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CISG CASE PRESENTATION

Serbia 27 May 2004 Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (Hydro-isolation material case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040527sb.html]

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

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Case identification

DATE OF DECISION: 20040527 (27 May 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-37/03

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: FYR Macedonia (claimant)

BUYER'S COUNTRY: Serbia (respondent)

GOODS INVOLVED: Hydro-isolation material


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 59 ; 62 ; 78

Classification of issues using UNCITRAL classification code numbers:

59A [Payment due without request: no need for request by seller or other formality];

62A [Seller may compel performance of buyer's obligation to pay the price];

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

Descriptors: 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

Unavailable

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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 27 May 2004 [Proceedings No. T-37/03]

Translation [*] by Marko Jovanovic, LL.M.
Edited by Dr. Vladimir Pavic, Milena Djordjevic, LL.M. [**]

Claimant (FYR Macedonia) [Seller] v. Respondent (Serbia) [Buyer]

Foreign Trade Court of Arbitration attached to the Chamber of Commerce in Belgrade in the proceedings conducted by Dr. A as presiding arbitrator, Prof. Dr. B as the arbitrator appointed by Claimant [Seller] and Prof. Dr. C as the arbitrator appointed by Respondent [Buyer], concerning the claim of [Seller] of FYR Macedonia against [Buyer] of Serbia for payment of EUR 67,717.12, upon conducting the arbitral proceedings and hearing held on 25 May 2004, renders the following

AWARD

(1) The [Seller]'s claim is granted and [Buyer] is ordered to pay to [Seller] the amount of EUR 67,717.72 with a yearly interest of 2% in the following manner:

-    For the amount of EUR 1,303.10 the interest is due from 3 June 2002 until payment;
-    For the amount of EUR 13,929.56 the interest is due from 12 June 2002 until payment;
-    For the amount of EUR 8,637.50 the interest is due from 26 June 2002 until payment;
-    For the amount of EUR 22,746.32 the interest is due from 13 July 2002 until payment;
-    For the amount of EUR 21,101.34 the interest is due from 9 September 2002 until payment.

All payments are to be made within fifteen days from the day of receipt of the award.

(2) [Buyer] is ordered to pay to [Seller] the interest for the amount of EUR 18,523.80 at the yearly rate of 2% in the following manner:

-    For the amount of EUR 660.00 the interest is due from 30 May 2002 until 30 August 2002;
-    For the amount of EUR 1,105.92 the interest is due from 30 May 2002 until 4 September 2002;
-    For the amount of EUR 8,328.32 the interest is due from 30 May 2002 until 25 September 2002;
-    For the amount of EUR 5,000.00 the interest is due from 30 May 2002 until 26 September 2002;
-    For the amount of EUR 3,429.56 the interest is due from 30 May 2002 until 27 November 2002.

All payments are to be made within fifteen days from the day of receipt of this award.

(3) [Buyer] is ordered to pay to [Seller] compensation for the costs of proceedings in the amount of US $3.844,00.

STATEMENT OF REASONS

1. Jurisdiction of Arbitration Court and Existence of the Arbitration Agreement

In the Statement of Claim received on 30 October 2003, [Seller] submitted that Article 5 of the sales contract between [Seller] and [Buyer] contained a provision according to which, in case of a dispute, "an international arbitration in respondent's place of business - Skoplje-Beograd" shall have jurisdiction. The annex to the sales contract concluded on 10 July 2003 further defined in its Article 2 that disputes between the parties shall be resolved before the foreign trade court of arbitration attached to the chamber of commerce in respondent's place of business.

Considering that [Buyer] failed to submit an answer to the Statement of Claim which it received on 23 December 2003, the Board of the Foreign Trade Court of Arbitration, acting pursuant to Article 15(1) of the Rules of Arbitration, established that that the contract submitted by [Seller] contained an arbitration clause providing for jurisdiction of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce.

Pursuant to Article 15(3) of the Rules of Arbitration, the arbitral tribunal also established that there was a valid arbitration agreement between the parties, providing for jurisdiction of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce. Namely, Article 5 of the sales contract concluded on 25 January 2002 and Article 2(2) of the annex to the contract concluded on 10 July 2003 both contain a provision calling for jurisdiction of the foreign trade court of arbitration attached to the chamber of commerce in respondent's place of business. Since Respondent [Buyer] is a company from Serbia, the arbitration agreement is to be interpreted in the way that it provides for jurisdiction of this Arbitration, since this is the only foreign trade arbitral institution attached to a chamber of commerce in Serbia.

