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CISG CASE PRESENTATION

China 2 September 2005 CIETAC Arbitration proceeding (Freezing units case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050902c1.html]

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

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Case identification

DATE OF DECISION: 20050902 (2 September 2005)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2005/17

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: France (claimant)

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

GOODS INVOLVED: Freezing units


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 59 ; 62 ; 78

Classification of issues using UNCITRAL classification code numbers:

53A [Buyer's obligation to pay price of goods];

59A [Payment due without request: payment due at time fixed or determinable by contract or Convention];

62A [Seller may compel performance of any of buyer's obligations];

78B [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 (Chinese): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

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

Freezer units case [2 September 2005]

Translation [*] by Zheng Xie [**]

Edited by Jing Li [***]

The China International Economic and Trade Arbitration Commission (hereinafter, the "Arbitration Commission") accepted the case (Case number: M___) according to:

   -    The arbitration clause in Contract No. SJ2001-1-6129 (revised as No. SJ2002-I-6025) (hereinafter, the "Contract") signed by Claimant [Seller], ___ [of France], and Respondent [Buyer], ___ Auto Group [of the People's Republic of China], on 18 September 2001; and
 
   -  The written Application for Arbitration submitted by the [Seller] on 26 November 2004.

The Arbitration Rules of the Arbitration Commission [hereinafter, the "Arbitration Rules"], which took effect on 1 October 2000, apply to this case. In the [Seller]'s written Application for Arbitration, the name of the [Buyer] was stated as "___ Auto Group." Thereafter, on 15 December 2004, the [Seller] submitted a written statement to the Secretary of the Arbitration Commission clarifying that "___ Auto Group" was directly translated from the [Buyer]'s English name "___ Auto Group" stated in the Contract. After verifying, the [Seller] confirmed that "___ Auto Industry Ltd." is the [Buyer]'s officially registered name.

The [Seller] also explained in writing the matter of the modification of the Contract number, stating that Contract No. SJ2001-I-6129 concluded by the parties, was changed to No. SJ2002-I-6025 on 31 May 2002; thereafter, the parties used the revised number in all documents and correspondence pertinent to this case.

ARBITRATION PROCEEDINGS

On 14 January 2005, the Secretariat sent the Notice of Arbitration and the relevant documents to the [Seller].

On the same day, the Secretariat sent the [Buyer] the Notice of Arbitration, relevant documents, the [Seller]'s Application for Arbitration, and relevant evidence to ___ Building ___ Floor, ___ Street, ___ District, Beijing, China, which was the [Buyer]'s address provided in the [Seller]'s Application for Arbitration.

On 17 January 2005, the aforementioned documents sent to the [Buyer] were returned by Beijing Express Mail Service ("EMS") because "the recipient moved to a new address." On the same day, the Secretariat notified the [Seller]'s attorney of this situation.

On 18 February 2005, the [Seller]'s attorney sent a fascimile to the Secretariat advising that, after investigation, it found that " ___ Bridge ___, No. ___" (hereinafter, "___ Address") may be the [Buyer]'s current address, and the [Buyer]'s registered address with China National Industrial and Commercial Administrative Bureau is No. ___, ___ Building, ___ Street, ___ District, Beijing (hereinafter, "___ Building"). The [Seller] requested the Secretariat to first send the Notice of Arbitration and other documents to " ___ Address,", then "___ Building," if they were returned again.

On the same day, the Secretariat, as per the [Seller]'s request, sent the aforementioned documents to " ___ Address." On 20 February 2005, the aforesaid documents were returned by EMS marked "Company does not exist." On 28 February 2005, the Secretariat, as per the [Seller]'s request, sent the aforementioned documents to "___ Building." The receipt provided by EMS shows that the documents were "Delivered on 2 March 2005."

The [Buyer] neither submitted a response nor filed a counterclaim during the period provided by the Arbitration Rules.

The [Seller] submitted the written enterprise registration documents issued by China National Industrial and Commercial Administrative Bureau Data Center demonstrating that the place of business of the [Buyer] is the aforementioned "___ Building." In the next arbitration proceedings, the Secretariat sent all relevant documents to the [Buyer] with the address at "___ Building."

The [Seller] appointed Mr. ___ as Arbitrator. However, the [Buyer] neither appointed nor authorized the Chairman of the Arbitration Commission to appoint an arbitrator within the period provided by the Arbitration Rules. According to Article 26 of the Arbitration Rules, the Chairman appointed Ms. ___ as Arbitrator for the [Buyer]. Since the parties neither jointly appointed nor authorized the Chairman to appoint the Presiding Arbitrator within the period provided by the Arbitration Rules, according to Article 24 of the Arbitration Rules, the Chairman appointed Ms. ___ as the Presiding Arbitrator. On 28 March 2005, these three arbitrators formed the Arbitration Tribunal to hear this case.

