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CISG CASE PRESENTATION

ICC Arbitration Case No. 6653 of 26 March 1993 (Steel bars case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/936653i1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19930326 (26 March 1993)

JURISDICTION: Arbitration ; ICC

TRIBUNAL: Court of Arbitration of the International Chamber of Commerce

JUDGE(S): Case report does not identify presiding arbitrator(s)

CASE NUMBER/DOCKET NUMBER: 6653 of 1993

CASE NAME: Maaden v. Thyssen

CASE HISTORY: 2d instance, appeal to Cour d'appel de Paris 6 April 1995 [affirming right to interest; reversing ruling on rate of interest]

SELLER'S COUNTRY: Germany (defendant)

BUYER'S COUNTRY: Syria (claimant)

GOODS INVOLVED: Steel bars


Case abstract

ICC Arbitration Case No. 6653 of 1993

Case law on UNCITRAL texts (CLOUT) abstract no. 103

Reproduced with permission from UNCITRAL

The parties concluded a contract for the sale of goods. The buyer contested the conformity of the goods to the contract specifications.

The arbitral tribunal applied the CISG on the grounds that: the parties had chosen French law as applicable law and the Convention was in force in France at the time the contract was concluded; the contract concerned international trade interests because its performance assumed a movement of goods and payments across frontiers; and the goods concerned fell within the scope of application of the CISG. The tribunal also noted that the buyer was located in Syria, which was a party to the Convention at the time the contract was concluded and that the seller was located in Germany which became a party to the Convention after the time of the conclusion of the contract.

The tribunal considered the question of which party had the burden of establishing the lack of conformity, a question that was not addressed in the CISG, and found that, pursuant to article 1315 of the French Civil Code and general principles of international trade, the party invoking a lack of conformity should have to prove it.

The tribunal found that some of the goods did not conform to the contract and ordered reimbursement of the buyer for the sums paid for these goods. As the seller was regarded as having been very cooperative at the time the difficulties arose, the tribunal left to the seller the choice of either removing the non-conforming goods at its own expense or abandoning them on site.

The tribunal awarded the buyer interest, although it was found that Article 84 CISG was somewhat ambiguous as to whether interest was payable if it had not been requested, in view of the fact that article 1153-1 of the French Civil Code prescribed it in any case. As CISG does not specify how the applicable interest rate is to be determined, the tribunal applied the rate commonly applied to Eurodollar settlements between operators in international trade, i.e., the one-year London Inter-Bank Offered Rate (LIBOR).

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 4 ; 6 ; 35 ; 78 ; 84 [Also cited: Articles 7(2) ; 9 ; 36 ; 79 ] [Also relevant: Articles 6 ; 81 ]

Classification of issues using UNCITRAL classification code numbers:

4B [Scope of Convention (issues excluded): burden of proof];

6B [Selection of law of a Contracting State = agreement to apply Convention];

35D [Conformity of goods to contract (burden of proof): determined by domestic law];

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

84A [Seller bound to refund price must pay interest: formal request for payment of interest not required]

Descriptors: Applicability ; Choice of law ; Scope of Convention ; Burden of proof ; Conformity of goods ; Interest

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=36&step=Abstract>

German: Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER)/Revue suisse de droit international et de droit européen, 1996, 56-57

Italian: Diritto del Commercio Internazionale (1994) 857-858 No. 41

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 262-263

CITATIONS TO TEXT OF DECISION

Original language (French): Journal du Droit International (1993) 1040-1047, 1053-1056 = ICC Coll III 512-519, 525-528; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=36&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [217 n.715 (choice of law of Contracting State), 253 n.1075 (interest issues)]; Honnold, Uniform Law for International Sales (1999) 81 [Art. 6 (choice of law)]; Behr, 17 Journal of Law and Commerce (1998) 266-288 [abstracts and comments on 29 interest rulings from 10 countries (this case presented at 277-278)]; Koneru, 6 Minnesota Journal of Global Trade (1997) 123-138 [comments on interest rulings in this case and other cases]; Thiele, 2 Vindobono Journal (1998) 3-35, citing this case [n.81-82] and 42 other interest rulings; Lookofsky, Understanding the CISG in the USA [CISG/USA] (1995) 16, 43-44, 96 n.232; Lookofsky, CISG/Scandinavia (1996) 21 n.64, 22 n.73, 51, 114 n.261; Bernstein/Lookofsky, CISG/Europe (1997) 8 n.42, 18 n.53, 54, 122 n.266; Curran, Journal of Law and Commerce 15 (1995) 175 [184-185] [English summary of comments by Witz in Les premières applications cited below]; Kazimierska, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n.n.285, 417; Petrochilos, Arbitration Conflict of Laws Rules and the CISG (1999) n.55; Flambouras, Transfer of risk (1999) n.270; Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000) [opting-out/opting-in the CISG 74-76 (this case at 74-75)]; Saidov, Damages under the CISG (December 2001) n.341; Perales, Battle of the Forms and Burden of Proof, 6:2 Vindobona Journal (2002) 217-228, n.22; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) §: 1-4 n.46; §: 2-7 n.96; §: 4-4 n.46; §: 4-9 n.116; §: 6-31 n.355; Liu Chengwei, Recovery of interest (November 2003) nn.115, 224; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.92; [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 26, 161, 171; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 4 para. 22 Art. 24 para. 18 Art. 35 para. 49 Art. 78 paras. 27, 29 Art. 84 para. 13; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 153, 158, 162, 179

French: Arnaldez, Journal du Droit International (1993) 1047-1053, 1056-1057 = ICC Coll III 519-525, 528-529; Witz, Les premières applications jurisprudentielles du droit uniforme de la vente internationale (L.G.D.J., Paris: 1995), 45 n. 89, 87 n. 32; Witz, Tilburg Lectures (1998) 159 [164 n.21]

German: Herber in von Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht (2d ed. 1995) 77 n. 39a [Article 4]; Schlechtriem, 206 n. 70 [Article 24]; Schlechtriem, Internationales UN-Kaufrecht (1996) 34 n.79, 179 n.296; Will, UN-Kaufrecht und internationale Schiedsgerichtsbarkeit (1999) n.35

Greek: Witz/Kapnopoulou, Ellenike epitheorese europaikou dicaiou (1995) 561 [569 n.27]

Italian: Giardina, Rivista dell' arbitrato (1998) 191 [207-208 n.48 n.49]

Spanish: Castellanos, Autonomia de la voluntad y derecho uniforme en la compraventa internacional, thesis, Carlos III de Madrid (1998) 90-92, 104 n.224, 111, 156-157, 165

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

ICC Arbitration Case No. 6653 of 1993

Translation by Kirstin Stadtländer [*]

[...]

The parties to the dispute concluded a contract of sale on 3 November 1988. That classification is not contested. The contract stipulates in its article entitled "Arbitration clause" for the Arbitral Tribunal to apply "the substantive laws of France," meaning French law.

The contract of 3 November 1998 is an international sales contract. In fact, it concerns the interests of the international commerce in so far as it presupposes for its execution a movement of goods and payments across frontiers.

The French law of the sale of goods is established by Articles 1582 et seq.. of the Civil Code, but, since 1 January 1988, the French law of the international sale of goods is established by the United Nations Convention on Contracts for the International Sale of Goods, the Vienna Convention of 11 April 1980. The goods involved in this contract fall without discussion into the scope of application of this Convention.

It must be mentioned that Syria is among the States in which the Convention has become applicable at that same time (cf. for example, V. Heuzé, La vente internationale de merchandises - Droit uniforme, GLN-Joly éd. 1992, p. 96, n. 119). The Convention became applicable in Germany on 1 January 1991.

The intention of the parties to choose French law corresponds to the regulation of the Convention, which today constitutes an integral part of French national law. For all issues not specially covered by the Vienna Convention, the intention of the parties to refer to French law leads the Arbitral Tribunal to retain French internal law for questions of proof, concerning general principles of obligations and, if necessary, the national law of the sale of goods. Furthermore, the explicit reference of the parties to Incoterms leads the Arbitral Tribunal just as well to refer, to the necessary extent, to these principles and usages of international commerce.

Concerning the terms used, it must be mentioned that, in the context of the obligations of the seller, the French internal law of the sale of goods distinguishes between a warranty of conformity and a warranty against deficiencies, whereas the French international law of the sale of goods - the Vienna Convention - sticks to a uniform term, which is that of an obligation of conformity covering both warranties of the French internal law. Therefore, the obligations of the respondent [seller] have to be considered in the light of Articles 35 and 36 of the Convention.

[...]

The most delicate question in this context is that of the burden of proof of the alleged lack of conformity. This proof has to be provided by claimant [the buyer]. In fact, as the Convention does not regulate this issue, Article 1315 of the French Civil Code has to be applied here. That text takes up the rule of actori incumbit probation, the party alleging lack of conformity has to provide proof for it. This rule is as well, according to the Arbitral Tribunal, a basic principle of international commerce.

[...]

As a result of the above said, the Arbitral Tribunal should not accept the demand for avoidance of the whole contract in favor of claimant [buyer]. It is observed that, concerning several payments, claimant [buyer] has referred to a global percentage of non-conformity of 22 % which was, on the one hand, not justified and, on the other hand, cannot be applied with regard to the method of analysis item-by-item retained by the Tribunal. The Arbitral Tribunal meanwhile grants that claimant [buyer] must receive reimbursement of the sums that it paid to respondent [seller] for items that lack conformity. In order to determine the price, the Arbitral Tribunal takes as a basis the contract which under the clause " Material" provides, according to the diameter of the bars, the price in US $ per ton. The calculation can therefore be presented as follows: for each item, the number of tons is taken and multiplied by the price per ton of bars having that diameter [...]. In total, respondent [seller] must reimburse the sum of [...] US $.

The Arbitral Tribunal finds that with regard to the very cooperative behavior when the difficulties arose, respondent [seller] can, at its choice, either remove the non-conforming goods at its own expense or abandon them on site.

[...]

The Convention (Art. 78) generally grants the payment of interest. Article 84 of the Convention prescribes that "If the seller is bound to refund the price, he must also pay interest on it, from the date on which the price was paid."

According to this text, interest is due for respondent [seller] to be paid to claimant [buyer] starting from the day of payment. The starting point of the interest is therefore the date of the payment of the item concerned.

The question arises whether the interest aspired to by Art. 84 is due even it had not been formally requested. The Arbitral Tribunal finds that, for two reasons, this question must be answered in the affirmative.

First of all, Article 84 of the Convention sets forth that the seller must and not "can" pay interest.

Furthermore, supposed that one considers Article 84 to be ambiguous in that question, the French Law of Obligations, which has been retained as the subsidiary law, sets forth in Article 1153-1 of the Civil Code that interest is due in all cases "even in the absence of request."

But then the Convention does not regulate the method of determination of the percentage of interest. The Arbitral Tribunal finds that in matters of international commerce, the percentage that must be retained is the one that corresponds to the use which the creditor could have made of the sum to be reimbursed. Consequently, it appears logical to retain a percentage currently applied between merchants and that conforms with the currency in which the settlement was made and in which the payment must be made. This solution, which is in the eyes of the Arbitral Tribunal the most logical one from the economic point of view, leads to retaining the percentage that operators of international commerce apply to settlements made in Eurodollar, i.e., the one-year percentage of LIBOR (London Inter-Bank Offered Rate), published every day in the Wall Street Journal.

[...]


FOOTNOTE

* Kirstin Statlšnder is a student of law at Humboldt University Berlin. She was a member of the team of Humboldt University at the 9th Willem C. Vis International Commercial Arbitration Moot 2001/02 and is a coach of the team at the 10th Willem C. Vis International Commercial Arbitration Moot 2002/03.

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 February 15, 2007
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