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CISG CASE PRESENTATION

Egypt Arbitration Award of 16 January 2005 Alexandria Center for International Arbitration (Semi-dried dates case) [English text]
[Cite as: http://cisgw3.law.pace.edu/cases/050116e1.html]

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

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Case identification

DATE OF DECISION: 20050116 (16 January 2005)

JURISDICTION: Arbitration ; Egypt

TRIBUNAL: Alexandria Center for International Arbitration

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Case number 6/2003, Alexandria Center for International Arbitration

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Egypt (claimant)

BUYER'S COUNTRY: Morocco (respondent)

GOODS INVOLVED: Semi-dried dates


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 74 ; 75

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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Editorial remarks

Excerpt from Hossam A. El-Saghir, "The Interpretation of the CISG in the Arab World" (2008)

"Th[is] award concerns a dispute between an Egyptian seller and a Moroccan buyer. The dispute concerns a contract for the sale of semi-dried dates concluded on July 24, 2002. The contract contained a dispute settlement provision stipulating that disputes are to be settled by arbitration in accordance with the rules of Alexandria Center for International Commercial Arbitration and that arbitration is to be located in Alexandria, Egypt.

"The seller claimed that the buyer failed to perform his contractual obligations by not paying the full price and not taking delivery of the goods, although the seller notified him to that effect. The seller consequently resold the dates and initiated arbitration proceedings claiming damages for demurrage, storage expenses and commercial premium. The defendant failed to attend any of the arbitral proceedings. The arbitration was therefore held ex parte. The seller claimed that the CISG applies to the dispute and the Panel agreed. The Panel quoted Article 1 of the CISG and concluded that the CISG applies by virtue of Article 1(1)(b).

"However, the way the Panel applied the Convention is defective. The Panel reasoned that 'the provisions of the CISG do not apply to the exclusion of the national Egyptian law but in addition to it. However, since both texts coincide, it is worth mentioning that applying either, i.e., the Vienna Convention or the ECC, would not affect the decision on the principal issues in dispute.' The Panel consequently applied the Egyptian Civil Code (ECC) and the CISG simultaneously.

"In applying the Civil Code in parallel with the CISG, the Panel failed to observe the autonomous rules of interpretation ... The Panel reasoned that both, the CISG and the Civil Code rules would lead to the same outcome. To be noted however that the Panel should have applied the Egyptian law only if both, the CISG provisions and the principles on which the Convention is based fail to resolve the question. Moreover, on the assumption that the national Egyptian law applies to the dispute, the Panel should have applied the Commercial, not the Civil Code. Therefore, there are two reasons why the application of the Civil Code to the dispute is flawed. First, the CISG precedes the national law. Second, had the Egyptian law been applicable to the dispute, the Commercial, not the Civil Code, should have governed.

"Finally, the Panel failed to mention the basis on which it entitled the seller to resell the dates. Nothing in the award clarifies whether the seller exercised his right to avoid the contract as per Article 49, or whether the seller was performing his duty to preserve the goods as per Article 85. If the seller sold the dates in performance of his duty to preserve them, he should have fulfilled the Article 88 requirement to notify the buyer of his intention to do so. Nothing in the facts suggests that the seller made this notice. The award is simply silent as to which article applies to the situation."

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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 (English): Text presented below

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text

Alexandria Center for International Arbitration
Semi-dried dates case of 10 January 2005

  1. The Parties
  2. Background to the Dispute
  3. The Agreement to Arbitrate
  4. The Place of Arbitration and the Applicable Law
  5. The Arbitral proceeding
  6. The Material Terms of the Agreement
  7. The Claim
  8. The Principal Issues in Dispute
  9. Discussion
  10. Contract Price
  11. Reasoning and Conclusions
  12. Costs
  13. The Award

I. The Parties

(1) The Claimant _____, (hereinafter referred to as "Claimant"), is a company incorporated and existing under the Laws of Egypt, with its principal place of business at 2 Estambol Street, Alexandria and with a legal domicile for purposed of notification at Nadoury Nahas Law Office, its legal representative in this arbitration, located at 71 Sultan Hussein Street, Alexandria, telephone (03) 4873609, Fax (03) 4875136.

(2) The Respondent _____, (hereinafter referred to as "Respondent"), is a company incorporated and existing under the Laws of Morocco, with its principal place of business in the city of Casablanca and which was not represented in this arbitration.

II. Background to the Dispute

On 24 July, 2002, the parties entered into an agreement (hereinafter referred to as the "Agreement") under which Claimant agreed to sell, and Respondent accepted to buy, the quantity of 300 tons of Egyptian semi-dry dates for a price of USD 580 per ton. A subsequent agreement for 145 tons at a price of USD 550 per ton was concluded on 26 August (both agreements hereinafter collectively referred to as the "Agreements".

On 27 May, 2003, Claimant lodged its request for arbitration with the Alexandria Center for International Arbitration (hereinafter referred to as ACIA) claiming payment of outstanding contract losses as well as demurrages and storage fees incurred by Claimant as a result of the breach by Respondent of its contractual obligations in addition to expenses and attorney's fees.

III. The Agreement to Arbitrate

The Agreements concluded between Claimant and Respondent comprised identical arbitration clauses, stating:

"Any dispute, controversy or claims arising out of or relating to this contract or breach, termination or invalidity thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Alexandria Center for International Arbitration. The place of Arbitration shall be in Alexandria, Egypt. The language of Arbitration shall be English."

IV. The Place of Arbitration and the Applicable Law

As set out in the above cited arbitration clause, the seat of arbitration is Alexandria, Egypt; the law applicable to the substantive dispute is not stated in the concluded Agreements and was argued by Claimant as being the Vienna Convention on the International Sale of Goods.

V. The Arbitral Proceedings

A Request for Arbitration dated 27 May, 2003 was submitted to ACIA with respect to the dispute arising from the Agreements. The Claimant asserted that the Respondent had failed to take delivery of sold goods as set out in the parties' agreement, and, hence, Claimant was entitled to be awarded the sums claimed in the Request for Arbitration as amended by Claimant's own submittals thereafter in these proceedings. The Respondent, despite having been notified several times (as hereinafter detailed), failed to personally appear or to be represented at the proceedings, which were thus ex parte.

The Claimant nominated as arbitrator: _____. The Respondent did not nominate an arbitrator. Hence, pursuant to Article (6) of the Rules of the Cairo Regional Centre for International Commercial Arbitration (hereinafter referred to as CRCICA), which are applicable to ACIA, ACIA appointed: _____. Upon the joint proposal of the co-arbitrators, the agreed upon Chairman of the Arbitral Tribunal was: _____.

On 23 October, 2003, the Arbitral Tribunal at the premises of the ACIA held its first meeting where Claimant's attorney was present but Respondent failed to appear, whether in person or by proxy. At this meeting, the Arbitral Tribunal issued its order stating:

"2. Reference is made to article 2 of the Rules of the Cairo Regional Center for International Commercial Arbitration, the tribunal discussed the notification to the defendant and for more inquiries the tribunal directed Mr. Ashraf El-Nadoury to submit to the Center the address of the Moroccan Chamber of Commerce in Casablanca. The Alexandria Center will in accordance with the commercial customs, notify the defendant with the notice of arbitration and these minutes through the Casablanca Chamber of Commerce."

On 13 November, 2003, due to private circumstances, _____ resigned as Chairman and member of the Arbitral Tribunal. Upon the joint proposal of the co-arbitrators, the new agreed upon Chairman of the Arbitral Tribunal was: _____

On 11 December, 2003, the Arbitral Tribunal held a second meeting at the premises of ACIA where again the Claimant, but not the Respondent, was represented and the following were the discussion and decisions:

"Presentation and discussion of the letter sent by the Alexandria Center for International Arbitration to the Respondent in the current Arbitration via the Moroccan Chamber of Commerce, Industry and Services in Casablanca, receipt of which is included and dated 12 November, 2003.

There was no response received to the aforementioned notification.

Tribunal asked Claimant if it approves the new constitution of the Arbitral Tribunal. Claimant approved of the new constitution of the Arbitral Tribunal by an express 'yes' statement.

The Tribunal retreated for deliberation and decided the following:

      1. Claimant is requested to submit a full Statement of Claims including its understanding of the applicable law and the relevancy of the Vienna Convention on the International Sales of Goods to the current dispute.

      2. Claimant shall notify Respondent on its last known address via the Diplomatic Channels according to article 13(9) and (10) of the Law No. (13) on Civil and Commercial Procedures for the year 1968, which is part of the lex fori, this notification should include the following:

            (i) the notice of Arbitration and the accompanying file;

            (ii) the minutes of meeting of the first hearing held in the current case at the premises of Alexandria Center for International Arbitration on the 23rd of October, 2003;

            (iii) the letter sent by the Alexandria Center for International Arbitration to the Respondent dated 8 Nov. 2003 via the Moroccan Chamber of Commerce, Industry and Services in Casablanca;

            (iv) the new Power of Attorney submitted in the current session;

            (v) the Statement of Claims to be submitted by the Claimant by the First of January, 2004 to the Alexandria Center for International Arbitration;

            (vi) the minutes of meeting of the current session held at the premises of the Alexandria Center for International Arbitration on the 11th of Dec. 2003;

      3. A session shall be held Saturday the 21st of February, 2004 at the premises of Alexandria Center for International Arbitration at 12 noon."

On the first of January, 2004, Claimant submitted a memorandum and claimed the total sum of USD 92,650 (ninety two thousand and six hundred and fifty USD) as compensation for damages occurred to Claimant, in addition to all expenses incurred thereby (including all amounts paid on behalf of Respondent for the arbitration process) and attorney's fees.

On 21 February, 2004, the Arbitral Tribunal held a third meeting at the premises of ACIA in the presence of only the Claimant and the recorded discussion and decisions were as follows:

"The Tribunal asked Claimant its position and further clarifications as to its January 8th letter.

The Claimant answered that the Diplomatic notification was not possible because of lack of sixty days period between notification and hearing and requested another extension to execute the diplomatic notification.

The Tribunal asked for Claimant's position as to the legal notification process referenced in its January 8th letter. The Claimant answered that its representative:

      a) Contacted the Moroccan Chamber of Commerce, Industry and Services in Casablanca which confirmed orally that it attempted to notify Respondent on last known address but was unsuccessful since Respondent was no longer in this address. The Chamber added that in due course it will officially notify the Alexandria Center for International Arbitration with this position. No such confirmation from the Moroccan Chamber of Commerce, Industry and Services in Casablanca, arrived to date.

      b) Claimant instructed a private lawyer to execute notification on its behalf. The notification was not successful for same reasons as above, besides, lawyer extracted an official copy of the commercial register which showed a different address than the one last known and currently used in this Arbitration. Accordingly, the appointed lawyer attempted notification on the new address which was equally unsuccessful for the same reasons. The Claimant presented to the Tribunal the official extract of the commercial register with the new address as well as attorney's letters confirming non-successful notification for absence of Respondent from address.

The Tribunal asked Claimant whether it wanted to make further submittals whether orally or in writing and Claimant confirmed that it has nothing further to add unless Respondent appears and produces new arguments. Its only request was a postponement for further notification and Claimant stated that it was ready for closing of hearing.

The Tribunal retreated for deliberation and decided the following:

      1. Awarding Claimant the required postponement of time for purposes of notifying through Diplomatic Channels the Respondent on its newly discovered address as recorded in the office copy of the commercial register presented to the Tribunal.

      2. On basis of the above, the next hearing shall be held at the premises of the Alexandria Center for International Arbitration on Saturday 15th of May, 2004 at 12 noon."

On 15 May, 2004, the fourth session was held at the premises of ACIA and the following was discussed and decided:

"The Tribunal asked the Claimant's representative whether it notified Respondent by diplomatic channels.

The Claimant representative presented proof of such notification as well as memorandum requesting an award and requesting no further submissions.

Tribunal asked clarification on why documents No. 7 and 8 attached to the notice of arbitration are destinated to Cape Town and not Casablanca.

Claimant representative had no explanation and Tribunal allowed a recess to allow him contact with Client to provide explanation.