On 28 March 2005, the Secretariat of the Arbitration Commission's Commercial Sub-Commission decided to hold an arbitral hearing in Beijing at 9:30 a.m. on 9 May 2005, and on the same day, the Secretariat sent the Notice of Arbitral Hearing to both parties. Thereafter, the hearing was postponed to 2:00 p.m. on 9 May 2005. The Secretariat sent the Notice of Time Revision to both parties.

At 2:00 p.m. on 9 May 2005, the hearing was held as scheduled. The [Seller] appointed attorneys to attend the hearing, while the [Buyer] did not appoint any representatives to attend the hearing. According to Article 42 of the Arbitration Rules, the Arbitration Tribunal heard this case by default. In the course of the oral hearing, the Arbitration Tribunal heard the [Seller]'s statements, investigated the relevant facts, and examined the original copy of the relevant evidence submitted by the [Seller]. Before the end of the hearing, the [Seller] submitted supplementary documents including the Attorneys' Opinion and evidence related to the claim for attorneys' fee- and the arbitration fee.

On 10 May 2005, the Secretariat sent a letter to the [Buyer] informing it of the situation at the oral hearing, and also notified the [Buyer] that it could submit a request in writing for another oral hearing before 13 May 2005. The Secretariat also sent to the [Buyer] the supplementary documents submitted by the [Seller], and invited the [Buyer] to submit an opinion or objection to these supplementary materials before 13 May 2005.

On 24 May 2005, the [Seller] submitted a supplementary opinion with supporting evidence. The Secretariat forwarded these documents to the [Buyer] in a timely manner.

The [Buyer] did not submit any opinion in response to the written Notice sent by the Secretariat or the Attorneys' Opinion, the supplementary opinion and relevant evidence submitted by the [Seller].

This dispute is now settled. The Arbitration Tribunal handed down the award based on the written documents, and the facts and evidence verified in the hearings.

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

FACTS

On 18 September 2001, the [Seller] and the [Buyer] signed a Contract for sales of four LF____ freezer units and one LF___ freezer unit (totaling five freezer units). The Contract number was SJ2001-I-6129. On 21 September, the [Seller] signed a service contract (the "Service Contract") with the end-user of these units, ___ & ___ Technology Ltd. (hereinafter "___ Tech."), The Service Contract was numbered SJTY2001-I-6129B. The total value of these two Contracts was US $608,926.00 (US $379,200.00 + US $229,726.00).

Thereafter, the parties agreed to change the trade term from FOB (free on board) to EXW (ex works).

The price of the abovementioned freezer units shall be paid according to Article 9 of the Contract, which stipulates:

"The [Buyer] shall issue an irrevocable Letter of Credit (L/C) for 100% of the contract price with the [Seller] as the beneficiary. The [Seller] shall issue a Bill of Exchange for 100% of the value of the commercial invoice with the issuing bank as the Payer and for payment within 60 days after presentation, and shall provide the shipping documents stipulated in Article 10 for negotiation of the L/C."

On 20 February 2002, the [Buyer] issued irrevocable L/C No. 002L___ for US $379,200 with the [Seller] as the beneficiary. Upon the parties' agreement, the L/C was revised twice:

First, on 20 March 2002, Article 46A Clause 2 of the L/C was revised to provide for "freight collected on arrival;"

Second, on 23 May 2002, it was revised so that the total value (US $608,926.00) of the Contract and the Service Contract shall be paid under one L/C, and the expiration date of L/C and the latest date of loading were revised to 15 July 2002 and 30 June 2002, respectively.

On 4 June 2002, the [Seller] notified the [Buyer] that one of the freezer units was damaged, caused by an accident, and therefore, the units under the Contract could not be loaded for delivery before the deadline stipulated in the Contract. On 11 June 2002, with the ___ Tech.'s approval, the [Buyer] expressly agreed that the units could be shipped in two installments.

During the performance of the Contract, a dispute arose regarding payment of the contract price. After negotiation, the parties failed to reach an agreement; thereafter, the [Seller] filed the arbitration application.

