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CISG CASE PRESENTATION

Serbia 15 September 2008 Foreign Trade Court attached to the Serbian Chamber of Commerce (Feta cheese and other cheese products case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/080915sb.html]

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

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Case identification

DATE OF DECISION: 20080915 (15 September 2008)

JURISDICTION: Arbitration ; Serbia

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: T-23/06-13

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Serbia (claimant)

BUYER'S COUNTRY: FYR Macedonia and Kosovo/Serbia (responsdent)

GOODS INVOLVED: Feta cheese and other cheese products


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 4 ; 59 ; 62 ; 78 [Also mentioned: Articles 7(2) ; 30 ; 53 ; 61 ; 74]

Classification of issues using UNCITRAL classification code numbers:

4B [Issues excluded (the CISG does not govern the issue of joint liability or the assignment of obligation)];

59A [Payment due at time fixed or determinable by contract or Convention];

59B [No need for request by seller or other formality];

62A ; 62A1 [Seller may compel performance of any of buyer's obligations unless seller has exercised inconsistent remedy];

78A ; 78B [Interest on delay in receiving price or any other sum in arrears; Rate of interest]

Descriptors: Payment of 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 (Serbian): Click here for Serbian text of case

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Excerpt from: Vladimir Pavic & Milena Djordjevic, Application of the CISG Before the Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce - Looking Back at the Latest 100 Cases, 28 Journal of Law and Commerce 1, 19, 29 (Fall 2009), available at: <http://www.cisg.law.pace.edu/cisg/biblio/pavic-djordjevic.html>

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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 15 September 2008 [Proceedings No. T-23/06-13]

Translation [*] by Ana Martinovic and Tanja Šumar

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

Claimant (Serbia) [Seller] v. Respondent (FYR Macedonia and Kosovo/Serbia) [Buyer]

Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce in Belgrade (hereinafter referred to as: FTCA), in proceedings conducted by an arbitral tribunal constituted of three arbitrators […], between [Seller] from Serbia as Claimant and [Buyer] from Macedonia as first Respondent, and […] Kosovo [Serbia], as second Respondent, for payment of a debt […] unanimously rendered the following

FINAL AWARD

  1. Respondents are ordered to pay jointly to Claimant […] the amount of EUR 39.653,83 as the principal debt, with an interest at the Main refinancing operations rate, as of 24 November 2006, until the final payment, within fifteen days from the receipt of this award, subject to court enforcement in case of non-payment.

  2. Respondents are ordered to pay jointly to Claimant the costs of the proceedings in the amount of CSD 207.844,00 and the costs of representation in this dispute in the amount of CSD 61.000,00, within fifteen days from the receipt of this award, subject to court enforcement in case of non-payment.

STATEMENT OF REASONS

ARBITRAL PROCEEDINGS

Claimant, represented by its legal representative, attorney at law […], has submitted a Claim on November, 24, 2006 before FTCA against Respondents for payment of the amount of EUR 59.653,83, pursuant to Articles 4(1) and 9 of the Serbian Law on Arbitration (hereinafter referred to as: the LA), Article 20 of Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (hereinafter referred to as: the Rules), and Article 8 of the Contract for sale with payment by assignation, concluded on 23 March 2005. The power of attorney, issued in […], on 24 November 2005, by which the director of Claimant authorized Mr. A, attorney at law, to represent Claimant in this dispute, was attached to the claim.

[…]

On 12 January 2007, FTCA sent the claim with attachments to Respondents, instructing them to jointly appoint an arbitrator. The documents sent to the address of the second Respondent were returned and resent on 1 January 2007, to the same address, via DHL. Based on notification received from Claimant on 15 March 2007 that the address of the second Respondent was […], on 16 March 2007 FTCA asked DHL to confirm that the documents sent to the second Respondent had been duly delivered. In a letter that FTCA received on 20 March 2007, DHL informed FTCA that the documents were delivered on 15 March 2007, at 14.15.

At the session held on 8 May 2007, the Board of the FTCA established that the first Respondent duly received the Statement of Claim on 19 February 2007 and that it failed to submit an answer. The second Respondent duly received the Statement of Claim on 15 March 2007 and it also failed to submit an answer. The Board of the FTCA has established that Article 8 of the Contract for sale with payment by assignation, which was concluded between Claimant and Respondents on 14 July 2005 and attached to the Statement of Claim, contained an arbitration agreement.

Constitution of the arbitral tribunal - Given that Respondents did not submit an answer to the Statement of Claim, nor did they appoint an arbitrator, the President of FTCA named Mr. X as the arbitrator on behalf of Respondents. Mr. X accepted the appointment and signed a statement of independence on 6 September 2007. Claimant did not name an arbitrator when filing the Statement of Claim, nor did it appoint one at the later stage, when it was instructed to do so by the Secretariat of FTCA. Consequently, the President of FTCA appointed Ms. Y as arbitrator on behalf of Claimant. Ms. Y accepted the appointment and signed the statement of independence on 6 September 2007. Since the party-appointed arbitrators failed to propose the president of the arbitral tribunal within the provided time limit, the President of FTCA appointed Ms. Z as the third arbitrator. Ms. Z accepted the duty and signed the statement of independence on 23 October 2007. The Parties were informed about the appointment of arbitrators on 24 October 2007. Considering that the Parties did not have any objections, the arbitrators and the president of the arbitral tribunal were duly appointed.

The hearing was held on 26 December 2007, in the premises of the FTCA in Belgrade. Claimant was represented by […], whereas no one appeared on the side of Respondents. After it has been ascertained that Respondents had been duly invited to the hearing and that they did not justify their absence, the arbitral tribunal proceeded to the discussion of the dispute. Claimant's representative declared that, after the Statement of Claim has already been filed, namely on 5 December 2006, the second Respondent paid one part of the debt, in the amount of EUR 20.000. Consequently, Claimant, modified its request withdrawing the claim for the amount paid, but still requesting interest for that amount.

The arbitral tribunal requested Claimant to answer certain questions, and set a deadline for submitting the answers in the written form. Claimant was also requested to submit further evidence if it is in a position to do so. The arbitral tribunal granted Claimant's request for extension of the deadline. Therefore, Claimant confirmed in a written statement dated 20 February 2008, that it withdrew the claim for the amount of EUR 20.000, as well as the interest for that amount. After this modification of the claim, Claimant requests the payment of the amount of EUR 39.653,83, with interest as of 24 November 2006. Claimant also submitted some additional evidence and made a proposal to the tribunal to hear witnesses about the circumstances regarding the conclusion and performance of the contract, which was the cause of this dispute.

In a letter dated 26 February 2008, the Secretariat of Arbitration sent a record from the hearing and the modified Statement of Claim to Respondents and invited them to submit an answer to the amended claim, within 30 days from the reception thereof. Respondents failed to send an answer to the amended claim within the time limit set, so on 18 June 2008 the arbitral tribunal refused the request for hearing witnesses, decided to conclude the hearing and requested the Parties to submit the specification of the costs they incurred in regard to the arbitral proceedings, as well as the costs of representation. The Secretariat sent the aforementioned Order of the arbitral tribunal to the Parties on 26 June 2008.

In a letter dated 2 July 2008, Claimant submitted the specification of costs, while Respondents failed to do so.

[SELLER]'S CLAIMS

In the Statement of Claim of 24 November 2006, Claimant requested from the tribunal to order Respondents to jointly pay the amount of EUR 59.653,83 with interest at discount rate established by the European Central Bank (EURIBOR) . For the amount of EUR 21.567,30 interest is sought from 18 October 2005 and for the amount of EUR 12.564,62 interest is sought from 4 November 2005. Claimant also requested the reimbursement of the costs of proceedings.

In the amended Statement of Claim from 22 February 2008, Claimant requested from the tribunal to order Respondents to jointly pay the amount of EUR 39.653,83 with interest at the rate established by the European Central Bank, from 24 November 2006. Claimant also requested the reimbursement of the costs of proceedings. Claimant explained that after the Statement of Claim has been filed, the second Respondent paid the amount of EUR 20.000,00, so Claimant withdrew the claim for that amount. It is obvious from the Statement of Claim that Claimant requests interest from the day of filing the Statement of Claim for the amount of EUR 39.653,83.

[Sellers]'s claims are based on enclosed evidence: Contract for sale with payment by assignation from 23 March 2005, invoice No. 14/04 from 28 April 2005 for the amount of EUR 25.439,44, invoice No. 22/07 from 14 July 2005 for the amount of EUR 23.964,80, invoice No. 30/08, not dated, for the amount of EUR 21.567,29, invoice No. 33/09 from 5 September 2005 for the amount of EUR 12.564,62, with customs and other complementary documentation regarding the delivery of goods to the first Respondent, with every invoice, the List of unpaid invoices issued by Claimant on 18 February 2008, excerpt from a foreign currency account of Claimant from 5 December 2006 in regard to the payment of EUR 20.000,00 Euro.

