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 4 June 2009 Foreign Trade Court attached to the Serbian Chamber of Commerce (Mineral water case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/090604sb.html]

Primary source(s) of information for case presentation: Text of award

Case Table of Contents


Case identification

DATE OF DECISION: 20090604 (4 June 2009)

JURISDICTION: Arbitration ; Serbia

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: T-7/08

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Serbia (claimant)

BUYER'S COUNTRY: FYR Macedonia (respondent)

GOODS INVOLVED: Mineral water


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 59 ; 78

Classification of issues using UNCITRAL classification code numbers:

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

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

Descriptors: 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

Unavailable

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 4 June 2009 [Proceedings No. T - 7/08]

Translation by [*] Jovana Stevovic

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

Claimant (Serbia) v. Respondent (Macedonia)

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], represented by [L] whose power of attorney is in the case file, against [Buyer], who does not have legal representation, regarding the payment of the debt for delivered goods in the amount of 18,610.94 RSD, upon the conducted proceedings and the hearing held on 15 April 2009, in accordance with the Articles 37(6), 34 and 49 of the Rules of the Foreign Trade Court of Arbitration (hereinafter: Rules), on 4 June 2009 makes the following

AWARD

1. [Seller]'s claim is granted and [Buyer] is ordered to pay the sum of 18,610.94 EUR as the principle debt for the unpaid purchase price for delivered goods within 8 days from the day of receipt of this Award.

2. [Seller]'s claim regarding the interest on the principle debt is granted and [Buyer] is ordered to pay interest at the rate applied by the Central Bank of Europe to the deposits in Euro starting from the date each individual payment is due: for invoice no. 61 on the amount of 2,068.37 EUR starting from 25 July 2005 until the date of payment at the rate of 2.148 %, for invoice no. 64 on the amount of 5,822.20 EUR starting from 31 July 2005 until the date of payment at the rate of 2.173%, for invoice no. 81 on the amount of 3,931.20 EUR starting from 29 August 2005 until the date of payment at the rate of 2.209 %, for invoice no. 135 on the amount of 4,917.17 EUR starting from 5 November 2005 until the date of payment at the rate of 2.639 %, for invoice number 22 on the amount of 1,872.00 EUR starting from 11 April 2007 until the date of payment at the rate of 4.237 %, within 8 days from the day of receipt of the Award.

3. [Buyer] is ordered to pay the costs of the arbitration procedure in the amount of 262,310.00 RSD (registration costs and arbitration costs), along with costs of representation in the amount of 41,000.00 RSD, which totals to 303,310.00 RSD, within 8 days from the day of receipt of the Award.

STATEMENT OF REASONS

I. ESTABLISHING THE EXISTENCE OF THE ARBITRATION AGREEMENT

1. In the Statement of Claim dated 31 March 2008, [Seller] submitted that, pursuant to Article 14 of the Sales Contract no. 157/04 concluded on 4 January 2005 between [Seller] and [Buyer], the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce has jurisdiction. Article 14 of the Sales Contract provides that 'Contracting parties agree to resolve all the problems arisen in an amicable manner, by mutual agreement; if the amicable resolution is not possible, Parties accept the jurisdiction of the Foreign Trade Court of Arbitration attached to the Chamber of Commerce of Serbia and Montenegro and the Commercial Court in Leskovac'.

2. The Secretariat sent the Statement of Claim with Appendices to [Buyer] on 26 December 2008 and invited [Buyer] to, pursuant to Paragraph 1 and 2 of Article 31 of the Rules, submit the Statement of Defense and to, in agreement with [Seller], appoint a Sole Arbitrator within 30 days from the receipt of the Reply to the Statement of Claim, or to leave the appointment of the arbitrator to the President of the Court of Arbitration, in accordance with Article 21 Paragraph 1 and 2 of the Rules and to notify the Arbitration in writing regarding this.

The Statement of Claim that the Secretariat had sent to [Buyer] to the address indicated in the Statement of Claim by DHL could not be delivered since the recipient refused to accept the delivery, even though the delivery was attempted several times, namely on 29, 30 and 31 December 2008, as well as on 5, 8, 9, 12, 13 and 14 January 2009. The Arbitration was informed of this fact by the delivery service.

