CISG CASE PRESENTATION

Russia 16 February 1998 Arbitration proceeding 33/1997 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980216r2.html]

Case Table of Contents

• Case identification
• Classification of issues present
• Editorial remarks
• Citations to case abstracts, texts, and commentaries
• Case text (English translation)

• Guide to links contained in case presentations

Case identification

DATE OF DECISION: 19980216 (16 February 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: 33/1997

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Russian Federation (claimant)

BUYER'S COUNTRY: Germany (respondent)

GOODS INVOLVED: Goods

Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 38 [Also cited: Articles 7(2) ; 19 ; 55 ]

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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Editorial remarks

Article 19. "[T]he respondent referred to Article 19 in relation to the subsequent actions of the persons authorized by the respondent carried out after the conclusion of the contract. Such actions included, in particular, signature of a document evidencing the approval of the contract. The Tribunal correctly dismissed such a reference to Article 19 by stating that the provision in this Article deals with the manner of the conclusion of the contract, and not with the consequences of approval of the validity of the contract which had already been concluded." Djakhongir Saidov, 7 Vindobona Journal of International Commercial Law and Arbitration (1/2003) 1-62 at p. 11.

Article 38. "[A]lthough Article 38(1) was referred to, it was the provision of the contract that was, in fact, relied upon by the tribunal". Id. at p. 29 n.130.

Article 55. "[T]he contract gave the buyer the right to alter the prices provided for by the contract after examination of quantity and quality of the goods. The buyer did not avail itself of this right. It argued, however, that the price had to be determined under Article 55 because the contract did not provide a 'fixed' price. The Tribunal rejected this argument and held that in cases where the contract provided for the buyer's right to alter the price and where such a right had not been exercised, Article 55 could not be used to determine the price.

"It is not clear what reasons led the Tribunal to such a conclusion. It could be that the price was implicitly fixed or made a provision for determining the price. In such a case, Article 55 could not apply. However, this does not seem to have been the case as the Tribunal noted that Article 55 could not apply because the buyer did not exercise its right to alter the price. The most reasonable explanation seems to be that the Tribunal interpreted the contractual provision as to the buyer's right to alter the price as an implicit agreement to derogate from Article 55." Id. at pp. 36-37 (citations omitted).

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, Practika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (1998) No. 12 [52-54]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

1. SUMMARY OF RULING

     1.1 The commercial companies of the parties to the contract are located in countries (Russia and Germany) that are Contracting States to the Vienna Convention 1980 [UN Convention on Contracts for the International Sale of Goods (1980), hereinafter CISG]; thus the CISG was found applicable to the relations between the parties. Russian law, the law of the seller's country, was recognized to be applicable as the subsidiary statute.

      1.2 Regardless of whether or not the person who signed the contract was authorized by the [buyer] to do so, the contract, in accordance with Article 183(2) of the Russian Federation Civil Code, is enforceable from the date when it was signed, taking into consideration that it was further approved by the [buyer].

      1.3 The provision of the contract providing for the possibility of correction of the tentative price for the goods stipulated in the contract, depending on the results of the examination of the quality and quantity of the goods by [buyer], does not confer the right on the buyer, who did not make such an examination in the order provided by the contract, to review the amount of the price resulting from selling the goods to the third parties.

2. FACTS AND PLEADINGS

The dispute between the parties concerned the amount in the price for the goods delivered by Claimant, [seller], a Russian company, to Respondent [buyer], a German company, under the contract of 1 March 1996.

     2.1 [Buyer's position]

The [buyer] denied the fact of signing of the mentioned contract by her representative, saying that the relations between the parties arose not from that contract, but from the following document signed by a person who was duly authorized by the [buyer]. Accordingly, in [buyer]'s opinion, the price for the goods delivered by the [seller] prior to signing of that document should be determined not according to the terms of the contract, but according to Art. 55 CISG, because the parties did not fix a firm price for the goods. The [buyer] presented the report of expertise on the market price which was in effect for the goods.

Payment to the [seller] was made by the [buyer] at the prices at which, according to the [buyer]'s allegation, the [buyer] has re-sold the goods to the third parties and which accorded to the level of the prices effective on the market.

     2.2 [Seller's position]

The [seller], referring to the terms of the contract of 1 March 1996, which the [seller] alleged was approved by the [buyer], argued on the basis that the payment of the price between the parties should be made according to the prices calculated according to the method provided in the contract.

The fact that the [buyer] did not enforce the right under the contract to review the price upon the results of the examination and acceptance of the quality and quantity of the goods, does not entitle the [buyer] to review the prices for the goods sold to third parties.

The [seller] claimed from the [buyer] the sum not paid by the [buyer] for the goods received.

3. TRIBUNAL'S REASONING

The ruling of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry (hereinafter Tribunal), granting the [seller]'s claim, was reasoned by the following main points.

     3.1 [Jurisdiction competence of the Tribunal]

The Tribunal has the competence to hear the present case, according to the arbitration clause of the contract concluded between the parties on 1 March 1996. In accordance with Art. 16 of the Russian Federation Law On the Tribunal of International Commercial Arbitration, the arbitration clause does not depend on the validity of the other contractual provisions and is valid even if the Tribunal finds the entire contract void.

     3.2 [Applicable law]

As both the Russian Federation and Germany are Contracting States to the CISG, under Art. 1(1)(a) CISG, this Convention is applicable to the contract concluded between the parties in the present case. Based on Art. 7(2) CISG, and guided by the Russian Federation Law On the Tribunal of International Commercial Arbitration and Art. 166 of the Fundamentals of the Civil Law of the USSR 1991, the Tribunal recognized as applicable subsidiary statute the law of the Russian Federation, the law of the country of seller.

     3.3 [Formation and validity of the contract]

The contract is valid from the moment it was concluded on 1 March 1996, pursuant to Art. 183(2) of the Civil Code of the Russian Federation. The subsequent actions of the representatives authorized by the [buyer], including the document signed by them on 27 August 1997, show the [buyer]'s approval of the contract. The [buyer]'s reference to Art. 19 CISG is deemed unreasonable because that article makes provision for the procedure of concluding the contract, not the consequences of approval of the validity of the contract which was already concluded.

     3.4 [Fixing the price of the goods]

In accordance with the respective provision of the contract, the total price for the lot of goods could be negotiated by the [buyer] depending on the quality and quantity of the goods found at the moment of acceptance of the goods. Under the rule in Art. 38 CISG, the buyer must examine the goods, or cause them to be examined, within as short a period of time as is practically possible in the circumstances. According to clause 3.2.2 of the contract, the [buyer] had to take delivery of the goods within 3 days after the goods were delivered to the [buyer]'s warehouse, and, according to clause 5.1, the [buyer] had to examine the delivered goods as to quantity and quality without the [seller]'s presence within the period fixed in clause 3.2.2 of the contract and notify the [seller] on acceptance of the goods.

There is no evidence in the case materials that the [buyer] examined the goods delivered; such evidence was not presented at the hearing of the Tribunal. The Tribunal believes that the [buyer] had the opportunity to set the price for the goods according to the procedure stipulated in clause 1.1 of the contract on the basis of the examination of the goods and their acceptance on the basis of quality and quantity.

Objecting to the [seller]'s action, the [buyer] stated that she did not have any claims concerning the quality and the quantity of the goods. That fact did not relieve the [buyer] from her obligation to accept the goods in due manner as required by the contract and exercise her right to review the price, if that was necessary. Absence of the [seller]'s specifications, as alleged by [buyer], at the time when the goods arrived at the [buyer]'s warehouse also did not release the [buyer] from the obligation to accept the goods presented there. Whereas the [buyer] did not take delivery of the goods, did not fix the price and accordingly did not notify the [seller] about this, the Tribunal believes that the basis for payment to [seller] should be provided by the price stipulated in the contract and the [seller]'s specifications confirmed by the customs declaration. The possibility of payment for the goods by [buyer] to [seller] at the prices of re-sale of the goods to third persons was not provided by the contract. There is no information in the case materials about the price at which the goods were re-sold to third persons, or evidence that the sum indicated by the [buyer] was received by her for the whole lot of the goods.

FOOTNOTES

* 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]; Respondent of Germany is referred to as [buyer].

** Marina Koukanova (bio. info.) The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

*** Mykhaylo Danylko is a Partner with the law firm Danylko, Kushnir, Soltys & Yakymyak, Attorneys & Counselors at Law, Kiev, Ukraine <http://www.dksylaw.com>. He holds a Masters of Laws (European Studies Program) from the Law School of International Science and Technology University, Kiev, Ukraine (July 2000); a Master of Management in Business of the Business School of International Science and Technology University (June 2002); and has received his LL.M. in International and Comparative Law at the Pace University School of Law.