After a recess of 15 minutes the hearing reconvened and representative of Claimant explained that the consignment to Cape Town was diverted to Casablanca but there was no proof of such. Also, he restated that the total amount of exported goods is calculated as in attachments.

Tribunal did not comment and decided to issue an award in the current case on basis of available briefs and documents by 17 July, 2004."

By letter dated 17 July, 2004, ACIA notified the parties that:

"The Arbitral Tribunal composed in the arbitration case No. 6/2003 decided to reopen the hearings in order for the Claimant to furnish proof evidencing his payment and entitlement to the demurrages and storage fees claimed in his Statement of Claim. This evidence should be submitted to the Alexandria Center for International Arbitration before August 15th, 2004."

By a letter dated 9 August, 2004, Claimant requested an extension of time until 20 August, 2004 to submit the evidence required by the Arbitral Tribunal as above referenced. On 12 August, 2004, the requested extension of time was granted until 22 August, 2004.

On 21 August, 2004, Claimant submitted a memorandum with 25 documents attached therewith and requested the Arbitral Tribunal to order the Respondent to pay a sum amounting to USD 74,697.7 (seventy four thousand six hundred and ninety seven and seven USD) representing demurrages and storage fees instead of the initially claimed sum of USD 20,000.

By letter dated 9 January, 2005, ACIA notified the parties that:

"The Arbitral Tribunal composed in the arbitration case No. 6/2003 decided to declare the closure of the hearings. The arbitral award shall be rendered before the end of this month."

VI. The Material Terms of the Agreement

Between the Claimant and Respondent two agreements were concluded; the first is Contract No. 045/02 and the second, No. 069/02, dated 24/07/2002 and 26/08/2002, respectively. The two agreements are of identical terms and conditions in respect of the supply of different quantities of semi-dry dates. The following recitals and terms of the agreements are material to the substance of this dispute:

Contract 045/02:

Article (2) specifying quantity at about 300 MT.

Article (4) stating:

"USD 580/MT (say Five Hundred Eighty and 00/100 US Dollars per Metric Ton). Total contract value about USD 174,000 (say One Hundred Seventy Four Thousand and 00/100 US Dollars)." (See infra for adjustment of total contract price).

Article (5) defining delivery terms as C11 Casablanca port.

Article (6) specifying delivery schedule as follows:

6. -- Delivery Schedule

1st shipment of 2x10' FCL to be shipped by 10/09/2002 on the first available vessel.
2nd shipment of 2x40' FCL to be shipped by 17/09/2002 on the first available vessel.
3rd shipment of 2x40' FCL to be shipped by 24/09/2002 on the first available vessel.
4th shipment of 2x40' FCL to be shipped by 01/10/2002 on the first available vessel.
5th shipment of 2x40' FCL to be shipped by 08/10/2002 on the first available vessel.
6th shipment of 2x40' FCL to be shipped by 15/10/2002 on the first available vessel."

Contract No. 069/02

Articles (2), (4), (5) and (6), respectively, stating:

"2. Quantity. About 180 MT (say three hundred Metric Tons)."

"4. Price. USD 550/MT (say Five Hundred Fifty and 00/100 US Dollars per Metric Ton). Total contract value about USD 99,000 (Say Ninety Nine Thousand and 00/100 US Dollars). (See infra for adjustment of total contract price)."

"5. Delivery Terms, Goods to be delivered on CIF basis Casablanca port."

"6. -- Delivery Schedule

1st shipment of 2x20' FCL to be shipped by 10/09/2002 on the first available vessel.
2nd shipment of 2x20' FCL to be shipped by 17/09/2002 on the first available vessel.
3rd shipment of 2x20' FCL to be shipped by 24/09/2002 on the first available vessel.
4th shipment of 2x20' FCL to be shipped by 01/10/2002 on the first available vessel.
5th shipment of 2x20' FCL to be shipped by 08/10/2002 on the first available vessel.
6th shipment of 2x20' FCL to be shipped by 15/10/2002 on the first available vessel.

VII. The Claim

In its Request for Arbitration, Claimant, _____ (SAE), requested the Arbitral Tribunal to order the Respondent, SAVECO (SAR), to pay the sum of USD 99,000 (ninety nine thousand USD) representing incurred demurrage and storage fees (of USD 20,000) and commercial premium (of USD 79,900); as well as attorney's fees and other related expenses.

This claim was subsequently amended by Claimant in its submittal dated 1/1/2004 to the lesser amount of USD 92,650 (ninety two thousand six hundred and fifty USD) covering demurrages and storage fees (of USD 20,000) in addition to loss (amounting to USD 72,650) incurred as a result of selling the undelivered goods at a lower price.

In its final submittal dated 21/8/2004, the claimed demurrages and storage fees were further amended to the greater amount of USD 74,697.7 (seventy four thousand six hundred and ninety seven and seven USD) instead of the USD 20,000 initially claimed in Claimant's earlier submittals.

VIII. The Principal Issues in Dispute

The performance of the Agreements and the consequences of breach; in particular, losses, if any, resulting therefrom.

IX. Discussion

The Respondent was notified several times through various means but to no avail as is clear from the above cited minutes of the Arbitral Tribunal's meetings. Accordingly, since Respondent did not participate to whatsoever form in the current proceedings, it did not present any defense arguments. On its part, Claimant requested payment of the above referenced sum (Section VII) for breach of contract and argued the applicability of the UN Convention on Contracts for the International Sale of Goods (the Vienna Convention) concluded on April 11, 1980.

X. Contract Price

The above cited article (4) of both Agreements determining the contract price and the total contract value was subsequently amended by a handwritten note on the margin of both Agreements. The sale was executed accordingly and the goods were shipped by the Claimant without any reservations.

The new price under Contract No. 045/02 was 290 USD/MT. The new price under Contract No. 069/02 was either 280 USD/MT or 270 USD/MT as in the Arabic inscription. Taking one or the other reductions is irrelevant to the outcome of this arbitration. The only main issue in focus is that the price was reduced regardless the amount of reduction. The amended contract price is the legal basis upon which the claims in the present arbitration should have been based.

XI. Reasoning and Conclusions

In its Request for Arbitration, the Claimant, after referencing the agreed upon arbitration clause stated:

"Whereas the litigants didn't agree on the way of forming the panel of arbitrators nor their number, we suggest the panel to consist of one arbitrator and authorize the Alexandria Center for International Arbitration in appointment this arbitrator."

Since Article (5) of the Arbitration Rules of CRCICA, which are applicable to ACIA, as well as Article (15/1) of Law No. 27 for the year 1994 concerning arbitration in civil and commercial matters, which is the lex fori since the agreed seat of arbitration is Alexandria, require the consent of both parties, and since the present arbitration proceedings are ex parte for the absence of Respondent, therefore it would have been contrary to the preceding Rules and Law to appoint a sole arbitrator as requested by Claimant.

Absent an express agreement as to the law governing the parties' contractual relationship, a preliminary question arises as to determining the applicable law. Pursuant to Article (33/1) of the Arbitration Rules of CRCICA, in the absence of a designation of the applicable law by the parties, the arbitral tribunal shall apply "the law determined by the conflict of laws rules which it considers applicable." In defining the latter, rules, there is a well established tradition in international commercial arbitration to apply the rules of conflict of the lex fori to resolve the preliminary question of determining the law applicable to the contract. The lex fori or the law of the seat of arbitration in the current proceedings is the Egyptian law. In this respect, the Egyptian Civil Code of 1948 (hereinafter 'ECC') expressly addresses the issue under Articles (10) and (19), which respectively stipulate:

Article 10 - "Egyptian law will rule to determine the nature of a legal relationship in order to ascertain the law applicable in the event of a conflict between various laws in any particular suit."

Article 19 - "Contractual obligations are governed by the law of the domicile when such domicile is common to the contracting parties, and in the absence of a common domicile by the law of the place where the contract was concluded. These provisions are applicable unless the parties agree, or the circumstances indicate that it is intended to apply another law.(...)".

