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CISG CASE PRESENTATION

China 12 September 2005 CIETAC Arbitration proceeding (Hydraulic pressure geologic equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050912c1.html]

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

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Case identification

DATE OF DECISION: 20050912 (12 September 2005)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/2005/18

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Australia (respondent)

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

GOODS INVOLVED: Hydraulic pressure geologic equipment


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 36 ; 74 ; 77 ; 84 ; 86 [Also cited: Article 25 ]

Classification of issues using UNCITRAL classification code numbers:

36B2 [Time for assessing conformity of goods (lack of conformity occurring after passage of risk): guarantee of continued conformity];

74C [General rules for measuring damages (other problems): causation];

77A [Obligation to take reasonable measures to mitigate damages];

84B2 [Restitution of benefits received: when impossible to return goods in same condition];

86A1 [Buyer's duty to preserve goods (duty of buyer who has received goods and intends to reject):obligation to take reasonable steps to preserve]

Descriptors: Guarantees ; Damages ; Mitigation of loss ; Restitution ; Storage of goods

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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

Hydraulic pressure geologic equipment case [12 September 2005]

Translation [*] by Jing Li [**]

Edited by Meihua Xu [***]

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

   -    The arbitration clause in the Import Agency Agreement signed by a third party, Shandong ___ Trading Co. Ltd. [of China] (hereinafter, "___ Co. Ltd."), and Claimant [Buyer], ___ University of China;
 
   -    The arbitration clause in Contract No. 021A7008 (hereinafter, the "Purchase Contract" or "Contract") signed by ___ Co. Ltd. and Respondent [Seller], ___ Pty. Ltd. [of Australia] on 2 November 2001;
 
   -    The written Application for Arbitration submitted by the [Buyer] on 18 February 2004.

The Arbitration Rules of CIETAC (hereinafter, the "Arbitration Rules"), which took effect on 1 October 2000, apply to this case.

ARBITRATION PROCEEDINGS

The Secretariat of CIETAC sent the Notice of Arbitration, the Arbitration Rules, and the Panel of Arbitrators to both parties, respectively, by express mail on 3 June 2004. Meanwhile, the Secretariat sent the Application for Arbitration and the evidence submitted by the [Buyer] to the [Seller].

The [Buyer] appointed Mr. ___ as Arbitrator. Since the [Seller] failed to appoint an arbitrator within the regulated time and did not entrust the Chairman of CIETAC to make such appointment, according to Article 26 of Arbitration Rules, the Chairman appointed Mr. ___ on behalf of the [Seller]. Also, since the parties did not jointly appoint a presiding arbitrator or authorize the Chairman to make such appointment, the Chairman, according to Article 24 of Arbitration Rules, appointed Ms. ___ as the Presiding Arbitrator. On 12 July 2004, the above three arbitrators formed the Arbitral Tribunal (hereinafter the "Tribunal") to hear this dispute. On the same day, the Secretariat of CIETAC sent the Notice of Formation of the Tribunal to both parties, respectively.

The Tribunal, through the Secretariat, decided that the arbitral proceedings shall be commenced on 12 October 2004 in Beijing, China. On 24 August 2004, the Secretariat sent the Notice of Commencement of Arbitration by express mail. On 8 October 2004 and 22 October 2004, respectively, the [Seller] requested CIETAC to postpone the time of the oral hearing. The Tribunal decided that the reasons provided by the [Seller] for postponing the oral hearing were appropriate. Therefore, the Tribunal postponed the oral hearing to 15 December 2004.

On 15 December 2004, the Tribunal commenced the arbitration proceedings in Beijing as scheduled. In light of the situations of this case, two more oral hearings were held, respectively, on 12 May 2005 and 9 June 2005. At these three hearings, both the [Buyer] and the [Seller] appointed attorneys to attend. They made oral statements on the facts and legal issues, made oral arguments, cross-examined evidence, and answered questions raised by the Tribunal. Both parties also agreed that written cross-examinations on the supplementary evidence could be submitted after the oral hearings. After these hearings, both parties submitted their final statements, supplementary evidence, and cross-examinations in writing. The Secretariat exchanged the above materials with both parties.

On 17 November 2004, the [Seller] wrote to CIETAC, objecting to CIETAC's jurisdiction over this dispute. CIETAC made a careful study of the written materials submitted by both parties, and on 1 June 2005 issued its Decision on Jurisdiction (2005) CIETAC Beijing No. ___, after listening to the report prepared by the Tribunal upon two hearings on this issue. The decision was: the [Buyer] and the [Seller] are the proper subjects of the present case, and the arbitral proceedings shall proceed between the [Buyer] and the [Seller].

Since the jurisdiction issue was raised and the [Buyer] and the [Seller] had submitted written statements and evidence, the Tribunal was entrusted by CIETAC to hold two hearings on this issue, respectively, on 15 December 2004 and 12 May 2005. Therefore, the Tribunal could not award before 12 April 2005 as had been scheduled. CIETAC therefore approved that the originally scheduled award date 12 April 2005 be postponed to 12 July 2005. Afterwards, the [Buyer] submitted a proposal for conciliation, and the [Seller] submitted a request for re-inspection and evaluation. The Tribunal then requested CIETAC to postpone the date for award again. CIETAC, after consideration, eventually decided to postpone the award date until 12 September 2005.

As for the [Seller]'s request of re-inspection and evaluation, the Tribunal decided to refuse this request, and notified the parties of this decision by writing.

This dispute is now settled. The Tribunal issues its award within the regulated time period under the Arbitration Rules after discussion by the members of the Tribunal, based on the facts investigated, and the written opinions and evidence provided by both parties.

The followings are the facts, the opinion of the Tribunal, and the award.

POSITIONS AND REQUESTS BY THE PARTIES

[Buyer]'s position

On 2 November 2001, as commissioned by the [Buyer], ___ Co. Ltd. in its own name concluded the Purchase Contract in dispute with the [Seller], purchasing three sets of ___ (equipment) from the [Seller], for the price of US $239,769.00. Among these three ___, the parties raised no dispute on the two 2000 meter ___s. However, the 8,000 meter hydraulic pressure geologic ___ (hereinafter, the "Equipment in dispute" or the "Equipment") failed the testing in the ocean between 20 August 2002 and 8 September 2002 after [Buyer]'s installation.

   -    From 30 September 2002 to 27 November 2002, although the [Buyer] and the [Seller] negotiated and agreed to adjust the Equipment in dispute several times, it still did not operate normally. The inspection by the Entry-Exit Inspection and Quarantine of Qingdao, China on 16 December 2002 indicated that:

The hydraulic pressure motor of the Equipment in dispute was severely damaged, and could not be put into use;

Five of the nine plungers were stuck, and the slipper-frames of these nine plungers were broken, with all of the slippers sloughing;

The swash plate of the motor and the stud of the cable layer were severely abraded, the cable system did not operate normally, and the cable was snapped.

   -    The conclusion of this inspection was that the design and/or manufacture was defective. Therefore, the [Buyer] had requested several times that the [Seller] solve these problems of this Equipment and make payment of the relevant fees. The [Seller], however, had never given any sincere reply. On 26 August 2003, the [Buyer] again sent a letter to Managers ___ and ___ of the [Seller]'s branch in China, requesting the [Seller] to solve the Equipment's defects before 31 August 2003; otherwise, the [Buyer] would return the Equipment.
 
   -    On 21 November 2003, the [Seller] sent a letter to ___, the Deputy Head Master of the [Buyer], replying with its opinion of solution. In response, the [Buyer] sent its own opinion of solution to the [Seller] on 25 December 2003. However, the [Seller] did not reply. Consequently, in order to protect its interests, the [Buyer] filed this application for arbitration, requesting the Tribunal to arbitrate according to the law.

[Buyer]'s claims

The [Buyer] requested the Tribunal to have the [Seller]:

   1.   Compensate for the price of the Equipment in dispute in the amount of US $88,840.00, and retrieve this Equipment;
 
   2.   Compensate for the fee for installing, testing, and adjusting the Equipment, the fee for design, and the fee for utilizing the port, in the amount of renminbi [RMB] 228,575.00; and
 
   3.   Compensate for the arbitration fee of this arbitration.

[Seller]'s response

In response to the arbitration request by the [Buyer], the [Seller] submitted its Statement of Defense on 21 December 2004:

As commissioned by ___ Corporation, the [Seller] concluded the Contract of this case with ___ Co. Ltd. on 2 November 2001. After the delivery and installation of the goods, because of the technical problems with the Equipment in dispute, the [Buyer], ___ Corporation, and the [Seller] together signed a Memorandum on Relative Matters of ___ Hydraulic Pressure ___ (hereinafter, the "Memorandum") on 5 October 2002, agreeing on the solution to the technical problems of the Equipment in dispute, which was to return this Equipment to ___ Corporation for it to redesign and manufacture the ___, and the relative fees were to borne by ___ Corporation.

After signing the Memorandum, the [Buyer] did not return the Equipment in dispute to ___ Corporation.

   -    Instead, the [Buyer] utilized it in its program of high sea investigation and experiment, and caused the breaking of the motor, the abrasion of the cable layer, and the snap of the cable.
 
   -    The [Seller] also responded that the limitation period for [Buyer]'s claim of damages had exceeded the quality warranty period as agreed in the Purchase Contract.

Therefore, the [Seller] did not have any obligation to indemnity towards the [Buyer]'s arbitration requests. The reasons are as follows:

Article 14 of the Contract provided that only the indemnity in the inspection certificate issued by the Commodity Inspection and Testing Bureau of China was effective. The [Buyer] should have had calculated the indemnity based on the indemnity provided in this inspection certificate. Moreover, this article of the Contract also provided that the longest quality warranty period of the Equipment was twelve months, and this period started on the date when the goods arrived at the destination. According to the [Buyer]'s evidence, the arrival date of the goods was 6 July 2002. Therefore, the quality warranty period of the Equipment could be expanded to 6 July 2003.

   -    However, before the receipt of the Application for Arbitration, i.e., before 3 June 2004, the [Seller] had not received any effective indemnity claims based on the inspection certificate issued by the Commodity Inspection and Testing Bureau of China. The only effective damages claimed by the [Buyer] were this request for arbitration to CIETAC, and this request was filed way later than 6 July 2003, which had exceeded the quality warranty period agreed in the Contract. Consequently, as for this request for arbitration, the [Seller] submitted that it did not have any obligations for damages.
 
   -    Further, the evidence provided by the [Buyer] indicated that the date of issuance of the invoice of the installation, refit, and dismounting of the Equipment by the People's Liberation Army ___ Factory was before 3 November 2003, which was way later than the agreed warranty period. The [Seller], therefore, argued that since the evidence of the [Buyer] filing arbitration before 3 November 2003 did not exist, the [Buyer] could not have effectively claimed damages before that date.

Based on the reasons listed above, the [Seller] submitted that the [Seller] was not responsible for any obligations of damages towards the [Buyer]. The Application for Arbitration of the [Buyer] should be rejected, and the relative fees should be borne by the [Buyer].

[Buyer]'s final Statement

After the third hearing, the [Buyer] submitted the following final Statement:

1. ___ Co. Ltd. was commissioned by the [Buyer] to purchase the 8,000 meter geologic ___ in its own name from the [Seller]. Since this Equipment was defectively designed and manufactured, in the experiment its hydraulic pressure motor was severely damaged, five of the nine plungers were stuck, the slipper-frames of these nine plungers were broken, with all of the slippers sloughing, the swash plate of the motor and the stud of the cable layer were severely abraded, the cable system did not operate normally, and the cable was snapped. The Survey Report issued by the Entry-Exit Inspection and Quarantine of Qingdao, China on 16 December 2002 could further demonstrate these defects of the Equipment. According to Article 14 of the Contract and Article 40 of the Product Quality Law of the People's Republic of China, the [Buyer] requested the Tribunal to have the [Seller] compensate for the amount of US $88,840 of the Equipment price, the fee for installing, adjusting, and designing, and the fee for utilizing the port, totaling RMB $228,575.00 in order to protect the [Buyer]'s legal rights.

2. The [Buyer] also submitted a conciliation proposal. However, the [Buyer] indicated therein that if the [Seller] did not conciliate, the [Buyer] requested the Tribunal to proceed and hand down the arbitral award.

