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CISG CASE PRESENTATION

Russia 25 February 1997 Arbitration proceeding 430/1995 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970225r1.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19970225 (25 February 1997)

JURISDICTION: Arbitration ; Russian Federation

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 430/1995

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Russia (claimant)

BUYER'S COUNTRY: Austria (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: Article 78 [Also cited: Articles 53 ; 62 ]

Classification of issues using UNCITRAL classification code numbers:

78B [Rate of interest]

Descriptors: 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. 51 [183-185]

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 nn.158, 231, 238

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Case text (English translation)

Queen Mary Case Translation Programme

Russian Federation arbitration proceeding 430/1995 of 25 February 1997

Translation [*] by Mykhaylo Danylko [**]

Translation edited by Yuliya Chernykh [***]

1. SUMMARY OF RULING

     1.1 Despite the unclearness of the arbitration clause in the contract, the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry (hereinafter Tribunal) recognized itself competent to arbitrate the present dispute.

     1.2 The Tribunal found it possible to hear the dispute in absence of Respondent because the summons for the hearing sent to his address by registered letter was returned by the express post service due to the absence of addressee at that address. Since the Respondent, who recently had received the action documents at the same address, failed to notify the Tribunal about his change of address, the Tribunal, based on the Rules of Tribunal, stated that the summons was deemed to have been received by the Respondent.

     1.3 The CISG and Russian laws were found as applicable laws to the dispute between Russian and Austrian companies.

2. FACTS AND PLEADINGS

The action was brought by [Seller], a Russian company (Claimant), against [Buyer], an Austrian company (Respondent), in connection with partial payment for the goods delivered under the contract concluded between the parties in June 1993. The [Seller] claimed from [Buyer] recovery of the debt, payment of annual interest and compensation of arbitration fees. The [Buyer] did not present any explanations as to the action.

3. TRIBUNAL'S REASONING

The Tribunal's award contained the following main points.

     3.1 [Jurisdiction and competence of the Tribunal]

The Tribunal is competent to arbitrate the dispute.

Clause 10 of the contract of 10 June 1993 provides for arbitration of disputes by the International Commercial Arbitration Court at the Chamber of Commerce and Industry in Moscow. During the hearing, the Seller explained that signing the contract the parties had in mind the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation rather than at Moscow [Chamber of Commerce and Industry].

Having discussed and analyzed the arbitration clause of the contract, the Tribunal concluded that from its language and context it provides for arbitration of disputes between the parties by the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry in the City of Moscow rather than by the Arbitration at the Moscow Chamber of Commerce and Industry. [...]

The Arbitration Court at the USSR Chamber of Commerce and Industry was established in 1932 in Moscow. The title of the Court has changed several times. The current title is "The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation."

The contracts of Russian foreign trade entities and other Russian entities with firms of foreign States contain in most cases arbitration clauses referring all disputes to the Arbitration Court at the USSR Chamber of Commerce and Industry and later on to the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in the City of Moscow. Because of that, the Arbitration Court [the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation] as well as its practice is well-known in business circles of many countries, including Austria and the Russian Federation.

Therefore, the reference in the arbitration clause to the Arbitration Court at the Chamber of Commerce and Industry in Moscow was intended to refer to the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation situated in the City of Moscow and not to any arbitration court in any other city.

The Arbitration Court at the Moscow Chamber of Commerce and Industry is also situated in Moscow, but was established in March 1993 and at the moment of signing the contract, it and its practice were not as well known.

Since the title of the arbitration court was not clearly determined in the contract, the wording of the arbitration clause "... the Arbitration Court of the Chamber of Commerce and Industry in Moscow' should be interpreted as a reference to Moscow as a geographical notion [situs of arbitration] and not as the title of the Arbitration Court of the Moscow Chamber of Commerce and Industry.

     3.2 [Hearing absente reo]

Although the [Buyer] did not appear before the Tribunal, the Tribunal found possible to hear the case in his absence on the basis of paras. 28(2) and 12(5) of the Rules of Tribunal because all possible measures to inform the [Buyer] of time and place of hearing were taken.

The Tribunal sent to the [Buyer]'s address, provided by [Seller], the statement of claim, which was received by [Buyer] on 25 April 1996, the receipt of which is confirmed by the express post service notification on delivery to the addressee.

After the composition of the Tribunal, the summons informing of the time and place of hearing was sent by the same express post service to the same address of [Buyer] by registered mail, which was returned due to the absence of addressee.

According to para. 12(1) of the Rules of Tribunal, the [Buyer] was obliged to notify the Tribunal of any change of his address, but failed to fulfill this requirement; therefore, as provided by para. 12(5) of the Rules of Tribunal, the summons is deemed to have been received by the [Buyer], since the express post service presented to the Tribunal the post register with registered attempts to deliver the summons to the [Buyer].

Considering the above, the Tribunal concluded that it was possible to hear the dispute in absence of [Buyer] who was duly notified of the time and place of hearing.

     3.3 [Applicable law]

As the concluded between the parties contract does not contain provisions on applicable law, the Tribunal stated that, according to para. 13(1) of the Rules of Tribunal, the Tribunal should be guided by the Principles of Civil Law 1991, Art. 166 of which remains in force at the territory of Russia. By virtue of Art. 166(1) of the Principles of Civil Laws, if there is no agreement between the parties on applicable law, the law of the country where the seller to the sales contract is established or has its main place of business should be applied, i.e., in this case, a company established in Russia, thus Russian laws should be applied. Also, the provisions of CISG should be applied to settle the present dispute since the commercial companies of the parties are located in territories of the Russian Federation (Seller) and Austria (Buyer). At the time of conclusion of the contract, the Russian Federation and Austria were Contracting States to the CISG, thus the relations between the parties under the contract are governed by this Convention (Art. 1(1)(a) CISG).

     3.4 [The merits of the case]

The case materials prove the fact of delivery of the goods by the [Seller] to the [Buyer] and partial non-payment for them in the amount specified in the statement of claim. The claim of [Seller] to recover the sum of the principal debt should be granted on the basis of clause 7 of the contract concluded between the parties and Arts. 53 and 62 CISG.

The claim to recover the annual interest for use of the money are reasonable and should be granted in accordance with Art. 78 CISG. Since Art. 78 CISG does not provide for the interest rate for use of money, Art. 395 of the Russian Federation Civil Code should be applied subsidiary.

To prove the interest rate, the [Seller] provided a report of one of the leading banks of the City of Moscow confirming the average interest rate for the hard currency short term credits giving by this bank on the date of 20 February 1997.

Taking into consideration the consistent arbitration practice, identified in para. 52 of the Resolution of the Presidium of the Russian Federation Supreme Court and the Russian Federation Supreme Court of Arbitration No. 6/8 of 1 July 1996 and considering that during the hearings, the [Seller] upheld his position to recover the annual interest since the date of filing of the claims, the Tribunal concluded that [Seller] should recover from [Buyer] the annual interest at the above rate from the date of filing of the claims to the date of actual payment.


FOOTNOTES

* This is a translation of data on Proceeding 430/1995, dated 25 February 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. 51 [183-185].

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] and Respondent of Austria 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.

*** Yuliya Chernykh graduated from the National University of Kyiv-Mogyla Academy (Ukraine, 2004) and Stockholm University (LL.M. in International Commercial Law, 2005), Intern at UNCITRAL (2005).

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Pace Law School Institute of International Commercial Law - Last updated September 8, 2005
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