Russia 18 September 1996 Arbitration proceeding 448/1995 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/960918r1.html]
DATE OF DECISIONS:
CASE NUMBER/DOCKET NUMBER: 448/1995
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Hungary (claimant)
BUYER'S COUNTRY: Italy (respondent)
GOODS INVOLVED: Unavailable
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issues:
Classification of issues using UNCITRAL classification code numbers:
53A [Buyer's obligation to pay price of goods]; 78B [Rate of interest; calculation of interest]
53A [Buyer's obligation to pay price of goods];
78B [Rate of interest; calculation of interest]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
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. 26 [89-91]
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.233Go to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
Translation [*] by Mykhaylo Danylko [**]
1. SUMMARY OF RULING
1.1 The rules of Vienna Convention 1980 (CISG) should be applied primarily to the relations of the parties to this dispute because the commercial companies of these parties to the contract concluded in September 1994 are located in Contracting States (Hungary and Italy) of the CISG since 1988. At the same time, the Tribunal of International Commercial Arbitration (hereinafter Tribunal), considering the circumstances and matter of the contract, found it possible to apply subsidiary the Russian Federation Civil Code Art. 395 to define the amount of annual interest for use of money.
1.2 [The Tribunal] dismissed the Respondent [Buyer]'s arguments that the action against him is unreasonable since the Claimant [Seller] shipped the goods to another company -- but not under the contract concluded with the [Buyer] -- on board a vessel freighted by this other company, which partially paid for the goods.
Partial payment under the contract by another company, but not by the [Buyer], does not mean replacement of the buyer in the contract. The Tribunal so concluded based on the fact that this company acted as a third party and that the [Seller], as a creditor, did not have grounds to reject the mentioned payment.
1.3 The Tribunal accepted a report of one of the leading banks in the country of creditor on the LIBOR rate as a proof of the amount of annual interest to be recovered.
2. FACTS AND PLEADINGS
The action was brought by the [Seller], a Hungarian company, against the [Buyer], an Italian company, in connection with partial payment for the goods, delivered under FOB-Russian port terms by the [Seller] under the contract concluded between the parties in September 1994. The goods had not been paid for in the stipulated-by-the-contract term of 30 days from receipt of the invoice and full package of bills of lading. Later, the debt was paid partially. The [Seller]'s claim on the date of hearing included recovery of the outstanding debt and capitalized annual interest for the delay of payment. The [Buyer] rejected that the goods had been shipped to him under the contract concluded with him. By his allegation, the shipment had been made on board of a vessel freighted by another company, which made a partial payment [for the goods].
3. TRIBUNAL'S REASONING
The ruling of the Tribunal contained the following main points.
3.1 [Jurisdiction and competence of the Tribunal]
The contract between the parties provides for arbitration of all disputes and misunderstandings that might arise from or in connection with it by the Tribunal of International Commercial Arbitration at the Chamber of Commerce and Industry in Moscow.
The Tribunal, in accordance with the Russian Federation Law on the Tribunal of International Commercial Arbitration, is an arbitration authority at the Russian Federation Chamber of Commerce and Trade in Moscow, thus it is competent to arbitrate the present case.
3.2 [Applicable law]
Taking into attention that both Hungary and Italy, i.e., the countries where the commercial companies of the parties are situated, have been Contracting States of the CISG since 1988, the rules of this Convention should be applied primarily to the relations of the parties to the contract. At the same time, the Tribunal, considering the circumstances and matter of the contract, found it possible to apply subsidiary Russian Federation Civil Code Art. 395 to define the amount of annual interest.
3.3 [The merits of the case]
The [Seller] had shipped the goods in accordance with the provisions of the contract. The [Seller] sent an invoice along with a package of onboard bills of lading to the [Buyer] on 29 November 1994. [This invoice] had to be paid before 1 February 1995, however the [Buyer] did not make payment in this term.
The Tribunal dismissed the [Buyer]'s arguments that:
|-||The vessel had been freighted by another company but not by the [Buyer];
|-||The relations exist between the [Seller] and this other company which on that basis, performing the contract, had paid the [Seller] partially for the goods, but not between the [Buyer] and [Seller];
|-||A letter of 15 July 1995, to which the [Seller] referred, does not relate to the contract concluded between the [Buyer] and [Seller].|
The Tribunal found that the letter of 15 July 1995 addressed to the [Seller]'s representative in Moscow is about the same quantity of goods from the same port, in connection with nonpayment for which the action had been filed. In accordance with this letter, the [Buyer] freighted the vessel onboard of which the goods were shipped, and the [Buyer] was intended to pay the [Seller] the same amount, which was paid by another company. The Tribunal excluded the possibility of mere coincidence of the data in letter of 15 July 1995 with the data in the action papers of the present dispute.
A partial payment of the debt sum by another company, but not by the [Buyer], does not mean the replacement by this company of the [Buyer] to the contract. This company in this case is a third party and the [Seller], as a creditor, did not have basis to reject the mentioned payment.
Based on the foresaid, the Tribunal found that the [Seller] had performed his obligations under the contract.
As to the [Buyer], [the Tribunal found] that he did not perform his obligation to pay for the goods because he only partially paid for the delivered goods.
In accordance with provisions of the contracts and CISG Art. 53, by virtue of which the buyer must pay the price for the goods as required by the contract terms, the Tribunal found that [Seller]'s claims to recover the sum of principal debt should be granted.
CISG Art. 78 provides for the right of a party to the contract to recover annual interest for the delayed sum if the other party delayed in payment of the price. Since the said article does not contain either the amount of interest or the methods of its calculation, the Tribunal, based on application of the rules of national law, inter alia, Russian Federation Civil Code Art. 395, found reasonable the calculation of the annual interest made by the [Seller] on the basis of the LIBOR rates confirmed by the report issued by one of the leading banks in Hungary. Based on this, the Tribunal found that the [Buyer] shall pay the capitalized interest, calculated on the sum of the principal debt (for the period from 1 February 1995 to 3 September 1996) since this claim was covered by the arbitration's fees by the [Seller].
* This is a translation of data on Proceeding 448/1995, dated 18 September 1996, of the Tribunal of International Commercial Arbiteration at the Russian Federation Chamber of Commerce and Industry, reported in Rozenberg ed., Arb. Praktika (1996-1997) No. 26 [89-91].
All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Hungary is referred to as [Seller]; Respondent of Italy 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.Go to Case Table of Contents