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CISG CASE PRESENTATION

Serbia 31 July 2007 Foreign Trade Court attached to the Serbian Chamber of Commerce (Meat products case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070731sb.html]

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

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Case identification

DATE OF DECISION: 20070731 (31 July 2007)

JURISDICTION: Arbitration ; Serbia

TRIBUNAL: Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: T-6/06

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Serbia (claimant

BUYER'S COUNTRY: Bosnia and Herzegovina (respondent)

GOODS INVOLVED: Meat products


Classification of issues present

APPLICATION OF CISG: Yes [Article 1]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 59 ; 62

Classification of issues using UNCITRAL classification code numbers:

6A [Exclusion or modification of Convention by contract - choice of law of the contracting state does not amount to exclusion of the Convention];

59A ; 59B [Payment due at time fixed or determinable by contract or Convention; No need for request by seller or other formality]

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

Descriptors: Payment of price

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Serbian): Click here for Serbian text of case

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Foreign Trade Court of Arbitration
attached to the Serbian Chamber of Commerce in Belgrade

Award of 31 July 2007 [Proceedings No. T-6/06]

Translation by [*] Jovana Stevovic

Edited by Milena Djordjevic, LL.M. and Marko Jovanovic, LL.M.[**]

Claimant (Serbia) [Seller] v. Respondent (Bosnia and Herzegovina) [Buyer]

The Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce in Belgrade and its sole arbitrator in the legal matter of [Seller] against [Buyer] for payment of debt in the amount of EUR 17,371.74 with interest and a claim for reimbursement of costs of the arbitral proceedings, upon the conducted proceedings and hearing of 31 July 2007 and pursuant to Article 37 paragraph 6 and Articles 48 and 51 of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (hereinafter the Rules), makes the following

AWARD

[Seller]'s claim is granted and [Buyer] is ordered to pay to [Seller] the sum in the amount of EUR 17,371.74 with interest at the rate of 3.3% annually on the amount of EUR 3.411,51 as of 10 June 2004 until the date of payment and interest at the rate of 3,3% annually on the amount of EUR 13,960.23 as of 18 June 2004 until the date of payment, all within 15 days from the day of receipt of this Award.

[Seller] is ordered to pay to [Buyer] the amount of EUR 1,409.00 as a reimbursement of arbitration costs, within 15 days from the day of receipt of this Award.

STATEMENT OF REASONS

I. JURISDICTION OF THE FOREIGN TRADE COURT OF ARBITRATION ATTACHED TO THE SERBIAN CHAMBER OF COMMERCE IN BELGRADE ON DECIDING THIS LEGAL MATTER; EXISTENCE OF AN ARBITRAL AGREEMENT

1. On 29 March 2006 [Seller] submitted the Statement of Claim to the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce in Belgrade, in which it stated that, according to Article 6 of the Sales Contract which the parties had concluded on 10 December 2003 (archived as no 331 by [Seller]), the jurisdiction of the Foreign Trade Court of Arbitration attached to the Chamber of Commerce of Serbia and Montenegro is stipulated.

2. [Buyer] did not file a Statement of Defense within the provided deadline despite having properly received the Statement of Claim accompanied with the Secretariat notice on 17 April 2006 (which was determined on the basis of the report of the courier service).

3. As [Buyer] failed to submit a Statement of Defense, in accordance with Article 15 Paragraph 1 of the Rules, the Board of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce determined at the session held on 12 June 2006 that according to the documents submitted by [Seller] Article 6 of the Sales Contract dated 10 December 2003 (archived as no 331 by [Seller]) contained an arbitration agreement.

4. Applying the provision contained in Article 15 Paragraph 3 of the Rules, the Sole Arbitrator determined that the arbitration agreement in this dispute which provided for the jurisdiction of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce seated in Belgrade is existent and valid (Article 6 of the Sales Contract dated 10 December 2003 - archived as no 311 by [Seller]).

5. Article 3 of the Law on Abrogation of the Law on Yugoslav Chamber of Commerce (Official Gazette of the Republic of Serbia 55/2003), which came into force on 5 June 2003, stipulates that the Foreign Trade Court of Arbitration attached to the Yugoslav Chamber of Commerce continues operating, in the existing composition, and under the same organization and conditions, fully autonomous and independent, within the framework of the Serbian Chamber of Commerce, and that all disputes are to be settled by applying the existing arbitration rules.

