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CISG CASE PRESENTATION

ICC Arbitration Case No. 8962 of September 1997 (Glass commodities case) [English text]
[Cite as: http://cisgw3.law.pace.edu/cases/978962i1.html]

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

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Case identification

DATE OF DECISION: 19970900 (September 1997)

JURISDICTION: Arbitration ; ICC

TRIBUNAL: Court of Arbitration of the International Chamber of Commerce

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 8962 of September 1997

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Unavailable (claimant)

BUYER'S COUNTRY: Unavailable (respondent)

GOODS INVOLVED: Glass commodities


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 38(1) ; 39(1) ; 78 [Also cited: Articles 53 ; 74 ]

Classification of issues using UNCITRAL classification code numbers:

38A [Buyer's obligation to examine goods];

39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time];

78A ; 78B [Interest on delay in receiving price or any other sum in arrears; Rate of interest]

Descriptors: Examination of goods ; Notice of lack of conformity, timeliness ; 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

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=464&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (English): ICC International Court of Arbitration Bulletin [ICAB], Vol. 11/No. 2 (Fall 2000) 76-77; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=464&step=FullText>; case digest presented below

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

English: van Houtte, ICAB (Fall 2000) 26 nn.32, 34 [choice of law], 19 n.57 [inspection and notification], 32 n.80 [interest]; Witz, ICAB (Fall 2000) 21 n.50 [inspection and notification]; Liu Chengwei, Recovery of interest (November 2003) n.227; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion); [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 84

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Case digest

EDITOR: Daniel J. Morse [*]

ICC Arbitration Award
Case No. 8962 of September of 1997

Facts. This matter arose out of a contract for the sale of glass commodities. Defendant [buyer] refused to pay the Claimant [seller] for the last shipment of goods claiming that they were defective. [Seller] objected to such an allegation claiming that the contract did not provide for claims on the grounds of defectiveness. Furthermore, the [seller] argued, that such a claim without evidence from a neutral body or complaints from the [buyer]'s customers would be unacceptable. Finally, [seller] argued that the objection to payment was unacceptable since the [buyer] had already accepted samples. [Seller] commenced arbitration proceedings seeking payment of the outstanding invoice with interest from the date on which payment was to be made pursuant to the contract. [Buyer] did not participate in the arbitration proceedings.

Applicable law. Since the contract was silent as to the law applicable to the contract, the Arbitrator determined the applicable law pursuant to Art. 13.3 of the ICC Rules of Conciliation and Arbitration. According to this provision, the absence of any indication of law to be applied to a contract allows the Arbitrator to apply the law designated as proper by the rules of private international law [conflict of law] which he deems appropriate. Applying Art. 1(1)(a) of the United Nations Convention for the International Sale of Goods, the Arbitrator chose to apply the CISG, since both the [seller] (resident of Romania) and the [buyer] (resident of Italy) have their places of business in countries that have adopted the Vienna Convention [Contracting States].

Payment of the price.Pursuant to the "Purchasing Contract", the [buyer] had ordered goods from the [seller] on the basis of negotiations entered into between the parties in November and December of 1993. These negotiations pertained to the goods to be provided as well as the price to be paid as evidenced by the invoice submitted by the [seller]. As such, the Arbitrator determined that price was not an issue.

Pursuant to Art. 53 of the CISG, the buyer is obligated to pay the price for the goods and to take delivery of the goods pursuant to the subject contract. Based on the facts presented by the [seller], it was clear to the Arbitrator that the [buyer] had not performed its obligations. [page 77] [**]

Examination of the goods; Notice of lack of conformity, timeliness.The Arbitrator refused to recognize the [buyer]'s rights on deficiency of the goods. The facts revealed that the [buyer] did not act on his rights no sooner than by letter dated 7 March 1994, over one month after delivery of the goods was taken on 28 January 1994. Certainly, the Arbitrator concluded, this was more than sufficient time for the [buyer] to discover the deficiencies to the [seller] and identify same. "Pursuant to Art. 38(1) of the United Nations Convention for the International Sale of Goods the buyer must inspect the goods or have the inspection done in a shortest possible time according to circumstances. Pursuant to Art. 39(1) of the CISG the right of the buyer from the deficiencies of goods shall expire unless the buyer has informed the seller of the character of these deficiencies within a reasonable period of time after he found them or was supposed to find them. [page 77] In the Arbitrator's mind, the [buyer] did not properly inspect the goods delivered and likewise did not inform the [seller] of the alleged deficiencies. As an aside, the Arbitrator also indicated that no evidence had even been submitted that the [buyer] had even identified the alleged deficiencies to the [seller].

Analysis. Although the award would seem to place some quantification on what is considered a "reasonable time" to notify of defects pursuant to Article 39(1) CISG, this is not the case. What constitutes a reasonable time will generally be dependant on the nature of the goods involved and other relevant circumstances. In this case, the Arbitrator alluded to the fact that one month was more than enough time to inspect the goods involved (glass commodities) and discover any alleged defects. The Arbitrator apparently determined that the deficiency in this case is one which could have been determined at the time of delivery and seller could have been notified in a more timely fashion. Should the defect involve goods of a more complex nature, or if the defect is latent, then what constitutes a "reasonable time" will clearly be affected.

Interest. The Arbitrator determined that the [seller] was entitled to interest on the amount in delay pursuant to Art. 78 of the Convention, with no rights to compensation for damage being affected pursuant to Art. 74 of the Convention.

Rate of interest; Calculation of interest. [Seller] requested that the Arbitrator apply the Romanian Government's Order No. 18 to determine the amount of interest to be awarded. However, given that the Arbitrator was applying the Convention to the matter, he applied Article 78. Since the [seller] was entitled to payment in German currency [Deutsch Mark], the Arbitrator held that the [seller] was entitled to interest using the market rate for Deutsch Mark on the date of default.

The contract required that the [buyer] make payment for the goods delivered within ten days from the date of delivery. Since the goods were delivered on 28 January 1994, payment would then be due on 7 February 1994. When payment was not made on this date, the [buyer] was then determined to be in default. The commercially reasonable interest on the Deutsch Mark on that date was 5.4%. Accordingly, the [seller] was awarded interest in the amount of 5.4% commencing on 8 February 1994 until such payment was made.

Analysis. Although the award would seem to place some quantification on what is considered a "reasonable time" pursuant to Art. 39(1) CISG to reject delivery, this is not the case. What constitutes a reasonable time will generally be dependant on the nature of the goods involved. In this case, the Arbitrator alluded to the fact that one month was more than enough time to inspect the goods involved (glass commodities) and discover any alleged defects. The Arbitrator apparently determined that the deficiency in this case is one which could have been determined at the time of delivery. Should the defect involve goods of a more complex nature, or if the defect is latent, then what constitutes a "reasonable time" will clearly be effected.


FOOTNOTES

* Daniel J. Morse is a member of the New York Bar. He is associated with the law firm Hardin, Kundla, McKeon, Poletto & Polifroni.

** Pagination is to publication of the case text at ICC International Court of Arbitration Bulletin, Vol. 11/No. 2 (Fall 2000) 76-77.

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Pace Law School Institute of International Commercial Law - Last updated February 15, 2007
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