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CISG CASE PRESENTATION

Russia 16 September 1996 Arbitration proceeding 74/1995 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/960916r1.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19960916 (16 September 1996)

JURISDICTION: Arbitration ; Russian Federation

TRIBUNAL: Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 74/1995

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Russia (claimant)

BUYER'S COUNTRY: Syria (respondent)

GOODS INVOLVED: Unavailable


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issues: Articles 7 ; 53 ; 78

Classification of issues using UNCITRAL classification code numbers:

7C [Gap filling];

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

78B [Rate of interest]

Descriptors: Gap filling ; 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 (Russian): Rozenberg ed., Arbitrazhnaja praktika za 1996-1997 gg. [Arbitration practice in the years 1996-1997], Moskva (Statut) 1998, No. 24 [83-85]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Djakhongir Saidov, 7 Vindobona Journal of International Commercial Law and Arbitration (1/2003) 1-62 at n.157

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Russian Federation arbitration proceeding 74/1995 of 16 September 1996

Translation [*] by Mykhaylo Danylko [**]

1. SUMMARY OF RULING

     1.1 The number of lots of goods, delivered under CIF-port of destination terms, was defined on the basis of information contained in the bill of lading instead of that contained in the Seller's invoice.

     1.2 At the time of conclusion of the contract the main places of business of the parties to that contract were in Contracting States of the CISG (the USSR and Syria), thus this Convention is applicable to the relations of parties. Considering that the contract had been concluded in Moscow, the Russian law was applied subsidiary on the basis of Russian Federation Civil Code 1964 Art. 566.

     1.3 The penalty for the delay in payment in the amount specified in the contract was recovered from the Respondent [Buyer] for the period until filing the claim. Annual interest for the period from the date when the action was filed until the factual payment was awarded to the Claimant [Seller] at the rate of the banking credit at his place proved by the [Seller] on the basis of Russian Federation Civil Code Art. 395.

2. FACTS AND PLEADINGS

The action was brought by the [Seller],a Russian company, against the [Buyer],a Syrian company, in connection with failure to pay for the goods delivered under the contract between the parties of October 1991. The [Seller]'s claims included recovery of payment for the price of goods and payment of the penalty for the delay in payment, as stipulated in the contract. Additionally, on the basis of Russian Federation Civil Code Art. 395, [Seller] claims recovery of annual interest for using the money for the period from filing an action until the date of payment of the principal debt.

3. TRIBUNAL'S REASONING

The ruling of the Tribunal of International Commercial Arbitration (hereinafter Tribunal) contained the following main points.

     3.1 [Jurisdiction and competence of the Tribunal]

The Tribunal's competence to arbitrate the present case is based on para. 16 of the General Provisions of Sales, which is a part of the contract of 26 October 1991, also an arbitration clause "[a]ll disputes or misunderstandings between the parties that might arise from or in connection with this contract shall be solved, excluding the courts of general jurisdiction, by the International Trade Commission at the USSR Chamber of Commerce and Trade according to the Rules of Procedure of this Commission". By the Order of the USSR Supreme Council of 14 December 1987, the said Commission was renamed the Tribunal of Arbitration at the USSR Chamber of Commerce and Trade. According to the Chapter of the Tribunal, the Tribunal is a successor to the Tribunal of Arbitration at the USSR Chamber of Commerce and Trade and is competent to arbitrate the disputes, which parties aimed in their agreements to be referred to the Tribunal of Arbitration at the USSR Chamber of Commerce and Trade. Therefore, the Tribunal is competent to arbitrate the present dispute.

     3.2 [Applicable law]

The contract concluded between the parties does not specify any applicable law. Since at the time of conclusion of the contract the USSR and Syria have already been the Contracting States of the CISG, thus the provisions of this Convention are applicable to the relations of parties to the dispute. By virtue of CISG Art. 7, issues not governed by the Convention should be solved on the basis of general principles on which the Convention is based, or when such principles do not exist - according to the law, applicable under the rules of international private law.

Art. 28(2) of the Russian Federation Law On the Tribunal of International Commercial Arbitration provides that when there is no parties' agreement as to applicable law, the Tribunal should apply the law defined under the rules of conflict of laws that the Tribunal considers applicable. The Tribunal has a stable trend to apply to such cases Russian rules of conflict of laws. The Tribunal did not find any reasons to revert from practice when arbitrating the present dispute. According to the rule of conflict of laws of the Russian Federation Civil Code 1964 Art. 566 which governs the relations between the parties, the rights and obligations of parties to an international sales contract should be defined under the laws of the place of conclusion of the contract [lex loci actus] provided the parties did not agree otherwise. Since the contract had been concluded in Moscow,the Russian laws should be applied subsidiary to the provisions of CISG.

     3.3 [The merits of the case]

The [Seller] shipped the goods on the CIF - port of destination terms as required by the contract. According to Amendment No. 1 to the contract, the [Buyer] was obligated to pay the price for the goods within 60 days from the date of [issuing] of the bill of lading. However, the [Buyer] failed to do so in the required term, neither did he pay later after multiple notices from the [Seller]. By this, the [Buyer] breached the contract provisions, as well as CISG Art. 53 and must pay the [Seller] the price for the goods delivered.

The [Seller] claims recovery of the sum which is the same as the sum in the invoice sent to the [Buyer]. This invoice has a reference to the bill of lading. However, the bill of lading specifies less number of lots of goods shipped than specified in the invoice. The [Seller] calculated the sum of his claim on the basis of the numbers specified in the invoice.

The Tribunal believes that this sum is not correct because in contrast with the bill of lading, the number of lots of goods has been increased without any reasons. Therefore, the Tribunal found that [Seller] shall recover only the sum that covers the number of lots of goods specified in the bill of lading.

According to the Amendment No. 1 to the contract, the [Buyer] must pay a penalty, calculated for every day of the delay of payment. The [Seller] made a calculation effective on the date of filing the action. Since the sum claimed by the [Seller] does not exceed the amount of penalty for the delay of payment for the period from 21 April 1992 until 1 March 1995, thus it shall be recovered from the [Buyer].

Based on the Russian Federation Civil Code Art. 395, the [Seller] claimed recovery of the annual interest for using the money for the period from 1 March 1995 (the day of filing the action) until the day of actual payment. The practice of application of the said Art. 395, which is confirmed by the Decision of the Russian Federation Supreme Court and Supreme Tribunal of Arbitration No. 6/8 of 1 July 1996, provides for the following. In cases when, according to the currency regulation laws, the monetary obligation is specified in a foreign currency and there is no information about the official credit rate on the day of performance of the obligation at the place of the creditor, the annual interest rate should be defined on the basis of official publications on the average rates of banking credits in foreign currency at the place of the creditor. If there are no such publications, the annual interest rate should be established on the basis of the report of one of the leading banks at the place of the creditor (such report shall be presented by the claimant) which confirms that this rate is applicable to the short term currency credits.

In light of the above the Tribunal, when defining the rate of annual interest based this decision on the report on the average annual credit rate, issued by the Russian Federation Bank of Foreign Trade on 28 February 1996.


FOOTNOTES

* This is a translation of data on Proceeding 74/1995, dated 16 September 1996, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, reported in Rozenberg ed., Arb. Praktika (1996-1997) No. 24 [83-85].

All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Russia is referred to as [Seller]; Respondent of Syria is referred to as [Buyer].

** Mykhaylo Danylko is a Partner with the law firm Danylko, Kushnir, Soltys & Yakymyak, Attorneys & Counselors at Law, Kiev, Ukraine <http://www.dksylaw.com>. He holds a Masters of Laws (European Studies Program) from the Law School of International Science and Technology University, Kiev, Ukraine (July 2000); a Master of Management in Business of the Business School of International Science and Technology University (June 2002); and has received his LL.M. in International and Comparative Law at the Pace University School of Law.

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