[Buyer] appeared at the hearing for oral argument held on 25 May 2004 and discussed the merits of the case without objecting to the jurisdiction of this Arbitration. Therefore, it should be assumed that [Buyer] accepted the jurisdiction of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce.

2. Appointment of arbitral tribunal

[…]

The arbitral tribunal was properly constituted in accordance with Article 28 and 33(3) of the Rules of Arbitration.

3. Applicable law

Pursuant to Article 46(2) of the Rules of Arbitration, in deciding the case, the arbitral tribunal applied the provisions of the parties' agreement contained in the contract concluded on 25 January 2002 and the annex to that contract concluded on 10 July 2003, as well as the substantive law of the State Union of Serbia and Montenegro, which was deemed to be the most appropriate in the case at hand. The substantive law of Serbia and Montenegro in this matter is the 1980 UN Convention on Contracts for the International Sale of Goods (hereinafter: the CISG).

4. Arbitral proceedings

[Buyer] failed to submit an answer to the Statement of Claim and failed to appoint an arbitrator, although it duly received the Statement of Claim, as evidenced by a return receipt.

However, counsel for both parties appeared at the hearing of 25 May 2004, and counsel for [Buyer] entered into discussion on the subject-matter of the dispute.

5. [Seller]'s claim

The Foreign Trade Court of Arbitration received [Seller]'s Statement of Claim on 30 October 2003. In its Statement of Claim, [Seller] submitted that on 25 January 2002 it concluded a contract for sale of hydro-isolation material with [Buyer]. [Seller] delivered the goods in accordance with the contract and sent the invoices to [Buyer]. [Buyer] received the goods but it paid only a part of the purchase price. [Seller] stated that [Buyer] paid only the sum of EUR 18,523.80 for invoice no. 10169 and this was done with a delay (in cash and by product offset [by delivering other goods], both of these payment methods being provided for by the contract). However, [Buyer] failed to pay the remaining EUR 1,303.10 for invoice no. 10169. Furthermore, [Buyer] also failed to pay the total amount of EUR 66,414.62 for invoice nos. 10197, 10210, 10239 and 10336. [Seller] further submitted that on 10 July 2003 it concluded an annex to the contract. In article 1 of the annex, [Buyer] acknowledged its debt in the amount of EUR 67,717.72 and undertook to pay this debt by wire transfer by 10 August 2003 at the latest. However, [Buyer] never undertook such payment.

In its Statement of Claim, [Seller] also requested to be awarded interest on the said amounts. Considering that the contract did not fix the date by which the payment should have been made, [Seller] requested interest for the unpaid sum and the sum paid with delay from the eighth day following the day on which [Buyer] received the invoice until payment. For the amount paid by product offset, [Seller] considered the day on which [Buyer] sent the invoice for the delivered goods as a day on which the payment has been made.

[Seller] also requested compensation for the registration fee (US $200), the costs of arbitral proceedings (US $3,284) and travel expenses and costs of stay in Belgrade during the hearing (US $360).

At the hearing of 25 May 2004, the counsel for [Seller] reiterated [Seller]'s position taken in the Statement of Claim. In addition, counsel for [Seller] further defined that [Seller] requests domiciliary interest.

As a proof for its claim, [Seller] submitted photocopies of the sales contract of 25 January 2002 with the annex of 10 July 2003, invoice no. 10169 of 21 May 2002 with customs declaration of 20 May 2002, invoice no. 10197 of 31 May 2002 with customs declaration of 1 June 2002 and C.M.R. waybill no. 0001431, invoice no. 10210 of 13 June 2002 with customs declaration of the same date and C.M.R. waybill no. 0001091, invoice no. 10239 of 2 July 2002 with customs declaration of the same date and C.M.R. waybill no. 001760, invoice no. 10336 of 28 August 2002 with customs declaration of the same date and C.M.R. waybill no. 001622, receipt of international incoming payment no. FT/02270/12277 of 26 September 2002, receipt of international incoming payment no. FT/02332/03155 of 27 November 2002, as well as [Buyer]'s invoice nos. VII/018/2002 of 30 August 2002, IX/002/2002 of 4 September 2002 and IX/021/2002 of 25 September 2002 (delivery of offset goods in compensation).

[Buyer] has not denied [Seller]'s claim, i.e., it failed to submit an answer to [Seller]'s Statement of Claim. Moreover, at the hearing of 25 May 2004, [Buyer] acknowledged [Seller]'s claim.

6. The reasoning of the arbitral tribunal with respect to the claim

Considering that [Buyer] did not rebut [Seller]'s claim, the arbitral tribunal applied Article 331 of the Serbian Law on Civil Procedure (judgment on the grounds of admission) on the basis of Article 44 of the Rules of Arbitration, and decided not to take any evidence nor to assess substantive grounds of the claim. The arbitral tribunal decided to grant [Seller]'s claim and to render an award based on consent. Therefore, the content of the award is determined by the disposition of the parties. Although the arbitral tribunal is generally bound by [Buyer]'s admission of the claim, the tribunal nevertheless verified the existence of procedural prerequisites for rendering the award by reading the exhibits filed in support of the claim. The arbitral tribunal also reviewed the factual and legal basis of the claim in order to establish whether the [Buyer]'s acceptance of the claim was allowed by mandatory norms. The arbitral tribunal determined that there were no indications of any deficiencies of [Buyer]'s will with respect to the admission of the claim.

When deciding on the claim for interest, the arbitral tribunal considered the provisions of the CISG according to which the buyer must pay the price on the date fixed by or determinable from the contract and the Convention without the need for any request or compliance with any formality on the part of the seller (Article 59), the seller may require the buyer to pay the price (Article 62) and the interest for the price in arrears (Article 78).

Considering that the CISG does not set the interest rate, the arbitral tribunal assessed [Seller]'s request for domiciliary interest in the light of the previous practice of the Foreign Trade Court of Arbitration and the judicial practice of Serbian commercial courts, and decided to grant such request. On the basis of statistical data regarding the interest for Euro-denominated deposits (data from the European Central Bank and Euribor), the arbitral tribunal determined the interest rate and the domiciliary interest for the currency in which the debt is due.

Upon request of the arbitral tribunal, [Seller] specified the costs of arbitration in the letter dated 26 May 2004. When deciding on the claim for compensation of the costs of proceedings, the arbitral tribunal took into consideration that all [Seller]'s claims were granted and therefore decided to order to [Buyer] to reimburse [Seller] in the following manner: [Buyer] is ordered to pay US $200 for the registration fee, US $3,284 for the costs of arbitration and US $360 for travel expenses and cost of stay in Belgrade during the hearing.

7. Effects of the award

Pursuant to Article 54(1) of the Rules of Arbitration, this award is final and is not subject to appeal. It has the force of a final court judgment. Pursuant to Article 483(1) of the Serbian Law on Civil Procedure, an arbitral award has the effect of a final court judgment if the arbitral agreement does not give the possibility of appeal against the decision. Neither Article 4 of the contract of 25 January 2002 nor Article 2 of the annex to the contract of 10 July 2003 contain such a possibility.

Considering that the parties did not agree on the possibility of an appeal against the arbitral award and pursuant to the provisions of the Rules of Arbitration referred to in the previous paragraph, this award is final and has the force of a final court judgment.

Done in Belgrade, 27 May 2004

Members of the arbitral tribunal (signed)


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the FYR Macedonia is referred to as [Seller]; Respondent of Serbia is referred to as [Buyer]. Amounts in the currency of the European Community (Euro) are indicated as [EUR]; amounts in the currency of the United States (dollars) are indicated as [US $].

** Marko Jovanovic, LL.M (U. of Belgrade) is a Doctorate student at the University of Paris 1- Panthéon Sorbonne and at the University of Belgrade. Dr. Vladimir Pavic is an Assistant Professor in Private International Law and Arbitration. Milena Djordjevic, LL.M. (U. of Pittsburgh) is a Lecturer in International Commercial Law t the University of Belgrade Faculty of Law.

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