CLAIMS AND REQUESTS BY THE PARTIES

[Seller]'s position

1. The first delivery of four units

On 29 May 2002, the [Seller] issued the first invoice in the amount of US $485,988 for four freezer units. This amount was the total value of the Contract and the Service Contract, after deducting the price of one freezer unit that was not delivered. The price for each unit included the relevant service fee.

These four freezer units were loaded for delivery on 22 June 2002, and were delivered on 30 September 2002. Because the parties agreed on delivery by installments, on 8 July 2002, the [Seller] presented the first document to the designated bank, ___ Credit. On 9 September 2002, the issuing bank (China ___ Bank) accepted the document, with the expiration date of Letter of Exchange 9 December 2002. However, although the units had been delivered, and the document had been accepted by the issuing bank, the [Buyer] still refused to pay the price of the invoice before the expiration date of the Letter of Exchange, and held up the payment until 9 April 2003.

2. The second payment for the remaining freezer unit

On 12 September 2002, the [Seller] informed the [Buyer] that the remaining unit was ready to load for delivery. On 18 September 2002, the [Buyer] accepted the condition that the payment should be made within 90 days of the acceptance of the documents. On 27 September 2002, the [Seller] issued the second invoice in the amount of US $122,938. On 3 October 2002, this unit was loaded for delivery, and was delivered on 19 November 2002.

On 7 November 2002, the [Seller] presented the second document under the same L/C No. 002LC___ to the designated bank. On 20 November 2002, regarding the payment of US $129,938 for the second installment, the issuing bank via SWIFT notified the designated bank that "the aforementioned document has been accepted, and the payment will be made on time. The expiration date is 13 February 2003."

However, the [Buyer] neither made the payment on or before the expiration date nor paid thereafter. Both the [Seller] and the designated bank made numerous demands that the [Buyer] should pay the remaining price, but the [Buyer] did not respond.

On 12 March 2004, the [Seller]'s attorney send a demand letter to the [Buyer] requesting it to pay US $122,938; otherwise, the [Seller] would take any necessary measures to protect its interests.

On 22 March 2004, the [Buyer] responded:

"With respect to the payments mentioned in your registered letter, please allow us to take a few days to confirm this amount and to discuss with our bank about payment in detail. Our bank (China ___ Bank) and our accounting department are preparing to resolve the aforementioned matter, and would confirm this payment probably at the end of this month."

However, the [Buyer] did not make the payment.

3. [Seller]'s claims

      (1) The [Buyer] should pay US $122,938 for the one freezer unit of LF ___;

      (2) The [Buyer] should pay interest on the delayed payment. The interest on the first delayed payment of US $485,988 is US $6,587; the interest on the second delayed payment of US $122,938 should be calculated to the date when the second delayed payment is actually made.

      (3) The [Buyer] should pay the [Seller] for the expenses and the attorneys' fee incurred for this arbitration;

      (4) The [Buyer] should pay the arbitration fee of this case.

4. Legal Grounds

      (1) Jurisdiction

      The [Seller] filed this arbitration based on Contract No. SJ2002-I-6025. According to the Arbitration Clause in the Contract, any dispute that arises out of the Contract shall be submitted to the Arbitration Commission for arbitration.

      (2) Applicable law

      Because both China and France are Contracting States of the United Nations Convention on Contracts for International Sales of Goods (CISG), the CISG shall automatically apply to the Contract of this dispute.

      (3) Claim for the arrearage of one unit in the amount of US $122,938

      According to Articles 53 and 59 of CISG, the [Buyer] shall pay the contract price.

Article 53 of CISG provides:

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

Article 59 of CISG provides:

"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 fifth freezer unit was loaded on 3 October 2002, and the [Buyer] and the issuing bank had already confirmed the contract price of this unit. Regarding this unit, the [Buyer] had not raised any material objection. Therefore, the [Buyer] should pay the contact price for this unit.

      (4) Claim for interest on the two delayed payments

      Article 78 of CISG provides:

"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."

Therefore, the [Seller] requests the [Buyer] to pay interest on the delayed payments. Since both China and France are Member States of the UNIDROIT Principles of International Commercial Contracts (hereinafter, the "Principles"), the interest rate should be determined according to Article 7.4.9 of the Principles:

"The rate of interest shall be the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the place for payment, or where no such rate exists at that place, then the same rate in the State of the currency of payment. In the absence of such a rate at either place the rate of interest shall be the appropriate rate fixed by the law of the State of the currency of payment."

Because the payment should be made in US dollars, the interest rate should be the prime interest rate of the United States, i.e., the annual interest rate of 4.67% in 2002, the annual interest rate of 4.12% in 2003, and the annual interest rate of 4% in 2004.

