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CISG CASE PRESENTATION

China 19 April 1991 CIETAC Arbitration (Metal silicon case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/910419c1.html]

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

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Case identification

DATE OF DECISION: 19910419 (19 April 1991) [Date arbitration claim filed]

JURISDICTION: Arbitration ; China

TRIBUNAL: China International Economic and Trade Arbitration Commission [CIETAC] (PRC)

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1991/02

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: China (respondent)

BUYER'S COUNTRY: United States (claimant)

GOODS INVOLVED: Metal silicon


Classification of issues present

APPLICATION OF CISG: The Convention appears to have been applicable, however, there is no mention of the CISG in the award.

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 8 ; 74 ; 78 [Perhaps also relevant: Articles 38 ; 39 ]

Classification of issues using UNCITRAL classification code numbers:

8A [Intent of party making statement or engaged in conduct];

74A [General rules for measuring damages: loss suffered as consequence of breach];

78B [Rate of Interest]

Descriptors: Damages ; Burden of proof ; 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 (Chinese): Unavailable

Translation (English): Text presented below; see also <http://www.sccietac.org/cietac/en/content/content.jsp?id=912>

CITATIONS TO COMMENTS ON DECISION

English: Article 78 and rate of interest: Mazzotta, Endless disagreement among commentators, much less among courts (2004) [citing this case and 275 other court and arbitral rulings]; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 157

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

China International Economic & Trade Arbitration Commission
CIETAC Arbitration Award

Metal silicon case (claim filed 19 April 1991)

Translation by Wei Huo [*]


[We do not at this time have the date of the award.
For identification, in this presentation the award was
assigned the date that the claim for arbitration was filed.]

Outline

1)  Date of award / docket number unavailable.
2)  Claimant [buyer] is from the United States.
      Respondent [seller] is from China.
3)  CISG appears to have been relevant.
4)  However, no mention of CISG in opinion.

I. Details of the case

With the authorization of Claimant, Trading Company A signed Contact #(90) GTSMC014 [the "Contract] with [seller]. The Contract stipulates that [seller] will provide 285 tons of metal silicon [the "goods"]. The price is set at $730 per ton, totaling $208,050. Shipment was to be before the end of September 1990, payment by letter of credit. CCIC was to inspect the goods before shipment. Buyer can ask SGS to re-inspect after the goods arrive at the destination port. In the event the quantity and quality of the goods are not in accordance with the Contract, buyer has the right to file a claim. The Contract states that buyer's claim must be presented within forty-five days after the arrival of the goods at the destination port.

After the conclusion of the Contract, Claimant provided a letter of credit on 11 September 1990 with [seller] as the beneficiary. On 10 October 1990, [seller] loaded 250 tons of goods on board at Hongpu Port, Guangzhou. The goods arrived at Birmingham, Alabama, U.S.A., during the period 19 to 26 November -- one shipment after another -- and were taken into warehouse. On the basis of the re-inspection clause of the Contract, Claimant entrusted SGS to re-inspect. SGS submitted a preliminary inspection report on 21 December 1990. On 27 December 1990, SGS submitted its inspection report to Claimant for the second time. It was clear that the quality of the goods was not in accordance with the Contract. On 22 December 1990, Company A, the agent of Claimant, called [seller's] attention to the dispute over quality and pointed out that Claimant was willing to resolve the dispute through friendly negotiation. Since then the two parties had several rounds of talks but without result. Claimant submitted the application for arbitration on 19 April 1991.

II. Application and Answer

Claimant states in its application that:

      1. [Seller] failed to deliver the goods prior to 30 September 1990, as stipulated in Contract;

      2. Because of the serious quality problem, [seller] agreed to pay $200/t as compensation. The two parties reached Compensation Agreement #(91) GTCLA001 [the "Agreement"] on 16 January 1991. On 1 February 1991, [seller] repudiated the Agreement claiming that the goods were not those delivered by it and required Claimant to provide the original sealed aluminum loading marks.

      3. [Seller] disregarded Claimant's request to send personnel to the U.S.A. to investigate and re-inspect. Claimant suffered more than $80,000 in terms of direct loss. Claimant asks the arbitration panel to render an award requiring [seller] to take back its 280 tons of disqualified goods, compensate all economic losses suffered by Claimant, and assume the arbitration fees.

The main points of [seller's] answer are:

(1) Claimant does not have the status to take the case to arbitration. The signing party is Company A even though it was written in the Contract that "Buyers" are Claimant and Company A. The absence of Claimant's signature on the contract proves that this was not Claimant's business.

(2) [Seller] never reached any compensation agreement with Claimant. The agreement to compensate Claimant $200/t was forged by Company A. One of the faxes from a businessperson of [seller's] Department II offered to compensate Claimant $300/t. But this could not be deemed the act of the [seller] because this communication did not bear [seller's] official stamp nor authorization from the general manager of [seller].

