Russia 27 January 1997 Arbitration proceeding 94/1996 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970127r1.html]
DATE OF DECISIONS:
CASE NUMBER/DOCKET NUMBER: 94/1996
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russia (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:
7C22 [Recourse to general principles on which Convention is based: freedom of contract, reasonableness] 35A ; 35B4 [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law: packaging to protect goods in usual manner for similar goods] 53A [Buyer's obligation to pay price of goods]
7C22 [Recourse to general principles on which Convention is based: freedom of contract, reasonableness]
35A ; 35B4 [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law: packaging to protect goods in usual manner for similar goods]
53A [Buyer's obligation to pay price of goods]
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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. 43 [158-160]
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 nn.59 (reference to "reasonableness" as a general principle of the Convention), 157 (one of numerous decisions relying "on Article 53 in order to grant the sellers' claim for the unpaid price or the unpaid parts of the price")Go to Case Table of Contents
Queen Mary Case Translation Programme
Translation [*] by Yelena Kalika [**]
1. SUMMARY OF RULING
1.1 Taking into consideration that a contract for the international sale of goods was made in April 1995 by parties located in CISG Contracting States, the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry [hereinafter referred to as the "Tribunal"] finds that the CISG governs this dispute based on Article 1(1)(a) CISG.
1.2 Taking into consideration the general principle of "freedom of contract", on which the CISG is based, the Tribunal denies a claim of one of the parties because it concluded that the purpose [of the claim] was to modify the terms of the contract in the absence of the other party's assent.
1.3 That the goods were shipped in a number of lots different from the one which the buyer considered to be economically efficient, is not found to be a non-conformity of goods. [The Tribunal finds so] because this issue is not settled in the contract.
2. FACTS AND PLEADINGS
Claimant [Seller], a Russian firm, made a contract with Respondent [Buyer], an Italian firm, in April 1995. Pursuant to [the contract], the [Seller] delivered the goods to the [Buyer]. The [Buyer] failed to pay for the goods. The [Buyer] argues that the packaging of the goods did not meet the requirements set in the contract. The [Buyer] considered the quality and packaging of the goods unsuitable for [any] use and demanded that the [Seller] give him a confirmation that the goods could be returned. The [Seller] thought that the [Buyer]'s claim was unreasonable because both the quality of the goods and their packaging fully conformed with the requirements set in the contract.
The facts of the case were: The [Buyer] expected to receive the goods in twenty-two lots and that each of the lots was to include the same goods. The goods were actually delivered in twenty-three lots. In the [Buyer] 's opinion, [this circumstance] inflicted additional expenses upon him in connection with inspection of the goods. Therefore, the market price of the goods would increase and it would lead to difficulties in selling the goods.
In addition to the price of the goods, the [Seller] also claimed the contractual penalties for the delay in payment and the cost of transportation. Under the contract, the [Buyer] was to pay transportation costs.
3. TRIBUNAL'S REASONING
The Tribunal's award contained the following main points.
3.1 Taking into consideration that the contract, which was made by the parties in April 1995, provides for the arbitration of disputes following from it by the Arbitration Court at the Russian Federation Chamber of Commerce and Industry, the Tribunal finds that it is competent to arbitrate the present dispute as the said Arbitration Court was renamed the Tribunal by the Resolution of the Russian Federation Supreme Council of 7 July 1993.
3.2 The [Seller]'s State and the [Buyer]'s State (Russia and Italy, respectively) are CISG Contracting States. For this reason, the Tribunal finds that the dispute should be resolved based on the provisions of the CISG (see Article 1(1)(a) CISG).
3.3 The Tribunal finds that the [Seller] fulfilled his obligations under the contract. The fact of delivery of the goods, the payment for which is the subject of this claim, is evidenced by the materials of the case and is not contested by the [Buyer].
By not paying the [Seller]'s invoice, the [Buyer] failed to fulfill his obligation under the contract. As follows from the materials attached to the claim (see the parties' correspondence and the reply to the claim), the [Buyer] explains his refusal to pay for the goods by the [Seller]'s breach of contract terms regarding the quality of the goods and their packaging.
In accordance with the terms of the contract (Clause 4.1), the quality of the goods must meet the requirements set in certificates and technical specifications currently accepted in Russia as well as conform to the samples sent earlier along with the requirements as to the contents of the main element. The packaging (see Clause 4.2) must be suitable for shipping of goods without impairing their quality. The parties further provided for the quantity of the lots (twenty-two) and the packaging containing a certain number of boxes. The goods were, in fact, packed in the number of boxes, which was agreed upon by the parties, and shipped in twenty-three lots. The [Buyer] was of the opinion that each lot of goods was to be shipped separately and refused to accept the goods.
It was established during the proceeding that the [Buyer] failed to submit documentary evidence of defectiveness of the goods. Nor did he submit his claim and relevant evidence to the [Seller] within one month as required in the contract. That the goods were delivered in twenty-three lots and not in twenty-two lots cannot be viewed as a breach of contractual terms because the contract contains no provision concerning this issue.
These circumstances allow the Tribunal to find that the [Buyer] failed to establish the fact that non-conforming goods (as to the quality and packaging) were delivered to him. As to the [Buyer]'s argument, which was stated in his reply to the claim, that he was ready to return the goods to the [Seller], the Tribunal finds it not possible to sustain the [Buyer]'s position since the goods were delivered to the [Buyer] under the contract and since the [Seller] did not assent to this method of settling the dispute. To sustain the [Buyer]'s claim in the absence of the [Seller]'s assent would mean the modification of contract terms by the Tribunal itself and would violate the principle of freedom of contract on which the CISG is based.
Considering that, according to Article 53 CISG, the Buyer must pay the price for the goods received as required by the contract, the Tribunal concludes that the price of the goods delivered to the [Buyer] must be recovered from him for the [Seller]'s benefit.
3.4 A [Seller]'s right to seek penalties for the delay in payment from the [Buyer] is expressly set forth in the contract. The computation of the penalties [was done] in accordance with the terms of the contract. Therefore, the claim to recover such penalties should be sustained.
3.5 The [Seller]'s claim to recover transportation expenses from the [Buyer] also must be sustained. According to the terms of the contract, the buyer must separately pay these transportation expenses based on the invoices issued by a carrier. The [Seller] submitted the carrier's invoice that evidences the amount of expenses stated in the claim.
3.6 The Respondent [Buyer] must pay the Claimant [Seller]'s expenses in connection with the arbitration based on Article 9 of the Regulations on arbitration fees and expenses.
* This is a translation of data on Proceeding 94/1996, dated 27 January 1997, 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. 43 [158-160].
All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the Russian Federation is referred to as [Seller] and Respondent of Italy is referred to as [Buyer].
** Yelena Kalika, JD Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Moscow law firm, and is an Associate at the Pace Institute of International Commercial Law.Go to Case Table of Contents