China 11 April 1994 CIETAC Arbitration proceeding (Old paper case)
[Cite as: http://cisgw3.law.pace.edu/cases/940411c1.html]
DATE OF DECISION:
DATABASE ASSIGNED DOCKET NUMBER: CISG/1994/06
CASE HISTORY: Unavailable
SELLER'S COUNTRY: United States (respondent)
BUYER'S COUNTRY: People's Republic of China (claimant)
GOODS INVOLVED: Old paper
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:
30A [Summary of seller's obligations: deliver the goods, hand over any documents relating to them and transfer the property in the goods as required]; 34A [Seller's obligation to hand over documents]; 84A [Seller bound to refund price must pay interest]
30A [Summary of seller's obligations: deliver the goods, hand over any documents relating to them and transfer the property in the goods as required];
34A [Seller's obligation to hand over documents];
84A [Seller bound to refund price must pay interest]
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) 1994 vol., pp. 760-763
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Dong WU, CIETAC's Practice on the CISG, at nn.60, 234, Nordic Journal of Commercial Law (2/2005)Go to Case Table of Contents
|Case text (English translation)|
Old paper case (11 April 1994)
Translation [*] by Qihua YAN [**]
Translation edited by Meihua Xu [***]
The China International Economic and Trade Arbitration Commission (Arbitration Commission) accepted this case according to:
|-||The arbitration clause in Contract No. 92FST/OA002 signed by Claimant [Buyer], Yantai ___ Paper Industry Ltd., and Respondent [Seller], American ___ Company; and
|-||The application for arbitration submitted by the [Buyer] on 27 January 1993.|
The Presiding Arbitrator, Mr. P, appointed by the Chairman of the Arbitration Commission, according to the Arbitration Rules; the Arbitrator, Ms. A, appointed by the [Buyer]; and the Arbitrator, Mr. D, appointed by the [Seller]. constituted the Arbitration Tribunal for this case.
The Tribunal heard the case in Beijing on 20 September 1993. The representatives and attorney appointed by the [Buyer] presented at this hearing, made a statement and answered questions posed by the Arbitration Tribunal. After the hearing, the [Buyer] submitted a supplement to its arbitration application and evidence. The Secretariat of the Arbitration Commission sent these materials to the [Seller]. Prior thereto - on 27 April 1993 when the [Seller] sent the No. YH566 Letter to the Arbitration Commission - material on this proceeding had been sent to the [Seller] which had advised that it had decided to institute a cross action and that "materials of evidence will be submitted later." However, the [Seller] did not thereafter submit any materials on either a counterclaim or [Seller]'s evidence. Moreover, after receiving the notice of the pending hearing, [Seller] still did not appear in court or explain its reasons for not appearing.
On 11 October 1993, sending (93) Trade Arbitration Letter No.***, the Arbitration Tribunal had the Secretariat of the Arbitration Commission to advise the [Seller] that "if you wish to have us hold a second court hearing or want to submit any written materials on your position, you should present such materials before 10 November 1993. " However, the [Seller] did not reply within this time frame.
After a careful reading of the application for arbitration submitted by the [Buyer], the evidence, and the supplement materials of the arbitration application and its evidence, and considering the statement made by the [Buyer] at the hearing, the Arbitration Tribunal concluded that the inquiries on this case can be regarded as concluded. The Tribunal, accordingly, elected to hand down its award according to existing materials.
The following are the facts, the Tribunal's opinion and award.
On 20 April 1992, the [Buyer] and the [Seller] signed Contract No. 92FST/OA002 contract (No. 002 contract). This contract stipulated that the [Buyer] purchased from the [Seller] 2,000 tons of old newspapers and magazines for the price of US $256,000. The delivery term was CIF Yantai.
On 2 July 1992, in accordance with the contract, the [Buyer] issued Letter of Credit No. 37492159, and the [Seller] delivered the goods in fourteen batches. The [Buyer] satisfactorily picked up the first eight batches of goods with China A Transportation Company ("A") referred to in the Bills of Lading provided by the [Seller] for these batches of goods. In July, 1992, the [Seller] then submitted to the [Buyer] the Bills of Lading for the last six batches of the goods. The Bills of Lading for these six batches were issued in the name of America GOF. The Bills of Lading indicated that GOF was "A" 's agent. During the period 18 June to 10 August 1992, the [Buyer] made the entire payment for fourteen batches of the goods. This payment amounted to US $257,514.33.
During the period 8 to 28 August 1992, the last six batches of the goods were delivered to Yantai Port separately by "A" 's ships. However, the [Buyer] was advised by the Yantai Foreign Agency that the [Buyer] could not pick up the goods with the Bills of Lading in the name of GOF.
|-||Therefore, on 12 August, [Buyer] sent a fax to require the [Seller] to submit the original Bills of Lading of "A". Although on 17 August, the [Seller] faxed six original Bills of Lading of "A" to the [Buyer], there was no signature on these Bills of Lading.
|-||On 10 September 1992, after received an injunction from "A", Yantai Foreign Agency notified the [Buyer] that: "A" had never entrusted GOF as its agent, and that GOF had used the name of "A" illegally; therefore, the goods could be picked up only with Bills of Lading of "A" not GOF; and that the related freightage was still not paid.
|-||Thereafter, the [Buyer] negotiated with the [Seller] many times, and on 7 November 1992, the [Seller] sent the [Buyer] the original Bills of Lading of "A" for two of the six batches of the goods. The [Buyer] was therefore able to pick up these two batches of goods with them. However, as for the remaining four batches of the goods, which had a worth of US $83,151.33, though the [Buyer] urged the [Seller] many times, the [Seller] did not submit the original Bills of Lading of "A". These four batches of goods were auctioned by "A" due to the freightage that was owed.|
Thereupon, the [Buyer] applied to the Arbitration Commission for arbitration, requesting the following award:
|-||The [Seller] should refund the payment for four batches of goods, which have the worth of US $66,696.45. (There are forty four boxes for four batches of goods; the [Buyer] alleges that there should be another six boxes.)
|-||The [Seller] should pay interest on this sum; the time of calculating this interest should be from 10 August 1992 to the actual date of refund. The monthly interest should be calculated at 10.98%/1000.
|-||The arbitration costs (renminbi [RMB] 19,405) should be paid by the [Seller].
|-||The [Seller] should assume the responsibility of the expenses of retaining attorneys by the [Buyer], which is RMB 11,500.
|-||The [Seller] should compensate the other economic losses of the [Buyer].|
The [Buyer]'s position
According to the applicable provisions of "United Nations Convention on Contracts for the International Sale of Goods", the main obligations of the seller are delivery of the goods and handing over of documents. The evidence in this case makes it clear that the [Seller] did not pay the freightage for the last four batches of the goods, so it did not acquire the valid documents to permit the goods to be picked up, nor did the [Seller] hand over the documents needed to pick up the four batches of goods. Therefore, the [Buyer] was unable to pick up the goods, a result equivalent to the [Seller] not delivering these four batches of goods to [Buyer] at all. Therefore, the [Seller] should refund the payment for the four batches of goods and assume the responsibility to compensate the economic losses of the [Buyer].
The [Seller]'s response
The [Seller] did not provide any reply to this rationale and these claims.
II. OPINION OF THE ARBITRATON TRIBUNAL
From the written materials provided by the [Buyer], we can see that the two parties did not settle the disputes of Contract No. 92FST/OA006 (006 contract), and that when the [Seller] fulfilled the No. 002 contract involved in this case. The [Seller] deliberately used the Bills of Lading, which did not pay the freightage, to change for the payment for goods. [Seller] had told the [Buyer] that the payment for goods of No. 006 contract, which was owed to the [Seller] by the [Buyer], should balance out the freightage of No. 002 contract, which had to be paid by the [Seller].
However, the Arbitration Tribunal has only accepted and agreed to hear the dispute over the No. 002 contract. The dispute over the No. 006 contract is beyond the jurisdiction of the Arbitration Tribunal for this case. Accordingly, the Tribunal has no authority to make any award on the disputes over the No. 006 contract. The 006 compensation from the [Buyer] which the [Seller] claims can only be settled by instituting another action or arbitration.
In so far as the dispute over the No. 002 contract is concerned, according to "United Nations Convention on Contracts for the International Sale of Goods", Article 30 states that:
"The seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention."
The [Buyer] and [Seller] of this case are a Chinese company and an American company, respectively. Therefore, according to the contract and the provisions of the "United Nations Convention on Contracts for the International Sale of Goods", both parties should fulfill the obligations of the contract.
The evidence provided by the [Buyer] indicates that after the contract was concluded, the [Seller] delivered fourteen batches of goods in total, and handed over the Bills of Lading for these batches of goods, whereupon the [Buyer] paid the [Seller] US $257,514.33 for all of these goods. Afterward, the [Buyer] satisfactorily picked up ten batches of the goods, providing for this purpose satisfactory Bills of Lading submitted by the [Seller]. However, the last four Bills of Lading were issued by GOF, and these Bills of Lading were the ones for which the freightage had not been paid. Therefore, "A" company did not allow the [Buyer] to pick up the goods referred to in these last four Bills of Lading, and required it to send parts of the goods back to "A", which had been picked up by the [Buyer] with these four Bills of Lading.
The Arbitration Tribunal holds that:
|-||According to the contract's condition (CIF Yantai), the [Seller]'s obligation can be fulfilled and the property transferred to the [Buyer] only after the [Seller] delivers all of the goods which are under the contract, and hands over to the [Buyer] valid Bills of Lading for all of the goods, which indicate that the related freightage has been paid.
|-||However, as the [Seller] handed over Bills of Lading for the last four batches of goods which did not indicate the payment of the freightage, this was a breach of contract.
|-||Therefore, the [Seller] should assume the responsibilities for breach of contract: It should refund to the [Buyer] the payment (US $66,696.45) for the last four batches of the goods, which cannot be picked up, but for which the [Buyer] paid, and pay the annual interest of 6%, calculated from the date, when the payment should have been made (10 August 1992).
|-||The [Seller] should assume the entire arbitration fees and compensate the [Buyer] for the attorneys' fee - [RMB] 11,500 spent on this case.
|-||Other economic losses, for which it is claimed the [Seller] should compensate the [Buyer], cannot be recognized by the Tribunal, because the [Buyer] has neither identified a concrete sum nor provided relevant evidence.|
Based on the evidence and the reasons recited above, the Arbitration Tribunal hands down the following award:
|-||The [Seller] shall refund the payment (US $66,696.45) for the goods, and add annual interest of 6%, calculated from 10 August 1992 to the actual date of payment;
|-||The [Seller] shall compensate the [Buyer] for its attorneys' fee - RMB 11,500;
|-||Responsibility for the costs of the arbitration (RMB ___) shall be assumed by the [Seller] totally. The [Buyer] has paid the Arbitration Commission the arbitration fees (RMB ___) in advance. Therefore, the [Seller] should repay RMB ___ to the [Buyer] to compensate for the arbitration fees paid by the [Buyer].
|-||All of the money which the [Seller] must pay back to the [Buyer], must be repaid 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 [Buyer] and Respondent of the United States is referred to as [Seller]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].
** Qihua YAN, of Shenyang City, China, is pursuing her LL.M. degree at the University of Leicester, United Kingdom. She received her LL.B. with honors from the University of Electronic Science and Technology of China in 2004.
*** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.Go to Case Table of Contents