Therefore, the [Buyer] should pay the [Seller] the following interest:

The first installment of four units:
2002: (485,988 365) 23 days 4.67% US $1,430
2003: (485,988 365) 94 days 4.12% US $5,157
Total:   US $6,587

The second installment of one unit:
2003: (122,938 365) 306 days 4.12% US $4,246
2004: the [Buyer] shall pay interest up to the date when the payment is actually made.

[Seller]'s Attorneys' Opinion

In the Attorneys' Opinion submitted on the same day, the [Seller] alleged as follows:

1. The facts in this case are clear, and the evidence is sufficient

The sales contractual relationship between the [Seller] and the [Buyer] can be proved by the Evidence 1 of the Contract and the Evidence 21 of the [Buyer]'s Responding Letter.

After signing the Contract, the [Seller] delivered the goods to the [Buyer] in two installments. Evidence 5 proves that the [Buyer] agreed on delivery by installments; Evidence 8 proves that the first installment had been delivered; Evidence 13 and Evidence 14 prove that the second installment was delivered; the Evidence 21 of the [Buyer]'s responding letter also proves the delivery of the goods.

2. The [Seller]'s claims are based on the relevant laws

According to the relevant provisions of CISG, after accepting the goods under the Contract, the [Buyer] should have paid the contract price; if the payment was delayed, the [Buyer] should pay interest accrued due to the delay of payment. Therefore, the [Seller]'s claim should be sustained based on the relevant law.

3. Attorneys' fee

Since the [Buyer] had no intent to pay the contract price, the [Seller] had to resort to legal remedy to resolve this matter; therefore, the [Seller] incurred attorneys' fees of US $12,000. The [Seller] requests the Arbitration Tribunal to find that the [Buyer] should bear the [Seller]'s attorneys' fee.

After the oral hearing, the [Seller] submitted Supplementary Statements Regarding Some Relevant Issues Raised in the Oral Hearing, and provided English Translation of some of the evidence attached to the Application for Arbitration, as well as supplementary statements on some evidence. The [Seller] also submitted six new pieces of evidence. In addition, the [Seller] submitted supplementary explanation on the parties' modification of payment terms and the contract number. The modification of the contract number is referred to in the first part of this award, so it is not re-stated here. As to the modification of the payment terms, the [Seller] explained as follows:

As stated above, on 4 June 2002, the [Seller] informed the [Buyer] that because one of the units was damaged due to an accident, it could not be loaded for delivery as provided in the Contract; on 11 June 2002, after obtaining ___ Tech.'s approval, the [Buyer] expressly agreed on delivery in two installments. Because delivery in two installments might cause some economic loss to the [Buyer], in order to avoid loss, as per the [Buyer]'s request, the [Seller] accepted the payment term of the payment by presentation of documents within 60 days. Thereafter, on 29 August 2002, the [Buyer] contacted the [Seller] in the hope that the [Seller] could accept the payment term of payment within 90 days of delivery of documents instead of payment within 60 days of delivery of documents as formerly accepted. Considering that the term of payment within 90 days of delivery of documents could provide a convenience to the [Buyer] to pay the contract price after selling the goods to a third party and receiving the payment, the [Seller] accepted the payment term of payment within 90 days of delivery of documents as proposed by the [Buyer].

THE ARBITRATION TRIBUNAL'S OPINION

1. The scope of this arbitration

The [Seller] filed this Arbitration Application regarding the disputes arising out of Contract No. SJ2002-I-6025. With respect to the relationship between Contract No. SJ2002-I-6025 and Service Contract No. SJ2001-I-6129, the Arbitration Tribunal verified the following facts:

      (1) The parties signed Contract No. SJ2001-I-6129 for the sale of freezer units; the [Seller] and end-user ___ Tech signed Service Contract No. SJTY2001-I-6129B as to the use of the freezer units under the Contract. The [Seller] alleged that for the [Buyer]'s convenience to issue the L/C, on 31 May 2002, the new contract number SJ2002-I-6025 was assigned to both the Contract and the Service Contract. This new contract number was used by the parties in the following correspondence and documents, and the [Buyer] did not raise any objection.

      (2) It appears that as early as 20 February 2002 when the [Buyer] issued the first L/C, the new contract number SJ2002-I-6025 was recorded in the L/C, and this contract number had been used thereafter. Some pieces of evidence proved that during the performance of the Contract, Contract No. SJ2002-I-6025 actually covered the content of both Contract No. SJ2001-I-6129 and Service Contract No. SJTY2001-I-6129B. The contract price of Contract No. SJ2002-I-6025 was actually the total of the price under Contract No. SJ2001-I-6129 and the price under Service Contract No. SJTY2001-I-6129B. The [Buyer] did not object to the [Seller]'s allegation during the arbitration proceedings that the Service Contract had been completed.

In sum, Contract No. SJ2001-I-6129 was re-numbered as SJ2002-I-6025; therefore, the Arbitration Clause stipulated in Contract No. SJ2001-I-6129 should also apply to Contract No. SJ2002-I-6025. Therefore, the Arbitration Tribunal finds that the scope of this arbitration covers all disputes under and related to Contract No. SJ2002-I-6025.

2. Name of the [Buyer]

In the Arbitration Application, the [Seller] stated the [Buyer]'s name as "___ Auto Group," which was not consistent with "___ Auto Industry Ltd.," the Chinese name of the [Buyer], as stated in the Contract. Thereafter, the [Seller] explained that "___ Auto Group" stated in the Arbitration Application was the word-by-word translation of the English name of the [Buyer] as stated in the Contract, and after investigation, it appeared that "___ Auto Industry Ltd." is the [Buyer]'s registered name.

The Arbitration Tribunal finds that the Chinese name of the [Buyer] was "___ Auto Industry Ltd.," and the English name was "___ Auto Group."

3. Applicable law

The parties did not stipulate either applicable substantive law or procedural law. According to the general principles of international private law and international trade custom, the procedural law of the situs shall apply; as to the substantive law, since France and China, where the [Seller]'s and the [Buyer]'s respective places of business were, are Contracting States of the CISG, the Arbitration Tribunal finds that the provisions of CISG governing the rights and obligations of buyer and seller shall apply.

As for whether the UNIDROIT Principles of International Commercial Rules shall apply to this case, the Arbitration Tribunal notes that the [Seller] cited the relevant articles of the Principles when calculating interest on the delayed payments. The Arbitration Tribunal finds that the Principles are neither an international convention, nor did the parties stipulate the Principles in the Contract, and therefore, it lacked either legal or contractual grounds for the Arbitration Tribunal to consider the case according to the Principles; however, the Arbitration Tribunal could refer to the Principles.

4. The performance of the Contract

According to the [Seller]'s statements and the twenty-eight (28) pieces of evidence submitted by the [Seller], the Arbitration Tribunal verified the following facts regarding the performance of the Contract:

      (1) The parties did not object to the deliveries in two installments. The relevant evidence proved that the parties agreed that the payment term of "payment of 100% of the value of the commercial invoice within 60 days of presentation of the letter of exchange" was changed to "payment of 100% of the value of the commercial invoice within 90 days of acceptance."

      (2) During the performance of the Contract, although the unit price was not changed, the price of one or four units recorded in the L/C and other documents/evidence included the corresponding price of the Service Contract.

      (3) The evidence demonstrated that the first installment of four units was loaded for delivery on 22 June 2002, and the issuing bank accepted the documents on September 9, and the expiration date of the letter of exchange should be 9 December as calculated based on 90 days. On 22 February 2003, the [Buyer] sent a fax to the [Seller] confirming the contract price of US $485,988 and promising to make the payment before the end of February of 2003. In fact, the [Seller]'s evidence proved that this payment was not made until 9 April 2003.

      (4) The evidence showed that as to the second installment of one freezer unit, the [Seller] issued an invoice in the amount of US $122,938; the goods were loaded for delivery on October 3 and delivered on 19 November 2002; on 7 November 2002, the [Seller] provided several documents to the designated bank showing that the goods were one -LF___ freezer unit for the price of US $122,938. On 20 November 2002, the issuing bank notified the designated bank that the documents had been accepted, and that the payment deadline was 13 February 2003.

      (5) On 12 March 2004, the [Seller]'s attorney sent a demand letter to the [Buyer] requiring that the [Buyer] pay US $122,938 for the one unit; on 22 March 2004, the [Buyer] responded to the demand letter confirming the transaction of the five units, and requesting the [Seller] to allow more time to verify the contract price, and promising to respond to the payment at the end of March.

      (6) No evidence or defense showed that the [Buyer] made further confirmation of the contract price or paid US $122,938 for the second installment.

5. The [Buyer]'s liability for breach of contract

The Arbitration Tribunal finds that the Contract was voluntarily established with the parties' true intent, and was binding on both parties; therefore, the parties should perform the Contract in good faith accordingly.

