Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography
Search the entire CISG Database (case data + other data)

CISG CASE PRESENTATION

China June 2004 CIETAC Arbitration proceeding (Citric acid case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040600c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20040600 (June 2005)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2004/08

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: United States (claimant)

GOODS INVOLVED: Citric acid


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 4 [Also cited: Articles 30 ; 32 ]

Classification of issues using UNCITRAL classification code numbers:

4B1 [Scope of Convention (issues excluded): validity]

Descriptors: Scope of Convention ; Validity

Go to Case Table of Contents

Editorial remarks

Go to Case Table of Contents

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 (Chinese): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

Go to Case Table of Contents
Case text (English translation)

Queen Mary Case Translation Programme

China International Economic & Trade Arbitration Commission
CIETAC (PRC) Arbitration Award

Citric acid case (June 2004)

Translation [*] by Zheng Xie [**]

Edited by Li Jie [***]

Particulars of the proceeding
Facts
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: G2003____) according to:

   -    The arbitration clauses in Contracts CAA-010319-1008 [Contract 1008] and CAA-010416-1009 [Contract 1009] signed by Claimant [Buyer], ___ Purchasing, Inc. [of the United States] and Respondent [Seller], ___ Factory [of the People's Republic of China] on 19 March 2001 and 16 April 2001, respectively; and
 
   -    The written arbitration application submitted by the [Buyer] on 2 June 2003.

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

On 11 August 2003, the Secretariat of the Arbitration Commission by express mail sent the Arbitration Notice, the Arbitration Rules, and Panel of Arbitrators to both parties, and also sent the [Buyer]'s arbitration application and evidence to the [Seller].

The [Buyer] appointed ___ as arbitrator, and the [Seller] appointed ___ as arbitrator. Because the parties did not jointly appoint a Presiding Arbitrator within the provided period, the Chairman of the Arbitration Commission appointed ___ as the Presiding Arbitrator pursuant to Article 24 of the Arbitration Rules. The aforementioned three arbitrators formed the Arbitration Tribunal on 5 September 2003 to hear this case.

After discussing with the Secretariat, the Arbitration Tribunal decided to open a court session in Beijing on 16 October 2003. On 11 September 2003, the Secretariat served the parties the aforementioned Notice of Formation of the Arbitration Tribunal and Notice of Court Session.

The [Buyer] petitioned to adjourn the court session. The Arbitration Tribunal found this petition reasonable and adjourned the court session from 16 October 2003 to 2 December 2003. Thereafter, the court scheduled for 2 December 2003 was again adjourned to 18 December 2003. The Secretariat served the aforementioned notice of adjournment to the parties.

The Arbitration Tribunal opened the court session in Beijing on 18 December 2003 as scheduled. Each party sent its arbitration representative to appear. The representatives presented the facts and position to the Arbitration Tribunal, and made the arguments and examined the evidence, and answered the Tribunal's questions.

After the court session, both parties submitted written documents and the Arbitration Tribunal granted the parties a reasonable time for examination.

Based on the facts verified in the court session and all written material, the Arbitration Tribunal entered this award by consent.

The facts, the Arbitration Tribunal's opinion and award are as follows:

FACTS

[Buyer]'s complaint recited the following contract details:

CONTRACT 1008. On 19 March 2001, the [Buyer] and the [Seller] entered into Contract 1008 via facsimile. It stipulates:

-    Goods: [Buyer] purchases eighty-eight (88) tons of citric acid from the [Seller];
-    Quality: with specific description;
-    Unit price: US $905/ton CIF New York port;
-    Total price: US $79,640;
-    Time of shipment: [Seller] shall ship two containers in one shipment before 15 April 2001; the second shipment of two containers shall be shipped before 30 April 2001.

When performing the contract, the [Seller] requested to delay delivery of the goods, and the [Buyer] agreed that the goods could be delivered no later than May 30. However, the [Seller] failed to deliver the goods by May 30 despite the [Buyer]'s numerous demands.

CONTRACT 1009. On 16 April 2001, the [Buyer] and the [Seller] entered Contract 1009. It stipulates:

-    Goods: [Buyer] shall purchase 1,045.08 tons of citric acid from the [Seller];
-    Quality: with specific description;
-    Unit price: US $905/ton CIF New York port;
-    Total price: US $[945,797.40];
-    Time of shipment: [Seller] shall ship 16 containers each in May, June and July, respectively;
-    Payment terms: D/D 30 days after arrival of the goods.