6. Keeping in mind the decision of the parties to have disputes between them settled by arbitration and having in mind the arbitral institution which they have chosen in their arbitration clause, the Sole Arbitrator has concluded that the parties obviously wanted to stipulate the jurisdiction of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce, as this is the only arbitral institution that the wording of the arbitral clause refers to.

7. Throughout the proceeding the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce i.e. the arbitrator applied the Rules which were valid at the moment of undertaking a certain action in the proceedings. The arbitrator applied the Rules which came into force on 16 June 2007 in making this Award.

II. APPOINTMENT OF ARBITRATORS

[...]

III. DELIVERY OF DOCUMENTS TO THE [BUYER]

1. Upon sending the Statement of Claim to [Buyer] which was it duly received, the Secretariat of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce sent further notices to this party by means of certified mail or DHL International to the same address to which the Statement of Claim was delivered. The same address of [Buyer] was stated in the Decision of the Court in […] of 23 July 2004, as well as in the Confirmation on registration of the Ministry of Finance - Tax Department of the Republic of Srpska dated 29 July 2004.

2. However, from the post office reports and detailed reports of courier service DHL International which are contained in the case file, it can be concluded that attempts of delivery of the documents to [Buyer] at the abovementioned address were unsuccessful. The post office and courier service have indicated in their reports that the address of [Buyer] was incorrect or incomplete or that the receiver of the parcel was informed of the parcel and that they awaited for the parcel to be picked up at the post office or that the premises of [Buyer] were closed.

3. According to Article 34 Paragraph 2 and in connection with Paragraph 3 of the Rules, in the above mentioned situation, a mailing address is considered to be the address of the legal entity's principal place of business. Furthermore, a written notification is deemed to have been made if it is sent to the addressee's last known mailing address. Therefore, it was concluded that [Buyer] was duly notified of all written submissions and procedural acts of [Seller] and the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce and in turn was enabled to fully participate in the proceedings.

4. Keeping in mind all of the above, the arbitral proceedings were carried out without the participation of [Buyer] and in accordance with the Rules.

5. According to the abovementioned decision of the Court in […] of 23 July 2004 a change of [Buyer]'s business name was registered in the court registry: the previous business name under which [Buyer] operated was repealed and the new business name was registered. The arbitrator concluded that the legal entity under the new name is the same legal entity which concluded the arbitral agreement stipulated in Article 6 of the Sales Contract dated 10 December 2003 (archived as no. 331 by [Seller]) i.e. that the same entity is referred to as [Buyer] in the Sales Contract.

IV. APPLICABLE LAW

1. The Sales Contract dated 10 December 2003 (archived as no. 331 by [Seller]), in regards to the enforcement of which these arbitral proceedings are being conducted, stipulates that in case of dispute the substantive law of Serbia and Montenegro is applicable.

2. The Sole Arbitrator decided that the dispute at hand should be resolved by application of the Serbian substantive law, including the provisions of the United Nations Convention for the International Sales of Goods adopted in Vienna on 11 April 1980 - CISG (Vienna Convention). Pursuant to Article 1 of the Vienna Convention, the Convention applies to contracts for sale of goods between parties whose places of business are in different States when the States are Contracting States. Having in mind that the Vienna Convention was ratified by Yugoslavia, both Serbia and Bosnia and Herzegovina are therefore parties to the Vienna Convention. Due to the fact that the parties in this dispute, i.e. parties to the Sales Contract out of which a dispute arose, have their place of business in states which are parties to the Convention, and therefore the Vienna Convention is to be applied to this dispute. The provisions of the Serbian substantive law are to be applied in regards to issues which are not covered by the Vienna Convention.

V. ARBITRATION PROCEEDINGS

1.  1.1. Upon the examination of the postal return receipts and the reports of the courier service (DHL), the Sole Arbitrator concluded that [Buyer] was properly notified by the Secretariat of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce of the written submissions and acts submitted by [Seller] and the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (as referred above in section III) and therefore had the opportunity to participate in the proceedings. Having in mind these circumstances, the arbitral proceedings in this dispute were carried out without the participation of [Buyer] and in accordance with the Rules.

      1.2. Throughout the proceeding the Sole Arbitrator kept in mind the fact that the proceedings were carried out without the presence of the [Buyer] and in this regard reviewed the evidence submitted by [Seller] taking into consideration all of the objections [Buyer] could have made, however within the scope of the rules regarding the burden of proof.

2. Only the legal representative of [Seller] (submitting a power of attorney for representation of [Seller] in this matter) was present at the hearing held on 12 October 2006. After the Sole Arbitrator determined that the Secretariat of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce had properly notified [Buyer] of the hearing , the Sole Arbitrator had decided to proceed with the hearing in the absence of [Buyer] in accordance with Article 25 Paragraph 5 of the Rules.

3.  3.1. Due to the replacement of the arbitrator i.e. to the reconstitution of the Tribunal, the parties were notified by the Secretariat on 29 June 2007 that a new hearing was scheduled for 31 July 2007 ([Seller] received the notice on 3 July 2007, while the report of the courier service DHL International dated 31 July 2007 indicated that the attempt of delivery of the notice to [Buyer] was unsuccessful due to the incorrect/incomplete address).

      3.2. Only the legal representative of [Seller] with the accompanying power of attorney was present at the hearing held on 31 July 2007.

      3.3. As the Sole Arbitrator had concluded that the hearing in the previous proceedings had been closed, and therefore had decided that the hearing is to be once again reopened due to the appointment of the new Sole Arbitrator.

      3.4. In accordance with Article 37 Paragraph 6 of the Rules, the Sole Arbitrator decided to conduct the hearing in the absence of [Buyer]. In making this decision, the Sole Arbitrator took into consideration the fact that the legal provisions on delivery and notification stipulated both in the law and the Rules were fully respected, and that their purpose is to prevent either of the parties in the dispute from making it impossible to conduct the proceedings. The Sole Arbitrator had in mind the obligation to make sure that the proceedings are not unnecessarily delayed with respect to the rights of the parties; the Sole Arbitrator concluded that in the present case, conducting the hearing without the presence of [Buyer] does not hinder the rights of [Buyer] to a defense as [Buyer] was fully enabled to exercise this right.

VI. STATEMENT OF CLAIM, THE POSITION OF THE SELLER REGARDING THE FACTS AND LEGAL ISSUES, COURSE OF THE HEARING

1. In the Statement of Claim received by the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce on 29 March 2006, [Seller] stated that it had concluded a Sales Contract with [Buyer] on 10 December 2003 (archived under no 331) in accordance with which it had delivered the agreed amount of processed meat, which is specified in the invoice no. 04/008 dated 22 April 2004 and 04/009/01 dated 29 April 2004 and therefore had fulfilled its contractual obligation. According to the Statement of Claim, [Buyer] did not pay to [Seller] the agreed purchase price, which it was obliged to do within 45 days from the day of delivery, and therefore owes to seller [Seller] the amount of 17,371.74 EUR.

2. In the Statement of Claim [Seller] also requested the accrued interest at the rate determined by the Central Bank of the European Union for the amount of 3,411.51 EUR from 10 June 2004 until the date of final payment and for the amount of 13,960.23 EUR from 18 June 2004 until the date of final payment.

3. [Seller] also requested the reimbursement of the costs of the proceedings in the amount of 112,567,00 RSD for the registration and arbitration costs that it had paid to the Arbitration.

4. As evidence to support its arguments, [Seller] enclosed the photocopies of the following documents to the Statement of Claim: Sales Contract dated 10 December 2003, Invoice no. 04/2008-a dated 22 April 2004, Invoice no. 04/009/2 dated 29 April 2004, customs documents dated 22 April and 29 April 2004, specification of the invoice for the claim, the cumulative card accounts of […] no. 20300 for the period 1 January 2006 - 31 December 2006.

5. At the hearings held on 12 October 2006 and 31 July 2007 the legal representatives of [Seller] reiterated the arguments made in the Statement of Claim. The legal representatives further explained that the difference in the amount of debt expressed in the claim and in the cumulative card accounts originated from the fact that in the accounting report the amount invoiced was reduced in the name of rebate, so the amount of the accounting records corresponds to the amount claimed.

6. [Buyer] did not respond to the Statement of Claim nor did it participate in the hearing.

VII. REASONS FOR THE AWARD

1. While deliberating on the merits of the dispute at the hearing of 31 July 2007, the Sole Arbitrator read all the written evidence submitted with the claim.

2. In examining the evidence, the Sole Arbitrator took the stand that this legal matter can be resolved on the basis of the submitted written evidence and the statements of [Seller] given throughout the procedure.

3.  3.1. In assessing the presented evidence, individually and in their mutual relationship, the Sole Arbitrator found that the Statement of Claim submitted by [Seller] is justified and that its requests should be granted.

      3.2. The Sole Arbitrator found that it has been proven that [Seller] delivered to [Buyer] the goods as stipulated in the Sales Contract and sent a proper invoice, while [Buyer] did not fulfill its obligation to pay the purchase price for the delivered goods in the amount of 17,371.74 EUR. The Sole Arbitrator accepted the argumentation of [Seller] that the difference in the amount stipulated in the claim and the amount stipulated in the invoices submitted as evidence exists due to the fact that the invoiced amounts were decreased by the accounting documents in the name of rebates on the basis of the Sales Contract.

      3.3. In making the decision, the Sole Arbitrator was guided by the legal rules according to which the parties to an agreement are obliged to fulfill their obligations and are responsible for their fulfillment. Therefore, the creditor has the right to demand fulfillment of the obligation from the debtor and the debtor is obliged to fulfill the obligation in full. The mentioned rules are stipulated in Article 53 and 56(1) of the Vienna Convention according to which the buyer is obliged to pay the purchase price in accordance with the Sales Contract. The Vienna Convention (Article 61) also provides that in case the buyer does not fulfill any of its obligations the seller can use the rights provided in the Convention, including the right constituted in Article 62 to demand from the buyer to pay the purchase price.

4.  4.1. In making the decision on the interest, the Sole Arbitrator kept in mind the provision of the Article 277 of the Law on Contracts and Torts of the Republic of Serbia according to which the debtor who is arrears in fulfilling its monetary obligation is obliged to pay a default interest at the stipulated rate apart from the principle debt. The default interest is provided for a debt in RSD, while the general rule, accepted in the arbitral and court practice in Serbia, is that for a debt in a foreign currency the default interest is granted in accordance to the domiciliary rate.

      4.2. Granting [Seller]'s claim as justified in regards to the interest, the Sole Arbitrator kept in mind that it had requested "accrued interest according to the rate of the European Central Bank." The Sole Arbitrator concluded that, in determining its claim in regards to the interest, [Seller] had in mind the domiciliary interest for EURO i.e. the interest according to the rate determined by the European Central Bank to its customers with time deposits. The European Central Bank publishes these interest rates in its Statistical Bulletin, as well in the Reuters informational system. Upon examining the reports on the interest rate, the Sole Arbitrator established that the average interest rate in the first half of 2007 for the EURO was 3.3% per year, and awarded the interest on the debt according to this interest rate.

      4.3. The Sole Arbitrator found that the claim was justified in regards to the beginning of the period to which interest should be accounted. Namely, the Sole Arbitrator determined that, according to the date of export indicated in the customs documents and the provision of the Sales Contract that stipulates that the payment is to be made within 45 days, the amount of 3,411.51 EUR was due on 10 June 2004 and the amount of 13,960.23 was due on 18 June 2004.

5. When awarding the arbitration costs, the Sole Arbitrator had in mind the outcome of the dispute. As [Seller] had fully succeeded in these proceedings, the Sole Arbitrator ordered [Buyer] to pay [Seller] the costs paid to the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce in the total amount of 112,567.00 (in the name of registration costs in the amount of 7,195.00 RSD and in the name of arbitration costs 105,372.00 RSD). As the mentioned costs were paid in RSD, the Sole Arbitrator awarded the costs in EUR with the application of the middle exchange rate of the EUR and RSD in Serbia on the day of making this award.

VIII. FINALITY OF THE AWARD

3. Pursuant to Article 64 of the Serbian Law on Arbitration (Official Gazette of the republic of Serbia 46/2006) and Article 56 paragraph 1 of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce, this Award is final and is not subject to appeal. It has the force of a final decision of a Court of the Republic of Serbia.

In Belgrade, 31 July 2007      Sole Arbitrator
[Signed]    


FOOTNOTES

* All translations should be verified by cross-checking against the original text.

** Jovana Stevovic is a legal associate with the CMS Hasche Sigle doo in Belgrade. Milena Djordjevic, LL.M. (U. of Pittsburgh) is a Lecturer in International Commercial Law at the University of Belgrade Faculty of Law. Marko Jovanovic, LL.M. is a Lecturer in Private International Law at the University of Belgrade Faculty of Law.

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