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CISG CASE PRESENTATION

China 14 May 1996 CIETAC Arbitration proceeding (Down coat case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/960514c1.html]

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

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Case identification

DATE OF DECISION: 19960514 (14 May 1996)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1996/23

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: People's Republic of China (claimant)

BUYER'S COUNTRY: Hungary (respondent)

GOODS INVOLVED: Down coats, students' bags with snowshoes and sport shoes, men's pigskin jackets, pigskin gloves


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 74 [Also cited: Article 61 ]

Classification of issues using UNCITRAL classification code numbers:

53A [Buyer's obligation to pay price of goods];

74A [General rules for measuring damages (loss suffered as consequence of breach): includes attorneys' fee (regarded as an indirect loss caused by buyer's breach)]

Descriptors: Price ; Damages ; Collection costs

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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) 1996 vol., p. 1233-1235

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

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

Down coat case (14 May 1996)

Translation [*] by Zheng Xie [**]

Translation edited by Meihua Xu [***]

China's International Trade and Economic Arbitration Commission (Shanghai Commission) [hereafter, Shanghai Commission] accepted the present case on 19 July 1995 according to:

   -    The arbitration clauses in Sales Confirmations No. WJI93S001, WJI9310-I, WJIN001 and WJI931106 signed by Claimant [Seller] Wujiang XX Trade Company and Respondent [Buyer] Hungary XX Company on 7 September, 9 October, 2 November and 29 November 1993, respectively, and
 
   -    The written arbitration application submitted by [Seller] to the Shanghai Commission.

The Secretariat of the Shanghai Commission sent a notice of arbitration to [Seller] and [Buyer] by registered mail. On 16 August 1995, the mail to [Buyer] was returned without definite reason. In accordance with Article 77 of the Arbitration Rules (1994), the Secretariat of the Shanghai Commission authorized Shanghai XX Law Firm to send [Buyer] that notice of arbitration to [Buyer]'s last known address by ordinary mail on 25 August 1995. [Buyer] did not reply.

[Seller] appointed Mr. A as arbitrator. Because [Buyer] did not appoint an arbitrator within the stipulated time, the Chairman of the Shanghai Commission appointed Ms. D as arbitrator for [Buyer]. The Chairman, according to the Arbitration Rules, appointed Mr. P as the presiding arbitrator. In accordance with the Arbitration Rules, Mr. A, Ms. D and Mr. P formed the Arbitration Tribunal on 20 November 1995 and heard the case. The Secretariat of the Shanghai Commission sent [Seller] and [Buyer] the notice of formation of the Arbitration Tribunal and the scheduled court session, and authorized Shanghai XX Law Firm to send the notice to [Buyer] by ordinary mail.

The Arbitration Tribunal reviewed [Seller]'s arbitration application and evidence ([Buyer] had neither submitted a defense, nor did it file any counterclaim), and held its court session in Shanghai on 21 December 1995. [Seller]'s representative presented at the court session, made a statement and answered the Arbitration Tribunal's questions. [Buyer] did not attend the session. According to Article 42 of the Arbitration Rules, the Arbitration Tribunal heard the session by default. At the session, [Seller] requested permission to add an arbitration claim, and submitted the written claim after the session. In accordance with Article 19 of the Arbitration Rules, the Arbitration Tribunal accepted this claim. The Secretariat of Shanghai Commission authorized Shanghai XX Law Firm to send [Buyer] the above materials in time, but [Buyer] did not reply. The Arbitration Tribunal has concluded the case, and handed down the award according to the facts and the law.

The following are the facts, the opinion of the Arbitration Tribunal and the award.

FACTS

[Seller] and [Buyer] signed Sales Confirmations No. WJI93S001, WJI9310-I, WJIN001 and WJI931106 (hereafter, Confirmations S001, 10-I, N001 and 1106) on 7 September, 9 October, 2 November and 29 November 1993, respectively.

Confirmation S001 was for down coats:

   -    Price: US $43,329.00.
   -    Delivery term: CIF Hamburg.
   -    Terms of payment: T/T within two months after arrival of the goods.

Confirmation 10-I was for students' bags (each a set of bags, snowshoes and sport shoes):

   -    Price: US $17,555.00.
   -    Delivery term: CIF Hamburg.
   -    Terms of payment: T/T within one month after arrival of the goods.

Confirmation N001 was for men's pigskin jackets:

   -    Price: US $7,300.00.
   -    Delivery term: CIF Budapest
   -    Terms of payment: T/T within one month after arrival of the goods.

Confirmation 1106 was for pigskin gloves:

   -    Price: US $3,030.00.
   -    Delivery term: CIF Budapest.
   -    Terms of payment: T/T within one month after arrival of the goods.

The four sales confirmations stipulate "more or less 5%".

On 12 October, 31 October, 22 November and 15 December 1993, [Seller] delivered the goods for US $43,329.00, US $18,023.00, US $7,300.00 and US $3,030.00, respectively, under the four sales confirmations. [Buyer] paid US $6,000.00 and US $5,000.00 on 2 February and 10 May 1994. The total amount paid was US $11,000.00. [Buyer] still owes [Seller] US $60,682.00. [Seller] tried to solve the dispute through negotiation, but [Buyer] did not cooperate. [Seller] filed application for arbitration with Shanghai Commission.

[Seller]'s position

[Seller] requests the Arbitration Tribunal to rule that:

  1. [Buyer] shall pay the remainder of the price of the goods, US $ 60,682.00, i.e., renminbi [RMB] 500,000.

  2. [Buyer] shall pay interest, US $8,919.68.

  3. [Buyer] shall pay the expenses of the attorney handling the case, RMB 6000,00, and the attorney's fee, RMB 36,500.00.

  4. [Buyer] shall pay the arbitration fee of this case.

[Seller] alleges that [Buyer]'s breach caused [Seller]'s severe loss. According to Article 18 of Law of the People's Republic of China on Economic Contracts Involving Foreign Interest:

"If a party fails to perform the contract or its performance of the contractual obligations does not conform to the agreed terms, this constitutes a breach of contract, and the other party is entitled to claim damages or demand other reasonable remedial measures."

Accordingly, [Seller] claims damages including interest, attorney's fee and arbitration fee, etc., which, due to [Buyer]'s breach, is justifiable. Interest should be calculated at the People's Bank of China's floating interest rate, 7% from 1 January 1994 to 31 December 1995, i.e., two years.

[Buyer] neither raises any defense to [Seller]'s claims, nor does it file any counterclaim.

OPINION OF THE ARBITRATION TRIBUNAL

The Arbitration Tribunal heard [Seller]'s statement and reviewed its written materials, and by consent holds:

1. [Seller] and [Buyer] executed Sales Confirmations S001, 10-I, N001 and 1106 on 7 September, 9 October, 2 November and 29 November 1993, respectively. The representative of each party signed the sales confirmations, which are valid, so [Seller] shall perform the obligation to deliver the goods and [Buyer] shall make payment therefore in accordance with the confirmations.

2. Because this case involves disputes on contracts, and the countries, in which [Seller]'s and [Buyer]'s places of business are located, are Contracting States of the United Nations Convention on Contracts for the International Sale of Goods (CISG), the CISG applies instead of the Law of the People's Republic of China on Economic Contracts Involving Foreign Interest, which [Seller] cites.

3. After reviewing the relevant invoices, B/Ls and other documents, the Arbitration Tribunal finds that [Seller] has performed its obligation of delivering the goods in accordance with the contract, and has delivered down coats, students' bags, etc. with the value of US $43,329.00, US $18,023.00, US $7,300.00 and US $3,030.00 under the four sales confirmations on 12 October, 31 October, 22 November, and 15 December 1993, respectively. The price of the goods delivered under Confirmations S001, N001 and 1106 are in conformity with stipulation of the confirmations. The goods delivered under Confirmation 10-I are US $468.00 more than the value stipulated in the contract, but the contract specifies "more or less of 5%". Thus, the Arbitration Tribunal holds that [Seller] has performed its obligation of delivering the goods in accordance with the contract. After receiving the goods, [Buyer] did not make any objection, and paid US $6,000.00 and US $5,000.00 on 2 February and 10 May 1994, but it still owes US $60,682, which constitutes breach of the contracts. Accordingly, [Buyer] is liable for [Seller]'s damages.

4. Article 53 of CISG stipulates, "The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention". Article 61 stipulates that if the buyer fails to perform any of his obligations under the contract or this Convention, the seller may claim damages as provided in articles 74 to 77. [Seller] has requested [Buyer] to pay the remainder of the price of the goods, US $60,682.00, i.e., renminbi 500,000, interest of US $8,919.68, the expenses of attorney handling the case, RMB 6,000.00, and the attorney's fee, RMB 36,500.00. The Arbitration Tribunal decides that [Buyer] shall pay the price of the goods, US $60,682.00. The expenses of attorney handling the case and attorney fee, US RMB 42,500.00, are indirect losses caused by [Buyer]'s breach, and [Seller] has provided certificate of such expenses, so [Buyer] shall indemnify [Seller] such expenses. The Arbitration Tribunal finds that the interest of US $8,919.68 is inaccurately calculated, and it shall be US $60,682.00 x 7% x 2 = US $8495.48; thus, [Buyer] shall indemnify [Seller] loss of interest US $8,495.480.

The dispute in this case was caused by [Buyer], so it shall pay the arbitration fee, RMB 38,500.00.

AWARD

  1. [Buyer] shall pay the price of the goods, US $60,682.00.

  2. [Buyer] shall pay interest, US $8,495.48.

  3. [Buyer] shall pay the expenses of [Seller]'s attorney handling the case and the attorney's fee, RMB 42,500.00.

  4. [Buyer] shall pay the arbitration fee, RMB ___. [Seller] paid the arbitration fee RMB ___ in advance, so [Buyer] shall indemnify [Seller] RMB ___.

  5. [Buyer] shall pay the above 1-4 amounts within forty-five days of the date of the award. If [Buyer] does not pay the amount within that time limit, interest at the daily rate of 2.5/1,000 for items 1 and 2 above shall be added from the date when the payment should have been made to the date when the payment is made, and, for items 3 and 4 above, the daily interest rate 5/1,000 shall be added from the date when the payment should have been made to the date when the payment is made.

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 the People's Republic of China is referred to as [Seller]; Respondent of Hungary is referred to as [Buyer]. 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].

** Zheng Xie, LL.M. Washington University in St. Louis, LL.M., BA in Economics, University of International Business and Economics, Beijing.

*** 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.

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