Russia 18 October 2007 Judicial Division of the Supreme Arbitration Court of the Russian Federation, Moscow
[Cite as: http://cisgw3.law.pace.edu/cases/071018r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 12842/07
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russia
BUYER'S COUNTRY: Russia
GOODS INVOLVED: Equipment
RUSSIAN FEDERATION: Judicial Division of the Supreme Arbitration Court of the Russian Federation, Moscow
[No. 12842/07] 18 October 2007
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/145],
CLOUT abstract no. 1371
Reproduced with permission of UNCITRAL
A Kazakh buyer filed a claim against a Russian seller to recover an advance payment for goods delivered, with damages and interest. The buyer stated that it had refused to fulfil the contract owing to a material breach by the seller of the agreement on the quality of the equipment supplied.
The court of first instance dismissed the claim. The court of second instance overturned the decision of the court of first instance and allowed the claim in part. The court of third instance upheld the ruling of the court of second instance.
The Supreme Arbitration Court of the Russian Federation rejected the buyer's request for a review of the ruling of the courts of second and third instance, on the following grounds.
Under the contract, the respondent (the seller) had undertaken to deliver goods, the quality of which complied with Russian State standards and the manufacturer's technical specifications, and the claimant (the buyer) had undertaken to accept and pay for these goods under Free Carrier (FCA) delivery terms and conditions. The date of manufacture of the goods to be delivered was to be no earlier than August 2005. The parties had agreed that the interpretation of the contract terms should be guided by International Commercial Terms (Incoterms) 2000 and the CISG.
Pursuant to article 36(1) CISG, the seller is liable in accordance with the contract for any lack of conformity that existed at the time when the risk passed to the buyer, even though the lack of conformity becomes apparent only after that time. Article 36(2) CISG provides for the seller's liability for any lack of conformity that occurs after the specified time and is due to a breach of any of his obligations.
As established by the courts, the engine of the machine delivered to the buyer had been stamped with a date of manufacture in 1989. Therefore the seller could not be considered to have properly fulfilled its contractual obligations. In addition, the equipment had not passed customs clearance, which was why, taking into consideration article 36 CISG and the specific conditions of FCA, the courts had come to the correct conclusion on the liability of the seller for any lack of conformity existing at the time when and after the risk passed to the buyer.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Russian): online database of court judgements <http://kad.arbitr.ru>
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents