China 26 March 1993 CIETAC Arbitration proceeding (Cement case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/930326c1.html]
DATE OF DECISION:
DATABASE ASSIGNED DOCKET NUMBER: CISG/1993/06
CASE HISTORY: Unavailable
SELLER'S COUNTRY: People's Republic of China (claimant)
BUYER'S COUNTRY: Hong Kong (respondent)
GOODS INVOLVED: Cement
APPLICATION OF CISG: [-]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
53A [Buyer's obligations: obligation to pay price of goods]; 78A [Interest on delay in receiving price or any other sum in arrears]
53A [Buyer's obligations: obligation to pay price of goods];
78A [Interest on delay in receiving price or any other sum in arrears]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Chinese): Zhong Guo Guo Ji Jing Ji Mao Yi Zhong Cai Wei Yuan Hui Cai Jue Shu Hui Bian [Compilation of CIETAC Arbitration Awards] (May 2004) 1993 vol., pp. 246-251
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Dong WU, CIETAC's Practice on the CISG, at nn.29, 39, Nordic Journal of Commercial Law (2/2005); Fan Yang, The Application of the CISG in the Current PRC Law and CIETAC Arbitration Practice (December 2006) n. 78Go to Case Table of Contents
Cement case (26 March 1993)
Translation [*] by Xiaoxuan Pi [**]
China International Economic and Trade Arbitration Commission (Arbitration Commission) accepted this case according to:
|-||The arbitration clause in Contract No. E91NT-9010 Contract between the Claimant [Seller], China XX Trade Company, and the [Buyer], Hong Kong T Company; and
|-||The application for arbitration submitted by the [Seller] on 2 March 1992.|
The Presiding Arbitrator, Mr. P, appointed by the Chairman of the Arbitration Commission according to the Arbitration Rules, the Arbitrator, Mr. A, appointed by the [Seller], and the Arbitrator, Mr. D, appointed by the Presiding Arbitrator because the [Buyer] failed to appoint a arbitrator on time, constituted of the Arbitration Tribunal for this case.
After received the application from the [Seller], the Arbitration Tribunal issued notice of the proceedings to the [Buyer], Hong Kong T Company and Mr. T, the owner of Hong Kong T Company, and sent the application and the supplement materials to them. The [Buyer] replied but did not submit any defense material. After carefully reading the application for arbitration and the documents in evidence, the Arbitration Tribunal notified both parties that the Tribunal will hear this case in Beijing, on 12 October 1992.
The Arbitration Tribunal heard the case, under Arbitration Regulation Art. 29, in the absence of the [Buyer], because the [Buyer] did not appear in the court after receiving the notice. The [Seller] made an oral statement and answered the questions asked by the Arbitration Tribunal. Afterward, the [Seller] submitted a supplement to the arbitration application and related evidence. The Tribunal forwarded these documents to the [Buyer] in time and asked Buyer to reply. However, the [Buyer] did not make any reply till the time limit expired.
The details of this case, the opinion of the Arbitration Tribunal and the arbitral award are presented below.
THE DETAILS OF THE CASE
On 8 February 1991, the [Seller] and the [Buyer] signed Contract No. E91 NT-9010 was for the sale of 30,000 tons of cement, China Standard No. GB175-85 No. 525. The price was US $42.00 per ton, and the total price US $1,260,000 FOB ST Yantai. Shipment was to be in three installments: the first was of 11,000 tons, during the period of 28 February 1991 and 5 March 1991; the second and the third installments were of 11,000 tons and 8000 tons separately, during the period of 25 March 1991 and 7 April 1991.
No question arose on the first shipment. For the second shipment, the [Seller] received a letter of credit which named the [Seller] as the beneficiary on 20 March 1991. However, on 24 April 1991 the bank of issue (or the bank of transfer) of Z Company (the subsequent purchaser of Respondent [Buyer]), refused to pay for the goods by the reason of non-conformity of the letter of credit.
The [Seller] contacted the [Buyer] asking for payment on 15 May 1991, after the bank refused to pay. On 22 May 1991, the [Buyer] wrote to the [Seller]:
|-||"First, the reason why we did not send the payment to the you is that the Korean Z Company did not send the payment to us;|
|-||"Second, we have already urged Z Company to pay for the goods several times;|
|-||"Third, we would like to send 90% of the payment to you even if Z Company does not pay;|
|-||"Finally, we will continue to ask Z Company to pay for the goods, and no matter whether Z Company pays or not, we will send the rest of the payment to you in two or three months."|
On 4 June 1991, the [Seller] rejected the [Buyer]'s proposal, and claimed for a non-installment payment in a lump sum. On 10 June, Douglas Myron Lee, owner of the [Buyer], sent a letter to the [Seller], stating:
|-||"We are in a drastic dispute with Z Company. Although we made a contract with you, we cannot take up the goods and cannot pay for the goods once Z Company has repealed the contract, because we only act on behalf of Z Company."|
In the meantime, B Ltd, consigned by the [Seller] to investigate, notified the [Seller] that Z Company had already taken up the goods from 11 May 1991 to 17 May 1991, and had already sent the payment to the [Buyer]. Thereafter, the [Seller] had negotiated with the [Buyer] many times, asking for payment for the goods. However, the [Buyer] did not provide any reply. Therefore, the [Seller] applied for arbitration on 2 March 1992.
The [Seller]'s position
1. The [Buyer] should pay the payment for the goods for the second installment, which amounts to US $462,000, plus interest.
2. The [Seller] reserves the rights of claiming for compensation, for the expense made by the unfulfilled third installment of goods, which is 8,000 tons of cement.
3. The [Buyer] should assume the responsibility for the arbitration fee.
4. The [Buyer] should assume responsibility for:
(2) A commission fee for the investigation paid to B Ltd of 19,453.19 Hong Kong dollars.
THE OPINION OF THE ARBITRATION TRIBUNAL
1. This applicable law is the Law of China referring to the International Convention.
2. Mr. L is the sole owner of T Company, an unlimited liability company. The Arbitration Tribunal holds that Mr. L should assume all the rights and duties of the [Buyer] in this case.
3. According to Article 53 of "United Nations Convention on Contracts for the International Sale of Goods" and the clause F.O.B., the [Seller] completed his duties when the goods were loading on the named vessel. The [Buyer] and Z Company are parties under another contract. Moreover, Z Company, the subsequent purchaser of the [Buyer], had already taken up the goods without objection. Therefore, the [Buyer] cannot neglected the duties to pay for the goods just because the bank rejected the letter of credit.
4. The [Buyer] has no right to impose upon the [Seller] to undertake two installment payments.
5. It is a serious breach of contract that the [Buyer] refuses to pay for the goods. And it offends bona fides as the [Buyer] still neglected the duty to pay for the goods even after the subsequent purchaser had taken up the goods and paid for them. Therefore, the [Buyer], T Company, and Mr. L should assume the liability of breach of contract, and should compensate the [Seller] for his economic loss:
(2) The [Buyer] should pay for the arbitration fees and a retaining fee, but not the commission fee for the investigation to B Ltd, because of no evidence to support this payment;
(3) The rights of reserving claiming for compensation, claimed by the [Buyer] for the last installment of goods in the contract that has not been carried out, cannot be recognized by the Arbitration Tribunal as outside its jurisdiction.
According to the evidence and reasons above, the Arbitration Tribunal hands down the following award:
1. The [Buyer] shall pay back the payment for goods, which is US $462,000, added to that monthly interest of 5% calculated from 6 May 1991;
2. The [Buyer] shall pay for the retaining fee, RMB 23,000 yuan;
3. The [Buyer] assumes the responsibility for the arbitration fee, RMB ___ yuan;
4. All the sum of money above, which should be paid by the [Buyer] to the [Seller], must be paid in 45 days calculated from the date of this award.
This award is final.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the People's Republic of China is referred to as [Seller] and Respondent of Hong Kong is referred to as [Buyer].
** Xiaoxuan Pi of Beijing, China, is pursuing her LL.M. degree at Leicester University, United Kingdom.Go to Case Table of Contents