Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography
Search the entire CISG Database (case data + other data)

CISG CASE PRESENTATION

Serbia 5 January 2009 Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce (Paper handkerchiefs production line case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/090105sb.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20090105 (5 January 2009)

JURISDICTION: Arbitration ; Serbia

TRIBUNAL: Foreign Trade Court of Arbitration

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: T-5/08

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Serbia (claimant)

BUYER'S COUNTRY: Italy (respondent)

GOODS INVOLVED: Line for the production and packaging of paper handkerchiefs


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 62 ; 78

Classification of issues using UNCITRAL classification code numbers:

1B [Relation to Contracting State: when law of the contracting states is chosen the Convention applies]

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

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

Descriptors: Scope of Convention ; Payment of Price ; Interest

Go to Case Table of Contents

Editorial remarks

Go to Case Table of Contents

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: [2010] 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, cited at pp. 10, 47, 54.

Go to Case Table of Contents

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 5 January 2009 [Proceedings No. T-5/08]

Translation by [*] Marija Skundric
Edited by Dr. Vladimir Pavic, Milena Djordjevic, LL.M. [**]

Claimant (Serbia) [Seller] v. Respondent (Italy) [Buyer]

Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce in Belgrade in the proceedings conducted by a sole Arbitrator, in a dispute concerning the claim of the [Seller] against [Buyer] for payment of EUR 43.840, upon the conducted arbitration proceedings, pursuant to Articles 37(6), 47 and 49 of the Rules of the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce, on 5 January 2009 makes the following

AWARD

  1. [Seller]’s claim is granted and [Buyer] is ordered to pay to the [Seller] the amount of EUR 318.169,44 with interest at a 3% annual rate from 13 December 2005 until payment, which is to be made within 15 days from the day of receipt of the award.

  2. [Buyer] is ordered to pay to [Seller] EUR 5.320 for registration fee, costs of the arbitration proceedings and costs of legal representation in the proceedings.

STATEMENT OF REASONS

I. Jurisdiction; the existence of the arbitration agreement

  1. In the Statement of Claim received on 11 March 2008, [Seller] submitted that pursuant to Article 13 of the Agency Contract signed on 5 October 2005 between  (manufacturer [..]), [Seller] and [Buyer], in case of disputes, Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce shall have jurisdiction.

  2. [Buyer] did not reply to Statement of Claim, which it received on 16 June 2008 but only returned its notification to Foreign Trade Court of Arbitration on 1 July 2008. Pursuant to Article 15 paragraph 1 of the Rules of the Foreign Trade Court of Arbitration (hereinafter the Rules), the jurisdiction of arbitration in this matter was examined by the Board of the Court of Arbitration at the session held on 23 July 2008. The Board determined that in the documents contained in the case file, an arbitration agreement can be found and that this agreement establishes jurisdiction of Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce for disputes between [Seller] and [Buyer].

  3. Pursuant to Article 15 paragraph 3 of the Rules, the sole Arbitrator established that in Article 13 of the Agency Contract the parties concluded a valid arbitration agreement which provides for jurisdiction of Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce. Article 13 specifically determines the jurisdiction of “arbitration in Belgrade.” The Arbitrator found that the parties obviously wanted to stipulate jurisdiction of an arbitration institution in order to avoid the State court intervention. The Arbitrator also found that it can be unambiguously concluded from the agreement of the parties, that jurisdiction of Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce is negotiated, due to the fact that it is the only arbitrational institution in Belgrade which can resolve disputes which have a foreign element. This standpoint, based on similar formulations of parties agreement on dispute settlement, was previously taken by the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce for several times. The following sentence from the arbitration clause: “as a last resort, the parties stipulate the jurisdiction of Trade Court in Belgrade” should neither be interpreted as a choice of court clause (since it would have no purpose within the arbitration clause) nor as stipulating two-tier procedure (since both the Rules and Serbian Law on Arbitration do not allow it). The Arbitrator interpreted this sentence only as an observation that if court assistance in the arbitral proceedings is needed, Serbian courts shall have such jurisdiction in cases stipulated by the law (Article 7 of Serbian Law on Arbitration).

II. Appointment of the arbitral tribunal

  1. In its Statement of Claim, [Seller] explicitly entrusted the Board to appoint the arbitrator and [Buyer] refused to participate in the proceedings. Pursuant to Articles 20(1) and 21(3) of the Rules, since the value of the dispute is under US$ 70.000,00, on 24 July 2008, the president of the Board appointed […] as Sole Arbitrator.

[…]

III. Applicable law

  1. Article 12 of the Agency Contract concluded on 5 October 2004 between the parties, stipulates that Serbian substantial law is to be applied on the Contract and disputes arising from it.

  2. Regarding the question of locus standi (legal standing before a court) of [Buyer] and his capacity to take part in the proceedings, the Arbitrator applied Italian law pursuant to general rules of International private law since [Buyer] is registered in Italy as entrepreneur and has his place of residence in Italy.

IV. Arbitral proceedings

  1. [Buyer] did not reply to Statement of Claim nor has it commented on the appointment of the Arbitrator, although both Statement of Claim and notification on appointment  of arbitrator were dully delivered to him.

  2. The Secretariat of the Foreign Trade Court of Arbitration scheduled the hearing to be held on 23 December 2008 and sent the notifications to the Parties on 24 November 2008. Notification to [Buyer] was sent through courier service DHL, however DHL’s report delivered to the Court on 11 December 2008, established that [Buyer] can no longer be found at the address specified in the Contract

  3. The hearing was held on 23 December 2008, in the presence of [Seller]'s representative (attorney). The Arbitrator determined that [Buyer] was duly notified of the scheduled hearing, so pursuant to Article 37 paragraph 6 of the Rules, it concluded that hearing can be held without [Buyer]’s presence . When deciding on this matter, the Arbitrator took into consideration [Buyer]’s previous conduct and relevant provisions of the Rules on written notifications (Articles 34(2), (3) and (4)).

V. [Seller]'s claim

  1. In its Statement of Claim of 11 March 2008 [Seller] asserted that it concluded the Agency Contract with [Buyer] on 5 October 2004, whereas [Seller] was to be an exporter and a general agent and [Buyer] was to be an exclusive agent who undertakes an obligation to market products of the producer […] from Serbia at the territories of Italy, France  and Libia. On the basis of the Agency Contract and subsequent Annex No. 1 of 5 October 2005 and Annex No. 2 of 1 April 2005, [Seller] delivered the line for the production and packaging of paper handkerchiefs in the total value of EUR 120.000 to [Buyer] on 6 April 2005. [Buyer] received the delivery and got entitled to a trade-fair discount in the amount of EUR 23.760. [Buyer] contracted to pay the price for the goods in several installments (EUR 5.000 by 4 April 2005, EUR 19.000 by 7 April 2005 and the rest of the price was to be given in 10 equal monthly payments from 1 May 2005 to 28 February 2006). [Buyer] paid the price partially, more precisely the amount of EUR 52.284,40 in seven installments. Hence the remainder of his debt amounted to EUR 43.840. The cheque given to [Seller] from the [Buyer] as a guarantee of payment could not have been realized. Therefore, [Seller]’s claim amounts to EUR 43.840, the value of [Buyer]’s debt. During the hearing, [Seller]’s Counsel confirmed [Seller]’s position from the Statement of Claim regarding the main debt.

  2. In its Statement of Claim [Seller] also requested to be awarded “statutory interest” on the said sum, from 1 November 2005. During the oral proceedings, [Seller] specified its request by demanding interest starting from the date of [Buyer]’s last payment, namely 13 December 2005, at 'domiciliary' interest rate for deposits in Euros.

  3. [Seller] also requested compensation for the registration fee (RSD 16.680,00), the costs of arbitral proceedings (RSD 374.567,00) and the cost of representation (RSD 80.000,00).

  4. In its submission of 25 September 2008 [Seller] made an addition to its original claim by specifying that [Buyer], as a natural person, is the Respondent in this case, listed at the same address in Italy. At the same time, [Seller] established that [Buyer], as an entrepreneur i.e. individual company within the meaning of Italian law, was a contracting party to the Agency Contract from 5 October 2004. Given that the Italian law sets the rule that if a natural person is at the same time an entrepreneur, his personal assets can be used to pay the debts he made as an entrepreneur, [Seller] specified that the [Buyer] as a natural person is the Respondent in this case, without specifying that he is an entrepreneur. [Seller] did not accept [Buyer]’s justifications (see point 6 infra) that [Buyer], as an entrepreneur i.e. as an individual company, was erased from the business register. In other words, it is [Seller]’s position that the excerpt from the Chamber of Commerce of [city in Italy] (which can be found in [Buyer]’s submission of 1 July 2008) only proves that the Chamber of Commerce of [city in Italy] received a request for erasing of [Buyer] from registry, and not that [Buyer] was indeed erased from the registry. In its submission of 29 July 2008 [Seller] delivered certified translation of the excerpt from the Chamber of Commerce of [city in Italy] which proves the fact that [Buyer] falsely presented the contents of the excerpt from the registry in its submission.