Pursuant to the above stated provisions, it is Egyptian law which applies to the parties' contractual relationship since the meeting of the will occurred in Alexandria, and, hence, both the disputed contracts were concluded in Egypt. The very same law also applies to determine a second preliminary issue, namely: validity and enforceability of the disputed contract. Both contracts were validly concluded to comprise a commercial deal by two registered companies and their validity and enforceability is neither doubted nor was it challenged, and hence, the Arbitral Tribunal must consider it as established and binding.

In applying Egyptian law to the disputed contracts, the Claimant rightly argued the application of the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention) concluded on April 11, 1980 and to which Egypt had acceded and became a Contracting State since January, 1988. The most relevant provisions of this Convention are Articles (1) and (100) which respectively stipulate:

Article 1 - "(1) 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; or(b) when the rules of private international law lead to the application of the law of Contracting State."

Article 100 - "This Convention applies to contracts concluded on or after the date when the Convention enters into force in respect of the Contracting States referred in article one."

In this respect, and in addition to the Claimant's arguments, it must be clarified that the provisions of the Vienna Convention do not apply to the exclusion of national Egyptian law but in addition to it. However, since both tests coincide, it is worth mentioning that applying either, i.e., the Vienna Convention or the FCC, would not affect the decision on the principal issues in dispute.

It goes without need of being stated that taking delivery of goods is the second main obligation of buyer after payment of price. These obligations are expressly stated under Article (53) of the Vienna Convention and Articles (456) and (463) of the ECC, which, respectively, state:

Article 53 - "The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention."

Article 456 - "Subject to a clause or custom to the contrary, the price is payable at the place where the delivery of the thing sold is made. If the price is not payable at the time of delivery of the thing sold payment must be made at the domicile of the purchaser on due date."

Article 463 - "In the absence of agreement or usage indicating the place and time of delivery, the Purchaser is bound to take delivery of the thing sold at the place where it was at the time of the sale and to remove it without delay, subject to the time necessary for such removal."

Claimant established by documentary evidence attached to its submittals that Respondent had failed to pay full contractual price and take delivery of full contractual consignments despite notification to that effect. The non-performance of Respondent of its obligations constitutes a breach of its contractual obligations giving rise to Claimant's right to be compensated.

Claimant had argued its right to recovery under Articles (74) and (75) of the Vienna Convention which respectively state:

Article 74 - "Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach."

Article 75 - "If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under article 74."

On the basis of the above cited articles, Claimant final claims comprised two matters which need to be addressed separately.

      Firstly, Claimant in its submittals and calculations based itself on the original contract price totally ignoring the amendments referenced hereinabove under Section X. This approach is not supported by Claimant's submitted documents. None of the commercial invoices submitted in the present arbitration comprised a selling price equivalent to the original contract price indicated in the Agreements. All these invoices were calculated on the basis of a reduced contract price which, though not necessarily the new price agreed upon in the amendment, is not at least the original price.

This leaves the Arbitral Tribunal with no doubt that the original contract price indicated in the Agreements was never insisted on by the Claimant or acted upon in the execution of the transaction. This further supports that the new contract prices inscribed on the margin of both Agreements were the prices meant to be agreed upon by the parties and those representing their joint will. Accordingly, the Arbitral Tribunal cannot agree with Claimant's approach of basing the calculations of its losses resulting from the resale of the non-delivered goods on the original contract price of the Agreements. In this respect, the relevant price to the Arbitral Tribunal's view is the one amended as detailed hereinabove under Section X.

      Secondly, Claimant's request indicated in its submittal of August 21, 2004, providing evidence of the payment of demurrage and storage fees including charges for freight and clearance, was for compensation for damages which added up to USD 147,347.7 as well as incurred expenses including arbitration costs and attorney's fees. Taking into consideration that both disputed Agreements were CIF Casablanca Port, the charges for freight and clearance are included in the contract price as amended (see supra Section X) and cannot therefore be regarded as the consequence of Respondent's breach. A CIF contract is a contract for cost, insurance and freight at a named port of destination, in our case, Casablanca port. This means that the seller's deliver obligation takes place when the goods pass the ship's rail at the port of shipment, which includes clearing the goods, if necessary.

