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CISG CASE PRESENTATION

China 9 August 1996 CIETAC Arbitration proceeding (China tableware case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/960809c1.html]

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

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Case identification

DATE OF DECISION: 19960809 (9 August 1996)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1996/38

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: Argentina (respondent)

GOODS INVOLVED: China tableware


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 30 ; 53 ; 78

Classification of issues using UNCITRAL classification code numbers:

30A [Summary of seller's obligations: obligation to deliver];

53A [Summary of buyer's obligations: obligation to pay price];

78A [Interest on delay in paying price or any other sum in arrears]

Descriptors: Delivery ; Price ; Interest

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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., pp. 1660-1663

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

China tableware case (9 August 1996)

Translation [*] by Meihua Xu [**]

Edited by John W. Zhu [***]

The China's International Trade and Economic Arbitration Commission (hereafter, "the Arbitration Commission") accepted the case according to:

   -    The arbitration clause in Sales Confirmation No. 94 AC 8069 (hereafter "the contract") signed by Claimant [Seller], China __ Import & Export Company and Respondent [Buyer], Argentina __ Company; and
 
   -    The written arbitration application submitted by [Seller] on 25 September 1995.

Because the amount in dispute in this case is less than renminbi [RMB] 500,000, according to Article 64 of the Arbitration Rules that became effective on 1 October 1995, the summary procedure is applicable in this case.

Both parties failed to appoint or ask the Director of the Arbitration Commission to appoint a sole arbitrator within the time limit stipulated in Article 65 of the Arbitration Rules, therefore, on 7 March 1996, the Director of the Arbitration Commission appointed Mr. P as the sole arbitrator in the Arbitration Tribunal to hear this case.

On 29 April 1996, the Secretary Office of the Arbitration Tribunal sent a (96) Maozhongzi __ notice to both parties, asking whether they needed a court session, however, neither party responded within the time limit stipulated by the Arbitration Commission.

After examining the [Seller]'s arbitration application and the [Buyer]'s arbitration defense, the Arbitration Tribunal deemed that a court session is necessary in order to clarify related facts and legal issues, therefore, on 23 May 1996, the Secretary Office of the Arbitration Commission sent an Arbitration Court Session Notice to the two parties.

On 11 June 1996, a court session was held in Beijing as planned. The [Seller] sent a representative to the court session, but the [Buyer] did not present.

According to Article 42 of the Arbitration Rules, the Arbitration Tribunal ruled on this case by default.

During the court session, the [Seller]'s representative made a statement and answered the Arbitration Tribunal's questions. After the court session, the [Seller] sent supplementary statements and attachments on 2 July, 4 July, and 10 July.

Considering the fact that the [Buyer] did not present in the court session and that the [Buyer] needed some time to prepare an arbitration answer to the supplementary statements submitted by the [Seller] after the court session, the Arbitration Tribunal asked the Secretary-General of the Arbitration Commission to postpone the deadline for awarding judgment in this case following Article 73 of the Arbitration Rules.

The Arbitration Commission deemed that the aforesaid request was reasonable and necessary; therefore, the deadline for awarding judgment in this case was postponed to 11 August 1996.

The [Buyer] did not submit a further arbitration defense against the supplementary statements and documents.

During the proceedings of this case, the [Buyer] filed an arbitration counterclaim, but without paying the arbitration fee. According to Article 18 Paragraph 3 of the Arbitration Rules, the counterclaim could not be processed because of the [Buyer]'s incomplete procedure.

This case has been concluded and the Arbitration Tribunal made this judgment based on the documents and the court session.

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

I. FACTS

POSITION OF THE PARTIES

A. [Seller]'s position

The [Seller] alleges that:

On 22 October 1994, the [Seller] and the [Buyer] signed Contract No. 94 AC 8096 for the sale of white porcelain tableware produced in China. The contract stipulated :

Goods: Packaged white porcelain tableware sets;
Quantity: 8,000 sets, 30 pieces per set;
Price: Unit price US $5.9/set CNF Hong Kong or US $5.45/set FOB Qingdao, China
Delivery and payment terms: The goods can be delivered in installments. The delivery dates and payment terms are: 1 January 1995, L/C at sight; 1 March 1995, D/P at sight; 1 April 1995, L/C at sight;1 May 1995, D/P at sight;

After signing the contract, the [Seller] made the first delivery in January 1995, and received the payment through the L/C; in March 1995, the [Seller] made the second delivery at the unit price of US $5.45/set FOB Qingdao. This delivery amounted to 1,862 sets, totaling US $10,147.90. In May 1995, the [Seller] made the third delivery at the unit price of US $5.85/set, 3,724 sets, totaling US $21,785.40.

In February 1996, the [Buyer] made the payment for the second delivery through Calberson Shipping Company. The payment term for the third delivery was D/P at sight. After handing over the documents, the [Seller] asked the bank to collect the payment on behalf of the [Seller], however, the [Seller] was later informed by the bank that the [Buyer] refused to make the payment.

The [Seller] negotiated the issue of the payments for the second and the third delivery with the [Buyer], but with no result, therefore, the [Seller] filed an arbitration application on 25 September 1995. After the [Seller] submitted the arbitration application, the [Buyer] made the second payment, therefore, the [Seller] modified its arbitration claim during the court session and claims that:

  1. [Buyer] shall compensate the interest on the second payment, which is US $10,147.90.

    1. 10,147.90 8.7 (1 + 0.145) 9/1,000 11 = RMB 10,007.74 (including loss of tax refund: 14.5%; interest rate: 9/1,000; US $ and RMB exchanging rate: 1: 8.7; period: April 1995 to February 1996)

    2. 10,007.74 10.08/1,000 5 = RMB 5,043. 9 (February 1996 to July 1996)

  2. [Buyer] shall pay US $21,785.40 for the third delivery and the interest on it, which should be calculated as:

    21,785.40 8.7 (1 + 0.145) 9/1,000 14 = RMB 27,343.92 (June 1995 to July 1996.

  3. [Buyer] shall bear the entire arbitration fee.

The [Seller] also alleges that:

After signing the contract, the parties confirmed the FOB Qingdao price via fax. The [Seller] made the second delivery following the contract; however, the [Buyer] not only delayed the payment for the second delivery, but also refused to accept the third delivery, which caused severe economic loss to the [Seller].

The [Seller] asserts that the [Buyer] should bear the loss of price, interest, and tax refund resulting from the [Buyer]'s violation of the contract.

B. [Buyer]'s position

[Buyer] counter argues that:

On 12 April 1995, the [Buyer] received the first delivery, of which the packaging did not conform to the contract that causing severe damages to the goods, and the quality of the goods also did not conform to A - B grade as stipulated in the contract.

For the aforesaid reason, the loss of the [Buyer] was about 45% of the price, which was US $4,566.55. The representative of the [Buyer], Mr. Yao, has negotiated the compensation issue with the [Seller], and the [Buyer] asserts that because the [Seller] did not deliver the goods as defined in the contract, therefore, it should compensate the [Buyer]'s loss.

II. OPINION OF THE ARBITRATION TRIBUNAL

(1) Applicable law

The parties did not stipulate the applicable law in their contract. However, both China and Argentina are Contracting States of the United Nations Convention on Contracts for the International Sales of Goods (hereafter, "the CISG"), and the parties did not exclude the application of the CISG, therefore, the CISG should be applied here.

(2) Packaging and quality issues

The [Buyer] stated in its arbitration answer that the packaging of the goods did not conform to the contract, and that the grade of the goods was also different from what was stipulated in the contract. However, the [Buyer] has not provided any evidence to support its assertion, and the [Seller] has submitted the packaging inspection certificate issued by the Commodity Inspection Bureau of the People's Republic of China; therefore, the [Buyer]'s aforesaid claim is not acceptable.

(3) Compensation for price and the interest on it

According to the CISG, "a seller has the obligation to deliver the goods and hand over any documents related to them and the buyer has the obligation to pay for the goods and to take delivery of the goods". In the instant case, the [Seller] has performed its obligation to deliver the goods and to provide the documents, but the [Buyer] refused to accept the third delivery and to pay the price without legal cause, which has constituted a contract violation. Therefore, based on the CISG, the [Buyer] shall take delivery of the goods, pay the price, and bear the responsibility for contract violation.

For the second delivery, the [Buyer] clearly delayed the payment. According to Article 78 of the CISG, the [Buyer] shall pay the interest on the price delayed, which is RMB 7,945.81. The calculation for this is:

10,147.90 8.7 9/1,000 10 = RMB 7,945.81
(US $ and RMB exchange rate: 1: 8.7; annual interest rate: 9/1,000; interest period: the interest should be calculated from a reasonable time after the [Buyer] received the goods to the day the payment was made, which is from June 1995 to March 1996, totaling three months.)

For the third delivery, the [Buyer] shall pay the price of US $21,785.40 and the interest on it, totaling RMB 20,469.56, which should be calculated using the aforesaid formula. The period should be from August 1995 to July 1996, which is 12 months.

21,785.40 8. 7 9/1,000 12 = RMB 20,469.56

(4) Tax refund

The [Seller] mentioned the loss of tax refund in its arbitration claim. Since the [Seller] did not provide any evidence to prove this loss, therefore, it should not be accepted.

(5) Arbitration fee

The [Buyer] is the losing party in this case; therefore, the [Buyer] shall bear the entire arbitration fee.

III. THE AWARD

(1) [Buyer] shall pay the price of US $21,785.40 and the interest on two payments, which is RMB 28,415.37;

(2) [Buyer] shall bear the entire arbitration fee;

Aforesaid (1) and (2) totals US $21,785.40 and RMB 58,415.37, which shall be paid by the [Buyer] within 45 days after this award takes effect. Otherwise, annual interest shall be added at an 8% rate on the US dollar amount and an 11% annual rate on the RMB amount.

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] and Respondent of Argentina 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].

** 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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Pace Law School Institute of International Commercial Law - Last updated August 8, 2006
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