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CISG CASE PRESENTATION

China 10 May 1994 CIETAC Arbitration proceeding (Carbamide case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/940510c1.html]

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

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Case identification

DATE OF DECISION: 19940510 (10 May 1994)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1994/07

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (seller)

BUYER'S COUNTRY: Australia (claimant)

GOODS INVOLVED: Carbamide


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: [-]

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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): 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. 796-798

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Dong WU, CIETACís Practice on the CISG, at n.223, Nordic Journal of Commercial Law (2/2005)

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Case text (English translation)

Queen Mary Case Translation Programme

China International Economic & Trade Arbitration Commission
CIETAC (PRC) Arbitration Award

Carbomide case (10 May 1994)

Translation [*] by Meihua Xu [**]

Edited by John W. Zhu [***]

The China International Trade and Economic Arbitration Commission (formerly known as the Foreign Economic and Trade Arbitration Committee of China Council for the Promotion of International Trade, hereafter, the "Arbitration Commission") accepted this case involving a dispute on the delivery of 6,000 m.t. of packaged carbomide according to:

   -    The arbitration clause in Sales Contract No. p-91/063(91XIXA777256AU) signed by Claimant [Buyer], Australia __ Company, and Respondent [Seller], Germany __ Company; and
 
   -    The written arbitration application submitted by [Buyer] on 24 September 1992.

After receiving the Arbitration Notice and the attachment sent by the Secretariat Office of the Arbitration Commission, the [Seller] raised objections to the jurisdiction and on the effectiveness of the arbitration clause in the contract. The Arbitration Commission decreed that the arbitration clause was effective. After received this decree, the [Seller] appointed an arbitrator.

Mr. P, the Presiding Arbitrator appointed by the Chairman of the Arbitration Commission, Mr. A, the arbitrator appointed by the [Buyer], and Mr. D, the arbitrator appointed by the [Seller], formed the Arbitration Tribunal to hear this case.

The Arbitration Tribunal held a court session in Shanghai from 14 to 15 December 1993. Both the [Buyer] and the [Seller] attended the court session. They made statements, presented arguments and answered the Arbitration Tribunal's questions. The parties tried to settle this case through the mediation arranged by the Arbitration Tribunal, but with no result.

After the court session, both parties submitted written supplementary materials as requested by the Arbitration Tribunal.

This case has been concluded. After deliberation, the Arbitration Tribunal made this award by consent based on the materials available and the court session.

The following are the facts, the Tribunal's opinion and award.

I. FACTS

In the middle of September 1991, the [Seller] informed the [Buyer] that 6,000 tons of carbomide were being transported to Shanghai, and asked the [Buyer] to look for a purchaser. On 19 November 1991, the [Seller] sent a formal offer to the [Buyer], and on 25 November, the [Seller] sent a whole set of shipping documents to the [Buyer]. On 4 December, the [Buyer] informed the [Seller] that it would purchase the goods and sent all the terms of the transaction (the contract in this case) to the [Seller]. The contract was made by modifying and supplementing the [Seller]'s terms of the transaction contained in the offer made on 19 November 1991. The [Buyer] also asked the [Seller] to insure the goods, direct the shipping company to deliver the goods to the [Buyer]'s client, and to sent the entire original shipping documents to the [Buyer]. On the same day, the [Seller] delivered the aforesaid documents.

However, due to problems that occurred during taking delivery of the goods, the contract could not be performed. The [Buyer] asked compensation from the [Seller]. The parties negotiated but failed to reach an agreement on the amount of the compensation. The [Buyer] then filed this arbitration application.

[POSITION OF THE PARTIES]

[Buyer]'s position

The [Buyer] alleges that:

When taking delivery of the goods, the [Buyer] found that there were two sets of original B/Ls: one held by the [Buyer]; another one held by a company named Conagra. The shipping company took the position that it could not give the goods to the [Buyer] without [Seller]'s permission. Meanwhile, the [Buyer] was informed by the Shanghai Marine Law Office that: "these goods were involved in a complicated multiple parties' lawsuit". The [Buyer] therefore, concluded that the goods could not be delivered on time. Later, the import license held by the [Buyer]'s client expired and the [Buyer] suffered severe losses.

The [Buyer] and the [Seller] negotiated the compensation issue several times; however, due to the large gap between the compensation amounts proposed by the two parties, no agreement was reached. The [Buyer] filed this arbitration application to have the Tribunal rule that:

1. The [Seller] should compensate the [Buyer]'s total loss of US $114,000, which is calculated as

      (1) The compensation claimed by the [Buyer]'s client, US $19/ton, totaling US $90,000; (loss suffered due to the expiration of the Import License); and

      (2) [Buyer]'s loss of profit. The difference in price between this contract and the contract between the [Buyer] and its client is US $4/ton, totaling US $24,000;

2. The [Seller] should bear the entire arbitration fee;

3. The [Seller] should pay [Buyer]'s attorneys' fee of US $2,005.

[Seller]'s defense

The [Seller] counter argues that:

      (1) The goods were sold while in transport. The parties agreed orally that it was difficult to agree on the conditions of delivery of the goods, which should be decided after the [Buyer] received the goods. The payment term of the contract was stipulated as "after receipt of the goods and 14 days after the issuance of the inspection certificate".

On 19 November 1991, in the offer [Seller] sent to the [Buyer], the [Seller] explicitly requested that the client of the [Buyer] contact the sea transportation agency in Shanghai to check whether there was a record for the arrival of the contract goods. On 25 November, the [Seller] faxed the copy of the B/L to the [Buyer], asking it to get further information; however, the [Buyer] signed a formal contract with its client on 30 November without disclosing the risk. The [Buyer] first made promises to its client, and then sent the modified contract to the [Seller] on 4 December. Under this circumstance, the [Seller] certainly could not accept this contract.

As a matter of fact, the [Seller] has called the [Buyer], stating that the resale must wait until the goods arrived; therefore, although there was a compensation issue between the [Buyer] and its client, it had nothing to do with the [Seller], and in fact, the [Buyer] could not provide any evidence to prove that a compensation has been made.

      (2) The [Seller] has sent a set of original B/L to the [Buyer]. The [Buyer] alleged that Conagra Company had another set of B/L to the goods; however, the [Seller] does not believe it is effective. In fact, Conagra Company did not take delivery of the goods. The [Seller] has been repeatedly urging the [Buyer] to take delivery of the goods, and if the [Buyer] had provided the original B/L to the sea transportation agency, it had no reason to reject the [Buyer]'s taking delivery of the goods. The [Buyer] cannot submit the evidence showing that it has been rejected by the sea transportation company. The facts indicated that the [Buyer] did not follow the [Seller]'s request to take positive actions; therefore, the [Seller] should not be held responsible.

      (3) The [Seller] cannot understand the notice sent by the Shanghai Marine Law Office, informing the [Buyer] not to take delivery of the goods;

      (4) The [Buyer]'s compensation claims lack legal and factual basis, and cannot be accepted; therefore, the [Seller] asks the Arbitration Tribunal to dismiss the [Buyer]'s claims.

II. OPINION OF THE ARBITRATION TRIBUNAL

Australia and Germany, where the places of business of the [Buyer] and [Seller] are situated, respectively, are Contracting States of the United Nations Convention on Contracts for the International Sales of Goods (hereafter, the "CISG"); therefore, the CISG and other international trade usages should be applied in this case.

Both parties admit that the [Seller] has provided one set of B/L to the [Buyer], and that the payment was to be made after the [Buyer] received the goods and had them inspected. The [Buyer] failed to provide sufficient evidence showing the B/L provide by the [Seller] was invalid or that the [Seller] has resold the goods to another party, or that the sea transportation agency refused to accept the B/L and deliver the goods.

Because the [Buyer] failed to prove that [Seller]'s breach of the contract caused the contract to be unable to be performed, [Buyer]'s arbitration claims lack basis, thus, the Arbitration Tribunal cannot accept them.

III. THE AWARD

The Arbitration Tribunal rules that:

(1)   [Buyer]'s claims are dismissed;
 
(2) The arbitration fee is US $___, which should be borne by the [Buyer] entirely. The [Buyer] has paid US $__ in advance.

This is the final award.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Australia is referred to as [Buyer] and Respondent of Germany is referred to as [Seller]. Amounts in the currency of the United States (dollars) are indicated as [US $].

** 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.

*** John W. Zhu, LL.M. China University of Political Science and Law (National Graduate Scholarship); Bachelor of Law, Southwest University of Political Science and Law; Double Degree, English Literature, Sichuan International Studies University, Chongqing, China. Focus: International Economic Law.

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