3. The [Buyer] also submitted details of the damages it claimed, including the following six items:

      (1) Price of the Equipment was US $88,840, with the exchange rate 8.3, and therefore it was RMB 737,372;

      (2) Fee for designing the Equipment was renminbi [RMB] 4,500 (the total fee for designing three ___ and one ___was RMB 18,000, and therefore, the fee for designing the Equipment in dispute could be calculated as 1/4, which was 18,000 1/4 = RMB 4,500);

      (3) Fee for installing the Equipment was RMB 121,105 (the total fee for installing three ___ was RMB 363,315, and therefore, the fee for installing the Equipment in dispute could be calculated as 1/3, which was 363,315 1/3 = RMB 121,105);

      (4) Fee for adjusting the Equipment was RMB 89,760;

      (5) Fee for refitting the Equipment was RMB 13,210;

      (6) Arbitration fee was RMB 43,808.

The above fees totaled RMB 1,009,755, which equaled US $121,657.20.

[Seller]'s final Statement

After the third hearing, the [Seller] submitted the following final Statement:

1. The [Seller] still objected to the Decision on Jurisdiction (2005) CIETAC Beijing No. ___, and reserved its rights to apply to the People's Court for the cancellation of the arbitration award in accordance with Article 58 of Arbitration Law of People's Republic of China and to have the People's Court issue an order not to execute the award under Article 260 of the Procedure Law of the People's Republic of China.

2. As for the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao provided by the [Buyer] as evidence, the [Seller] objected as follows:

      (1) The [Seller] did not attend the actual inspection;

      (2) The evidence provided by the [Buyer] indicated that the inspection date shown on the inspection certificate issued by the Entry-Exit Inspection and Quarantine was 16 December 2002. The evidence provided by the [Buyer] also indicated that the dismounting of the Equipment was between 12 December 2002 and 14 December 2002, i.e., the Equipment inspected by the Entry-Exit Inspection and Quarantine was of the dismounted status. Since the Equipment was not kept in the original status at the original spot, it was impossible for the inspection to reflect the real reasons for the damages of the Equipment, and therefore, the [Seller] raised doubts to the result of the inspection of the dismounted Equipment. Further, the [Seller] requested re-inspection and evaluation of the reasons for the damages of the Equipment.

3. The limitation period for [Buyer]'s claim of damages had exceeded the quality warranty period as agreed in the Purchase Contract, and the [Seller] was not responsible for any obligations of damages towards the [Buyer].

Article 14 of the Purchase Contract clearly provided that only the indemnity in the inspection certificate issued by the Commodity Inspection and Testing Bureau of China was effective. The [Buyer] should have claimed damages on the basis of an inspection certificate issued by the Commodity Inspection and Testing Bureau of China.

Further, Article 14 of the Purchase Contract also provided:

(1) If the quality, description, and quantity of the goods do not fit for the contract (not including the responsibilities of the insurance company and shipping company), the Buyer shall complain or claim damages within 90 days after the arrival of the goods;

(2) Regarding the damages caused by the quality and techniques of the goods, the Buyer shall claim damages within twelve months after the arrival of the goods with the emphasis that the Buyer was obliged to promptly provide written notice to the Seller and claim damages.

According to the evidence provided by the [Buyer], the arrival date of the Equipment was 6 July 2002. Therefore, 90 days after the arrival of the goods was 4 October 2002, and twelve months after the arrival of the goods was 6 July 2003.

However, before the [Seller]'s receipt of the Application for Arbitration by the [Buyer], i.e., before 3 June 2004, the [Buyer] had never filed any effective indemnity claims based on an inspection certificate issued by the Commodity Inspection and Testing Bureau of China. Hence, the only effective damages claimed by the [Buyer] were this request for arbitration to CIETAC, and this request was filed way later than 6 July 2003, which had exceeded the quality warranty period and the period for effective damages agreed in the Contract. The [Seller] was no longer responsible for these arbitration requests.

As for the express mail envelope sheet provided by the [Buyer] in order to prove that it had sent to the [Seller] the inspection certificate, the [Seller] held the following doubts:

1.  It was indicated in the express mail envelope sheet that the express mail included an inspection certificate; however, it did not necessarily mean that the inspection certificate enclosed was the one that was relevant to this case;

2.  There was no signature under the item "receiver's signature" on the express mail envelope sheet.

3.  The date of filling this express mail envelope sheet was 25 December 2003, which was way after 6 July 2003 and 4 October 2002.

Consequently, the [Seller] alleged that the [Buyer] did not effectively claim damages: before the arbitration, the [Buyer] had not sent the inspection certificate to the [Seller], and neither had the [Seller] received such inspection certificate.

4.  As for Memorandum on the matters of ___ signed by the [Seller], ___ Corporation, and the [Buyer] on 5 October 2002, the [Seller] alleged that:

      (1) In this Memorandum, the representatives of the three parties clearly agreed and indicated that the first step approaching the matters of ___ was to ship the Equipment back to ___ Corporation for redesign and manufacture. The prerequisite for the [Buyer]'s claim of damages based on the Memorandum shall be that the newly manufactured Equipment still could not meet the technical requirements.

In actuality, after the signature of the Memorandum, the [Buyer] did not ship the Equipment back to ___ Corporation, and therefore, it was impossible for ___ Corporation to redesign and manufacture the Equipment in its factory. The prerequisite of the [Buyer]'s claim of damages based on the Memorandum was not established. The [Buyer] itself first breached the fundamental agreement in the Memorandum.

Further, after the signature of the Memorandum, the [Buyer] not only did not ship the Equipment back to ___ Corporation, but also utilized the Equipment in its program of high sea investigation and experiment in November and December 2002, and caused the break of the motor, the abrasion of the cable layer, and the snap of the cable. The [Buyer] utilized the Equipment in its program of high sea investigation and experiment in November and December 2002, and it did not notify the [Seller] or ___ Corporation, nor did it seek agreements and authorizations from the [Seller] or ___ Corporation. During the period of high sea investigation and experiment, ___ Corporation sent a facsimile to the [Buyer] providing technical guides. However, it was merely because the use of the Equipment already became a fact, and ___ Corporation provided moral help to the [Buyer] in order to assist it to mitigate loss. This facsimile did not mean that ___ Corporation had already agreed to the high sea experiment carried ot by the [Buyer].

The [Buyer] knew about the technical problems the Equipment had. However, it did not fulfill its duty of care. On the other hand, it utilized the Equipment, without agreements from the [Seller] and the ___ Corporation, and caused the enlargement of the loss of the Equipment. For the enlargement of the loss, i.e., the damage to the motor of the Equipment, the abrasion of the cable layer, and the snap of the cable, they should be deducted from the damages claimed. According to the evidence of the price provided by the actual manufacturer, the detailed amount that should be deducted is:

   -    Motor: US $  6,655
   -    Cable layer: 9,950
   -    Cable:          29,950
   -    Total: US $46,555

This total should be deducted from the price of the returned goods claimed by the [Buyer].

      (2) In the Memorandum, the [Seller], ___ Corporation, and the [Buyer] agreed and indicated that the fees arising from solving the technical problems the Equipment had, such as the fees for redesign and manufacture, direct engineering fees for redoing (dismounting, transportation, etc.), fees for the [Buyer]'s staffs investigating in ___ Corporation, shall be borne by the provider of the Equipment, i.e., ___ Corporation.

___ Corporation directly signed and confirmed the Memorandum. The [Buyer] also signed and confirmed therein. As for the technical problems of the Equipment, ___ Corporation, as the provider of the Equipment, had promised to bear the responsibility, and the [Buyer] had agreed thereon and confirmed. Therefore, since the Decision on Jurisdiction established that the [Seller] was ___ Corporation's distributor, not its agent, the damages and responsibility arising from the Equipment's technical problems, i.e., the arbitration requests made by the [Buyer] in this case, were irrelevant to the [Seller].

5. As for the [Buyer]'s requests of compensation of RMB 121,105 as the fee for first-time installation of the Equipment and compensation of RMB 4,500 as the fee of designing, the [Seller] argued that it did not assume the responsibility of these payments. Besides the above points 3 and 4, the detailed reasons were:

      (1) Even if the fee for installation was called "fee for first-time installation," the actual fee did not actually directly arise from the installation of the Equipment:

According to the evidence provided by the [Buyer], the fee for first-time installation of the Equipment mainly included a fundamental engineering fee and service fee, with the fundamental engineering fee of RMB 253,670, and the service fee RMB 109,645.

In accordance with the Receiving Report of Felly by the People's Liberation Army ___ Factory provided by the [Buyer], the fundamental engineering fee mainly included the following types:

First, the ship itself did not have the fundamental conditions for the installation of the Equipment. Therefore, the fees for the refitting and installing of the ship and other relative devices on the ship, such as items 3, 4, 5, 6, 8, 9, and 12 on the receiving report, totaling RMB 196,650 (9,840 + 8,100 + 71,660 + 33,610 + 600 + 44,520 + 28,320) should be deducted;

Second, the engineering fee arising from the ship itself or the fees irrelevant to the installation of the Equipment, such as items 1 and 2 on the receiving report (cleaning and keeping clean of the cabin), item 10 (not related to the installation of the Equipment, but the use of it), items 11 and 13 (not related to the Equipment), totaling RMB 26,820 (4,320 + 2,880 + 16,320 + 3,300) should be deducted;

Third, the engineering fees arising from promoting the capacity of installation of ___ Factory due to the disqualification of ___ Factory, which was responsible for the installation of the Equipment, such as item 7 on the receiving report (fee arising from the refitting of the head mast of ___ Factory because of its lack of capacity of fulfilling its tasks), totaling RMB 26,880 should be deducted.

According to the Engineering Bill of the People's Liberation Army ___ Factory, as for the service fee as mentioned above included in the engineering fee for first-time installation of the Equipment:

Some were fees that were deemed to occur arising from the operations or pulling into shore of the ship with or without the installation of the Equipment, such as the suppression and patrol inspection fees of RMB 8,505, the fee for temporarily installation of fire control facilities of RMB 1,080, water fee of RMB 4,275, electricity fee of RMB 30,195, dockage of 20,730, ship inspection fee of RMB 4,800, towing fee of RMB 9,000, totaling RMB 78,585. These fees should be deducted;

Some were fees repeatedly calculated with the engineering fee, such as garbage cleaning fee RMB 1,725, fees for scaffold and hoist of RMB 11,000, testing fee of RMB 11,400, totaling RMB 24,125, irrelevant to the installation of the Equipment. These fees should also be deducted.

      (2) Article 14 of the Purchase Contract clearly provided that if the quality of the Equipment was not fit for the Contract, and if the [Buyer] claimed damages effectively within 90 days after the arrival of the goods, the [Seller]'s scope of compensation shall include the Equipment itself and other relevant direct fees (e.g., inspection fee, goods exchanging fee, and fees for insurance, storage, loading and unloading); and if the [Buyer] claimed damages effectively within twelve months after the arrival of the goods, the [Seller]'s scope of compensation shall include eliminating negligence, exchanging goods totally or partially, or reducing the price of the goods according to the situations. It did not include the abovementioned "fee for first-time installation of the Equipment," nor did it include the design fee of the Equipment.

      (3) In accordance with Article 111 of the Chinese Contract Law, the scope for the [Buyer] to claim damages also shall be: according to the nature and the amount of the loss, the [Buyer] may reasonably choose to request the [Seller] to repair, substitute the goods, reproduce the goods, return the goods, reduce the price or remuneration, not including the abovementioned fees not directly related to the sale of the Equipment itself, nor the design fee of the Equipment.

6. As for the engineering fee for improvement of the Equipment of RMB 102,970 claimed by the [Buyer], it included two parts, the first of which was the fee for adjusting the Equipment of RMB 89,760, and the second of which was the fee for refitting the Equipment of RMB 13,210 according to the evidence provided by the [Buyer].

As to the above fee for refitting of RMB 13,210, if it arose from the dismounting and shipping the Equipment back to the ___ Corporation, under the Memorandum, ___ Corporation had promised to assume the responsibility for this payment, and therefore, the [Seller] was not responsible for this claim of damages. If this dismounting was not for shipping back the Equipment to ___ Corporation, on the basis of the above points 3 and 4, the quality warranty period had already expired when the [Buyer] file for arbitration, and therefore, the [Seller] and ___ Corporation were no longer responsible to any damages.

Regarding the abovementioned fee for adjustment of RMB 89,760, the [Seller] alleged that this fee was not relevant to its agency conduct of sale of the Equipment, and therefore, the [Seller] and ___ Corporation were not responsible for this claim of damages. Besides the abovementioned points 3 and 4, the reasons were:

In accordance with Article 4(5) of the Contract of Ship Repair provided by the [Buyer], the engineering period for the adjustment of the Equipment was from 30 September 2002 (start of the engineering) to 13 October 2002 (accomplishment of the engineering), totaling 14 days. Further, in accordance with the Item 3 in the Engineering Bill of Adjustment of the Equipment, the dockage was 14 days. That is to say, during the engineering of this adjustment of the Equipment, the anchorage of the ship was near the port, and this ship had been near this port during the period of engineering from 30 September 2002 (start of the engineering) to 13 October 2002 (accomplishment of the engineering).

However, a few days before and after 5 October 2002, which was within the period of the above engineering, the [Seller] and ___ Corporation were in the city of Qingdao and negotiating with the [Buyer] on how to solve the technical problems of the Equipment, and signed the Memorandum.

   -    During this period, the [Seller] had been working on the Equipment, and did not find out that the [Buyer] was still adjusting the Equipment unilaterally. The [Seller] thought it was unbelievable that while the [Buyer] requesting ___ Corporation to offer an effective solution to the technical problems of the Equipment, the [Buyer] already had a solution and was unilaterally performing this solution. The [Seller] also objected that while the [Seller] was positively trying to solve the technical problems of the Equipment, the [Buyer] adjusted the Equipment without the agreement of the [Seller].
 
   -    The [Seller] further objected that after the Memorandum of 5 October 2002 on the solution to the technical problems were signed, and the parties agreed therein to ship the Equipment back to ___ Corporation for redesign and manufacture, the [Buyer] had been unilaterally adjusting the Equipment until 13 October 2002. At the same time, the [Seller] alleged that the [Buyer]'s unilateral adjustment of the Equipment during this period later caused the enlargement of the loss, and therefore, it should be deducted from the claim of the [Buyer].
 
   -    Moreover, according to the Statistics of the Tasks of the Equipment issued by the [Buyer] on its website, the ship No. ___ 2 with the Equipment installed on board was in Qianhai, Qingdao and the Equipment was under experiment from 9 October 2002 to 15 October 2002, and it was impossible for the ship to be near the port for adjustment.

Consequently, the [Seller] argued that the equipment that was under adjustment by the [Buyer] from 30 September 2002 (start of the engineering) to 13 October 2002 (accomplishment of the engineering) could not be the Equipment that the [Seller] sold to the [Buyer] as an agent. The former equipment was not relevant to the [Seller] or ___ Corporation, and the fee for adjustment of this equipment was not reasonably claimed towards the [Seller].

7. As for the first arbitration request that "the [Seller] compensate for the price of the Equipment in dispute in the amount of US $88,840.00, and retrieve this Equipment," besides the fact that on the basis of the points 3 and 4, the [Seller] was no longer responsible for this claim, the [Seller] also argued that the claim of return of the price of the goods, the following parts shall be deducted:

      (1) Up until the present, the [Buyer] still did not pay the arrearage of US $23,976.69 to the [Seller], and this arrearage should have been deducted from the amount claimed of the return of the price of the goods.

      (2) As for the duty of care that the [Buyer] had not fulfilled, which caused the enlargement of the loss of the Equipment, such as the break of the motor, the abrasion of the cable layer, and the snap of the cable, it should be deducted from the amount claimed of the return of the price of the goods. The detailed calculation shall be: motor US $6,655, cable layer US $9,950, [cable US $29,950, totaling US $29,950 (should be US $46,555)]. The reasons were:

            (a) If the [Buyer] had performed as agreed in the Memorandum, and shipped the Equipment back to ___ Corporation for redesign and manufacture, the Equipment could have been remained in the original status when it was provided by the [Seller], instead of having suffered any enlargement of loss. However, the [Buyer] unilaterally breached the agreements in the Memorandum, and did not return the Equipment to ___ Corporation. On the other hand, it utilized it in its program of high sea investigation and experiment from the end of November 2002 to the beginning of December 2002, and directly caused the enlargement of the loss, which was the break of the motor, the abrasion of the cable layer, and the snap of the cable. The [Buyer] should be responsible for the enlargement of loss arising from its failure to fulfill its duty of care.

            (b) There were two ways to withdraw the cable, one of which was via the Equipment itself, the other was via the warping winch on the ship. Even if the Equipment could not operate due to the technical problems it had, the withdrawal of the cable could be accomplished by the warping winch. That is to say, the breakdown of the Equipment did not necessarily lead to the snap of the cable, and the breakdown of the Equipment was not the sufficient condition or the necessary condition of the snap of the cable. Furthermore, the evidence provided by the [Buyer] sufficiently demonstrated that the cable was withdrawn by the warping winch, and the cable was snapped on the ship after the withdrawal of both the sampler and the cable. Evidently, the Equipment itself could not have caused the snap of the cable. Merely the false or negligent operation by the staff of the [Buyer] could have caused the snap of the cable.

            (c) The evidence provided by the [Buyer] demonstrated that the motor and its surface temperature had exceeded 88 , and the relevant staffs of the [Buyer] falsely believed that the engineers thought this temperature was normal. However, the evidence provided by the [Buyer] showed that engineers of ___ Corporation thought the temperature of 70 was deemed normal. Further, this evidence also showed that the operators of the [Buyer], without authorization, adjusted the valve of the Equipment on the day when the motor's temperature was shown abnormal. The false or negligent operations of the staffs of the [Buyer] caused the damage of the motor.

8. On the basis of the above points 3 and 4, no matter according to the Purchase Contract or the Memorandum, the [Seller] was not responsible for the damages claimed by the [Buyer]. The [Buyer]'s request of arbitration should be rejected, and the total amount of the relevant arbitration fee shall be borne by the [Buyer].

In conclusion, the [Seller] argued that the time when the [Buyer] requested arbitration had already passed the agreed warranty period in the Contract. Before this request of arbitration, the [Buyer] did not raise any effective claims for damages towards the [Seller] according to the Contract in dispute either. The [Seller] should no longer be held responsible for any damages as provided in the arbitration claims by the [Buyer]. Additionally, the [Buyer] itself breached the agreement in the Memorandum to ship the Equipment back to ___ Corporation for redesign and manufacture, which means that the [Buyer] failed to establish the prerequisite for a claim for damages under the Memorandum. Also, in the Memorandum, both the [Buyer] and ___ Corporation already directly signed and confirmed that the responsibility related to the technical problems of the Equipment shall be borne by ___ Corporation. Besides, according to the points 5, 6, 7, and 8 mentioned above, the [Seller] was no longer responsible for the claims of damages by the [Buyer]. Hence, the [Seller] requested that the Tribunal reject the request for arbitration by the [Buyer].