3. Having in mind that [Buyer] had not filed the Statement of Defense by the specified deadline, the Board of the Foreign Trade Court of Arbitration comprising of: Prof. Dr. X, president of the Court of Arbitration, Prof. Dr. Y, vice-president of the Court of Arbitration and Z, secretary of the Court of Arbitration, at the meeting held on 2 February 2009, based on the records and documents submitted by [Seller] found that the arbitration agreement related to the dispute exists in the records of the dispute, i.e. that the agreement is incorporated in the Article 14 of the Sales Contract no. 157/04 concluded on 4 January 2005.

II. APPOINTMENT OF ARBITRATORS

1. Pursuant to Article 20 Paragraph 1 of the Rules, considering that the value of the dispute is below US$ 70.000,00 this dispute is to be resolved by a sole arbitrator.

2. Pursuant to Article 21 Paragraph 3 of the Rules, considering that [Buyer] has not filed the Statement of Defense by the specified deadline, the president of the Court of Arbitration appointed [X], a University professor, as a sole arbitrator, who made a declaration of acceptance of duty and signed the statement of independence.

III. ESTABLISHING JURISDICTION OF THE ARBITRATION

1. Together with the Statement of Claim filed on 31 March 2008, [Seller] submitted the Sales Contract no. 157/04 concluded on 4 January 2005 by and between [Seller] and [Buyer], which contains in Article 14 the following clause: 'Contracting parties agree to resolve all the problems arisen in an amicable manner, by mutual agreement; if the amicable resolution is not possible, Parties accept the jurisdiction of the Foreign Trade Court of Arbitration attached to the Chamber of Commerce of Serbia and Montenegro and the Commercial Court in Leskovac'.

2. From this clause it stems that it is, by its nature, an arbitration clause and a prorogation clause, leaving the choice of the dispute settlement mechanism to the contracting party that initiates the proceedings. Being the requesting party in this dispute, [Seller] has opted for arbitration as the applicable dispute settlement mechanism by filing the Statement of Claim to the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce.

3. [Seller] filed the Statement of Claim against [Buyer] to the Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce which, pursuant to the Law on Abrogation of the Law on Yugoslav Chamber of Commerce (Official Gazette of the Republic of Serbia 55/2003), represents the successor of the Foreign Trade Court of Arbitration attached to the Yugoslav Chamber of Commerce and 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.

4. Arbitration agreement contained in the article 14 of the Sales Contract no. 157/04 fulfils the conditions of validity in accordance with Article 5 Paragraph 1 of the Serbian Law on Arbitration (Official Gazette of the Republic of Serbia 46/2006) and Articles 12-13 of the Rules, specifically:

(1)    subject matter of the dispute is an international business relation (Article 12 of the Rules), which stems from the Sales Contract between [Seller] from Serbia and [Buyer] from Macedonia, concluded on 4 January 2005, whose subject matter is purchase of the mineral water […] (article 1 of the Contract); and as such, the subject matter of the dispute does not fall within exclusive jurisdiction of Serbian courts, and it fulfils the arbitrability requirement pursuant to Article 5 Paragraph 1 of the Serbian Law on Arbitration (Official Gazette of the Republic of Serbia 46/2006);
 
(2)    the arbitration agreement is incorporated in the article 14 of the Sales Contract no. 157/04 concluded on 4 January 2005 by and between [Seller] and [Buyer], and it applies to all future disputes arising from the Sales Contract.

5. Based on these elements and the evidence contained in the record, the Sole Arbitrator established the jurisdiction of Arbitration in this dispute.

IV. THE STATEMENT OF CLAIM AND ARBITRAL PROCEEDINGS

1. [Seller] filed the Statement of Claim to this Arbitration on 31 March 2008 for payment of debt. In the Statement of Claim [Seller] stated that it concluded the Sales Contract with [Buyer] on 4 January 2005, the subject matter of which was purchase of mineral water […]. Pursuant to the Sales Contract [Seller] delivered the goods to [Buyer] for which [Buyer] was obliged to pay a purchase price in accordance with Article 6. Based on the Statement of Claim, [Buyer] did not pay the purchase price for the delivered and accepted goods from [Seller] for the period from 25 May 2005 until 11 April 2007. On the basis of the above mentioned, [Buyer] owes to [Seller] the amount of 18,610.94 EUR. Until the date of submitting the Statement of Claim, [Buyer] did not pay to [Seller] the agreed purchase price for the mineral water which was properly transported and cleared by customs, regarding which there are the following pieces of evidence: Invoice-dispatch note no. 61 dated 24 May 2005 and customs document no. 101949142 dated 25 May 2005; invoice/dispatch note no. 64 dated 31 May 2005 and customs documents dated 31 May 2005; invoice-dispatch note no. 81 dated 29 June 2005 and customs documents dated 29 June 2005, invoice-dispatch note no. 135 dated 5 September 2005 and customs documents dated 5 September 2005 and invoice-dispatch note no. 22 dated 11 April 2007 and customs documents dated 11 April 2007. According to the Statement of Claim, [Seller] stated that it had delivered invoices to [Buyer], who did not make payments according to these invoices, although it had duly received them, which can be evidenced from the dispatch notes. [Seller] had made several telephone calls to [Buyer] in order to urge it to fulfill its obligations, however [Buyer] did not make the payments nor had it given any indication that it had the good will to fulfill its obligations towards [Seller]. Based on the above, [Seller] has concluded that [Buyer] is evading the payment its debt for the delivered and accepted goods. Therefore, [Seller] proposes that the Arbitration makes an award ordering to [Buyer] to pay the amount of 18,610.94 EUR as principle debt for the delivered and accepted goods. Along with the claim for payment of principle debt, [Seller] is also requesting payment of interest at the rate determined by the Central European Bank, calculated from the date each individual amount is due as follows: for invoice no. 61 on the amount of 2,068.37 EUR starting from 25 July 2005 until the date of payment; for invoice no. 64 on the amount of 5,822.20 EUR starting from 31 July 2005 until the date of payment; for invoice no. 81 on the amount of 3,931.20 EUR starting from 29 August 2005 until the date of payment; for invoice no. 135 on the amount of 4,917.17 EUR starting form 5 November 2005 until date of payment; for invoice no. 22 on the amount of 1,872.00 EUR starting from 11 April 2007 until the date of payment. [Seller] also requested the costs of the proceeding to be borne by [Buyer].

2. [Seller] submitted the following evidence with the Statement of Claim: photocopy of the Sales Contract concluded on 4 January 2005; specification of unpaid invoices by [Buyer]; photocopy of the above mentioned invoices-dispatch notes and a special power of attorney dated 27 March 2008 authorizing [L] to submit the claim against [Buyer] to the Arbitration and to undertake all legal acts before the Arbitration until the end of the proceedings.

3. After [Seller] had, in accordance with Article 57 of the Rules, paid the registration costs in the amount of 16,462.00 RSD, of which the Arbitration was notified on 4 December 2008, and after the payment of the arbitration costs by [Seller] in accordance with Article 57 Paragraph 1 of the Rules in the amount of 245,848.00 RSD, of which the Arbitration was notified on 25 December 2008, the Arbitration had sent a notice to [Buyer] requesting it to respond to the Statement of Claim within 30 days from the day of receipt of the Statement of Claim and to give its statement regarding [Seller]'s proposal for the appointment of the Sole Arbitrator. The Arbitration had informed [Seller] of this fact and as well as of the fact that the President of the Arbitration was to appoint a Sole Arbitration in accordance with Article 27 Paragraph 3 of the Rules if [Seller] and [Buyer] fail to reach an agreement on the choice of arbitrator within 30 days from the day of receipt of the Statement of Defense.

4. [Buyer] did not respond to the Statement of Claim which the DHL had tried to deliver on several occasions in the period from 29 December 2008 to 14 January 2009 nor did it make a statement regarding the appointment of the arbitrator.

5. Pursuant to Article 21 Paragraph 3 of the Rules the President of the Arbitration appointed a Sole Arbitrator on 2 February 2009. Subsequently, the Sole Arbitrator had, pursuant to Article 34 Paragraph 3 and 4 of the Rules (Official Gazette of the Republic of Serbia no. 52/07 dated 8 June 2007), as well as in accordance with Article 35 Paragraph 1 of the Rules, scheduled a hearing on 1 April 2009 at the premises of the Arbitration. The hearing was postponed upon the request of [Seller] on 15 April 2009. The Secretariat of the Arbitration had notified the parties of these circumstances on 20 March 2009.

6. At the hearing held on 15 April 2009 the legal representative of [Seller] was present. The notice to attend the hearing was sent to [Buyer] in accordance with Article 34 Paragraph 1 of the Rules on 20 March 2009. The DHL service had notified the Secretariat of the Arbitration on 23 March 2009 that attempts to deliver the notice to [Buyer] were unsuccessful due to "incorrect/incomplete" address.

7. Having in mind the mentioned circumstances and facts, the Sole Arbitrator concluded pursuant to Article 34 Paragraph 3 of the Rules that the notice was delivered since it was sent to the last known address of the recipient, and in accordance with Article 34 Paragraph 7 of the Rules and proceeded with the hearing in the dispute in accordance with the provisions of the Rules.

8. At the hearing [Seller]'s representative stated that it had nothing to add to the claims stated in the Statement of Claim, as they have been stated in the very text of the Statement of Claim.

In the evidentiary procedure the Sole Arbitrator questioned [Seller]'s representative and read the submitted documentation in the case file.

9. In addition to the request for the payment of the principle debt, [Seller] had also requested the payment of the interest at the rate applied by the Central Bank of Europe, whereas the interest rate was to be determined by the arbitrator in accordance with the practice of the Arbitration.

10. Evidentiary procedure was concluded by the reading of the documents submitted by [Seller] with the Statement of Claim.

11. Due to the fact that the representative of [Seller] did not submit the specification of costs of representation at the beginning of the hearing or at the hearing, the Sole Arbitrator ordered the representative to submit the specification within three days. [Seller]'s representative submitted the specification of the costs of representation after the conclusion of the hearing on 15 April 2009, according to which the costs amount to 41,000.00 RSD (for the preparation of the Statement of Claim and the preparation of the case for the hearing costs amount to 21,000.00 RSD and for representation at the hearing held on 15 April 2009 the costs amount to 20,000.00 RSD). [Seller]'s costs also encompass the registration costs for the arbitration in the amount of 16,462.00 RSD and the arbitration costs in the amount of 245,848.00 RSD.

V. LAW APPLICABLE TO THE ARBITRATION PROCEEDINGS AND SUBJECT MATTER OF THE DISPUTE

1. The arbitration clause, incorporated in article 14 of the Sales Contract no. 157/04 concluded on 4 January 2005 by and between [Seller] and [Buyer] states: 'Contracting parties agree to resolve all the problems arisen in an amicable manner, by mutual agreement; if the amicable resolution is not possible, Parties accept the jurisdiction of the Foreign Trade Court of Arbitration attached to the Chamber of Commerce of Serbia and Montenegro and the Commercial Court in Leskovac'.

2. From this arbitration clause, which the Sole Arbitrator found to be valid, see above III.1-5., it can be inferred that the Parties have not agreed on the applicable law, neither for the procedure nor for the merits of the dispute. Accordingly, the Sole Arbitrator applied the relevant provisions of the Rules, pursuant to Article 45 of the Rules and, secondary, the Serbian Law on Civil Procedure (Official Gazette, No. 125/04).

3. As far as the law applicable to the merits of the dispute is concerned, the Sole Arbitrator noted that in the case of international sales of goods the UN Convention on Contracts for International Sale of Goods - CISG (hereinafter: the Vienna Convention) is primarily applied pursuant to Article 16 Paragraph 2 of the Constitution of the Republic of Serbia (Official Gazette of the Republic of Serbia no. 98/2006). According to the UN Commission for International Trade Law (UNCITRAL) data, available at <http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html>, the Vienna Convention came into force on 27 April 1992 in Serbia, on the basis of succession, and on 17 November 1991 in Macedonia, also on the basis of succession. Purusant to Article 1 (1(a)) of the Convention that defines its sphere of application, 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.

4. Pursuant to Article 7(2) of the Vienna Convention 'Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.' In line with this, the Sole Arbitrator notes that in relation to these types of questions, the applicable law is determined pursuant to Article 48 Paragraph 2 of the Rules. Pursuant to this provision the Sole Arbitrator has decided to apply the conflict-of-law provisions of the Law on the Resolution of Conflict of Laws with the Regulations of other Countries of the Republic of Serbia (Official Gazette of SFRY no. 43/82, 3/82 and Official Gazette of FRY, no. 46/96: hereinafter Law on PIL), as the most appropriate in this case. When the parties do not choose the applicable material law, the Law on PIL in Article 20(1) prescribes that the applicable law for the contracts for sale of movable goods is the law of the place where the seller has its seat at the time of the receipt of the offer - which in this case means that the law of the Republic of Serbia is applicable.

VI. ISSUES IN QUESTION

The subject matter of these proceedings relates to the following questions:

1)    Whether [Buyer] is obliged to pay the principle debt and interest on the principle debt;
 
2)  Whether [Buyer] is obliged to pay [Seller] costs of these proceedings.

VI.1. Obligation of [Buyer] to pay the principle debt and the interest on the principle debt

1. The subject matter of the Sales Contract no. 157/04 concluded on 4 January 2005 is purchase of mineral water […] (article 1), according to the type and price of goods as defined in the article 2. It stems from the Contract that [Seller] is obliged to deliver to [Buyer] the goods of the type and in the amount that is agreed upon on monthly bases (article 3). The goods are delivered successively, in accordance with article 3 (article 4). [Buyer] is obliged to pay the purchase price by making a payment order to the foreign currency bank account of [Seller] within 30 days from the date of the customs clearance for export in Serbia. [Seller] attached to the Statement of Claim evidence i.e. dispatch notes on the basis of which it can be concluded that the goods have been delivered to [Buyer] and invoices for the goods which have been delivered in the period from 25 May 2005 to 11 April 2007 as well as specifications of the unpaid invoices by [Buyer] which were signed by the manager of import and export of [Buyer]. At the hearing the Sole Arbitrator had questioned [Seller]'s representative and read all documents which were submitted.

Based on the facts established through the evidentiary procedure and pursuant to Article 59 of the Vienna Convention, the Sole Arbitrator found that the [Seller]'s request for the payment of the purchase price for the delivered goods was founded. Pursuant to this provision the buyer is obliged to pay the purchase price on the day stipulated in the sales contract, without the obligation of the seller to make a request for payment or undertake any other formalities. Due to the fact that [Buyer] did not fulfill its obligation of payment of the purchase price within the period determined in the Sales Contract as well as after several request from [Seller] to do so, [Buyer] breached its obligation under Article 59 and is therefore obliged to pay the [Seller] the total amount of 18,610.94 EUR on this basis.

2. Due to the fact that [Buyer] was in arrears regarding the payment of the purchase price for the goods it had accepted, [Seller] is entitled to interest on the above mentioned amount pursuant to Article 78 of the Vienna Convention. Pursuant to Article 277(1) of the Law on Contracts and Torts of the Republic of Serbia, [Seller] is entitled to interest from the date the payment of each individual invoice is due, as has been stipulated in the operative part of this Award.

3. [Seller] did not determine the interest rate in its Statement of Claim, but rather indicated that it requests interest at the rate applied by the European Central Bank. In the absence of authorities which determine the interest rate that is to be applied on foreign currency debts, in accordance with the practice of this Arbitration, the Sole Arbitrator has concluded that the domiciliary interest rate for the EUR can be the rate at which the European Central Bank charges its clients for time deposits. The information regarding these interest rates is available on the internet at the following address www.euribor.org/html/content/euribor_data.html and represents the inter-bank interest rate for deposits in EUR. After examining this information, the Sole Arbitrator has determined the interest rate for each individual amount invoiced from the date the payments were due, as has been stipulated in point 2 of the operative part of this Award.

VI.2. Obligation to pay the costs of the proceedings

1. Pursuant to the Article 149(1) of the Serbian Law on Civil Procedure: 'The party who loses the proceedings shall reimburse the costs of the other party'. [Buyer] in the case at hand, based on the established facts and presented evidence, lost the proceedings.

2. [Seller] has requested the reimbursement of costs of the arbitration proceedings in its Statement of Claim. [Seller]'s representative has submitted the specification of the costs of representation which amounts to a total of 41,000.00 RSD (for the preparation of the Statement of Claim and preparation of the case for hearings the costs amount to 21,000.00 RSD and for the representation at the hearing held on 15 April 2009 the costs amount to 20,000.00 RSD). [Seller]'s costs also encompass the registration costs for arbitration in the amount of 16,462.00 RSD and arbitration costs in the amount of 245,848.00 RSD.

3. Accordingly, the Sole Arbitrator, pursuant to the Article 150(1) of the Serbian Law on Civil Procedure, with respect to all circumstances, found that the costs of the arbitral proceedings determined in points 2 and 3 of this part of the Statement of Reasons were necessary. Based on that, [Buyer] is ordered to reimburse the costs of the proceedings in the total amount of 303,310.00 RSD as determined in point 3 of the operative part of this Award.

VII. FINALITY OF THE AWARD

Pursuant to the Article 64 of the Serbian Law on Arbitration and the Article 56(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.

  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.

Go to Case Table of Contents
Pace Law School Institute of International Commercial Law - Last updated October 24, 2011
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography