China 2 April 1997 CIETAC Arbitration proceeding (Wakame case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970402c1.html]
DATE OF DECISION:
DATABASE ASSIGNED DOCKET NUMBER: CISG/1997/03
CASE HISTORY: Unavailable
SELLER'S COUNTRY: People's Republic of China (claimant)
BUYER'S COUNTRY: Japan (respondent)
GOODS INVOLVED: Wakame [A brown seaweed (Undaria pinnatifida) native to the coasts of China, Japan, and Korea, having a short stipe and pinnately divided blades, extensively used in Asian cooking.]
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
53A [Buyer's obligation to pay price of goods]; 62A [Seller may compel performance of any of buyer's obligations] 78B [Rate of interest]
53A [Buyer's obligation to pay price of goods];
62A [Seller may compel performance of any of buyer's obligations]
78B [Rate of interest]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
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) 1997 vol., pp. 1624-1629
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Dong WU, CIETAC's Practice on the CISG, at n.35, Nordic Journal of Commercial Law (2/2005); Fan Yang, The Application of the CISG in the Current PRC Law and CIETAC Arbitration Practice (December 2006) n. 104Go to Case Table of Contents
|Case text (English translation)|
Wakame (Undaria pinnatifida) case (2 April 1997)
Translation [*] by Zheng Xie [**]
Translation edited by Meihua Xu [***]
China's International Trade and Economic Arbitration Commission [hereafter, the Arbitration Commission] accepted this case according to:
|-||The arbitration clauses in eleven contracts [Contracts No. W93-011, W94J08-005, W94J02-015, W94JH-105, W95J108-001, W95-013, W95-017, W95-019, W95-020, W95-022, W95-025] signed from 4 November 1993 to 20 June 1995, by Claimant [Seller], Qingdao ___ Seafood Company, and Respondent [Buyer], Japan ___ Corporation; and
|-||The written arbitration application submitted by [Seller] to the Arbitration Commission on 12 January, 1996.|
On 19 January 1996, the Arbitration Commission sent the notice of arbitration by registered mail and TNT, respectively, to [Seller] and [Buyer]. [Buyer] neither appointed an arbitrator in accordance with the notice of arbitration, nor filed a written defense.
On 6 May 1996, the Secretariat of the Arbitration Commission wrote to [Buyer] notifying him of the need to file the relevant documents before 1 June 1996. On 23 May 1996, the Arbitration Commission received [Buyer]'s fax in Japanese. In this fax, [Buyer] asserted, "We are notified that [Seller] has filed the arbitration application. We cannot believe that [Seller] cannot understand the capitalism economic organization…Japan has the same organization. We are negotiating with [Seller]. Please wait for our response. We will submit international standard defense materials …" However, after that the Arbitration Commission never received the defense materials referred to in the fax.
[Seller] appointed Mr. A as the arbitrator. Because [Buyer] did not appoint or authorize the Chairman of the Arbitration Commission to appoint an arbitrator within the stipulated time, according to Article 26 of the Arbitration Rules, the Chairman appointed Mr. D as the arbitrator for [Buyer]. Because the parties did not jointly appoint or authorize the Chairman to appoint the presiding arbitrator within the stipulated time, the Chairman, according to Article 24 of the Arbitration Rules appointed Mr. P as the presiding arbitrator. The above three arbitrators formed the Arbitration Tribunal on 3 July 1993 to hear this case.
On 5 July 1996, after consulting with the Secretariat of the Arbitration Commission, the Arbitration Tribunal decided to hold a court session in Beijing on 3 September 1996. On 5 July 1996 the Arbitration Commission sent the notice of this court session to [Buyer] by fax and registered mail. On 3 September 1996, the Arbitration Tribunal received a fax from [Buyer] requesting that the court session be postponed. After considering [Buyer]'s request, the Arbitration Tribunal holds that according to Article 33 of the Arbitration Rules, if the party reasonably requests to postpone the court session, he shall file the application twelve days before the court session; however, [Buyer] in this case filed the application on 3 September 1996, the date of the court session, so the Arbitration Tribunal cannot support his application. The court session was held on the original date.
According to Article 42 of the Arbitration Rules, because [Buyer] did not send a representative to attend the session, the Arbitration Tribunal heard the case by default. [Seller] sent a representative to attend the session; the representative made a statement and answered the Tribunal's questions.
After the court session, on 17 September 1996, the Arbitration Commission sent information about the court session by TNT and fax to [Buyer], and requested [Buyer] to submit written supplementary materials before 15 October 1996; meanwhile, the Commission notified [Buyer] that if he wished a second court session, he should file an application before 15 October 1996. However, [Buyer] did not reply.
[Seller] submitted supplementary materials to the Arbitration Tribunal within the stipulated time. According to the Arbitration Rules, the Arbitration Commission sent the supplementary materials to [Buyer].
The Arbitration Tribunal has concluded the case and handed down its award according to Article 42 of the Arbitration Rules. The following are the facts, the opinion of the Arbitration Tribunal and the award.
[Seller] and [Buyer] signed eleven contracts [Contracts No. W93-011, W94J08-005, W94J02-015, W94JH-105, W95J108-001, W95-013, W95-017, W95-019, W95-020, W95-022, W95-025] from 4 November 1993 to 20 June 1995. The contracts are for the sale of 375.262 tons of Undaria pinnatifida for a total price of US $157,036.52. (Note: according to the Arbitration Tribunal's calculation, the total price is US $157,037.04), and the payment by T/T. After signing the contracts, the parties had the dispute on payment. The [Seller] filed the application for arbitration according to the arbitration clause in the contracts.
POSITION OF THE PARTIES
After signing the contracts, [Seller] shipped the goods in accordance with the contracts, got the original B/L, and issued the invoice. [Seller] then sent the documents to [Buyer] in time, and urged [Buyer] to make the payment. [Buyer] accepted the goods arriving at the destination port, but he did not make the payment. On 22 November 1995, [Seller] and [Buyer] discussed the payment and [Buyer] admitted the above facts. Then [Seller] and [Buyer] negotiated many times, but did not reach an agreement.
|-||According to Article 62 of the United Nations Convention on Contracts for the
International Sale of Goods (1980) (CISG), [Buyer] is obligated to pay the price, US
|-||According to Article 78 of the CISG, [Buyer] shall pay interest, US $10,062.85. As to the calculation of the interest, [Seller] asserts that the formula for calculating should be based on the statement of account confirmed by the two parties, which is: Price X 6.8% (interest rate) ÷ 365 days X days that the price was owed = interest owed.|
It should be noted that (1) the annual interest rate of 6.8% is specified according to the US dollar lending rate in 1995 announced by the State Administration of Foreign Exchange, Qingdao Bureau; (2) the ending date of the days owing the price is the date when [Seller] filed the application, i.e., 9 January 1996; (3) the following number is the number in the payment invoices provided by [Seller]:
|Number|| Interest starting
and ending dates
|25,000 X 6.8% ÷ 365 X 712 = 3,316.16|
|18,150 X 6.8% ÷ 365 X 299 = 1,011.13|
|3,931 X 6.8% ÷ 365 X 304 = 222.63|
|18,150 X 6.8% ÷ 365 X 294 = 994.12|
|22,134.6 X 6.8% ÷ 365 X 252 = 1,039.17|
|15,904 X 6.8% ÷ 365 X 234 = 693.33|
|6,500 X 6.8% ÷ 365 X 224 = 271.25|
|4,895 X 6.8% ÷ 365 X 208 = 189.68|
|14,317.92 X 6.8% ÷ 365 X 196 = 522.82|
|7,968 X 6.8% ÷ 365 X 173 = 256.80|
|18,150 X 6.8% ÷ 365 X 269 = 909.69|
|240 X 6.8% ÷ 365 X 152 = 6.80|
|1,200 X 6.8% ÷ 365 X 102 = 22.80|
|8,286 X 6.8% ÷ 365 X 393 = 606.67|
Total interest: US $10,062.85
In accordance with Article 59 of the Arbitration Rules of the China International Trade and Economic Arbitration Commission, [Seller] also requests the Arbitration Tribunal to require [Buyer] to bear the attorneys' fee and the arbitration fee.
[Seller] makes the following claims. [Seller] requests that:
OPINION OF THE ARBITATION TRIBUNAL
1. Applicable law
The parties in this case did not stipulate the applicable law in the contract. Because the nations in which the parties' places of business are located ([Seller]'s in China, and [Buyer]'s in Japan), China and Japan, are parties of the United Nations Convention on Contracts for the International Sale of Goods (1980) (CISG), CISG shall be applied to this case.
2. Validity of the contracts
The Arbitration Tribunal notices that [Seller]'s written statement and evidence shows [Seller] and [Buyer] signed the eleven contracts [Contracts No. W93-011, W94J08-005, W94J02-015, W94JH-105, W95J108-001, W95-013, W95-017, W95-019, W95-020, W95-022, W95-025] from 4 November 1993 to 20 June 1995 for sales of Undaria pinnatifida. All of these contracts stipulate that the contract is signed by [Buyer], and then one original copy is sent to [Seller] by airmail. The Arbitration Tribunal also notes that the contracts [Seller] submitted to the Arbitration Tribunal are copies; according to [Seller]'s statement, the original contracts are still in [Buyer]'s possession. On 21 January 1997, the Arbitration Tribunal wrote to [Buyer] and requesting him to comment on the copies of the contracts, but [Buyer] did not reply. Because the contracts were signed and sealed by both parties' representatives; in addition, [Buyer] did not make any objection to the copies of the eleven contracts submitted by [Seller], the Arbitration Tribunal holds that the eleven contracts are valid, and the parties shall be bound. The parties shall perform their duties in accordance with the contracts; [Seller] shall perform his duty to deliver the goods; [Buyer] shall perform his duty to make the payment.
3. Performance and breach of the contracts
The Arbitration Tribunal carefully reviewed the invoices, the B/L and statement of account of the price of the goods, which was signed by the parties on 22 November 1995, and in which the parties verified the fourteen installments of the goods. The parties verified the fact that [Seller] shipped the goods under ten contracts (except the goods in Contract No. W94J02-015) to the destination port from 27 January 1994 to 19 July 1995. Meanwhile, [Seller] submitted the copies of the B/Ls under the ten contracts (except the goods in Contract No. W94J02-015); the B/Ls show that the goods are in accordance with the contracts. According to the above facts, the Arbitration Tribunal holds that the evidence submitted by [Seller] proves that [Buyer] received the goods (except the goods in Contract No. W94J02-015) at the destination port sent by [Seller]; [Buyer] did not make any defense to [Seller]'s claim for payment. Accordingly, the Arbitration Tribunal holds that [Seller] has fully performed the duties of delivering the goods under Contracts No. W93-011, W94J08-005, W94JH-105, W95J108-001, W95-013, W95-017, W95-019, W95-020, W95-022, W95-025, but [Buyer] did not make the payment by T/T according to the contract or by other means although [Seller] had frequently urged him to pay. The Arbitration Tribunal holds that [Buyer] breached the contracts. According to Article 53 and Article 78 of CISG, [Buyer] shall pay the price of the goods under the ten contracts, US $136,950.52, and interest.
The parties did not verify the delivery of the goods under Contract No. W94J02-015, when they signed the statement of the account; [Seller] did not submit evidence to show that the goods under this contract were delivered, so he did not prove he performed his duty under this contract. Thus, the Arbitration Tribunal cannot support [Seller]'s claim for price, US $18,150 and the interest under this contract.
Because the contract stipulates the means of payment is T/T, the Arbitration Tribunal holds that the interest shall be calculated from the date after a reasonable period of time when the goods were loaded, to the date when [Seller] filed this arbitration application. On the basis of the facts in this case, the Arbitration Tribunal holds that the reasonable period shall be 60 days after the goods were loaded; and the annual interest rate shall be 6.8%.
[Buyer] shall pay [Seller] the interest calculated as follows:
|No.||Contract No.||Loading Date||Price US $||Interest Period|
|25,000 X 22/12 X 6.8% = 3,317|
|18,150 X 8/12 X 6.8%= 823|
|18,150 X 8/12 X 6.8% = 823|
|3,931 X 8/12 X 6.8% = 178|
|22,134.60 X 6/12 X 6.8% = 753|
|15,904 X 6/12 X 6.8% = 541|
|6,500 X 6/12 X 6.8% = 221|
|4,895 X 5/12 X 6.8% = 139|
|14,317.92 X 5/12 X 6.8% = 406|
|7,968 X 4/12 X 6.8% = 181|
The total interest is US $7,182.
4. The arbitration fee and the attorneys' fee
[Buyer] shall pay the entire arbitration fee of this case. As to the attorneys' fee, because [Seller] did not provide the specific amount or relevant evidence, the Arbitration Tribunal cannot support [Seller]'s claim for the attorneys' fee.
The Arbitration Tribunal makes the following award:
2. [Buyer] shall pay [Seller] the interest on the above price, US $7,182;
3. [Buyer] shall pay the entire arbitration fee of this case. [Seller] has already paid the fee in advance, so [Buyer] shall pay [Seller] renminbi [RMB] ___;
4. [Seller]'s claim for the price under Contract No. W94J02-015 and interest is dismissed;
5. [Seller]'s claim for the attorneys' fee is not supported.
The above amount shall be paid within 45 days of the effective date of this award; otherwise, interest shall be added at the annual rate of 6%.
This is the final award.
* 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]; Respondent of Japan 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].
** Zheng Xie, LL.M. Washington University in St. Louis, LL.M., BA in Economics, University of International Business and Economics, Beijing.
*** 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 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.Go to Case Table of Contents