to apply for review every year; however, the [Seller] had to do so in order to keep the preferential treatment. Ms. __ also said via telephone that the [Seller] made mistakes in one application, suffering severe damages.

The [Seller] has applied for review nine times, which is indicated in the [Seller]'s defense. Therefore, the [Seller] was well aware of the entire procedure, requirements, and practices for exporting the goods to the U.S. and also knew the consequences if the [Seller] failed to file the review application in accordance with the requirements stipulated by the DOC and its responsibilities and obligations. The two parties signed their Contract based on these practices, recognizing the review applications. As to the transactions conducted afterwards, the contracts were signed based on the form of the first contract without mentioning this issue. However, during the performance of the contracts, the [Seller] filed the review application based on the usual practices.

The practices have two meanings: one is that the [Seller] did the same thing for export transactions with other purchasers, which means that before the transaction conducted with the [Buyer], the [Seller] had applied for nine review applications; the other is that the [Seller] followed the practices during the transactions between the two parties from December 1999 to December 2002. Therefore, the practices should be regarded as part of the Contract and the [Seller] breached the Contract by making mistakes in application.

3. It is true that there is a risk of anti-dumping duty being imposed on the import of agricultural picks from China, because the U.S. DOC may or may not approve exemption during the review. If the [Seller] makes mistakes or omits something when filing the application, as in the instant case, the DOC will not approve or will be unable to process the application and an anti-dumping duty and interest will be imposed. This risk should be borne by the [Seller] because the [Seller] made mistakes, which had nothing to do with the [Buyer].

4. As to the focus and causal relationship issues, this case has just one focus, which is whether the [Seller] has made mistakes during the review application process. If it has made mistakes, the [Seller] should be liable for the compensation. This can be demonstrated by the time of occurrence. The import application for the contract goods was filed with the U.S. customs on 31 January 2000. The entire documents were prepared by the [Seller] (including B/L, invoice, and packing list). After investigation by the U.S. customs, the goods exported by the [Seller] were exempted of anti-dumping duty; therefore, the [Buyer] imported the goods without paying any anti-dumping duty. Later, the [Seller] informed the [Buyer] that as usual, it had already applied for review. No anti-dumping fees had been paid for transactions conducted afterwards since the [Seller] applied for review following business practices. As for the goods in this case, it was not until the beginning of April 2003 that the [Buyer] received a notice from the DOC and the U.S. customs, explaining the reason for imposing an anti-dumping duty as that the [Seller] failed to file a review application in accordance with the DOC requirements (missed application), with the result, that the goods in this case could not be reviewed and that the goods were deemed dumped goods which were subject to anti-dumping duty and interest.

Later, the representative of the [Seller], Mr. __, in a letter, stated that the reason for this mistake was that the [Seller] failed to file the application for the ninth round, but mistakenly applied for the tenth round, admitting that it was the [Seller]'s internal responsibility. Due to the misapplication or wrongful application, the [Seller] lost its right and opportunity for review and this causal relationship is obvious.

Regarding the supplementary evidence submitted by the [Buyer] after the court session, attachments 14 and 15, two telephone records, which the [Buyer] stated in its representation statement dated 27 November 2003, and the statement made by the [Seller]'s employee and arbitration agent, which were quoted in the [Buyer]'s representation statement, were provided by the [Buyer] unilaterally, which were not in accordance with the facts and shall not be admitted as evidence.

Regarding the [Seller]'s supplementary evidence submitted after the court session, the [Buyer] alleged the "opinions on the [Seller]'s supplementary defense and evidence" dated 29 November 2003, i.e., evidence 1 and 2, and the documents sent by Mr. __ of the [Seller]'s U.S. office to the Tianjin office, asking the Tianjin office to check the countries of the shipping companies that delivered the goods to the U.S. in 1999 and 2000, cannot prove whether the application to review the goods in this case has been filed, nor can they prove when the application has been filed, or filed for the ninth or the tenth review. If the application had been filed, there would have been a formal application form and a receipt date issued by the DOC.

II. OPINION OF THE ARBITRATION TRIBUNAL

1. Applicable law

The [Buyer]'s place of business is in the U.S., and the [Seller]'s in China. The two parties did not stipulate the applicable law in the Contract. Because both China and the U.S. are Contracting States of the CISG, and the two parties did not exclude the application of the CISG in the Contract, according to Articles 1 and 6 of the CISG, the Arbitration Tribunal holds that the CISG shall be the applicable law.

2. Facts ascertained by the Arbitration Tribunal

      1. Based on the fax sent by __, the employee of the [Seller], to Mr. __ of the [Seller]'s U.S. office on 8 April 2003, Mr. __'s reply on the same day and the fax sent by __ Agency Inc. (___ Brokers), the customs agent, to the [Buyer], it was ascertained that the contract goods, picks, were determined to be dumped products by the DOC. However, because the [Seller] responded to the lawsuit when the U.S. was investigating whether its contract goods were dumped products, the [Seller] was exempted from the 98.77% anti-dumping duty. However, the [Seller] was required to file an application for review by providing relevant documents and material for each transaction within the period stipulated by the DOC and by following DOC's procedure. The application for the contract goods in this case should have been filed during the ninth review. However, the [Seller] missed the application with the result that a 98.77% anti-dumping duty and interest was imposed on the [Buyer] by the DOC.

Regarding the application for review, Mr. __ stated in his reply letter that:

"It is true that the goods under the Contract in this case arrived at the destination port on 31 January 2000, which should have been included in the ninth review application conducted from 1 February 1999 to 31 January 2000, and that the documents for the ninth review should have been submitted from February to May 2000. However, your department (the Agriculture Department of the [Seller] - note by the Arbitration Tribunal) did not provide any documents. The application was not found in the tenth review. It was not until May 2000, when the DOC was investigating the tenth application, that this transaction was discovered."

The reply by Mr. __ of the [Seller] can prove that the application for the contract goods in this case should have been filed for the ninth application. However, the [Seller] failed to do so. As to the reason, whether the [Seller]'s Agriculture Department failed to provide documents to Mr. __, or Mr. __ failed to file the application, the Arbitration Tribunal notes that it is the [Seller]'s internal reason. This can be further proved by the fax sent by __ Agency Inc. to the [Buyer], stating that "Mr. Manning of the DOC told me that Tianjin Machinery did not report the sale of picks to the U.S. government as required, so the DOC instructed the customs to liquidate the entry at 98.77%."

      2. Based on the document issued by the United National Bank, the [Buyer] has paid the anti-dumping duty and the interest to the U.S. customs, totaling US $12,636.99, on 9 April 2003.

3. [Buyer]'s arbitration claims

      1. The Arbitration Tribunal accepts the first claim of the [Buyer], which is to request the [Seller] to pay to the [Buyer] US $12,636.99, the damages suffered by the [Buyer] for the following reasons:

            (1) Until the dispute arose in this case, the [Seller] had filed applications for review ten times which exempted the importers in the U.S. from the anti-dumping duty of 98.77%. This has been a trade practice between the [Seller] and the [Buyer].

            (2) Filing the application for review is an obligation of the [Seller]. The [Seller] argued that filing the applications for was not a precondition for the conclusion of the Contract in this case and that the [Seller] had the right to choose whether or not to apply for review afterwards. The Arbitration Tribunal does not accept this allegation of the [Seller] because in international business, every buyer knows the consequences if the seller is unable to guarantee to file an application for review in order to be exempted from the anti-dumping duty, and no one will purchase dumped products at such a high price to suffer losses. Similarly, if the [Seller] does not apply for review, it would be difficult to export its products to the U.S. Why would the [Seller] choose not to file the application for review?