The arbitral tribunal conducted evidentiary proceedings by reading every enclosed written evidence, and on the basis of that determined the following

FACTS OF CASE

The Contract for sale with payment by assignation was concluded between parties, Claimant, as seller-recipient of payment, the first Respondent as buyer - assignor and the second Respondent as payer - assignee on 23 March 2005. Subject matter of the contract is the sale of "S." feta cheese and semi-hard cheese from [Seller]'s product range, in the total amount of cca(illegible) per month, CPT Skoplje. It was agreed by the Parties that the goods were to be ordered at least 15 days prior to delivery, and that payment would to be made within 3 days from the day of delivery of goods. The payment of the purchase price was contracted in the following way: Buyer of the goods (the first Respondent) assigned the amount due for each delivery to the second Respondent (assignee) requesting it to pay to Seller (Claimant) for each delivery received and evidenced by invoices. The second Respondent accepted the assignment and agreed to pay the amounts listed in invoices on behalf of the first Respondent within time lines set. Claimant also accepted the payments to be made by the second Respondent. Pursuant to Article 6 of the Sales contract, the first Respondent [Buyer] is acquitted from the contractual obligation to pay the price only in case that the second Respondent fully fulfils the first Respondent's contractual obligation towards Claimant. If the second Respondent refuses the obligation to pay pursuant to Claimant's request, Claimant is obliged to inform the first Respondent about that within 2 days from the day of refusal. The Contract is concluded for the period of 1 year, with the possibility of implied prolongation, unless contracting parties agree otherwise.

Based on the invoice No. 14/04 from 28 April 2005 for the amount of EUR 25.449,44, EXW S., invoice No. 22/07 from 14 July 2005 for the amount of EUR 23.964,80, EXW S., invoice No. 30/08, not dated, for the amount of EUR 21.567,29, EXW S., and invoice No. 33/09 from 5 September 2005 for the amount of EUR 12.564,62, the arbitral tribunal established that Respondents' debt amounted to the total of EUR 83.534,16.

Based on the List of unpaid invoices of the first Respondent from 18 February 2008, the arbitral tribunal established that Respondents partially paid the invoice No. 14/04 - in the amount of EUR 23.623,73, as well as the invoice No. 22/07 in the amount of EUR 258,60 (also partially), so they paid EUR 23.882 in total. This sum, when deduced from the total debt, leaves unpaid the amount of EUR 59.653,83, that claimant requested in the Statement of Claim.

Based on Claimant's submission, as well as the excerpt from Claimant's foreign currency account, the arbitral tribunal further established that after the Statement of Claim had been filed, the second Respondent paid the amount of EUR 20.000 of the remainder of debt amounting to EUR 39.653,83 is the principal debt that Claimant is requesting after the partial withdrawal of the claim. The arbitral tribunal established that this amount was used to cover unpaid amounts of less recent invoices, namely the invoice No. 14/04 in the amount of EUR 1.815,71, and this invoice being now fully paid, the invoice No. 22/07 in the amount of EUR 18.184,29, so the unpaid part of this invoice is EUR 5.521,91. The unpaid debt in the total amount of EUR 39.653,83 consists of EUR 5.521,91 for the invoice No. 22/07, EUR 21.567,30 for the invoice No. 30.08 and EUR 12.564,62 for the invoice No. 33/09.

Based on documentation attached to the invoice No. 22/07 (copy of disposition No. 60/05 from 15 July 2005, copy of the unified customs declaration showing that the value of goods was EUR 23.964,80 and that the goods crossed the border with FYR Macedonia on 15 July 2005, in the transport vehicle having the license number […], copy of the Statement of origin of goods from 15 July 2005, copy of Certificate of quality of goods issued by […], copy of CMR bill of lading for transportation of goods by the truck with license plates No. […] and […], copy of Calculation of statistical value of goods, issued by Customs Department in S., copy of a Request for a certificate of circulation of goods and copy of Certificate of circulation of goods, copy of Calculation of customs debt No. […], issued by the Customs Department in S., from 15 July 2005, copy of the Statement of origin of goods from 19 August 2005 (Accuracy of all copies is verified by the Serbian Customs Department in S.), the arbitral tribunal established that Claimant delivered goods of the value stated in the invoice, namely EUR 23.964,80, to the first Respondent, meaning that on 15 July 2005, the goods crossed the border with FYR of Macedonia, which was the country of destination.

Based on documentation attached to the invoice No. 30/08 (copy of disposition No. 60/05 from 19 August 2005, copy of Certificate of quality of goods issued by […], copy of CMR bill of lading for transportation of goods by the truck with license plates No. […] and […], copy of Calculation of statistical value of goods, issued by the Customs Department in S., copy of Certificate of circulation of goods, copy of declaration of exporter from 19 August 2005 and copy of Calculation of customs debt No. […] issued by the Customs Department in S., from 19 August 2005 (Accuracy of all copies is verified by the Serbian Customs Department in S.), the arbitral tribunal established that Claimant delivered goods of the value stated in the invoice, namely EUR 21.567,30, to the first Respondent, meaning that the goods crossed the border with FYR of Macedonia which was the country of destination.

Based on documentation attached to the invoice No. 33/09 (copy of disposition No. 60/05 from 5 September 2005, copy of the unified customs declaration showing that the value of goods was EUR 12.564,62 and that the goods crossed the border with FYR Macedonia on 7 September 2005 in the transport vehicle with the license No. […], copy of the Statement of origin of goods from 5 September 2005, copy of CMR bill of lading for transportation of goods by truck with license plates No. […] and […], copy of Calculation of statistical value of goods, from 5 September 2005, issued by the Customs Department in S., copy of Certificate of circulation of goods from 5 September 2005, copy of Calculation of customs debt No. […] issued by the Customs Department in S. on 5 September 2005 and copy of Certificate of imposing the mandatory fine to the person who declared the goods […] from S. (Accuracy of all copies is verified by the Serbian Customs Department in S.), the arbitral tribunal established that Claimant delivered the goods of the value stated in the invoice, namely EUR 12.564,62, to the first Respondent, meaning that on 7 September 2005, the goods crossed the border with FYR of Macedonia which was the country of destination.

The arbitral tribunal established that the Statement of Claim, with all attachments, was duly delivered to Respondents, but they did not submit an answer to the Statement of Claim, nor did they express their position with respect to Claimant's claims in any other way.

JURISDICTION, PROCEDURAL RULES AND APPLICABLE LAW

Considering this legal issue pursuant to Article 18(1) of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (hereinafter referred to as: the Rules), the arbitral tribunal has concluded that the case at hand falls within the jurisdiction of the FTCA .

In their Contract the Parties agreed upon jurisdiction of the FTCA in Belgrade in case of a dispute.

Namely, Article 8 of the Contract states: "The Contracting Parties hereby agree to settle their disputes arising from the performance of this Contract in an amicable manner; if an amicable solution is not possible, the Contracting Parties accept the jurisdiction of the Foreign Trade Court of Arbitration in Belgrade." The dispute between the parties, which arose from this Contract falls within the scope of international business relations by its nature, and is therefore within the jurisdiction of the FTCA […]

The Rules, as adopted on 24 May 2007, were applied to the arbitral proceedings. Article 63 of the Rules entitles the Parties to request the application of the Rules which were in force on the date of the conclusion of the arbitration agreement. Since neither of the parties made such a request, the arbitral tribunal made a decision to apply the Rules currently in force.

The parties failed to designate the substantial law which was to be applied to their contract. Pursuant to Article 48(2) of the Rules, the arbitral tribunal determined the applicable law according to the conflict - of - law rules it deemed the most appropriate for the case at hand. The dispute between the parties arose from the sales contract with an international element. It is widely accepted that, in case the applicable law for a sales contract is not stipulated, the law of the country where the seller has its business seat should be applied, considering the fact it is the seller who performs the characteristic obligation from the contract. The abovementioned conflict - of - law rule is provided for both in Article 20(1) of the Serbian Law on Resolution of Conflict of Laws with Regulations of Other Countries and in Article 22 of the Macedonian Law on International Private Law (Official Gazette of FYR Macedonia no. 87/07 of 12 July 12 2007). Pursuant to the stated rule, the substantial law of the Republic of Serbia is to be applied to the case at hand. The Republic of Serbia is a successor of the former SFRY in the UN Convention on Contracts for the International Sale of Goods (hereinafter referred to as: CISG or the Convention). Article 1 of the CISG states that the Convention is to be applied to contracts of sale of goods between the parties whose places of business are in different States when the States are Contracting States (Article 1(1)(a)) or when the rules of private international law lead to the application of the law of a Contracting State (Article 1(1)(b)). The arbitral tribunal has determined that the conditions set under Article 1(1)(b) CISG have been complied with, without inquiring whether Article 1(1)(a) should be referred to due to the fact FYR Macedonia did not give a notice of succession into rights and obligations of SFRY with respect to the CISG until after the contract at hand had been concluded. Consequently, it is the law of Republic of Serbia that is to be applied as the law of the Contracting State in which the CISG had been in force at the time of the conclusion of the contract between the Parties. In regard to the issues not explicitly mentioned in the CISG, which nevertheless fall within its scope of application, such as payment by assignment and interest rate, general principles of the CISG shall be applied, and in case of their absence - rules of the Law on Contracts and Torts of the Republic of Serbia (hereinafter as: LCT) shall be applied, according to Article 7(2) of the CISG.

REASONS FOR GRANTING THE CLAIM

The arbitral tribunal granted the claim at hand and obliged Respondents to jointly pay the amount of EUR 39.653,83 as the principal debt to Claimant, having taken into account the provisions of the applicable law and the contract between the Parties. Based on the written evidence that Claimant presented to the tribunal, it has been concluded that in the period from July 2005 to September 2005, Claimant had delivered the goods to the first Respondent without receiving full payment in return. Invoice no. 22/07 of 13 July 2005 shows that the Claimant delivered goods of the value of EUR 23,964.80, out of which EUR 5,521.91 remained unpaid. Invoice no. 30/08 of 19 August 2005 shows that the delivery of goods of the value of EUR 21,567.30 remained fully unpaid, while Invoice no. 33/09 of 5 September 2005 amounting to EUR 12,564.62 also remained fully unpaid. According to the contract, the payment should have been effected by the second Respondent as assignee, within three days from the receipt of order for the goods. The Claimant's invoices, however, show a different way of establishing due date of payment. Invoice no. 22/07 sets 12 September 2005, Invoice no. 30/08 sets 18 October 2005 and Invoice no. 33/09 sets 4 November 2005 as deadlines for payments. The total amount of debt due is EUR 39,653.84.

It is therefore concluded that the Claimant, as the seller from the contract, has fulfilled its obligation as stipulated and in conformity with Article 30 of the CISG which binds the seller to deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and the Convention.

On the other hand, neither the first Respondent [Buyer] nor the second Respondent met their obligations since they did not pay the price, i.e. they did not act in accordance with Article 53 of the CISG which imposes an obligation on the buyer to pay the price for the goods as required by the contract and the Convention.

The arbitral tribunal found that Respondents have joint and several liability to pay the price in the case at hand. [Buyer] authorized the second Respondent to pay the invoices on [Buyer]'s behalf. The second Respondent undertook the obligation of payment, and [Seller], too, accepted the abovementioned assignment. Further, the contract between the Parties states that [Buyer] will be discharged of its obligation only if the second Respondent honours its obligation of payment. Since the second Respondent did not fully comply with its obligation, it is consistent with the provisions of the contract for the buyer to remain liable for payment of the invoices. In case the buyer does not fulfil any of its obligations from the contract, the seller is authorized by Article 61 of the CISG to exercise its rights recognized in Articles 62 - 65 of the CISG, as well as to claim damages according to Articles 74 - 77 of the CISG. Article 62 of the CISG entitles the seller to require the buyer to pay the price, unless it has resorted to a remedy which is inconsistent with this requirement. According to Article 59 of the CISG, the buyer must pay the price on the date fixed by or determinable from the contract and the Convention without the need for any request or compliance with any formality on the part of the seller. The CISG does not contain rules on payment by assignment, nor can the mentioned rules be determined on grounds of general principles of the Convention. According to the provision of the Serbian LCT, which secondary applies to this questions, as part of the law applicable to this Contract, the recipient of assignment may not demand performance of a contract from the assignee before notifying him of his acceptance of the assignment (Article 1021), which the recipient ([Seller]) did at the time of signing the contract. Hence, an independent legal bond was created between the second Respondent as assignee and [Seller] as the recipient of assignment (Article 1022). Accordingly, the second Respondent's liability for payment was not discharged, i.e. the Claimant, as the seller, still has the right to demand payment of duly invoiced amounts from the second Respondent. The CISG remains silent in regard to the nature of liability for payment in situations where there are multiple subjects on the debtor's side. However, resolution of the mentioned issue is found in the provisions of the LCT. Article 413 sets forth a presumption of joint and several liability of debtors in cases of multiple subjects on debtor's side in divisible obligations arising from commercial contracts, unless such presumption has been explicitly excluded by the provisions of the contract. Taking into account that payment claims are divisible, and that in this case there are two debtors liable for the payment (the Respondents), the arbitral tribunal decided that the Respondents are jointly liable for payment of the debt defined in par. 1 of this Award.

Apart from its principal claim, Claimant also requested interest, which the arbitral tribunal deemed grounded. The seller's right to claim interest stems from Article 78 of the CISG which states that in case 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 Convention, however, does not contain the rules neither with respect to the issue of interest rate the debtor is due to pay, nor with respect to the date on which Claimant becomes entitled to request interest. In addition, pursuant to Article 277 of the LCT, Claimant's right to an interest exists also in its relation with assignee. The abovementioned provision specifies the debtor's obligation to pay a default interest at the rate determined by the Federal Law, besides the principal debt, in case the debtor is late with settling the payment claim. Other than that, the LCT in its Article 278(1) establishes the creditor's right to default interest regardless of the fact whether it suffered damages due to debtor being late or not. The second paragraph of the same article furthermore grants the creditor the right to claim damages in case their sum surmounts the sum that would be paid as default interest. Article 277 of the LCT then determines that default interest should be accrued as of the day of the debtor's delay. On the other hand, an answer to the question which interest rate is to be applied on payment claims in foreign currency is not provided by the Law on the Default Interest Rate. Considering the abovementioned, the arbitral tribunal reached a solution by applying general principles of the CISG and current case-law in Serbia, which adjudicates interest rate as prescribed by the European Central Bank, as the issuing bank for the currency of the debt. The abovementioned provisions of the CISG and LCT lead to conclusion that the default interest is defined as presumed damage […]. Both of the mentioned acts state that incurrence of damage in the amount greater than the default interest accrued, gives right to the creditor to claim damages as well. Therefore, default interest rate should correspond to the amount of the presumed damage the creditor suffered due to debtor's non performance of the contract. In the situation where the debtor does not meet its obligation of payment, it is to be expected that the creditor will compensate for the damage by obtaining a bank credit at an average interest rate for short-term loans in currency of the debt. In its Statement of Claim, the Claimant has requested interest at a discount rate of the European Central Bank […]. Although the Claimant initially required interest from the day the debt became due, in its submission of 22 February it withdrew that claim, and is now demanding interest at the discount rate of the European Central Bank from the day of submitting the Statement of Claim. According to the national law, a discount interest rate is the basic or the lowest interest rate at which the issuing bank (the National Bank of Serbia) grants other banks credits, or at which it (the issuing bank) discounts bills and government securities. The arbitral tribunal has […] established that the mentioned bank prescribes three different interest rates, none of which named as "discount interest rate". Instead, an interest rate named "Main refinancing operations rate" corresponds most closely to the concept of a discount interest rate. Therefore, the arbitration tribunal awarded this interest rate to the Claimant.

The decision on the costs of proceedings […] was made pursuant to Article 51 of the Rules, considering the fact Claimant has fully succeeded in its claim. Hence, Claimant is to be compensated for all justified and necessary expenses made in relation to these proceedings, which are: RSD 12,000 for registration fee, RSD 195,844 for arbitration costs, RSD 21,000 for costs of representation at the hearings, RSD 20,000 for writing of Statement of Claim and RSD 20,000 for writing of submission.

Pursuant to Article 64 of the Law on Arbitration (Official Gazette of the Republic of Serbia, No. 46/2006) and Article 56(1) of the Rules, this Award is final and cannot be subject to appeal. This award has the force of a final court decision.

Belgrade, 15 September 2008             Arbitral tribunal
(signed)     


FOOTNOTES

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

** Ana Martinovic is a master student at the University of Belgrade Faculty of Law. Tanja Šumar is an associate with the Belgrade law firm Moravcevic, Vojnovic, Zdravkovic OAD in cooperation with Schoenherr. 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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