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CISG CASE PRESENTATION

Russia 5 March 1998 Arbitration proceeding 8/1997 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980305r1.html]

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

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Case identification

DATE OF DECISION: 19980305 (5 March 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: 8/1997

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Bulgaria (claimant)

BUYER'S COUNTRY: Russian Federation (respondent)

GOODS INVOLVED: Goods and services


Classification of issues present

APPLICATION OF CISG: No [Held to be a "mixed" contract, not a contract for the sale of goods]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 3

Classification of issues using UNCITRAL classification code numbers:

3E [Questions of scope: mixed contracts]

Descriptors: Services

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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, Practika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (1998) No. 18 [73-75]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Djakhongir Saidov, 7 Vindobona Journal of International Commercial Law and Arbitration (1/2003) 1-62 at n.45

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Case text (English translation)

Queen Mary Case Translation Programme

Russian Federation arbitration proceeding 8/1997 of 5 March 1998

Translation [*] by Ksenia Lapteva [**]

Translation edited by Mykhaylo Danylko [***]

1. SUMMARY OF RULING

     1.1 Competence of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry [hereinafter, the Tribunal] to resolve the dispute between Bulgarian and Russian companies is based on the agreement of the parties, in accordance with the requirements of the Moscow Convention of 1972.

     1.2 Having considered the contents of the contract between the parties (entitled "Contract for the sale of goods with payment by installments"), the Tribunal qualified it as a contract of mixed type, which is not regulated by the UN Convention on Contracts for the International Sales of Goods (Vienna, 1980), [hereinafter CISG].

     1.3 Applicable law under a contract of mixed type is defined based on para. 5 of Art. 166 of the Fundamentals of the Civil Legislation of USSR of 1991 based on place of establishment and main place of business of the party whose performance is of decisive nature for the contents of the contract.

     1.4 Since [seller] did not present calculations for the increased sum of claim, and did not pay the arbitration fee for this increase, the dispute concerning the additional claim for this increase was left without consideration in these proceedings of the Tribunal.

2. FACTS AND PLEADINGS

In June 1993 a Bulgarian company [seller] and a Russian company [buyer] had concluded a contract, which was entitled by the parties a "Contract for the sale of goods with payment by installments". Due to [buyer]'s non-payment for part of goods delivered by [seller] in accordance with this contract, [seller] filed a claim. The claim included the request for [buyer] to pay to the seller the costs of the goods sold, including interest due for delay, to be counted from January 1994. [Buyer], not disputing the debt, referred to non-performance of the obligations by third parties, who did not pay for the goods delivered for them [by the buyer].

3. TRIBUNAL'S REASONING

The ruling of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry included the following main positions.

[Competence of the Tribunal]

The contract between the parties of 28 June 1993 contained an arbitration clause. In accordance with this arbitration clause, all disputes were to be resolved by the International Court of Arbitration at the Bulgarian Chamber of Commerce and Industry in Sophia. On 20 November 1996 the parties amended this contract, and concluded an arbitration agreement which provided for dispute resolution by the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry in Moscow.

The Tribunal states that at the date when the latter arbitration agreement was concluded, both Russia and Bulgaria were parties to the Moscow Convention of 1972 [1]. In accordance with paragraph 1 of Art. II of the Moscow Convention of 1972, all disputes between business organizations of Contracting States to the [Moscow] Convention, arising from contractual relations in the course of business cooperation should be resolved by the Tribunal of Arbitration at the Chamber of Commerce of the respondent's Contracting State, or upon agreement of the parties, at the third Contracting State to the said Convention.

The Parties did not conclude any agreement for resolution of disputes, arising from the contract at the Arbitration Tribunal of the third Contracting State to the Convention, as was found from review of the case materials.

On that basis the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry determined that [seller]'s claim at the present Tribunal, i.e., at the respondent's Contracting State, meets the requirements of the Moscow Convention of 1972.

Based on the foregoing, the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry held that it possessed the necessary competence to resolve the dispute presented.

[CISG is not applicable]

The contract, which was entitled by the parties "Contract for sale of goods with payment by installments" contains a number of provisions which are not typical for contracts for the sale of goods, such as: warehousing, storage, information on sale of goods, marketing services, payment for the goods upon resale, return of the goods, which were not sold, etc.

Based on the foregoing, the Tribunal cannot recognize the contract between the parties as a contract for the international sale of goods. The Tribunal considers that the legal nature of the contract is one of mixed type, and therefore the contractual relations under it are not regulated by the CISG.

[Applicable law]

At the time when the contract was signed, the parties did not agree on applicable substantial law. In accordance with the authority provided for [the Tribunal] by paragraph 2 of Art. 28 of the Law of the Russian Federation "On the Tribunal of International Commercial Arbitration"[2], the Tribunal decided to determine the applicable law in accordance with the norms on conflict of laws at the place of arbitration, i.e., in accordance with the norms of conflict of laws of the civil law of the Russian Federation. Norms of conflict of laws are contained in Art. 166 of the Fundamentals of Civil Law of USSR 1991 [3] (hereinafter, the Fundamentals), which have been applicable to the territory of the Russian Federation since 3 August 1992. In accordance with paragraph 5 of Art. 166 of the Fundamentals, in the sphere of rights and obligations under international business contracts not specified in paragraphs 1-4, the law of the State of establishment or main place of business of the party whose performance is of decisive value for the contents of the contract applies, unless the parties had otherwise reached agreement on applicable law. Since by its legal nature the contract between the parties does not fall under any category of contracts mentioned in paragraphs 1-4 of Art. 166 of the Fundamentals of 1991, the Tribunal applied paragraph 5 of this Article, and declared that the rights and obligations of the parties were regulated by the civil law of Russia, considering that the performance by the [buyer] was of decisive value for the contract.

[Payment of the principal debt]

Having reviewed the claims, the Tribunal recognized that the [buyer] had in part admitted the fact of his debt under the contract, which is proven by his response to the claim of 15 August 1997 and his statement at the hearing of 5 March 1998. Therefore the Tribunal found that the sum of principal debt should be recovered from the [buyer] in the amount admitted by the [buyer].

[Payment calculations]

As for the difference between the sum of claim and the sum of debt admitted by the [buyer], the Tribunal considers that in order to determine whether this amount is correct, it is necessary for the parties to compare their payment calculations, since at the hearing they were unable to demonstrate what sums and positions this difference consists of.  For this reason, the payment in the sum of this difference should be set aside for separate proceedings.

[Calculation of annual interest]

The [seller] capitalized the interest for the principal debt per annum, and had increased the sum of his claim, however he did not provide the Tribunal with the appropriate calculation of interest and did not pay the arbitration fee, considering the increase of this sum of claim. In these circumstances, this additional claim cannot be reviewed as part of the proceedings.


FOOTNOTES

* This is a translation of data on Proceeding 8/1997, dated 5 March 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. 18 [73-75]. All translations should be verified by cross-checking against the original text. For purposes of this presentation, [Claimant] of Bulgaria is referred to as [seller]; [Respondent] of the Russian Federation is referred to as [buyer].

** Ksenia Lapteva is a graduate of Law School of Mari State University, Russia, currently in her postgraduate studies. She took part in the Vis Arbitration Moot in 2001 and 2002, as a member of the MSU team. The MSU team ranked in the top 16 teams in Vis in 2002.

*** 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.

1. Konventsia o razreshenii arbitrazhnym putyom grazhdansko-pravovyh sporov, vytekaushih iz otnoshenii ekonomicheskogo i nauchno-tekhnicheskogo sotrudnichestva [Convention on Resolution of Civil Disputes, Arising out of Economical, Scientific and Technical Cooperation] (signed on 26 May 1973 in Moscow, came into force 13 August 1973).

2. Zakon RF "O mezhdunarodnom kommercheskom arbitrazhe" (7 July 1993) N. 5338-I.

3. Osnovy Grazhdanskogo Zakonodatelstva Soyuza SSR i Respublic, ot 31 maya 1991.

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Pace Law School Institute of International Commercial Law - Last updated July 30, 2004
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