(3) Claimant has failed to provide the original sealed aluminum loading markings of the fourteen containers. There was no clear evidence that the goods about which Claimant's complaints were filed were the goods delivered by [seller].

(4) Claimant's claim was void. According to Art 13 of the Contract, the time limit for Buyer to file a claim is within forty-five days after the goods arrive at the destination port. It is clear from the customs documents provided by Claimant that the goods arrived at the American destination port on 4 November 1990. [Seller] did not receive the preliminary report of SGS until 22 December 1990. The time limit for filing claims that is stipulated in the Contract had lapsed. [Seller] did not receive the "Formal Report" by SGS until 29 January 1991. The claim was therefore outside of the time limit. At the same time, the container numbers on the report did not match the numbers on the bill of lading, and there were no original sealed container numbers. Because the claim was not within its time limit, the [seller] considers the claim void.

III. The opinion of the arbitration panel

      1. With regard to the question whether Claimant is the buyer. In Contract # (90) GTSMC014, the buyers are listed as "Claimant and Company A". The Contract bore only the stamp of Company A and signature of its general manager. However, when applying for arbitration, Claimant provided its Power of Attorney dated 10 July 1990 authorizing Company A as its genuine, legal representative to sign the metal silicon purchasing contract in the People's Republic of China. The Power of Attorney was in effect through 31 December 1990.

[Seller] never raised any dispute as to Claimant's status as Buyer in the performance of the Contact. In a fax to Claimant dated 4 February 1991, [seller] suggested, " Because there was never direct contact, the parties did not grab the intents of each other. It resulted in some misunderstanding. From now on, please contact our company directly concerning relevant questions to avoid the wrongdoing of middleman and misunderstanding." Since then, the two parties contacted each other by fax about the problem of claims.

Based on the situation, the allegations of [seller] that the Contract was not Claimant's business and that Claimant was not the buyer do not accord with the facts. Therefore, they are untenable.

      2. With regard to the question whether Claimant [buyer] had lost its right of claim. The trade term in this case is FOB. The Contract stipulates that the loading port is Port of Huangpu, People's Republic of China and the destination port is an American port but it failed to specify the name of this port. However, the invoice that [seller] provided when shipping the goods made it clear that the beginning and ending points of the shipment were from Huangpu, China to Birmingham, Alabama in America. Obviously, [seller] was sure that the destination port was Birmingham, the U.S.A. The date that all of the Contract goods arrived at Birmingham is 26 November 1990. The date of [seller's] receipt of the preliminary SGS re-inspection report from the American party was 22 December 1990. This date is within forty-five days of the time limit for filing claims. Therefore, the claim is valid.

      3. With regard to the question whether the goods re-inspected by Claimant [buyer] in America were the original goods shipped by [seller]. After reviewing the materials provided by the parties, it was found that thirteen of the fourteen original container numbers were in accordance with the re-inspection report. There was one original container number listed as SEAU 1387840 but on the re-inspection report as SEAU 1378740. In the opinion of the arbitration panel, this is possibly a typing error. Based on this only, [seller] doubted or inferred that all of the re-inspected goods were not the original shipment. There is no adequate basis for this and the arbitration panel cannot recognize it.

Moreover, the arbitration panel also noticed that in the fax dated 15 January 1991 to Company A, [seller's] businessperson expressed the will to compensate Claimant [buyer]. On 4 February 1991, in his letter to Claimant [buyer], the person in charge of [seller's] business further stated quite clearly that "Based on the signed Contract and the formal inspection report by SGS on 27 December 1990, our company should compensate."

In summary, it is the view of the arbitration panel that Claimant [buyer] has the right to claim based on the re-inspection report. The criterion of compensation is that [seller] should reduce the price in accordance with the quality of the goods delivered. On the basis of the investigation and in reference of the materials provided by the parties, the arbitration panel considers that the scale of the reduction should be set at $200/t. [Seller] should pay compensation and interest to Claimant [buyer] based on this amount.

IV. Award

      1. [Seller] should compensate $56,000 for Claimant [buyer's] loss (calculated at $200/t) plus interest on it in the amount of $5,226.70 (from November 1990 to December 1991, calculated at an annual rate of 8%): a total payment of $61,226.70. The payment should be made within thirty days after the award. If overdue, there will be no surcharge over interest.

      2. [Seller] assumes the arbitration fees.

The award is final.


FOOTNOTE

* Wei Huo, Senior Attorney with the Junzejun Law Offices, Beijing, China, LL.M. University of Iowa College of Law, has handled numerous cases before the China International Economic and Trade Arbitration Committee (CIETAC) as well as other China foreign trade matters, including representation of the Chinese industry in the first antidumping case against foreign products in China.

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

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Pace Law School Institute of International Commercial Law - Last updated June 2, 2006
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