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CISG CASE PRESENTATION

China 15 October 1996 CIETAC Arbitration proceeding (Canned chufa case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/961015c1.html]

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

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Case identification

DATE OF DECISION: 19961015 (15 October 1996)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1996/46

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: United States (respondent)

GOODS INVOLVED: Canned chufa


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 53

Classification of issues using UNCITRAL classification code numbers:

53A [Obligation of buyer to pay price of goods]

Descriptors: Price

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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. 1963-1965

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Dong WU, CIETAC's Practice on the CISG, at nn.122, 123, 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

Canned chufa case (15 October 1996)

Translation [*] by Meihua Xu [**]

Edited by LIN Zhongming [***]

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

   -    The arbitration clause in Sales Contract No. HYFTC(19)2940825 signed by Claimant [Seller], China Huaiyin __ Trade Company, and Respondent [Buyer], America __ Company on 25 August 1994; and
 
   -    The written arbitration application submitted by [Seller] on 2 February 1996.

Because the two parties failed to jointly appoint or entrust the Chairman of the Arbitration Tribunal to appoint the Presiding Arbitrator within twenty days after the [Buyer] received arbitration notice, pursuant to Article 24 of the Arbitration Rules, the Chairman of the Arbitration Commission appointed Mr. P as the Presiding Arbitrator. Mr. P, Mr. A, the arbitrator appointed by the [Seller], and Mr. D, the arbitrator appointed by the Chairman of the Arbitration Commission on behalf of the [Buyer] according to Article 26 of the Arbitration Rules, formed the Arbitration Tribunal to hear this case.

After accepting this case, the Arbitration Commission sent the arbitration notice, arbitration application, and the attachment to the [Buyer], which have been received by the [Buyer]. However, the [Buyer] neither appointed an arbitrator as required by the arbitration notice, nor did it make defense. Later, the Arbitration Commission sent the arbitration tribunal formation notice and court session notice to the two parties according to the Arbitration Rules.

The Arbitration Tribunal examined the [Seller]'s arbitration application and the evidence, and held a court session in Beijing on 26 August 1996. The [Seller] sent representative to the court session, but the [Buyer] was absent without explaining the reason for its absence. Pursuant to Article 42 of the Arbitration Rules, the Arbitration Tribunal processed this case by default. The [Seller] made a statement at the court session and answered the Arbitration Tribunal's questions.

After the court session, the Arbitration Commission sent the statement on the court session and the [Seller]'s supplementary materials to the [Buyer]; however, the [Buyer] made no response.

This case has been concluded. The Arbitration Tribunal has handed down this award within the time limit stipulated in the Arbitration Rules.

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

I. FACTS

On 25 August 1994, the [Buyer] and the [Seller] signed Contract HYFTC(19)2940825 by fax, by which the [Buyer] was to purchase canned chufa from the [Seller] on the following terms.

   -    Products and pricing: 7,600 cases of canned chufa for a unit price of US $10.50/case, totaling US $79,800, CNF Long Beach; 5% plus or minus loading is allowed;
   -    Shipping term: Departure port is Xiamen, China, shipping in September 1994;
   -    Payment term: D/A 60 days.

After the conclusion of the contract, the two parties had a dispute due to the [Buyer]'s failure to make payment in accordance with the contract. Failing to reach an agreement after negotiation, the [Seller] filed this arbitration application to the Arbitration Commission.

[POSITION OF THE PARTIES]

[Seller]'s position

The [Seller] alleged that:

On 16 September 1994, the [Seller] delivered the goods to Xiamen port. The delivery consisted of 6,644 cases worth US $69,762. After receiving the goods, the [Buyer] did not raise any objection on the quality or quantity of the goods. After loading the goods, the [Seller] sent the entire documents to the [Buyer] through the bank; on 11 October, the [Buyer] accepted the draft, however, it failed to pay the price on the expiration day of the draft, which was 10 December 1994. After being urged by the [Seller], the [Buyer] sent a letter to the [Seller], asking to postpone the payment date to 31 January 1995. This was accepted by the [Seller]. However, even after being urged by the [Seller], the [Buyer] still did not make payment, raising that its business was not going well and that it had financial difficulties. In December 1995, the [Seller] specially sent its staff to the U.S. to ask for payment, and the [Buyer] wrote a payment plan, which has not been fulfilled yet. The [Buyer]'s delay in making payment caused a severe economic loss to the [Seller].

The [Seller] alleged that the [Buyer]'s non-payment after receiving the goods and promising to make payment has fundamentally breached Article 52 of the United Nations Convention on Contracts for the International Sales of Goods (hereafter, the "CISG"), therefore, according to Article 8 of the contract, the [Seller] claimed that:

  1. [Buyer] should pay the price for the goods of US $69,762 with interest calculated from 1 February 1995 to the date of actual payment at an 8% annual interest rate;

  2. [Buyer] should pay the [Seller]'s expenses incurred for this case including traveling fee and attorneys' fee, totaling US $3,000;

  3. [Buyer] should bear the arbitration fee.

II. OPINION OF THE ARBITRATION TRIBUNAL

1. The applicable law

The contract in this case is for the international sales of goods. The places of business of the [Buyer] and [Seller], America and China, are the Contracting States of the CISG. Therefore, the CISG shall be applied.

2. The fact in this case

The Arbitration Tribunal notes that after concluding the contract, the [Seller] delivered 6,644 boxes of goods worth US $69,762 as required in the contract. The [Buyer] did not raise objection on the quality and quantity of the goods, and accepted the draft on 11 October 1994. However, the [Buyer] failed to make payment on the expiration day of the draft, 10 December 1994. After negotiation, the [Seller] agreed to postpone the deadline for making payment to 31 January 1995. The [Buyer] still did not make payment. In December 1995, the [Buyer] gave the [Seller] a payment plan, which has not been fulfilled.

According to Article 53 of the CISG, "the [Buyer] must pay the price for the goods and take delivery of them as required by the contract", the Arbitration Tribunal holds that the [Buyer] should be liable for its fundamental breach of the contract.

3. [Buyer]'s responsibility for contract violation

The [Seller] has delivered the goods to the [Buyer], worth US $69,762, however, the [Buyer] has not performed its obligation to pay; therefore, the [Buyer] should pay the aforesaid sum to the [Seller].

The [Buyer] should pay interest on the aforesaid amount since the [Buyer] failed to make payment as determined in the contract, which caused loss of interest to the [Seller]. The two parties reached an agreement to postpone the deadline for making payment to 31 January 1995, and the [Buyer] should have paid the interest from that day. Thus, the Arbitration Tribunal rules that the [Buyer] should pay interest on the price for goods calculated from 1 February 1995 to the day of this award at 8% annual interest rate, which is US $69,762 8% 1.67 year = US $9,320.20.

For the traveling fee and attorneys' fee of US $3,000 claimed by the [Seller], the Arbitration Tribunal notes that the aforesaid expenses were caused by the [Buyer]'s breach of contract, and the [Seller] provided evidence to support this claim, therefore, the Arbitration Tribunal also accepts this claim of the [Seller].

4. The [Buyer] shall bear the arbitration fee.

III. THE AWARD

The Arbitration Tribunal rules that:

      (1) [Buyer] shall pay the price for the goods of US $69,762;

      (2) [Buyer] shall pay the interest on the aforesaid sum calculated from 1 February 1995 to the day of this award at an 8% annual interest rate, i.e., US $9,320.20;

      (3) [Buyer] shall pay the [Seller]'s reasonable expenses for this case of US $3,000;

      (4) [Buyer] shall bear the entire arbitration fee. The [Seller] has paid renminbi [RMB] __ in advance, which offsets the arbitration fee, therefore, the [Buyer] shall pay back RMB __ , i.e., US $__, to the [Seller];

      (5) The [Buyer] shall pay the aforesaid sum to the [Seller] within 45 days of this award, otherwise, 8% annual interest shall be added.

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 the United States of America 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 a 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.

*** LIN Zhongming, LL.M. China University of Political Science and Law. Major: International Economic Law.

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Pace Law School Institute of International Commercial Law - Last updated October 18, 2006
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