      Accordingly, the seller must pay the costs and freight as well as any clearing charges necessary to bring the goods to the named port of destination (Incoterms 2000). These items would have been paid even if Respondent duly performed its contractual obligations. The payment of freight and clearance charges is not under either of the disputed Agreements considered as obligation of the Respondent. Accordingly, the Arbitral Tribunal decided to exclude from its calculations of damages any freight and clearance charges.

As for the only other major item which is demurrage and storage fees, the proposed amount requested by Claimant lacks the support of the submitted evidence since the invoices submitted on 21/8/2004 after reopening the hearings do not in anyway correspond to the shipping invoices submitted earlier in the present arbitration. Scrutinizing both sets of invoices reveals a discrepancy not only in dates, but in vessels' names, amounts of good shipped and stored...etc.

This leaves Arbitral Tribunal's conscience with serious doubt as to the relevancy of the submitted invoices to the claimed amounts of demurrage and storage fees. It is beyond doubt to the Arbitral Tribunal's thinking that the Claimant did as a result of Respondent's breach and failure to take delivery of goods suffered losses in the form of payment of demurrage and storage fees. However, the submitted documents, as explained above, do not satisfy the Claimant's burden of proof. Thus, the Arbitral Tribunal cannot fully accept the claimed amounts as being actual losses suffered.

As reasoned above, it goes without saying that failure to take delivery of the sold goods has to result in demurrage and storage fees. This is particularly so, and further supported by, the fact that the resale contract of such goods was concluded on 30/11/2002. Accordingly, the interim period between the failed delivery date and the new contract with its new delivery schedule has to be regarded as the period during which Claimant suffered demurrage and storage losses. These costs, not being proved, the Arbitral Tribunal has the discretion according to the applicable law to determine the quantum of the losses suffered in this connection on basis of ongoing customs, trade usages and other factual circumstances surrounding the current claim for demurrage and storage fees.

A close examination of Claimant's submitted documents brings to the forefront his notice letter dated 30/12/2002, which, besides enumerating the claims and the failure to take action until 28/11/2002, expressly states that the delay costs are USD 20,000. Bearing in mind that this letter was written, as per its date, a month after the conclusion of the above referenced resale contract (which is exhibit No. 20 of Claimant's notice of arbitration dated 27/5/2000 and is named "Partnership Agreement"), it is interesting to note that the amount then claimed for all delay costs, i.e., demurrage and storage fees was only USD 20,000.

In view of the above stated factual developments of the transaction subject matter of the present arbitration and the lack of supportive evidence of the claimed demurrage and storage fees, it is neither realistic nor fair to accept Claimant's requested amounts in this respect.

Based on the above, and taking into consideration the irrelevancy of some of the claimed items, the Arbitral Tribunal is of the opinion that the sum hereunder awarded to the Claimant fully compensates any incurred damage resulting from Respondent's breach of its obligations under the two Agreements subject matter of this arbitration.

XII. Costs

Under the Rules of CRCICA, unless previously agreed upon between the parties, an arbitral tribunal has broad discretion in allocation of costs between them. In the particular circumstances of this case, the Arbitral Tribunal has decided that the fairest method of allocating costs is to order that (a) each party will bear its own legal costs and expenses and that (b) the registration fees, the administrative costs and the fees of the Arbitral Tribunal, which are fixed in the total sum of L.E. 15,000 shall be payable by the parties in equal shares.

XIII. The Award

For the reasons already set out in full above, the Arbitral Tribunal makes the following award:

Claimant _____'s claims are admitted in part and is awarded a total sum of USD 20,000 (twenty thousand USD) as compensation for losses incurred because of Respondent _____'s breach of contracts Nos. 045/02 and 069/02.

Each party shall bear its own legal costs and expenses and both parties shall equally share the registration fees, the administrative costs and the fees of the Arbitral Tribunal, which are fixed in the total sum of L.E. 15,000. The share of each party is L.E. 7,500.

This is a final award and accordingly these proceedings are now closed.

Signed by Members of the Arbitral Tribunal.

This award is made in Alexandria, Egypt, the Place of Arbitration on 16 January, 2005.

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Pace Law School Institute of International Commercial Law - Last updated October 20, 2008
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