In this case, the [Seller] performed its duties including delivery of the goods and the documents according to the Contract. The [Buyer] did not raise any objection as to the [Seller]'s performance including the quantity, quality, time of delivery, etc. However, the [Buyer] delayed the payment for the first installment of the goods, and did not pay for the second installment at all. The Arbitration Tribunal finds that the [Buyer] was obligated to take the delivery of the goods and pay the contract price; otherwise, it violated Articles 53 and 59 of the CISG. The [Buyer]'s aforementioned conduct constituted a breach of the Contract; therefore, the [Buyer] should bear the relevant liability according to the CISG.

6. The [Seller]'s claims

      (1) The [Seller] requests the [Buyer] to pay the contract price of US $122,938 for the one LF___ freezer unit. As stated above, the [Buyer]'s non-payment of US $122,938 for the second installment constituted a breach of the Contract. The Arbitration Tribunal finds that according to Article 62 of the CISG:

"The seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement."

Therefore, the [Seller] was entitled to request the [Buyer] to pay the arrearage of the contract price. The Arbitration Tribunal sustains this claim.

      (2) The [Seller] requests the [Buyer] to pay interest on the delayed payments. According to Article 78 of the CISG:

"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 Arbitration Tribunal finds that the [Buyer] should pay the [Seller] interest on the delayed payment for the first installment and on the unpaid contract price of the second installment.

Because the parties did not stipulate the method to calculate interest on delayed payment or non-payment, based on the relevant background and facts of this case, the Arbitration Tribunal sustains the [Seller]'s allegation on the annual interest rate and the period accrued as follows:

The first installment of four units:
2002: (485,988 365) 23 days 4.67% US $1,430
2003: (485,988 365) 94 days 4.12% US $5,157
Total: US $6,587

The second installment of one unit:
2003: (122,938 365) 306 days 4.12% US $4,246
2004: 122,938 4% US $4,917.52
2005: The [Seller] did not allege the interest rate; according to the most preferential interest rate in 2005 (e.g., 6.5% on August 22), the Arbitration Tribunal finds that the [Buyer] should pay the [Seller] interest on US $122,938 at the annual rate of 5% from 1 January 2005 to the date when the payment is actually made.

      (3) The [Seller] requests the [Buyer] to pay its attorneys' fee and other expenses incurred due to this arbitration. In the Attorneys' Opinion submitted by the [Seller], the [Seller] specified that the attorneys' fee were US $12,000, and other expenses specified in the evidence were US $1,254.66. According to Article 59 of the Arbitration Rules and the facts of this case, the Arbitration Tribunal finds that the [Buyer] should compensate the [Seller] for the attorneys' fee and other expenses, totaling US $13,000.

      (4) The [Seller] requests the [Buyer] to pay the arbitration fee. The Arbitration Tribunal finds that since this dispute arose due to the [Buyer]'s breach, and most of the [Seller]'s claims are sustained, according to the Article 58 of the Arbitration Rules, the Arbitration Tribunal finds that the [Buyer] should bear the entire arbitration fee.

AWARD

In view of the above analysis and judgments, the Arbitration Tribunal hands down the following award:

1. The [Buyer] shall pay the [Seller] US $122,938 for the price of the second installment of one LF____ freezer unit.

2. The [Buyer] shall pay the [Seller] interest in the amount of US $6,587 on the delayed payment for the four units, and interest on the unpaid contract price of US $122,938 of the second installment of one unit, including US $9,163.52 from 14 February 2003 to 31 December 2004, and interest at the annual rate of 5% from 1 January 2005 to the date when the payment is actually made.

3. The [Buyer] shall compensate the [Seller] for its attorneys' fee and other expenses incurred for this case, totaling US $13,000.

4. The [Buyer] shall pay the arbitration fee of US $6,236. The [Seller] had already pre-paid the arbitration fee of US $6,236 which was offset by the arbitration fee. Therefore, the [Buyer] should compensate the [Seller] for US $6,236.

The [Buyer] shall pay the [Seller] the above awarded amount within 30 days of this award; otherwise, interest at the annual rate of 6% should be added.

This is the final award. It takes effect when handed down.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant ___, of France is referred to as [Seller]; Respondent ___ Auto Group, of the People's Republic of China is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [US $].

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

*** Jing Li, LL.M., University of Texas at Austin, School of Law; Master of Law, Sun Yat-Sen University School of Law, China; LL.B., Sun Yat-Sen University School of Law, China.

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