THE OPINION OF THE TRIBUNAL

1. Applicable law

One of the parties to this case is a Chinese legal person, the other is an Australian legal person, and both China and Australia are Contracting States of the United Nations Convention on Contracts for the International Sale of Goods (1980) [hereinafter, "CISG"]. The conclusion of the Contract in this case conformed to Article 1(1)(a) of the CISG. Therefore, the Tribunal finds that the CISG is applicable to the Contract of this case. Issues that the CISG is not concerned with may refer to the relevant laws and regulations of the Contract.

2. Effectiveness of the Contract

The 8,000 meter hydraulic pressure geologic ___, i.e., the Equipment in dispute was for the particular purpose of deep sea testing, and the Equipment was specially designed and manufactured by the manufacture, ___ Corporation, for the [Buyer]. Technical specifications were in the attachment to the Contract in dispute. The [Buyer] chose a "tender for purchase" for the transaction, and the [Seller], as the exclusive agent of the manufacturer, ___ Corporation, independently submitted a tender. After the submission, opening, and evaluation of the tender, the [Seller] won the bid. The [Buyer] was the tenderee in the present case. However, it did not have the right to import and export. Therefore, after the winning of the tender by the [Seller], the [Buyer] commissioned ___ Co. Ltd. to conclude the Purchase Contract with the [Seller]. Neither the conclusion nor the effectiveness of the Contract are in dispute. Therefore, the Tribunal confirmed that the Purchase Contract was legally concluded and legally effective. The Contract is binding on both parties.

The Tribunal also notes that there has been an objection to its jurisdiction. However, after investigation and verification, CIETAC has issued its Decision on Jurisdiction on 1 June 2005. Based on this Decision, although the Contract in dispute was signed by ___ Co. Ltd. (the [Buyer]'s agent) and the [Seller], the [Buyer] was still the proper subject to this case. Therefore, the Contract is directly binding on both the [Buyer] and the [Seller].

3. The quality of the 8,000 meter hydraulic pressure geologic ___ (i.e., the Equipment)

Both parties have severe differences on the quality of the Equipment. The [Seller] objected to the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao, the limitation period, and the party who shall bear the legal responsibility for the non-conformity of the goods. In light of the major differences between both parties, the Tribunal holds the following opinion:

      (1) The quality of the Equipment

      The [Buyer] argued that "due to the defective design and manufacture of the Equipment, the Equipment suffered severe quality problems, such as the hydraulic pressure motor was severely damaged, and five of the nine plungers were stuck, etc."

The Tribunal notes that the [Seller] never directly denied that there were quality problems with the Equipment it delivered. On the other hand, evidence provided by both parties indicated that the [Seller] admitted that the Equipment it delivered suffered technical problems caused by its design and manufacture. The Memorandum signed by the [Buyer], the [Seller], and the manufacturer, ___ Corporation, on 5 October 2002 further demonstrated that the [Seller] acknowledged that the quality of the Equipment was defective, and agreed that the [Buyer] should ship the Equipment back to the manufacturer in Australia for redesign and manufacture. Evidently, it was an undoubted fact that upon installation, in the course of testing, the Equipment was defectively designed and manufactured.

Therefore, based on the above fact, the Tribunal finds that the 8,000 meter hydraulic pressure geologic ___ delivered by the [Seller] had internal quality problems.

      (2) The effectiveness of the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao

      The Tribunal notes that the [Seller] objected to the effectiveness of the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao based on two reasons: (a) in the course of the inspection carried out by this institute, the [Seller] did not have a representatives on site; and (b) this inspection was conducted after the Equipment was dismounted, and was not of the original status.

In this connection, the Tribunal finds that the two points raised by the [Seller] in order to object the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao were legally unfounded. In actuality, it was contrary to inspection custom. The Entry-Exit Inspection and Quarantine of Qingdao is a branch of the Entry-Exit Inspection and Quarantine of China. It is an institute independent of both the [Buyer] and the [Seller]. It manages the entry-exit inspection of goods in Qingdao, and it carries out compulsive inspections on imported and exported goods according to laws and regulations. An inspection does not require agreements or admissions by the parties, nor does it require the participation or presence of the parties. After the [Buyer] applied for import inspection, the Entry-Exit Inspection and Quarantine of Qingdao independently inspected the goods and issued an inspection certificate. This certificate was legally effective.

Additionally, the disputed quality in this case is presented as internal quality. The preservation of the original status of the Equipment could not have helped with inspection on the internal quality. In light of the facts of this case, the [Buyer] did not object to the external quality of the Equipment. During the testing in the course of installation, the Equipment was found not in conformity to the technical requirements provided in the Contract, and therefore, the Equipment was under repeated adjustments. However, it still could not reach the contractual requirements. Since the Equipment was submitted for inspection after repeated adjustments, it was reasonable that the Entry-Exit Inspection and Quarantine of Qingdao carried out an inspection when the Equipment was dismounted. The results shown in the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao were consistent with the description of the quality problems in the Memorandum as confirmed by the [Seller]. Moreover, the [Seller] did not provide the Tribunal with any evidence showing that the Equipment was not defectively designed or manufactured. Therefore, the Tribunal does not accept the objection by the [Seller] to the inspection certificate, and holds that this certificate is legally effective.

4. Limitation period for claims for damages

The Tribunal investigated evidence provided by both parties and correspondence between the parties, and notes that Article 13 of the Purchase Contract provides:

"Quality warranty: the Seller guarantees that the goods are manufactured from the best raw materials with first-class techniques. The goods shall be brand new, and conform to the description and quality in the contract. The warranty period is twelve months after the arrival of the goods at the port of destination."

Article 14 provides:

"Damages: If the Buyer finds quality, description, and quantity of the goods do not fit for the contract (not including the responsibilities of the insurance company and shipping company) within 90 days after the arrival of the goods, the Buyer is authorized to claim for exchange of goods or damages based on the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao, and all fees (such as inspection fee, fee for exchange of goods, and fees for insurance, storage, loading and unloading) shall be borne by the Seller. The Seller guarantees that within twelve months after the arrival of the goods, if any damage caused by the quality or techniques of the goods occurs, the Buyer shall promptly notify the Seller in writing, and claim damages based on the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao. The inspection certificate shall be the basis of the claim for damages. The Seller shall, according to the requests of the Buyer, eliminate the negligence, exchange goods totally or partially, or reduce the price of the goods according to the situations. If necessary, the Buyer may unilaterally remove the fault at the cost of the Seller's. If the Seller does not reply to the above claim of damages within one month, the Seller is deemed to consider accepting the claim."

