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CISG CASE PRESENTATION

Russia 25 March 1997 High Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation, Ruling No. 6, Resolution No. 4670/96 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970325r2.html]

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

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Case identification

DATE OF DECISION: 19970325 (25 March 1997)

JURISDICTION: Russian Federation

TRIBUNAL: Vysshi Arbitrazhnyi Sud Rossyiskoi Federatsii [High Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation]

[Russia has two types of State courts for private law disputes: Courts of general jurisdiction (also called "People's Courts") and economic courts (also called "Arbitration Courts"). The above is the official title of the top judicial authority of the Arbitration Courts.]

JUDGE(S): V.F. Yakovlev (Chairman)

CASE NUMBER/DOCKET NUMBER: Ruling No. 6, Resolution No. 4670/96

CASE NAME: Electrim (Poland) v. Firma Kosmos

CASE HISTORY: 1st instance Arbitration Court for the City of Moscow (60-409) 26 February 1996 [affirmed]

SELLER'S COUNTRY: Poland (plaintiff)

BUYER'S COUNTRY: Russian Federation (defendant)

GOODS INVOLVED: Onions


Case headnote

Reproduced from Internationales Handelsrecht [2/2006] 92

"1. Written form is necessary for both the conclusion and the amendment of contracts between parties who have their seat in the Russian Federation, as the Soviet Union made a declaration in accordance with Art. 96 CISG and this declaration still applies to the Russian Federation.

"2. An offer to amend a contract does conform to the form requirement in cases in which the other party expressed implicit acceptance of the proposal."

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 11 ; 12 ; 29 ; 96

Classification of issues using UNCITRAL classification code numbers:

11A1 [Writing or other formality for conclusion of contract: inapplicability of domestic law (subject to arts. 12 and 96)];

12A [Declaration by State preserving domestic formal requirements: effect of reservation under art. 96 rejecting art. 11];

29A [Modification or termination of contract by agreement]

Descriptors: Formal requirements ; Declaration, Art. 96 ; Modification of contract

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Editorial remarks

EDITOR: Alexandre Mouranov

By this Resolution (the first published decision of the Presidium of the High Arbitration Court of the Russian Federation on a specific CISG dispute), the High Arbitration Court affirmed the validity of the judgment of the Arbitration Court of Moscow City (Case no. 60-4096, Judgment of 15 February 1996) and rejected the protest of the Deputy-Chairman of the High Court aimed at recission of this judgment and submission of the case for a new trial. [This is a form of protest in Russian litigation: a special procedural act by which a competent judicial officer may cause competent judicial authority to test a valid judgment].

A Polish seller was bound to deliver onions to a Russian buyer. During delivery the parties changed the terms of the contract and the price. The buyer failed to pay. The Arbitration Court of Moscow City held the CISG applicable and concluded that the parties could change the contract either in oral or written form. The High Arbitration Court corrected this conclusion stating that any changes to the international sales contract may only be made in written form (because of the Article 96 reservation made by Russia to Article 12 [and Article 29] of the CISG). The High Arbitration Court held correct the resolution of the dispute by the Arbitration Court of Moscow City, reaffirmed that the contract was changed in a written form, that the buyer obtained the goods and failed to pay, and that he is bound to pay the debt and interest on it.

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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): Text presented below; published also (in extracts) in the official journal "Vestnik Bysshego Arbitrazhnogo Suda Rossyiskoi Federatsii" [The Herald of the High Arbitration Court of the Russian Federation] (1997) No. 6 = Neshataeva, Inostrannye predprinimateli v Rossii. Sudebno-arbitrazhnaja praktika [Foreign enterprises in Russia. Arbitration Court practice], Moskva: Delo (1998) 111-113

Translation (English): Text presented below

Translation (German): Internationales Handelsrecht [2/2006] 92 (excerpt)

CITATIONS TO COMMENTS ON DECISION

English: Djakhongir Saidov, 7 Vindobona Journal of International Commercial Law and Arbitration (1/2003) 1-62 n.95 (cited as an example of occasions in which "the Russian courts have reaffirmed the rule that the contracts to which Russian companies were parties could only be modified by means of a written agreement"); Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.154

Russian: Boguslavskij, Mezhdunarodnoe tchastnoe provo [Private international law], Moskva: Jurist, 3rd ed. (1998) 204, 211

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Resolution No. 4670/96
High Arbitration Court (or Presidium of Supreme Arbitration Court) of Russian Federation

25 March 1997

Translation by Yelena Kalika [*]

The Presidium of the Supreme Arbitration Court of the Russian Federation has reviewed the protest of the Deputy Chairman of the Supreme Arbitration Court of the Russian Federation on to the Decision of the Arbitration Court for the City of Moscow of 15 February 1996 on case No. 60-409.

After hearing and discussing the judicial report, the Presidium has found the following.

The joint stock company "Electrim" (Poland) filed a lawsuit against the private joint-stock company "Firma Kosmos" with the Arbitration Court for the City of Moscow seeking damages for the cost of a party of onions shipped under the contract No. PL 000144058/24-5155, dated 11 May 1994, as well as for the annual interest and court expenses in the total amount of [US] $304,072.80.

Prior to the court's reaching its decision, the plaintiff had increased the amount of his claim up to [US] $478,430.

On 25 February 1996 the court reached its decision to satisfy the claim in the amount of [US] $304,072.80 (the main debt) and [US] $151,576.12 in interest. The rest of the claim was denied.

The decision was neither appealed nor reviewed by a cassation court.

In his protest the Deputy Chairman of the Supreme Arbitration Court of the Russian Federation has suggested that the decision should be reversed and remanded.

After reviewing the protest, the Presidium finds no ground for its satisfying.

As follows from the materials of the case, in accordance with contract No. PL 000144058/24-5155 of 11 May 1994, the joint-stock company "Electrim" was obliged to deliver a party of onions CIF Novorossiysk.

On 30 May 1994 the first party of goods (500 tons) was shipped on the said terms.

In a fax dated 24 June 1994 the seller offered the buyer to change the terms of delivery to FOB Alexandria (Egypt) for the second party of onions.

Pursuant to the International Commercial Terms (Incoterms-1990) the CIF term of delivery means that the seller has to contract for carriage, whereas the FOB term of delivery means that the seller hands over the goods to the carrier contracted by the buyer.

The seller chartered a ship and sent it to the port of loading (Alexandria). Besides, the parties modified Provision 4 of the contract deducting the cost of freight from the price of goods.

On arrival of the goods their improper quality was determined. It served as a reason for the total refusal to pay for that party of goods. Besides, the buyer had only partially paid for the first party of goods. The debt amounted to [US] $19,072.80.

When resolving the dispute, the court reasonably applied the Vienna United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980. However, it wrongfully applied Articles 11 and 29 of the Convention which allowed modifications of a contract to be made in any form.

However, when joining the mentioned Convention, the USSR -- whose obligations have passed to the Russian Federation -- made a declaration that Article 12 was applicable. Article 12 establishes that a contract of sale shall be made or modified in writing.

The court's conclusion, that the modification of the contract price by means of its reducing for the cost of freight was, in fact, a written agreement between the parties to modify the terms of delivery, is correct. The assessment of the buyer to modify the contract is also evidenced by his chartering a ship and paying the cost of freight. Besides, an agent of the buyer in the port of loading signed a certificate of acceptance of 5 August 1994 which reflected the proper quality of the goods.

In these circumstances, the refusal to pay for the goods shall be held unreasonable and, therefore, the court has correctly ordered to uphold the claims in relation to the debt and interest.

On the above mentioned grounds and pursuant to Articles 187-189 of the Arbitration Procedural Code of the Russian Federation, the Presidium of the Supreme Arbitration Court holds:

The Decision of the Arbitration Court for the City of Moscow of 15 February 1996 on case No. 60-409 is affirmed.

Chairman of the Supreme Arbitration Court
of the Russian Federation
 
V.F. Yakovlev


FOOTNOTE

* Yelena Kalika, a law student at the Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Moscow law firm, and is a Research Assistant at the Pace Institute of International Commercial Law.

All translations should be verified by cross-checking against the original text.

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Case text

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Pace Law School Institute of International Commercial Law - Last updated May 4, 2006
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