In the instant case, the [Buyer] expressed repeatedly that in order to import the contract goods in this case, the [Buyer] had made investigations, knowing relevant information on anti-dumping and review applications. The Arbitration Tribunal understands and believes that the investigation conducted by the [Buyer] prior to the import was a normal and reasonable act of a professional importer. Meanwhile, the Arbitration Tribunal holds that it is a trade practice to apply for review when picks are imported to the U.S., which constitutes an implied term of the Contract. This is the [Seller]'s contractual obligation, not simply a cooperative assistance as alleged by the [Seller].

            (3) An anti-dumping duty and interest was imposed on the goods under the Contract in this case because of the [Seller]'s ignorance and mistakes, which has nothing to do with the [Buyer]'s failure to inform of the arrival date of the ship. The DOC imposed an anti-dumping duty and interest on the [Buyer] because the contract goods were not found in the ninth review, not as alleged by the [Seller] that it fulfilled its duty of cooperative assistance by filing the application for both the ninth review and the tenth.

Based on the facts ascertained by the Arbitration Tribunal, the [Seller] failed to file the application for the ninth review, which is an objective fact. It was the fault of the [Seller] whether the anti-dumping duty and interest imposed by the DOC was caused by the fact that the [Seller]'s Agriculture Department failed to provide documents to its U.S. office, or by the fact that the [Seller]'s U.S. office forgot to file the application. The evidence provided by the [Seller], an e-mail sent by its attorney in the U.S., cannot prove that a review application was filed for the contract goods in this case and that the problem was caused by the DOC.

Moreover, filing an application for review and the preparation of relevant documents are the duties of the [Seller] as an applicant. The [Seller] failed to file the application for the ninth review, which was not caused by the [Buyer]'s failure to inform of the ship's arrival date.

      First, the delivery term stipulated in the Contract is CFR. According to INCOTERMS 2000, the [Buyer] has no obligation to send notice regarding the ship's arrival date.

      Second, the two parties did not stipulate in the Contract and there is no such business practice that the [Buyer] should inform the [Seller] of the ship's arrival date. The faxes provided by the [Seller], which indicated that some importers had informed the [Seller] of the arrival dates of the ships, cannot prove that it is a general practice.

      Third, the [Seller] failed to provide evidence showing that during the application period, the [Seller] had asked the [Buyer] to provide the ship's arrival date and that the [Seller] missed the application period due to the [Buyer]'s failure to provide such a date. The fact is that the ship arrived on 31 January 2000 and that the ninth application submission period was from February to May 2000 (see Mr. __'s letter). It is impossible that the [Seller] was unable to know the arrival date of the ship within such a long period of time.

      2. As to the [Buyer]'s second arbitration claim, i.e., requesting the [Seller] to bear the [Buyer]'s business expenses and traveling fee of renminbi [RMB] 10,000, according to Article 59 of the Arbitration Rules, the Arbitration Tribunal holds that it is reasonable for the [Seller] to compensate the [Buyer] for the expenses incurred for processing this case, i.e., RMB 5,000.

4. Arbitration fee

The [Seller] shall bear the arbitration fee entirely.

III. THE AWARD

The Arbitration Tribunal rules that:

      (1) [Seller] shall pay US $12,636.99 to the [Buyer];

      (2) [Seller] shall pay US $2,398 to the [Buyer] as case processing fee;

      (3) The arbitration fee for this case is US $2,298, which shall be borne by the [Seller] entirely. The [Buyer] has paid the aforesaid amount in advance; therefore, the [Seller] shall pay US $2,298 to the [Buyer];

The [Seller] shall pay the aforesaid amount within 30 days of the effective date of this award; otherwise, 5% annual interest rate shall be added to US $ and 2.1/10,000 daily interest rate shall be added to RMB payment.

This is the final award, which becomes effective as the date of this award.

SOLE ARBITEATOR: _____

10 December 2003 in Beijing


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the United States is referred to as [Buyer] and Respondent of the People's Republic of China is referred to as [Seller]. 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.

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