  5. As evidence of its claim [Seller] submitted the following documents: Agency Contract of 5 October 2004, Annex 1 of the Contract of 5 October 2004, Annex 2 of 1 April 2005, customs declaration No [] of 6 April 2005 for the line for the production and packaging of paper handkerchiefs, [Seller]’s invoice No. [] of 6 April 2005 at the amount of EUR 120,000.00, certificate of trade-fair discount in the amount of EUR 23,760.00 issued by [Buyer] of 16 May 2005, notices for payment issued by [] Bank for payment of money which [Buyer] paid to [Seller] dated 7 and 14 April, 4 May, 28 July, 8 August, 25 October and 13 December 2005, cheque of the [] bank No [], urgency request of [Seller] to [Buyer] for payment of 23 June and 20 September 2006, notification of [Seller] of 25 September 2006 on avoidance of Agency Contract, request of []  bank of 11 October 2006 to bank [] for payment of cheqeue No. [], reports of bank [] of 20 and 25 October 2006 on impossibility of payment on the basis of cheque [] no. [], notification of bank [] to [] bank of 17 October 2006 with regards to payment on the bases of the said cheque.

  6. [Buyer] did not deny [Seller]’s claim, did not reply to [Seller]’s Statement of Claim nor has it attended the hearing. In a letter of 1 July 2008 [Buyer] only informed the Tribunal that he received the Statement of Claim and submitted a photocopy of the excerpt from the Chamber of Commerce of [city in Italy] from which it can be concluded that “[Buyer]’s Company was terminated on 21 April 2008, erased from the business registry and does not do business under the above-mentioned or any other name”.

VI. The reasoning of the Arbitrator with respect to the claim

  1. Regarding the capacity of the Respondent, the Arbitrator accepted [Seller]’s request from its submission of 25 September 2008, to specify [|Buyer] as a natural person to be the Respondent in this case and not [Buyer] as an entrepreneur, at the same address. The Arbitrator did not engage into determining whether [Buyer] (as an entrepreneur) was erased from the registry or had it only requested to be erased but excepted [Buyer]’s statement from its submission of 1 July 2008, that he as an entrepreneur i.e. his company no longer does business. According to the rules of International Private Law, when dealing with issues regarding the status of a person, national laws of that person’s nationality or place of residence, are to be applied. In the present case, Italian law has jurisdiction over [Buyer], both as a law of a country of ‘nationality’ of his company and as a law of his place of residence (as a natural person). Bearing in mind [Buyer]’s statement regarding the seizure of its business, the Arbitrator applied Article 2082 of Italian Civil Code, which states that a natural person, as an entrepreneur, financially bears the risk for company’s business ventures. The Arbitrator found that specifying that [Buyer], as a natural person, is the Respondent in this case, does not represent a modification of the Claim regarding the Respondent, since [Buyer] already bore the responsibility for all of the debts his company incurred and therefore it can be concluded that [Buyer], as a natural person, was a party in this proceedings from the very beginning.

  2. At the hearing held on 23 December 2008, the Arbitrator presented the evidence by reading the documents submitted in support of the Statement of Claim.

  3. While examining the evidence, the Arbitrator established that this legal matter can be resolved on the basis of the written evidence submitted.

  4. When resolving contentious questions, the Arbitrator took into consideration that Respondent neither participated in the proceedings nor had replied to Statement of Claim, therefore the Arbitrator bore in mind the objections that [Buyer] might have made, but within the boundaries of the rules on burden of proof.

  5. The Arbitrator found that, regardless of the terminology that parties used to define the Contract of 5 October 2004 (Agency Contract), the issue in this case is the delivery (sale) of the line for the production and packaging of paper handkerchiefs, where Claimant is the [Seller] and Respondent is the [Buyer].  This can be deduced from both Annex No. 1 and Annex No. 2 which mention delivery of goods in relation with a typical sales contract (even the parties to the Agency Contract are named as parties to the sales contract), documentation connected with this delivery (invoice and customs declaration), as well as the conduct of the parties after the delivery ([Buyer] giving a cheque as a guarantee, which was listed as an obligation of the buyer in Annex No.2, [Buyer]’s payment of the price).

