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CISG CASE PRESENTATION

Russia 16 January 1998 Arbitration proceeding 309/1996 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980116r1.html]

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

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Case identification

DATE OF DECISION: 19980116 (16 January 1998)

JURISDICTION: Arbitration ; Russian Federation

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 309/1996

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Russian Federation (claimant)

BUYER'S COUNTRY: United Kingdom (respondent)

GOODS INVOLVED: Goods


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7(2) ; 78

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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, Praktika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (1998) No. 3 [21-23]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Russian Federation arbitration proceeding 309/1996 of 16 January 1998

Translation [*] by Yelena Kalika [**]

1.  SUMMARY OF RULING

     1.1 The competence of the Tribunal to arbitrate the present dispute is established taking into consideration the change in the Tribunal's name as directly follows from the relevant laws.

     1.2 The Respondent [Buyer]'s counterclaim was denied since it followed from a different contract and the Claimant [Seller] did not agree to arbitrate it in the present proceeding.

     1.3 The dispute between a Russian firm and a U.K. firm was resolved in accordance with the CISG and the Russian Federation Civil Code as subsidiary law because Russian law was found applicable as the law of the seller's country.

     1.4 The claim of penalties for the delay in payment was sustained in the amount for which the [Seller] paid arbitration fees.

     1.5 The claim of interest for the use of another's funds based on Article 78 CISG was not arbitrated since the [Seller] did not pay any arbitration fee for that claim either on the date of claim or later on.

2.  FACTS AND PLEADINGS

[Seller], a Russian firm, brought a claim against [Buyer], a U.K. firm, in connection with partial nonpayment for the goods delivered under a contract made by the parties in November 1995.

The [Buyer] argued that he made a partial payment because he had claims as to the quantity and quality of the goods that the [Seller] delivered to the [Buyer] under a different contract.

3.  TRIBUNAL'S REASONING

The award rendered by the Tribunal contained the following main points.

     3.1 The Tribunal's competence to arbitrate the present dispute is based on the arbitration clause in a standard contract to which there was a reference in the contract in dispute. The Tribunal noted that it had competence to arbitrate the present dispute notwithstanding the fact that the standard contract named the International Trade Arbitration Commission at the USSR Chamber of Commerce and Industry in Moscow as the arbitration tribunal because by Resolution of the Presidium of the USSR Supreme Council of 14 December 1987 that Commission was renamed the Arbitration Court at the USSR Chamber of Commerce and Industry. In accordance with Clause 4 of the Tribunal's Regulations, the Tribunal at the Russian Federation Chamber of Commerce and Industry is a successor to the Arbitration Court at the USSR Chamber of Commerce and Industry. In particular, it is competent to arbitrate disputes based on parties' agreements that their disputes be arbitrated by the Arbitration Court at the USSR Chamber of Commerce and Industry.

As to the [Buyer]'s counterclaim, to which he referred in his answer to the claim, pursuant to Article 33(1) of the Tribunal's Rules, counterclaims may be brought only if they arise out of the same contract as the main claim. Any arbitration of a counterclaim or a claim arising out of a different contract is possible only if there is an agreement between the parties to do so. However, both at the proceedings and in the written motions, the [Seller] objected to arbitrating the [Buyer]'s counterclaim following from a different contract in this proceeding. In such circumstances, the Tribunal is not competent to arbitrate this counterclaim. Besides, the [Buyer] did not fulfilled the requirements of Article 33(2) of the Rules in accordance to which a counterclaim must meet the same requirements as the original claim (Articles 14, 15, 18 of the Rules) as well as the requirements of Article 5 of the Regulations on Arbitration Fees and Expenses.

     3.2 Neither in the contract of 6 November 1995 nor in the standard contract, which terms govern the parties' relationships under this contract in accordance with Clause 7, did the parties agree on the applicable law. Pursuant to Article 13 of the Tribunal's Rules, in such case the Tribunal must determine the applicable law in accordance with the conflict of laws provisions that it deems to be applicable.

Article 166 of the USSR Principles of Civil Law 1991 states that disputes arising out of sales contracts are governed by the laws of the seller's state, i.e., Russia in the present case. Since Russia is a CISG Contracting State, when arbitrating this dispute [the Tribunal] should apply the CISG. Issues not directly settled in the CISG should be governed by the Russian Federation Civil Code pursuant to Article 7(2) CISG.

     3.3 The amount of the main claim is evidenced by the materials of the case. The [Buyer] has made no objections as to the evaluation of the price of goods. The [Buyer] refuses to pay this price based on his counterclaims following from a different contract. The tribunal cannot arbitrate [the counterclaims] for the reasons stated above in paragraph 1.

The [Buyer]'s argument that the [Seller] allegedly agreed to accept a partial payment for the goods in full satisfaction of all the disputes between the parties is not supported by any documentary evidence and is denied by the [Seller].

For the above stated reasons, the [Buyer] must pay the amount of main debt to the [Seller].

     3.4 The [Seller]'s right to recover from the [Buyer] penalties for the delay in payment at the rate of 0.2% for each day of delay follows from Clause 6 of the contract of 6 November 1995. Since the [Buyer] failed to prove the reason for his delaying the payment for the goods, he must pay penalties as required by the contract.

Pursuant to Article 18(2) of the Tribunal's Rules, the [Seller]'s claim of penalties can be satisfied only in the sum computed as of 13 June 1996 for which the [Seller] paid arbitration fees.

The [Seller]'s claim of penalties for the period after 13 June 1996 cannot be arbitrated because [the [Seller] did not pay arbitration fees for this claim].

     3.5 Pursuant to Article 18(2) of the Tribunal's Rules, the [Seller]'s claim to recover from the [Buyer] annual interest for the use of another's funds based on Article 78 CISG and Article 395 of the Russian Federation Civil Code was not arbitrated because the [Seller] did not pay arbitration fees for this claim.


FOOTNOTES

* This is a translation of the award in proceeding 309/1996, dated 16 January 1998, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry reported in: Rozenberg ed., Arb. Praktika 1998, No. 3 [21-23]. 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 United Kingdom 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.

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Pace Law School Institute of International Commercial Law - Last updated August 9, 2004
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