However, after May 2001 the [Seller] failed to deliver any goods despite the [Buyer]'s numerous demands.

POSITION OF THE PARTIES

The [Buyer]'s position

The [Buyer] had signed a supply contract with its customer. [Buyer] alleged that because the [Seller] failed to perform these two contracts, the [Buyer] could not perform the supply contract with its customer and incurred loss of anticipated profits in the amount of $153,813 including $11,946 under Contract 1008 and $141,867 under Contract 1009.

The [Buyer] prayed for the following relief:

      1.  The [Seller] should compensate the [Buyer] for its loss of anticipated profits in the amount of $153,813;
 
      2. The [Seller] should pay the [Buyer]'s attorneys' fees and arbitration fee.

The [Seller]'s response

With respect to Contract 1008, the [Seller] shipped the goods on 28 April 2001, and the [Buyer] took delivery of the goods in June 2001. After investigation and verification, the [Seller] found that this contract did not exist. The contract submitted by the [Buyer] carried a forged signature of the [Seller]. The [Seller] alleged that the contract No. CAA-010426-1009 (Contract 426-1009) entered by the [Buyer] and the [Seller] on 26 April 2001 is not the Contract 1009 of this case. Regarding Contract 426-1009, the [Buyer] had requested the [Seller] to stop shipping the goods on 28 June 2001.

The [Buyer]'s Supplemental Opinion with respect to the [Seller]'s response

As to Contract 1008, the [Seller]'s evidence could only prove that it had already shipped the goods, but cannot show that it was the [Buyer] who took the delivery from the carrier. According to international trade custom, any company or individual that is holding the bills of lading may take the delivery of the goods from the carrier. The [Seller] also pointed out that the price term under Contract 1008 is CIF, and according to international trade custom, the nature of a CIF contract is symbolic delivery, i.e., a seller fulfills its duty of delivery when it delivers to the [Buyer] a full set of documents and bills of lading which comply with the contract. Contract 1008 stipulates that the [Seller] should send the full set of documents and bills of lading to the [Buyer] by courier. However, the documents submitted by the [Seller] could not prove that the [Seller] had delivered the documents under the Contract to the [Buyer]. Until July 2001, the [Buyer] had demanded the [Seller] to deliver the goods.

Regarding Contract 1009, the [Buyer] alleged that it had only entered two contracts with the [Seller], i.e., Contract 1009 and Contract CAA-010426-1010, but not Contract 426-1009. The [Buyer] did send an e-mail to the [Seller], but the content was not completely the same as the e-mail submitted by the [Seller] as Attachment 10. At the end of the second paragraph of the [Buyer]'s e-mail, it stated:

"Please make sure that next shipments under our contracts be expedited so that we can fulfill our contractual obligations of delivering conforming goods to our largest customer. Please expedite."

It did not state as alleged in the [Seller]'s Attachment 10:

"Please hold shipments on order and not to effect any shipment [D]alian or Xingang to New York until my further notice."

The e-mail submitted by the [Seller] was generated by [Seller] unilaterally. In fact, from June through July, the [Buyer] made several complaints and demands to the [Seller] requesting delivery of the goods under Contract 1009.

The [Seller]'s position

With respect to Contract 1008, the [Seller] had already shipped the goods, and the [Buyer] had taken delivery. On 5 June 2001, the [Buyer] sent an e-mail to the [Seller] requesting the Bill of Lading No. TJU222915 under Contract 1008, which showed that the [Buyer] knew the goods had been shipped, and therefore requested the Bill of Lading. The e-mail dated 12 June 2001 and sent by the [Buyer] to the [Seller] mentioned the four containers under the Bill of Lading No. TJU222915, which showed that the [Buyer] had taken the delivery of the goods. On 27 June 2001, the [Seller] sent an e-mail to the [Buyer] demanding the payment under invoice No. SBC0023 of Contract 1008. For two years, the [Buyer] had not expressed any intent to reject the payment.

The aforementioned three copies of electronic evidence were obtained from the [Seller]'s e-mail box in the presence of the notary public of B City.

Regarding Contract 1009, the [Seller] alleged that it had never signed a Contract 1009 for the quantity of 1,045.8 tons and price of US $945,797.40, but only signed Contract 426-1009 on 26 April 2001 for the quantity of 348.36 tons and the price of US $313,524.00. The [Buyer] alleged that the Contract was entered into via facsimile, i.e., it executed the Contract first and thereafter faxed it to the [Seller], and the [Seller] faxed it back after execution. However, the header of Contract 1009 submitted by the [Buyer] to the Arbitration Tribunal did not carry the [Buyer]'s fax no. and time record, which should be automatically recorded; therefore, this was not a true contract between the parties.

After finding that Mr. Liu's signature on Contract 1009 was suspicious when compared with the signature on Contract No. CAA-013101-1005 ["Contract 1005"], the [Seller] retained ___ Law Firm of B Province to request the Police Department of B City to do a signature authentication. The Police Department issued Authentication Report No. B Police Authentication (2003) No. 9 with the conclusion that Mr. Liu's signature in Contract 1009 was the same one as on Contract 1005. As one cannot sign with the exact signature on two different contracts, this conclusion showed that the Contract 1009 submitted by the [Buyer] was forged.

With respect to the issue whether the e-mails were forged or not, the [Buyer] averred that the three e-mails dated 9 July, 27 June and 29 June, 2001, respectively, i.e., Attachments Four, Seven and Eight, which the [Seller] submitted, were not authentic, because the e-mail address was not the one which the [Buyer] used at that time, and all three e-mails were sent before October 10.

As to the [Buyer]'s aforesaid position, the [Seller] alleged that Attachment Four submitted by the [Seller] was a Notice of Change of E-Mail Address, i.e., the [Buyer]'s e-mail address was ____@mail.msn.com before 10 October 2001, and was changed to _____@msn.com after 10 October 2001. However, the e-mail address in the [Buyer]'s Attachments Four, Seven and Eight was the one used after 10 October 2001, but all three Attachments were used to prove that the e-mails were sent before July. Therefore, the e-mails were forged.

The [Seller] also alleged that the purpose for the [Buyer] to commence this arbitration was to prolong the litigation which the [Seller] filed against the [Buyer] in the U.S. claiming the unpaid contract price.

[Buyer]'s Supplemental Opinion

In response to the [Seller]'s above position, the [Buyer] submitted the following Supplemental Opinion:

      Regarding Contract 1008, the [Seller] submitted Attachments Eleven and Twelve, i.e., three e-mails, and Attachment Seventeen, i.e., proof that ___ Company released the goods, to support its position. The [Buyer] had never sent and/or received these three e-mails, and ___ Company's proof of release the goods could not show that it was the [Buyer] who took the delivery. Accordingly, the [Buyer] re-stated its position raised in its arbitration petition and supplemental material, i.e., the [Seller] failed to perform its duty of delivery under Contract 1008.

      As to Contract 1009, the [Seller] alleged that the [Buyer] forged the [Seller]'s representative's signature in Contract 1009 submitted by the [Buyer], and also provided the Police Department of B City's Authentication Report as evidence. However, this authentication was not made on the original documents, and therefore, it was not credible.

Meanwhile, the conclusion itself that Mr. Liu's signature in Contract 1009 was completed by one person's one time execution in Contract 1005 does not show that the [Buyer] forged the [Seller]'s representative's signature in Contract 1009. In addition, the second paragraph regarding the authentication procedure stated that when the signature for authentication was compared with the sample signature, it was found that the two signatures did not completed overlap, but had a little difference. This showed that the signature in Contract 1009 was not forged by the [Buyer] as the [Seller] alleged.

The other reason which the [Seller] asserted to support its position that Contract 1009 was forged was that it did not carry any record of when the [Seller] received the [Buyer]'s fax. It was because [Buyer] sent the Contract to the [Seller] via both e-mail and facsimile, and if the [Seller] executed the one sent via e-mail, the Contract might not carry any record when the [Seller] received the [Buyer]'s fax.

With respect to the authenticity of the e-mails submitted by the [Buyer], the [Seller] alleged that the [Buyer]'s e-mail address was changed on 10 October 2001. The [Buyer] alleged that the e-mails, i.e., [Seller]'s Attachment Fourteen, did not show either the receiver or the receiver's e-mail address; in addition, the [Seller] also provided some e-mails to support its position, and the credibility of those e-mails was not higher than any other e-mails including the ones the [Buyer] submitted to the Arbitration Tribunal as evidence; the [Buyer] had never sent any e-mails submitted by the [Seller].

[Seller]'s supplemental material

In its supplemental material, the [Seller] stated the following position:

      The [Buyer]'s Attachment Two was contrary to the Attachment "Only for Reference". The time of shipping for the third shipment stated in the Attachment "Only for Reference" was June 2001 but in Attachment Two it was July 2001, and the font of "July" was changed and its size was different from the other words.

      The [Buyer] alleged in its supplemental material that the [Buyer]'s e-mail address was not the same as the one in the [Seller]'s Attachment Ten. The [Seller]'s Attachments Fourteen and Fifteen and the e-mail opened in its computer during the court session showed that the [Buyer]'s Attachments Four, Seven and Eight were false evidence. With respect to the issue raised by the [Buyer] that when an e-mail was sent, whether it should contain @___. This issued should be resolved by the [Buyer] itself. However, it was obvious that _____@email.msn.com is a different address than _____@msn.com.

Thereafter, the [Seller] repeated its aforementioned position in its additional supplemental material.

THE ARBITRATION TRIBUNAL'S OPINION

1. Applicable law

The Contracts did not stipulate the applicable law. The [Buyer] is a U.S. corporation, and the [Seller] is a Chinese corporation. Since both China and the U.S. are Contracting States of the United Nations Convention on Contracts for International Sales of Goods (CISG), the CISG should apply to this case; if the CISG does not prescribe, international trade custom should apply.

2. Issues of establishment and validity of the contracts

There were two contracts in this case. With respect to Contract 1008, neither party disputed its establishment and validity. Therefore, the Arbitration Tribunal held that the Contract 1008 was duly entered into and binding on both parties.

As to Contract 1009, the [Buyer] alleged that the parties signed Contract 1009, and the [Seller] contended that Contract 1009 did not exist at all and that the true contract was Contract 426-1009. As to the authenticity of the Contract 1009 submitted by the [Buyer], the parties' positions were substantially different.

The [Buyer] alleged that the parties entered Contract 1009 via facsimile, which stipulated that the [Buyer] should purchase 1,045.08 tons of citric acid from the [Seller] for the total price of US $[945,797.40].

The [Seller] repeatedly states that the Contract 1009 submitted by [Buyer] was forged because the signature was pasted from the one on Contract 1005. [Seller] alleges that the real contract is Contract 426-1009 with the quantity of 348.36 tons and amount of US $313,524.00. In order to support its position, the [Seller] submitted the Authentication Report issued by Songyuan Police Department as evidence.

However, the [Buyer] suspected the credibility of the Authentication Report, and alleged that this Report could not prove that the [Buyer] forged the [Seller]'s representative's signature in Contract 1009.

In view of the parties' different opinions regarding the credibility of the Authentication Report, the Arbitration Tribunal decided to entrust the Secretariat to hire an authority to do an authentication. However, both parties held that it was not necessary to do another authentication any more.

The [Buyer] suspected the credibility of the Authentication Report, but gave up its right to request the second authentication. Pursuant to the general rule that the party bears the burden of proof to support its position, the Arbitration Tribunal reached the following opinions based on the written material presented:

      (1) The authentication material, sample, method and conclusion stated in the B City Police Department's Authentication Report showed that Mr. Liu's signature carried in the copy of the Contract 1009 which the [Buyer] submitted was completed by one person's one time execution. The authentication conclusion only could not completely prove that the Contract 1009 submitted by the [Buyer] was forged. However, the [Buyer], who bears burden of proof, gave up its right for the second authentication; therefore, the [Buyer] should bear the adverse consequence caused by its insufficient proof or failure to prove.

      (2) The [Buyer] neither averred anything on the [Seller]'s alleged Contract 426-1009 with the quantity of 328.36 tons for the total price of $313,524.00, i.e., the Contract 426-1009 (the contract no. was changed to CAA-010426-1010), nor alleged any contrary opinion.

      (3) The [Buyer] admitted that the contract with the [Seller] was entered via facsimile, and it was the [Buyer] who first faxed the contract to the [Seller]. It was found that all other documents faxed between the parties carried automatically recorded fax information. However, the Contract 1009 which the [Buyer] submitted did not carry any such automatic record, but the Contract 426-1009 which the [Seller] submitted contained such an automatic record. It was obvious that the Contract 1009 submitted by the [Buyer] did not conform to the parties usual practice.

      (4) Although the [Buyer] submitted a copy of a fax sent by the [Seller], this fax did not carry either signature or seal.

In view of the above conclusion and the [Buyer]'s insufficient proof, the Arbitration Tribunal could not conclude that the Contract 1009 was entered into by the parties, and therefore, it was not legally binding on the parties.

3. Issue on the performance of Contract 1008

Although there is no dispute on the establishment of Contract 1008, the parties held different position on the performance of this Contract.

The [Buyer] alleged that:

   -    The Contract stipulated that the [Seller] should ship an installment of two containers before 15 April 2001, and ship a second installment of two containers before 30 April 2001;
 
   -    During the performance, the [Seller] requested to delay delivery of the goods;
 
   -    The [Buyer] agreed that the goods could be delivered no later than May 30 but the [Seller] failed to deliver the goods by May 30, although the [Buyer] demanded this several times.

The [Seller] repeatedly alleged that it had shipped the goods on April 28, and that the [Buyer] took delivery of them in June 2001. And the [Seller] submitted the export custom declaration form, bill of lading, packing list, commercial invoice and delivery slip as evidence.

The [Buyer] suspected the authentication of the documents submitted by the [Seller] including the shipping documents and e-mails, and denied the [Seller]'s allegation that it had fulfilled the duty of delivery under Contract 1008. With respect to this issue, the Arbitration Tribunal issued the following opinion:

      (1) After investigation, the Arbitration Tribunal found that the contract no., description of goods, quantity port of lading, etc. stated in the export custom declaration form, bill of lading, packing list, commercial invoice and delivery slip submitted by the [Seller] were consistent with the stipulations in Contract CAA-010319-1008. The date of the Bill of Lading was 26 April 2001, which confirmed to the [Seller]'s promise. Therefore, the Arbitration Tribunal held that the [Seller] had performed its duty of delivery under the CIF contract.

      (2) As to the [Seller]'s Attachment 5, i.e., the delivery slip, the [Buyer] alleged that it did not show who took the delivery, and even if it stated who took the delivery, it could not show that it was the [Buyer] who took the delivery from the carrier.

The Arbitration Tribunal held that when the goods arrived at the port of delivery, the consignee should take delivery by presenting original bills of lading. If the bills of lading are "To order", the consignee may not necessarily be the buyer, unless the contract stipulates that the seller should provide straight bills of lading to the buyer. Therefore, when the [Seller] delivered the "To Order" bills of lading to the [Buyer], the consignee or person taking delivery may not necessarily have been the [Buyer] itself.

      (3) With respect to the two e-mails submitted by the [Seller], the Arbitration Tribunal found that these two e-mails contained the sender's name, e-mail address, sending time, receiver's name, and e-mail address, etc. They were the [Seller]'s address and the [Buyer]'s, respectively, and these e-mail addresses were usually used by the parties. Especially, Attachment Twelve stated, "the [Buyer] had already received the full set of documents." Therefore, the Arbitration Tribunal initially concluded that it was the [Buyer] who sent the e-mail. However, the [Buyer] alleged in its supplemental opinion that it had never sent those e-mails. As to this allegation, the Arbitration Tribunal held that an e-mail might be forged if it did not pass a security system. However, since the [Buyer] alleged that it had never sent those e-mails, it should bear the burden of proof. The [Buyer] could not provide sufficient evidence, and therefore, its position could not be sustained.

In this proceeding, the [Seller] opened the e-mails through www.163.net and printed out and submitted the e-mails to the Arbitration Tribunal.

When the [Buyer] failed to submit sufficient evidence against the [Seller]'s position, the Arbitration Tribunal held that the [Buyer] did send the e-mails; even if the e-mails were forged, the [Buyer] should bear the adverse consequence caused by its failure to satisfy its burden of proof.

In view of the above and pursuant to Articles 30 and 31 of CISG and international trade custom, the Arbitration Tribunal held that the [Seller] had performed its duty under Contract 1008.

      (4) Arbitration claim

      Based on the Arbitration Tribunal's Opinions (2) and (3), the [Buyer] was not entitled to the loss of anticipated profits in the amount of $153,813.00.

AWARD

1.    The [Buyer]'s claims are dismissed;
 
2. The [Buyer] should bear the entire arbitration fee of $6,255, which was offset by the advanced payment of $6,255 by the [Buyer].

This award is final and took effect when entered into.


FOOTNOTES

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

** Zheng Xie, LL.M. Washington University in St. Louis, LL.M., BA in Economics, University of International Business and Economics, Beijing.

*** Li Jie, Master of Law, Tsinghua University in Beijing, BA in Law, Tsinghua University, Beijing.

Go to Case Table of Contents
Pace Law School Institute of International Commercial Law - Last updated October 21, 2009
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography