Russia 13 January 2011 Supreme Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation, Moscow
[Cite as: http://cisgw3.law.pace.edu/cases/110113r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 11861/10
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Ukraine
BUYER'S COUNTRY: Russia
GOODS INVOLVED: Food sales
RUSSIAN FEDERATION: Presidium of the Supreme Commercial Court of the Russian
Federation, Moscow of 13 January 2011
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/143],
CLOUT abstract no. 1355
Reproduced with permission of UNCITRAL
A Ukrainian company (the seller) requested the court to set aside an award made by the International Commercial Arbitration Court of the Russian Federation Chamber of Commerce and Industry (ICAC) requiring it to make a payment to a Russian company (the buyer) in relation to a food sales contract.
The court of first instance granted the application. The court of second instance upheld this decision. The Presidium of the Supreme Commercial Court of the Russian Federation set aside both courts’ decisions, at the request of the Russian company, and upheld the ICAC award, on the following grounds.
According to the contract, if the parties were unable to reach agreement and the claimant was the seller, the dispute was to be referred to a three-person panel of the International Commercial Arbitration Court of the Ukrainian Chamber of Commerce and Industry, in accordance with its regulations; if the claimant was the buyer, it was to be referred to a three-person panel of ICAC, in accordance with its regulations. When the case was being heard, the substantive and procedural laws of the claimant’s country were to apply.
Following a disagreement, the seller had applied to the International Commercial Arbitration Court of the Ukrainian Chamber of Commerce and Industry, seeking to recover from the buyer the value of the goods, a penalty and interest, as established in the contract. The buyer had filed a counterclaim for recognition of the invalidity of certain provisions in the contract. In its decision, the Ukrainian court had ruled that the substantive law of Ukraine was applicable to the dispute. While the case was being considered by the Ukrainian court, the buyer had applied to ICAC seeking to recover damages owing to the seller’s breach of contract. The seller had made a counterclaim for damages. In a contested award, ICAC had granted the initial application in part but dismissed the counterclaim.
The courts of first and second instance had concluded that, in resolving the dispute, ICAC had been wrong to recognize Russian law as the applicable law, because the Ukrainian court had ruled that Ukrainian law was the applicable law. Consequently, the ICAC award had run contrary to Russian public order and that was why it had been set aside, in accordance with article 34 (corresponding to Article 34 MAL) of the International Commercial Arbitration Act No. 5338-1 of 7 July 1993 (Arbitration Act). In addition, the courts of first and second instance had not taken into account the fact that the Russian Federation and Ukraine were parties to the United Nations Convention on Contracts for the International Sale of Goods (CISG). The Convention was an integral part of Russian and Ukrainian law. The arbitration tribunals of both countries had applied the provisions of the Convention, in view of the fact that the parties had not objected to its application to their contractual relations. When ICAC had made the contested award, it had indicated that, when issues arose over the provisions of the Convention that could not be resolved under the Convention itself, they should be settled by reference to the general principles on which the Convention was founded or, in the absence of such principles, by reference to the law that was applicable according to the rules of private international law. In such cases, violation of public order as grounds for setting aside an award must consist of a violation of the most fundamental principles of law and have real legal consequences for the applicant by restricting its rights and legitimate interests. However, the courts had decided that such circumstances did not exist and the applicant had not identified them.
For these reasons, ICAC’s application of Russian law, as represented by its application of the provisions of the Convention and of the contract between the parties, could not in itself be considered a violation of public order.Go to Case Table of Contents
APPLICATION OF CISG: Yes [Article 1(1)(a)]
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 judgments <http://kad.arbitr.ru>
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents