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CISG CASE PRESENTATION

Serbia 15 January 2004 Foreign Trade Court attached to the Serbian Chamber of Commerce (Cast, sewage framed covers and climbing irons case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040115sb.html]

Primary source(s) of information for case presentation: Text of award

Case Table of Contents


Case identification

DATE OF DECISION: 20040115 (15 January 2004)

JURISDICTION: Arbitration ; Serbia

TRIBUNAL: Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: T -22/03

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Serbia and Montenegro (Claimant)

BUYER'S COUNTRY: Hungary (Respondent)

GOODS INVOLVED: Cast, sewage framed covers and climbing irons


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 59 ; 78

Classification of issues using UNCITRAL classification code numbers:

59A [Payment due at time fixed or determinable by contract or Convention];

78A ; 78B [Interest on delay in receiving price or any other sum in arrears ; Rate of interest]

Descriptors: Payment of price ; Interest

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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 (Serbian): Click here for Serbian text of case

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: [2009] Vladimir Pavić, Milena Djordjević, Application of the CISG Before the Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce - Looking Back at the Latest 100 Cases, 28 Journal of Law and Commerce 1, 15

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Case text (English translation)

Queen Mary Case Translation Programme

Foreign Trade Court of Arbitration Attached to the Serbian Chamber of Commerce in Belgrade

Award of 15 January 2004 [Proceedings No T-22/03]

Translation [*] by Snezana Dabic

Edited by Milena Djordjevic, LLM and Marko Jovanovic

Claimant (Serbia and Montenegro) [Seller] v. Respondent (Hungary) [Buyer]

The Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce in Belgrade in the proceedings conducted by X as a sole arbitrator, in legal issue between Claimant [Seller] from Serbia and Montenegro and Respondent [Buyer] from Hungary, for payment of the principal debt in the amount of EUR 33,747.91 with interest and compensation for the costs of the proceedings, upon the conducted arbitration proceedings and hearing held on 15 January 2004, pursuant to Article 47 of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (hereinafter, the Rules), on the same day makes the following

AWARD

1.    [Seller]'s claim is granted and [Buyer] is ordered to pay to [Seller] the amount of EUR 33,747.91 for principal debt on the basis of the contract for sale of 11 August 1997 and Annex no. 1 of 19 March 1999, Annex no. 2 (non-dated) and Annex no. 3 of 6 July 1999 of the same contract of sale, within 15 days from the day of receipt of the Award, subject to court enforcement in case of non-payment.
 
2.    [Buyer] is ordered to pay to [Seller] interest for the amount of EUR 33,747.91, at the discount rate of the European Central Bank, starting from 30 June 2000 until final payment, all subject to court enforcement in case of non-payment.
 
3.    [Buyer] is ordered to pay to [Seller] the amount of RSD 116,563.50 as compensation for costs of the arbitral proceedings within 15 days from the day of receipt of the Award, subject to court enforcement in case of non-payment.

STATEMENT OF REASONS

Jurisdiction, composition and the appointment of the sole arbitrator

A claim arose from the contract for sale concluded on 11 August 1997, commercial invoices, bills of lading and international waybills related to delivery of castings in dimensions and specifications determined in the Contract and Annexes.

[Seller] submits the Statement of Claim on the basis of the Contract of 11 August 1997 and Annex no.1, Annex no. 2 and Annex no. 3 attached thereto. As far as the jurisdiction of the Foreign Trade Court of Arbitration is concerned, [Seller] relies upon Article 10 of the Contract.

[Seller] submitted the Statement of Claim to the Court of Arbitration on 16 May 2003 and as required by the Rules, paid the registration fee and arbitration fee.

In a letter of 23 September 2003 the Court of Arbitration notified [Buyer] that [Seller] initiated proceedings against it before the Foreign Trade Court of Arbitration and forwarded to [Buyer] the Statement of Claim with enclosed evidences, instructing it, in accordance with the Rules, to submit an Answer to the Statement of Claim within 30 days. At the same time [Buyer] was notified, pursuant to Article 26(1) of the Rules, that the dispute would be solved by sole arbitrator. Therefore, [Seller] and [Buyer] were advised to agree on the appointment of the sole arbitrator within 30 days. Pursuant to Article 25(5) of the Rules, the proceedings will nevertheless proceed if [Buyer], being duly summoned, fails to submit an Answer to the Statement of Claim or refuses to take part in the proceedings.

On 23 September 2003, the Court of Arbitration acknowledged the receipt of payment of the arbitration fee to [Seller]. The Court of Arbitration also informed [Seller] about forwarding the Statement of Claim with its supplements to [Buyer] and instructed it to appoint a sole arbitrator together with [Buyer], pursuant to Article 27(1) of the Rules, or to leave the appointment to the president of the Court of Arbitration.

On 3 October 2003, [Seller] notified the Court of Arbitration of leaving the appointment of the sole arbitrator in this dispute to the President of the Court of Arbitration. Consequently, in submission no. T-22/03-9 of 6 October 2003, the Court of Arbitration informed [Buyer] of [Seller]'s position and forwarded [Seller]'s notification as an enclosure to the submission no T-22/03-9.

On 10 October 2003 [Seller] acknowledged the receipt of submission no. T-22/03-9 in a reply to the Court of Arbitration and announced that it would send its position regarding [Seller]'s claims by fax, upon checking its business records. In accordance with this announcement, [Buyer] submitted an Answer to the Statement of Claim on 14 October 2003.

The President of the Court of Arbitration, in a Decision on the appointment of sole arbitrator of 16 October 2003, appointed X as sole arbitrator in this dispute, pursuant to Article 26(1) of the Rules, since the value of the claim was less than USD 70,000 and since the parties had failed to reach an agreement within a reasonable period on a person to act as a sole arbitrator, as required by Article 27(3) of the Rules. On 24 October 2003, the sole arbitrator was notified of his appointment and he accepted his duty in this dispute.

The parties were informed about the appointment in a notice of 1 December 2003 and that the sole arbitrator, pursuant to Article 34(6) of the Rules, scheduled the hearing for oral argument for 15 January 2004. The parties were summoned to appear at the hearing, with a note that, pursuant to Article 36(6) of the Rules, the hearing will be held even in their absence, if they were duly summoned.

Applicable Substantive Law

In determining the law to the subject-matter of the case, acting pursuant to Article 46(2) of the Rules, the sole arbitrator decided to apply the UN Convention on Contracts for the International Sale of Goods in Vienna of 11 April 1980 (hereinafter: the CISG).

Namely, Article 1(1) of the CISG provides that:

"This Convention applies to contracts of sale of goods between parties whose places of business are in different States:

a) When the States are Contracting States;"

The sole arbitrator notes that Serbia and Montenegro and Hungary are both Contracting States of the CISG.

Having applied the CISG to the case at hand, the sole arbitrator finds that the legal basis for [Seller]'s claim for payment of the purchase price in Article 59 which states:

"The buyer must pay the price on the date fixed by or determinable from the contract and this Convention, without the need for any request or compliance with any formality on the part of the seller."

The sole arbitrator finds the legal basis for [Seller]'s claim for the interest for delay in payment in Article 78 of the CISG which states:

"If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under Article 74."

The reasoning of the sole arbitrator

The contract of sale with its annexes was concluded between [Seller] and [Buyer]. During this business relationship [Seller] has issued the following invoices which oblige [Buyer] to pay EUR 33,747.91.

Invoice no. Bill of lading no. DEM (converted into EUR)
12/10057/99
-26.1.00
2407
-27.1.00
24,681.90 11,085.78
12/A-10057/99
-22.2.00
12993
-22.2.00
20,866.95 10,669.10
15/10057/99
-16.5.00
12999
-16.5.00
20,658.24 10,562.39
16/10057/99
-30.5.00
13004
-30.5.00
2,798.10 1,430.64

The subject-matter of the contract of 11 August 1997 (hereinafter: the Contract) was the delivery of the total of 1000 tons of cast, sewage framed covers and climbing irons, in accordance with the specification. Pursuant to Article 9 of the Contract, the parties allowed for modifications of the Contracts by subsequent agreements in form of written annexes, which will be deemed integral parts of the Contract. In the same Article the parties also provided that the Contract was to be considered "…a basic contract…".

Before the dispute arose, last modifications of subject-matter, terms, prices, including the method of payment were made by the parties in the Annex no. 3 of 6 July 1999. [Seller] was performing its obligation to deliver goods by installments until 16 May 2000. As of 16 May 2000 [Seller] stopped delivering goods since [Buyer] failed to fulfill any of its obligations regarding the timely payment of the price for delivered goods.

Under Article 7 of the Contract, the parties provided for equal installments "Ex Works", Incoterms 1990. [Seller]'s and [Buyer]'s rights and obligations are formally defined by the aforementioned agreement, as codified by the International Chamber of Commerce in Paris. Namely, [Seller]'s primary obligation is to deliver the goods and send the invoices, while [Buyer] is obliged to pay the price in the manner determined by the Contract.

[Seller] is also obliged to put the goods at [Buyer]'s disposal in the place designated by the Contract (in this case, that was [Seller]'s warehouse). This obligation corresponds to [Buyer]'s obligation to take over the delivered goods.

It is established that [Buyer] indeed took over the goods in accordance with the agreed equal installments, drawing the waybills out by the freight-forwarded in time and manner as stated in those waybills.

Pursuant to the Contract, namely Article 8 of the Annex no.3, payment is to be made within 30 days from the day in which the goods were customs cleared for export. [Buyer] failed to perform its obligation to pay the purchase price within the period provided by the Contract.

In its Answer to the Statement of Claim, submitted on 14 October 2003, [Buyer] asserted that the castings were produced only by model-tools it had supplied, while some models needed to be adjusted in order for the castings to comply with the sales terms. The costs of adjustment of the models are specified in [Buyer]'s submissions of 18 June 1998, 26 August 1998 and 16 February 1999. [Buyer] further asserts that it incurred costs in the amount of EUR 29,747.41 for starting and maintaining the production line by delivering and adjusting the model-tools pursuant to Article 5 of the Contract.

Article 5 of the Contract states: "Model-tools for production are to be supplied by [Buyer]. Once the production is completed or in case of avoidance of the Contract, [Seller] is obliged to return the model-tools to [Buyer]. Model-tools must not be misused for production of goods for sale in domestic market, without [Buyer]'s approval."

At the hearing held on 15 January 2004, [Seller] reaffirmed its submissions made in the Statement of Claim.

At the hearing, [Buyer] acknowledged that it had received the goods of quantity and quality described by [Seller] in the Statement of Claim.

[Buyer] also emphasized that it had delivered the model-tools to [Seller] for the purposes of producing the castings (as provided for in Article 5 of the Contract) and that [Seller] started the production of the goods in accordance with the Contract. When [Seller] received the model-tools, it was concluded that the tools needed to be adjusted in order to become suitable for production of the goods as required by the Contract. [Buyer] performed the adjustments, and notified [Seller] of the fact that this intervention had a certain price. During a certain period of time, the business co-operation between the parties was "…honest and fair…" [Seller] was producing and delivering the castings and [Buyer] was paying the purchase price.

However, [Buyer] did not pay for the goods referred to in the Statement of Claim because it considered that it had a counter-claim regarding the delivered model-tools. In the meantime, due to the economic blockade, [Buyer] began to co-operate with other producers, beside [Seller]. Meanwhile, it requested from [Seller] to return the delivered model-tools.

At the hearing, [Buyer] further stated that, in its opinion, the Contract of 11 August 1997 was still valid and that it was ready to continue co-operating with [Seller], but the terms of that co-operation would have to be renegotiated.

The evidence was gathered by reading the documents submitted by [Seller] and [Buyer].

Upon considering all relevant facts of the case, the submissions made in the Statement of Claim and accompanying documents, submissions in the Answer to the Statement of Claim, including the submissions made at the hearing, the sole arbitrator decided to grant [Seller]'s claim.

The Contract suggests that [Seller] was obliged to deliver the goods, which it did and which is made undisputed by the waybills and [Buyer]'s own admission given at the hearing.

It is also undisputed that [Buyer] failed to perform its obligation of payment for the delivered goods. The Contract required [Buyer] to pay for the goods within 30 days from the day that the goods cleared customs for export. Pursuant to Article 59 of the CISG the sole arbitrator concluded that [Seller] is entitled to claim the purchase price, since it has performed the deliveries.

The time limit to pay the price for each and every delivery has expired. Since the interest was not provided for in the Contract, [Seller] requested in the Statement of Claim "…the principal debt with accrued interest since 30 June 2000." The Sole arbitrator has come to conclusion that, pursuant to Article 78 of the CISG, [Seller] is entitled to interest if [Buyer] is in delay with payment of the price. The sole arbitrator determined the interest rate pursuant to the discount rate of the European Central Bank.

Costs of the proceedings

Since [Seller]'s claim was fully granted, it is entitled to reimbursement of the costs of the proceedings, namely, to the amount of RSD 5,661.00 for registration fee and to the amount of RSD 110,902.50 for arbitration fee (which makes RSD 116,563.50 in total). Therefore, the sole arbitrator ordered [Buyer] to pay the aforementioned amount to [Seller], as stated in operative part of this award.

Finality and validity of the Award

Pursuant to Article 483 of the Serbian Civil Law on Civil Procedure and Article 54(1) of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce, this arbitral award is final and is not subject to appeal. It has the force of a final decision of a court.

In Belgrade, 19 January 2004
[signed]


FOOTNOTES

* All translations should be verified by cross-checking against the original text.

** Snežana Dabić is an associate at Belgrade law firm Harissons Solicitors. Milena Djordjević, LL.M (U. Pittsburgh) and Marko Jovanović are lecturers at University of Belgrade Faculty of Law.

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Pace Law School Institute of International Commercial Law - Last updated August 23, 2011
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