  6.  After examining the evidence, the Arbitrator found that [Seller] fulfilled its obligation both from the Contract of 5 October 2004 and Annex No. 1 and No. 2, namely [Seller] delivered the goods (the line for the production and packaging of paper handkerchiefs) and [Buyer] received those goods (customs declaration, invoice, as well as certificate of trade-fair discount in the amount of EUR 23,760.00 issued by [Buyer] along with seven remittance forms for payment of price installments given to [Seller] by [Buyer]). The Arbitrator also found that [Buyer] objected neither to quantity nor to quality of the goods (since payments were made and [Buyer]’s certificate of discount in the amount of EUR 23,760.00 does not specify price reduction on any bases other than trade-fair discount). When earlier payments (EUR 52.284,40) and trade-fair discount (EUR 23.760) are deducted from the contracted price (EUR 120.000), [Buyer]’s debt to [Seller] for the goods it received amounts to EUR 43.955,60. In its Statement of Claim [Seller] requested a slightly reduced amount of EUR 43.840 and this reduction was explained as “discount for foreign expenses“. The Arbitrator found that [Seller]’s claim corresponds to the unpaid part of the price negotiated in both the Contract and Annexes Nos. 1 and 2. Therefore by failing to pay the full amount of price, [Buyer] breached its contractual obligations and the Arbitrator found that [Seller]’s claim is founded. Pursuant to Article 62 of United Nations Convention on Contracts for the International Sale of Goods (hereinafter CISG; which is to be applied to the Contract in the case at hand, pursuant to Article 1 paragraph 1 of the CISG, since the Convention forms part of the Serbian substantive law) the seller may require the buyer to pay the price when buyer fails to do so in accordance with the contract.

  7. The Arbitrator found that [Seller] is entitled both to full payment and interest as a consequence of non-payment. Pursuant to Article 78 of the CISG debtor must pay interest on the sum that is in arrears. The same legal opinion can be found in Serbian Law on Obligations (Article 277 paragraph 1), which adds that this obligation exists even when it is not specifically negotiated. As for the date from which interest is due, the Arbitrator accepted [Seller]’s recommendation and set it to be 13 December 2005, since it was the date of [Buyer]’s last payment (moreover this is the most favorable date for [Buyer] because its non-payment were due even before this date). The Arbitrator also accepted [Seller]’s request that interest should be determined in accordance with domiciliary interest rate for the EUR currency. Relying on Reuters information system at the time of making of the award, the interest rate for EUR is set to be 2,971 % (EURIBOR for six-months deposits), as specified in holding of the award.

  8. Regarding the costs of the proceedings, the Tribunal followed the rule on cost-allocation contingent on the party’s success in the proceedings and found that [Buyer] is obliged to compensate [Seller] for the amount of the paid registration fee (RSD 16.680,00) and arbitration costs (RSD 374.567,00) since it can be concluded from the documentation submitted that [Seller] incurred these expenses. The Arbitrator also accepted [Seller]’s request for compensation of costs of representation in the amount of RSD 80.000,00 (specified in accordance with the Tariff of Attorneys’ Legal Fees) since it was represented by an attorney in the first part of the proceedings.  Hence the total amount of RSD 471.367,00 was converted in EUR by using the official middle exchange rate set by the National Bank of Serbia on the date of the making of the award (1 EUR=88,6010 din.).

VII. Finality of the award 

  1. Pursuant to Article 56 paragraph 1 of the Rules and Article 64 paragraph 1 of Serbian Law on Arbitration, this award is final, is not subject to appeal and has the force of a final and binding decision of a state court.

In Belgrade, 5 January 2009

Arbitrator
 (signed)


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Serbia is referred to as [Seller] and Respondent of Italy is referred to as [Buyer].

** Marija Skundric is a graduate of the University of Belgrade Faculty of Law where she is currently attending Master Studies in Commercial Law. Dr. Vladimir Pavic is an Associate Professor in Private International Law and Arbitration at the University of Belgrade Faculty of Law. Milena Djordjevic, LL.M. (U. of Pittsburgh) is a Lecturer in International Commercial Law at the University of Belgrade Faculty of Law.

Go to Case Table of Contents
Pace Law School Institute of International Commercial Law - Last updated July 14, 2010
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography