Russia 6 November 1997 Arbitration proceeding 451/1996 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/971106r1.html]
DATE OF DECISIONS:
CASE NUMBER/DOCKET NUMBER: 451/1996
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russia (claimant)
BUYER'S COUNTRY: Netherlands (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:
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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. 73 [255-257]
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
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Queen Mary Case Translation Programme
Translation [*] by Yelena Kalika [**]
1. SUMMARY OF RULING
1.1 The Tribunal found that it had competence to arbitrate a dispute notwithstanding the discrepancy in the name of an arbitral tribunal in the arbitration clause. The Tribunal concluded that the parties' actions clearly evidenced their intention to submit their dispute to the Tribunal for arbitration.
1.2 Since the parties to the dispute are a Russian firm and a Dutch firm, the CISG was found applicable to the parties' relationships. Both Russia and the Netherlands had been CISG Contracting States as of the date of the contract.
Based on Article 7(2) CISG and Article 166 of the USSR Principles of Civil Law 1991, Russian law applies as a subsidiary statute, as the law of the seller's state.
1.3 Pursuant to Article 395(1) of the Russian Federation Civil Code, the amount of annual interest was calculated based on the rate applied on the date of the award. The Tribunal took into consideration the publication in the Financial News ("Finansovye Isvestia") concerning the Moscow Bank Currency Exchange median rate.
2. FACTS AND PLEADINGS
[Seller], a Russian firm, brought a claim against Respondent [Buyer], a Dutch firm, in connection with non-payment for the goods delivered under a contract made in May 1996.
The [Seller]'s claims included the main sum of debt, interest for the use of the [Seller]'s funds, and arbitration fees. The [Seller] reduced the amount of the main debt sought due to the [Buyer]'s partially paying it off after the date of claim. During the proceeding, the [Seller] brought additional claims to recover losses resulted from his payment of penalties for the violation of the export regime that were imposed by the customs authorities. He also demanded an increase of the annual interest sought.
The [Buyer] did not present any explanations in connection with the claim. It follows from the copies of [Buyer]'s letters attached to the claim that the [Buyer] does not contest the fact of delivery of the goods and asks for an extension of the payment due to the late arrival of the goods.
3. TRIBUNAL’S REASONING
The Tribunal's award contained the following main points.
3.1 The arbitration clause in the contract contains a provision stating that all the disputes following out of the contract or in connection with it shall be arbitrated by the Arbitrage at the Russian Chamber of Commerce and Industry in Moscow. In accordance with the Russian Federation Supreme Council Resolution of 7 July 1993 the Arbitration Court at the Russian Federation Chamber of Commerce and Industry was renamed the Tribunal.
Notwithstanding the fact that the arbitration clause contains an unclear name of the arbitral tribunal, the [Seller] brought his claim to the Tribunal and the [Buyer] did not file any objections. [Such actions of the parties] evidence that the parties intended to submit their disputes under the contract to the Tribunal. For this reason, the Tribunal finds itself competent to arbitrate the present dispute.
3.2 The parties to the dispute are a Russian firm and a Dutch firm. Both States, Russia and the Netherlands, had been CISG Contracting States as of 30 May 1996, i.e., the date of the contract. Therefore, the CISG governs this dispute. In accordance with Article 7 CISG, questions not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law. The Tribunal is of the opinion that in the present case the law applicable to questions not settled in the CISG should be determined based on the USSR Principles of Civil Law 1991. Article 166 [of the Principles] provides that the law of the Seller's State shall be applied to a sales contract, i.e., Russian law.
3.3 The materials of the case evidence that the [Seller] delivered the goods to the [Buyer] within the period of time set in the contract. The [Buyer] failed to pay for the goods within the time period stated in the contract. The [Buyer] further only partially paid off his debt.
In accordance with the terms of the contract and based on Article 53 CISG, which establishes a buyer's duty to pay the price of goods, the Tribunal finds that the [Seller]'s claim of the unpaid portion of debt should be sustained.
3.4 The Tribunal finds that the [Seller]'s claim of annual interest for the use of another's funds should be sustained in part. This claim is within the provisions of Article 78 CISG. However, since the CISG does not provide for the interest rate, based on Article 7(2) CISG the Tribunal applies Article 395 of the Russian Federation Civil Code. In accordance with Article 395 of the Civil Code, the Tribunal finds that the amount of such interest should be determined as of the date of the award.
Taking into account that, according to the publications in the Financial News ("Finansovye Izvestia") of 30 October 1997, at present the Moscow Bank Currency Exchange median rate is 18%, the Tribunal finds that this rate should be applied in the present case. [The Tribunal refused to apply] the rate used by the [Seller] in his computations.
3.5 The [Seller]'s claim of the arbitration fees in accordance with Article 6 of the Regulations on arbitration fees and expenses (Appendix to the Rules of the Tribunal) should be sustained in proportion to the claims sustained. The Tribunal noted that, when determining the amount of the arbitration fee recovered, it should take into account that the [Buyer] had partially paid off his debt after the date of claim. The Respondent [Buyer] must pay the arbitration fees based on the amount of claim including the amount paid off after the claim was brought.
3.6 The Tribunal leaves without consideration the [Seller]'s additional claim brought during the proceeding held on 6 November 1997. [The [Seller] demanded] the amount of penalties he paid in connection with a late payment. [The penalties] were imposed by the Russian customs authorities. The Tribunal also leaves without consideration the [Seller]'s additional claim to recover from the [Buyer] annual interest from the date of claim to the date of payment [of the debt]. The Tribunal reasoned that the [Buyer] was not informed of these claims and the [Seller] did not pay arbitration fees in connection with these claims.
The Tribunal is of the opinion that the [Seller] is entitled to bring these claims against the [Buyer] in another proceeding by means of filing a separate claim.
* This is a translation of data on Proceeding 451/1996, dated 6 November 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. 73 [255-257].
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 the Netherlands 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