The Tribunal finds that according to Article 14 of the Purchase Contract, the [Seller] has made the following two quality warranties to the [Buyer]:

(a) Warranty on the materials and techniques of the goods, guaranteeing brand new materials and first-class techniques, promising the conformity of the description and quantity of the goods to the Contract, with a period of claim for damages 90 days after the arrival of the goods at the port of destination;

(b) Warranty within the quality warranty period of the goods, i.e., warranty on the quality and techniques of the goods including any non-conformity caused by the defective design and manufacture, which is, professionally speaking, a warranty regarding the internal performance and function, with a period of claim for damages twelve months after the arrival of the goods.

The Tribunal notes that the [Buyer] did not claim under the first warranty. However, the [Buyer] claimed for damages on the basis of the second warranty.

The Tribunal also notes that the [Seller] argued that:

   -    According to Article 14 of the Contract, only claims based on the inspection issued by the Entry-Exit Inspection and Quarantine of Qingdao were deemed effective. However, before the receipt of the [Buyer]'s Request for Arbitration by CIETAC, i.e., 3 June 2004, even if the [Buyer] had claimed damages, the [Buyer] had never effectively claimed damages according to the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao.
 
   -    The only and first claim for damages by the [Buyer] based on the inspection certificate, i.e., this request for arbitration, was belated and it far exceeded the quality warranty period of twelve months agreed in the Contract. Hence, the [Seller] argued that the [Buyer] did not effectively claim for damages within the quality warranty period of twelve months, and therefore, the [Seller] was not responsible for any claim for damages under this arbitration.

The Tribunal finds that the [Seller] misunderstood Article 14 of the Contract by arguing that the effective claim by the [Buyer] exceeded the quality warranty period agreed in the Contract. Also, it is contrary to the facts of this case. The reasons are:

First, as for how to define an effective claim for damages. Article 14 of the Contract clearly provides that "[t]he [Seller] guarantees that within twelve months after the arrival of the goods, if any damage caused by the quality or techniques of the goods occurs, the [Buyer] shall promptly notify the Seller in writing, and claim damages based on the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao. The inspection certificate shall be the basis of the claim for damages." According to the agreements mentioned above, the Tribunal finds that if the [Buyer], within twelve months after the arrival of the goods at the port of destination, discovers quality problems of the goods, and promptly claims damages from the [Seller], this claim is effective. The provision that the claim shall be based on the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao shall be interpreted that the [Buyer]'s claim should be supported by the inspection certificate. This certificate shall be considered to be the evidential document of the claim. Therefore, it does not mean that the [Buyer] may not claim for damages effectively without the inspection by the Entry-Exit Inspection and Quarantine of Qingdao, or without the inspection certificate issued thereby. To the contrary, the Tribunal finds that as long as the [Buyer] simultaneously or within a reasonable time period after its claim for damages provides the inspection certificate issued by the Entry-Exit Inspection and Quarantine of Qingdao, the claim for damages by the [Buyer] shall be seen as effective under Article 14 of the Contract.

Second, as for the time for the claim for damages by the [Buyer]. The performance of the contract was investigated. The Equipment under the Purchase Contract arrived at the port of destination on 6 July 2002, and the installation testing was carried out from 20 August 2002 to 8 September 2002. Eventually, the sea experiment of the Equipment has failed. With representatives of all -- the [Buyer], the [Seller], and ___ Corporation -- these three parties signed the Memorandum on 5 October 2002, in which the [Seller] admitted that the Equipment had problems in its design and manufacture, and promised to solve the quality problems of the Equipment. The Tribunal notes that the [Seller], no matter during the hearing or in the written materials submitted, admits that on 5 October 2002, the [Buyer], the [Seller], and ___ Corporation signed the Memorandum, and the [Seller] has not objected to the authenticity of the content of this Memorandum. It was agreed in Article 8 of the Memorandum that "[d]ue to the fact that ___ Corporation could not accomplish the installation, adjustment, and inspection and acceptance of the Equipment within the period of the Contract, causing the [Buyer] to be unable to carry out an important research project, and that the Equipment was unqualified, ___ University of China [the Buyer] suffered reputational and economic loss (of approximately RMB 350,000 arising directly from the fees of this installation project). Therefore, ___ University of China [the Buyer] would claim damages under the relevant laws of the People's Republic of China. If the newly manufactured Equipment still could not meet the technical requirements, ___ University of China [the Buyer] would request exchange of goods and claim for damages. All direct fees, such as engineering fee for the installation and adjustment of the Equipment, design fee, dockage shall be borne by the provider of the Equipment." Therefore, the [Seller] could have been aware of the [Buyer]'s claim for damages on 5 October 2002 at the latest.

The Tribunal notes that after the signature of the Memorandum, the Equipment operated regularly in the experiment carried out in coastal waters upon several adjustments. Therefore, the [Buyer] put the Equipment under experiment in the high sea in November 2002. However, this Equipment could not meet the technical requirements agreed in the Contract when put into high sea experiment, and other severe quality problems occurred thereafter. On 16 December 2002, the Entry-Exit Inspection and Quarantine of Qingdao issued an inspection certificate, reporting that the quality problems were "caused by defective design and manufacture." The Tribunal also notes that the time of the issuance of this certificate, i.e., 16 December 2002, was within quality warranty period of 12 months after the arrival of the goods at the port of destination as provided in the Contract (the Equipment arrived at the port on 6 July 2002). Both parties did not object thereto. However, the parties objected to the issue whether the [Buyer] notified the [Seller] about the result of the inspection certificate within this quality warranty period.

   -    The [Buyer] indicated that it notified the [Seller] after the issuance of the inspection certificate via facsimile. Since the [Seller] claimed that it did not receive this facsimile, the [Buyer] notified the [Seller] again via express mail. The [Buyer] also provided with the related invoice of this express mail. The [Seller] objected to both the facsimile and the express mail reporting the inspection certificate claimed by the [Buyer]. However, it did not submit any contrary evidence.
 
   -    The Tribunal discovers, after investigation, that the [Buyer] sent a letter to the [Seller] on 10 April 2003, notifying the [Seller] of the official issuance of the inspection certificate by the Entry-Exit Inspection and Quarantine of Qingdao. The result indicated that due to the defective design and manufacture of the Equipment, the [Buyer] suffered severe negative reputation and economic loss since it could not execute the significant national fundamental investigation project. The [Buyer] required the [Seller] to bear relevant fees and preserved its right to return the goods, etc. As for this letter, the [Seller] has never denied the receipt thereof.
 
   -    Taking into account the performance of the Contract, and based on the abovementioned letter dated 10 April 2003, as well as the invoice of the express mail, the Tribunal decides to uphold the verity of the argument by the [Buyer] that the [Buyer] has provided to the [Seller] with the inspection certificate within a reasonable time after the issuance thereof (i.e., 16 December 2002), which fell within the period of twelve months after the arrival of the goods at the port of destination. Concluding the Tribunal's interpretation of Article 14 of the Contract, and the performance of this Contract, the Tribunal finds that the [Buyer]'s claim for damages was effective under Article 14 of the Contract.

The Tribunal does not support the [Seller]'s argument that the [Buyer]'s claim had exceeded the agreed period for filing claim in the Contract.

Further, the Tribunal finds that the Equipment in dispute was for the purpose of high sea scientific investigation, and the testing of its quality and function must be carried out in the high sea. Moreover, according to Article 14 of the Contract, the quality warranty by the [Seller] means warranty not only before the use of the goods, but this warranty also extends until after the use of the goods, and until the expiration of the warranty period. Therefore, it was legally unfounded for the [Seller] to claim that the [Buyer] utilized the Equipment in its high sea investigation project in November and December 2002 in order to avoid the legal responsibility of the quality of the goods.

5. Arbitration claims

      (1) First arbitration claim of the [Buyer]

      The [Buyer] requested compensation from the [Seller] for the price of the Equipment of US $88,840.00 and requested the [Seller] to take back the Equipment. In this connection, the Tribunal supports this claim according to Articles 1, 13 and 14 of the Purchase Contract, and Articles 25, 36(2) of CISG.

Based on the quality problems of the Equipment, effectiveness of the inspection certificate, and the verification of the limitation period of claim for damages by the [Buyer], the Tribunal does not support the [Seller]'s claims to deduct the price of the motor (US $6,655), the cable layer (US $9,950), and the cable (US $29,950) from the price of the Equipment. The [Seller]'s request of compensation from the [Buyer] of the arrearage of US $23,976.69 is not supported by the Tribunal because the [Seller] did not provide any relevant evidence and the Tribunal could not verify this request.

      (2) Second arbitration claim of the [Buyer]

      As for the [Buyer]'s request that the [Seller] compensate for the fee for installing, testing, and adjusting the Equipment, the Tribunal finds that since the Equipment delivered by the [Seller] was not in conformity of the Contract, the [Buyer] is authorized to the right to return the goods. However, the [Buyer] shall bear all fees arising from installation, testing, and adjustment of the Equipment, because:

First, according to the Memorandum signed by the [Buyer], the [Seller], and ___ Corporation, the [Seller] and ___ Corporation admitted that the Equipment suffered technical problems caused by the construction and the design, and the Equipment shall again undergo the process of calculation, design, manufacture, test before leaving the factory, installation, adjustment, and test on the sea. The [Buyer] agreed to provide ___ Corporation with one more opportunity to redesign and manufacture the whole Equipment. After investigation, the [Buyer] did not return the Equipment to ___ Corporation for redesign and manufacture after the signature of the Memorandum. The [Buyer] did not provide any evidence on whether the [Buyer] and ___ Corporation had agreed on modifying the agreement in the Memorandum on the redesign and manufacture, nor did it provide evidence showing that the [Seller] and ___ Corporation had agreed to let the [Buyer] unilaterally adjust the Equipment.

Second, the [Buyer] admitted that in November and December 2002, it utilized the Equipment in high sea testing. The [Seller] argued that the [Buyer]'s unilateral conduct without agreement from the [Seller] and ___ Corporation cause enlargement of the loss. The Tribunal notes that as for this response by the [Seller], the [Buyer] did not submit any evidence demonstrating that its conduct of putting the Equipment into high sea testing was agreed beforehand or verified afterwards by the [Seller] and ___ Corporation. The Tribunal also notes that the [Buyer] in the course of the high sea testing, the [Buyer] had sent letters to technical personnel of ___ Corporation several times inquiring about technical problems. The technical personnel responded regarding to the technical problems. However, the Tribunal does not find that this correspondence can sufficiently prove that the [Seller] and ___ Corporation have agreed to modify the agreement in the Memorandum that the Equipment shall be taken back to ___ Corporation for adjustment.

Further, there are three sets of ___ (equipment) sold by the [Seller], the quality of two of which was not objected to, and therefore, there shall not be fees for adjustment or redesign. The [Buyer] divided the packaged fees of these sets of ___ arising from installation and testing by three (i.e., RMB 228,575.00) and required compensation from the [Seller]. The Tribunal finds that this calculation does not reflect the actual fees arising from the installation, adjustment, refitting, and utilization of the Equipment. The Tribunal does not verify this calculation claimed by the [Buyer].

Based on the above reasons, the Tribunal does not support this claim by the [Buyer].

      (3) Arbitration fee

      As for the arbitration fee of this arbitration, since the [Buyer]'s claims were not totally supported by the Tribunal, the Tribunal finds that the [Buyer] bears 20% of the arbitration fee, while the [Seller] bears 80% thereof.

AWARD

The Tribunal hands down the following award according to the aforementioned:

   1.   The [Seller] shall return the price of the Equipment of US $88,840 to the [Buyer], and the [Buyer] shall return the Equipment to the [Seller];
 
   2.   The Tribunal denies other arbitration requests by the [Buyer];
 
   3.   The arbitration fee of this dispute is RMB 43,808. The [Buyer] bears 20% of this amount, i.e., RMB 8,761.60, while the [Seller] bears 80% of this amount, i.e., RMB 35,046.40; the total amount of this arbitration fee was prepaid by the [Buyer] at the time when the [Buyer] requested for this arbitration, and therefore, the [Seller] shall compensate the [Buyer] in the amount of RMB 35,046.40.

The abovementioned first and third payments to the [Buyer] shall be made by the [Seller] within 45 days after this award is handed down; after these payments are made, the [Seller] shall take back the Equipment in dispute within 45 days after this award is handed down.

This is a final award. This award comes into effect on the day when it is handed down.


FOOTNOTES

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

** 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.

*** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

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Pace Law School Institute of International Commercial Law - Last updated September 19, 2008
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