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CISG CASE PRESENTATION

China 15 December 1998 CIETAC Arbitration proceeding (Shirt case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/981215c1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 19981215 (15 December 1998)

JURISDICTION: Arbitration ; China

TRIBUNAL: China International Economic & Trade Arbitration Commission [CIETAC] (PRC)

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1998/09

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: People's Republic of China (claimant)

BUYER'S COUNTRY: Italy (respondent)

GOODS INVOLVED: Men's, women's and children's shirts


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 8 ; 9 ; 74 ; 78 ; 79(1)

Classification of issues using UNCITRAL classification code numbers:

8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct];

9A [International usages];

74A [General rules for measuring damages: loss suffered as consequence of breach];

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

79B [Impediments excusing party from damages]

Descriptors: Intent ; Usages and practices ; Letters of credit ; Burden of proof ; Damages ; Interest ; Exemptions or impediments

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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 (Chinese): Zhong Guo Guo Ji Jing Ji Mao Yi Zhong Cai Wei Yuan Hui Cai Jue Shu Hui Bian [Compilation of CIETAC Arbitration Awards] (May 2004) 1998 vol., pp. 2993-3000

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Dong WU, CIETAC's Practice on the CISG, at nn.123, 158, 240, Nordic Journal of Commercial Law (2/2005)

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Case text (English translation)

Queen Mary Case Translation Programme

China International Economic & Trade Arbitration Commission
CIETAC (PRC) Arbitration Award

Shirt case (15 December 1998)

Translation [*] by Zheng Xie [**]

Translation edited by Meihua Xu [***]

China's International Trade and Economic Arbitration Commission [hereafter, the Arbitration Commission] accepted this case according to:

   -    The arbitration clauses in Sales Confirmation Nos. CTP-4204(a) and CTP-4204(b) signed on 15 February 1995, by Claimant [Seller], Changzhou ___ Import and Export Company, and Respondent [Buyer], Italy ___ Corporation; and
   -    The written arbitration application submitted by [Seller] to the Arbitration Commission on 6 May 1997.

On 12 June 1997, the Secretariat of the Arbitration Commission sent to [Buyer] by express mail notice of arbitration No ___(97) and appendix (including the Arbitration Rules that took effect on 1 October 1995, the Arbitration Application and appendix to it, and the list of arbitrators). The acknowledgement of receipt of the express company shows that Mr. Fang in Vekzellomi signed and received this mail on 18 June 1997.

Because [Buyer] did not send notice appointing an arbitrator within the time stipulated in the notice of arbitration, on 23 July 1997 the Secretariat sent notice No. ___(97) to [Buyer] by express mail requesting him to appoint an arbitrator before 5 August 1997. The Secretariat did not receive [Buyer]'s notice of appointment by 5 August 1997, and on that date again sent notice No.___(97) to [Buyer] requesting him to fax the appointment of an arbitrator to the Arbitration Commission. In this notice, [Buyer] was asked to appoint before 12 August 1997.

On 6 August 1997, the Arbitration Commission received a fax sent by Monica Dotti from [Buyer] stating that because it was vacation time in Italy, all of the law firms in Italy were closed until the end of August, and [Buyer] could neither appoint an arbitrator within the stipulated time nor contact any arbitrator; [Buyer] requested the Arbitration Commission to suspend the arbitration until the beginning of September.

In response, the Secretariat faxed to [Buyer] a notice of arbitration No.__(97) with English translation advising [Buyer] that, as he requested, it would be acceptable for [Buyer] to notify the Arbitration Commission of the appointment of the arbitrator before 5 September 1997; otherwise, the Chairman will appoint the arbitrator for him according to the Arbitration Rules.

On 17 September 1997, the Chairman appointed Mr. P as the presiding arbitrator. [Seller] appointed Ms. A as the arbitrator. The Chairman appointed Mr. D as the arbitrator for [Buyer]. Mr. P, Ms. A and Mr. D formed the Arbitration Tribunal to hear this case.

The Arbitration Tribunal decided to hold a court session on 23 October 1997. Because the arbitrator, Mr. D, could not attend that court session, the Arbitration Tribunal postponed the court session to 9 December 1997. The Secretariat sent notices of the above decision No. __ and No.___(97) to [Buyer] by express mail and fax. According to the acknowledgement of receipt, [Buyer] received these documents.

After reviewing the application and other materials submitted by [Seller], the Arbitration Tribunal held the first court session on 9 December 1997. [Seller] sent his representative to the court session. [Seller]'s representative presented a statement and answered the questions. [Buyer] did not attend this court session. According to Article 42 of the Arbitration Rules, the Arbitration Tribunal heard the case by default.

On 29 December 1997, the Arbitration Tribunal through the Secretariat sent to [Buyer] notice No. __(97) informing him of the proceedings at the first court session, and [Seller]'s supplementary materials. At the same time, the Arbitration Tribunal invited [Buyer] to submit his comments and any objections to the court session or to [Seller]'s supplementary materials within the stipulated time. [Buyer] did not submit any comment or objection within the stipulated time.

On 19 January 1998, the Arbitration Tribunal through the Secretariat sent a notice No.___(98) to [Buyer] by express mail forwarding [Seller]'s supplementary materials, and inviting [Buyer] to submit comments and objections before 19 February 1998 and advising that, otherwise, the Arbitration Tribunal would not accept any materials and would proceed with the arbitration.

On 17 February 1998, the Arbitration Commission received [Buyer]'s materials of opinion by fax. In the materials, [Buyer] made defense on the substantive part of this case, and stated that the documents had been sent to [Buyer]'s old address, and [Buyer] accidentally received the notice of the arbitration at the beginning of February 1998 when the period to appoint the arbitrator had expired and the time of the court session was decided, so [Buyer] could neither appoint an arbitrator nor make defense, and that the Arbitration Commission's decisions are not valid.

On 2 March 1998, the Arbitration Commission sent document No. ___(98) to [Buyer] by express mail and fax, recalling the arbitration process to 1998 March and stating that the case was proceeded under [Buyer]'s knowledge, and all of the documents had been mailed and faxed to [Buyer]'s address which was provided by [Seller]; that [Buyer] had received and signed for the above documents sent to the above address, but that [Buyer] did not notify the Arbitration Commission that his address was changed; in addition, the Arbitration Commission had postponed the time of appointing the arbitrator for three times. In sum, this case proceeds in accordance with the Arbitration Rules. [Buyer] shall join this arbitration; [Buyer] can request the Arbitration Tribunal to hold a second court session within ten days after receiving this document, if he needs to submit a defense or make a statement.

[Buyer] requested the Arbitration Tribunal to hold a second session at the end of July 1998. The Arbitration Tribunal agreed to [Buyer]'s request for a second court session. Thus, the Arbitration Tribunal could not complete this case (before 17 June 1998). With the agreement of the Secretariat, the hearing period was prolonged to 17 October 1998.

The Arbitration Tribunal decided to hold the second court session on 23 September 1998. Because the presiding arbitrator could not attend that session due to urgent business reasons, the Arbitration Tribunal postponed the second court session to 14 October 1998.

On 28 September 1998, [Buyer] faxed to the Arbitration Tribunal asserting that his agent could not attend that court session, because the agent was busy with teaching, and requested the Arbitration Tribunal to postpone the second court session to 1998 December or 1999 January. [Seller] could not accept [Buyer]'s request, because the working schedule would be affected if the court session was postponed.

The Arbitration Tribunal holds that [Buyer]'s reason to postpone the court session is not sufficient; and if the court session were postponed, the hearing period of this case must be prolonged. If the period of hearing were prolonged, the case would not be completed until December 1998 or January 1999 without sufficient reasons; that is unfair to [Seller]. Thus, on 5 October 1998, the Arbitration Tribunal faxed notice No.___(98) to [Seller] and [Buyer] advising that the time for the second court session was not changed.

On 14 October 1998, the Arbitration Tribunal held the second court session in Beijing. [Seller] sent his representative to the court session. [Seller]'s representative presented a statement and answered questions. [Buyer] did not attend the court session. According to Article 42 of the Arbitration Rules, the Arbitration Tribunal heard the case by default.

The Arbitration Tribunal could not make the awards within three days after the second court session (from 15 to 17 October 1998), so it requested the Secretary General to prolonged the hearing period again. The Secretary General ruled that the Arbitration Tribunal's request was reasonable, and the time for handing down an award was prolonged to 17 December 1998.

The Arbitration Tribunal sent [Seller]'s supplementary materials submitted after the second court session to [Buyer] in time, and notified [Buyer] about the court session.

Considering the written materials and the two court sessions, the Arbitration Tribunal has concluded the case and handed down its award by consent.

The following are the facts, the opinion of the Arbitration Tribunal and the award.

FACTS

On 15 February 1995, [Seller] and [Buyer] signed the Sales Confirmation No. CTP-4204(a) and CTP-4204(b) (hereafter, the contract). The contract stipulates that

   -    [Buyer] purchased from [Seller] 21,731 Men's, Women's and Children's shirts;
   -    The total price is US $93,034.70 FOB Shanghai Airport;
   -    The model of the shirts is by [Buyer]'s sample;
   -    The payment term is irrevocable Letter of Credit [L/C];
   -    The shipping period is within 40 days after receiving the L/C.

The documents stipulated in the L/C include:

   -    Clean air Bill of Lading [B/L] issued by Shanghai Panalpina;
   -    Copy of acknowledgement of receipt that Shanghai Panalpina received the original export license by express mail 15 days before delivering the goods,
   -    Copy of certification of the inspection issued by GIPITEX or the person appointed by [Buyer], etc.

The accepting bank dishonored the L/C. The parties negotiated many times but did not reach an agreement, [Seller] applied for this arbitration.

POSITION OF THE PARTIES

[Seller]'s position

[Seller] tried his best to arrange to manufacture the goods under the contract within less than 20 days after the contract was signed. On 5 March 1995, GIPITEX inspected the goods and issued its certificate of inspection, stating that "the goods are in good condition." On 8 March 1995, [Seller] authorized Panalpina to transport the goods to Rome. On 6 April 1997, [Buyer] stated that [Seller] should be liable for the extra airport storage charge of US $4,800, and for the air freight charge of US $32,000, or should reduce the price by 50%, because the [Seller]'s export license arrived later than the arrival of the goods. Considering future cooperation, [Seller] agreed to pay US $4,800 for the extra airport storage charge. Under this circumstance, [Buyer] would pay only 50% of the contract price by the excuse that the goods were not in good condition. [Buyer] tasked [Seller] for compensation many times, and threatened to return the goods, and finally requested [Seller] to compensate US $35,000. [Seller], in order to avoid trouble, agreed to deduct US $18,000 from the contract price, but [Buyer] did not reply.

[Seller] asserts that [Buyer] has no reason to state that the goods are not complying, because this contract does not have any special requirement, and [Seller] did not know the goods would be dyed. Thus, it is unreasonable for [Buyer] to request [Seller] to compensate him. In order to protect [Seller]'s interest, [Seller] submits the following claims:

1. [Buyer] shall pay the contract price, US $93,034.70;

2. [Buyer] shall pay [Seller] the interest loss: US $13,639.70 (Bank of China fluid capital loan from May 1995 to May 1997 at the annual interest rate of 7.33%);

3. [Buyer] shall pay [Seller] the traveling expenses and attorneys' fees for this arbitration, US $10,000;

4. [Buyer] shall bear the entire arbitration fee.

[Seller] asserts that the L/C was issued on 25 January 1995, and [Seller] was notified on 28 January 1995. However, this contract was signed on 15 February 1995; the contract stipulates that the L/C shall be issued within 40 days after the L/C is issued. It is fraud that the L/C is issued before the contract is signed with the delivery date and date of issuing documents stipulated in the contract. According to the stipulation that the goods shall be delivered within 40 days after the L/C is issued, the date should be calculated from 29 January 1995, the day after [Seller]'s receipt of the L/C, so, on that basis, [Seller] should deliver the goods no later than 8 March 1995. However, according to the L/C, [Seller] shall mail the export license to [Buyer] 15 days before delivering the goods. Thus, [Seller] would be expected to mail the export license no later than 21 February 1995, which is the last day of 15 days before 8 March 1995. However, this contract was not signed until 15 February 1995. That leaves only six days from the day when the contract was signed to the day when the export license shall be sent. This is hard in any country. It even takes [Buyer] at least 15 days to get an import license.

[Seller] asserts that [Buyer] had never objected to the quantity of the goods. Article 11 of the contract states: "Objections to the quality of the goods shall be raised within three months after the goods arrive at the destination port," but does not stipulate the inspection organization. [Seller] asserts that [Buyer]'s representative inspected and approved the goods before delivery, so the parties reached an agreement about the quality of the goods on 5 March 1995 before the goods were shipped, and that there is no dispute on the quality of the goods. [Seller] did not receive any inspection report, which could be the evidence of the quality of the goods, issued by the Italian government or authorized organization within three months after the goods arrived at the destination port. Accordingly, [Seller] cannot approve [Buyer]'s objection to the quality of the goods.

[Buyer]'s position

[Seller]'s claims are unreasonable and unacceptable, because:

1. The goods arrived to [Buyer] more than 40 days later than the time stipulated in the contract, which caused [Buyer] to suffer severe damages, and caused the L/C to be dishonored by the issuer, International Clothing Industry S.A. [Seller] knows that the L/C was dishonored by International Clothing Industry S.A. because of his fault.

2. The goods delivered were severely damaged, and most cannot be used. [Seller] has admitted the defects of the goods in the parties' correspondence. In fact, on 15 and 22 February 1996, [Buyer] notified [Seller] about [Buyer]'s loss of US $62,000. In addition, because [Seller] did not take back the defective goods which are still in the warehouse, [Buyer] suffered the loss of US $20,556.25. Meanwhile, [Buyer] suggested that [Buyer] pay [Seller] US $35,000 by reconciliation agreement, which [Seller] rejected. However, on 25 November 1996, [Seller] faxed to [Buyer] accepting the reconciliation agreement.

When [Seller] accepted [Buyer]'s suggestion to make the reconciliation agreement, a valid contract was established; this contract relieved each party's duty under the original contract; [Buyer] was obligated to pay [Seller] US $35,000. The reconciliation agreement also shows that [Seller] impliedly admitted that the goods have severe defects. Accordingly, it is unreasonable for [Seller] to deny [Buyer]'s loss by asserting that [Buyer] did not object to the quality of the goods within three months after the goods arrived. In fact, [Buyer] expressed his objection to the quality of the goods in time; in addition, [Seller] knew the defects of the goods, so the stipulated period for the raising of objection is not applicable here. Moreover, [Seller]'s suggestion to reduce the price by US $18,000 shows that he knows that the goods are defective.

[Seller]'s response

As to [Buyer]'s above objection, [Seller] acknowledges that he mailed the export license late, which, however, (as indicated below) falls within the available exemption; [Seller] has never admitted that the goods are damaged or have defects; the reason that [Seller] agreed to reduce the price by US $18,000 is not that the goods are damaged or have defects, but that [Seller] was willing to make a compromise. [Seller] agreed to reduce the price by US $18,000 as a discount, which is not the precondition for [Buyer] to terminate or cancel the contract. The evidence submitted by [Seller] and [Buyer] does not show that [Seller] impliedly admitted the defects of the goods.

In the written materials submitted after the second court session, [Seller] asserts that the L/C was issued on 25 January 1995, but the contract was signed on 15 February 1995. Accordingly to the normal process, the L/C should be revised. However, according to Article 14 of UCP 500, the issuing bank can decide to contact [Buyer] to accept the lack of compliance, because it takes some time to revise the L/C, and the delivery may be delayed; in addition, the lack of compliance is mainly that the clean B/L and export license were not mailed on time. Thus, some terms in the L/C are not in compliance with the contract. Furthermore, the urgent correspondence from Greece Commercial Bank to Changzhou Industrial and Commercial Bank Internal Business Department shows that [Buyer] received the export license which was issued on 17 March 1995. [Seller] alleges that according to Article 79(1) of the United Nations Convention on Contracts for the International Sale of Goods (1980) (CISG), [Seller] could not get the export license within six working days, which falls within the exemption.

As to [Seller]'s enlarged loss and compensation, [Seller] insisted that [Buyer] should pay [Seller] an additional US $10,000, based on the following:

1. Interest on the contract price from 1 May 1995 ([Seller] asserts that 1 May 1995 is the latest day for payment) to 14 October 1998 with the interest rate of the bank during the same period;

2. [Seller]'s traveling expenses for this case, US $5,000.

As to the total of the above two items plus attorneys' fees and other fees, [Seller] gives up the amount exceeding US $10,000.

THE OPINION OF THE ARBITRATION TRIBUNAL

1. Applicable law

The parties did not stipulate the applicable law in the contract. [Seller]'s place of business is in China, and [Buyer]'s place of business is in Italy. These two countries are parties to the United Nations Convention on Contracts for the International Sale of Goods (1980) (CISG). Thus, the Arbitration Tribunal holds that CISG is applied to this case.

2. The contract and performance

The written materials show that

     (1) The contract was signed on 15 February 1995; the shipping date stipulated in the contract is within 40 days after [Seller] receives the L/C;

     (2) The L/C was issued on 25 January 1995, and the expiration date was 20 March 1995. China Industrial and Commercial Bank Changzhou Branch received the L/C on 28 January 1995; the L/C stipulates that [Seller] shall send the export license by express mail to the carrier 15 days before the goods are delivered;

     (3) The shipping date of the goods was 8 March 1995;

     (4) The export license was issued on 17 March 1995;

     (5) The goods arrived in Rome on 30 March 1995; [Buyer] took delivery on about 10 April 1995 (shown in the [Buyer]'s correspondence of 6 April 1995);

     (6) [Buyer] raised no quantity objection after receiving the contract goods, but raised quality objections;

     (7) [Buyer] has never paid the contract price.

3. The export license

The Arbitration Tribunal notes that the contract stipulates that [Seller] shall mail the original export license to the carrier 5 days before the goods are delivered. [Seller] submitted the correspondence from Greece Commercial Bank Panepistimiou Branch to China Industrial and Commercial Bank Changzhou Branch on 26 April 1995. The correspondence shows that the export license was issued on 17 March 1995, and the goods were shipped on 8 March 1995. [Seller] does not deny that the export license was mailed later than the shipping date. The Arbitration Tribunal notes that [Seller] suggested that in order to satisfy the conditions in the L/C, the export license would have had to be mailed 15 days earlier than the shipping date, 8 March 1995, stipulated in the contract. According to that, [Seller] should mail the export license no later than 21 February 1995; however, the contract was signed on 15 February 1995 and there are only six days between the date when the contract was signed and the date when the export license should be mailed. Thus, it is hard for [Seller] to get the export license within six working days after the contract was signed.

The Arbitration Tribunal notes that on 6 April 1995, [Buyer] wrote to [Seller] stating that because of lack of the export license, and lack of documents for customs clearance, the goods were still in the airport, and [Buyer] had to spend about US $4,800. On 9 April 1995, [Seller] wrote to [Buyer] agreeing that US $4,800 could be deducted from the contract price.

Article 79(1) of CISG states:

"A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences."

Accordingly, if [Seller] can prove that he could not mail the export license due to unforeseeable and uncontrollable reasons when signing the contract, the Arbitration Tribunal would hold that [Seller] is not liable; otherwise, the Arbitration Tribunal holds [Seller] is liable for not mailing the export license on time.

On 25 January 1995, the L/C was issued; the China Industrial and Commercial Bank Changzhou Branch received the L/C on 28 January 1995. However, the contract was signed on 15 February 1995. [Seller] asserts that the L/C was issued before the contract was signed, and then the delivery date and the date of issuing documents were stipulated, so it is fraud. However, [Seller] did not provide evidence to prove this assertion, so the Arbitration Tribunal cannot uphold it. On the contrary, the evidence which the Arbitration Tribunal got, shows that [Seller] should receive the L/C within some days after 28 January 1998 and before the contract was signed, and had sufficient time to prepare the export license in accordance with the L/C. In any event, [Seller] is an export and import company; therefore, it should know how much time is needed for the export license. [Seller] should anticipate the specific time for the export license in this case, and prepare the proper export license when receiving the L/C, or refuse to sign the contract, or request postponement of the shipping period when signing the contract. In sum, the Arbitration Tribunal holds that it is not an uncontrollable reason for [Seller] to mail the export license late. Accordingly, [Seller] shall be liable for demurrage and other loss because [Seller] mailed the export license later than the time stipulated in the contract.

4. The quality of the goods

The Arbitration Tribunal notes that, in the written materials, [Buyer] states that the goods have severe defects, and most cannot be sold.

The contract does not stipulate the quality of the goods. Article 11 "Objection of Quality/Quantity of the contract states that "objection to the quality of the goods shall be raised within three months after the goods arrive at the destination port " However, one of the necessary documents stipulated in the L/C is the copy of the inspection certificate issued by GIPITEX or applicant (Note: the applicant of the L/C - [Buyer]). Thus, the Arbitration Tribunal holds that the inspection certificate shall be important evidence of the quality of the goods.

Reviewing the certificate of inspection issued by GIPI.TEX, the Arbitration Tribunal finds that GIPITEX had inspected the goods before the goods were packed, and certified that the goods were in good condition. However, the Arbitration Tribunal notes that the certificate of inspection states:

"This certificate does not relieve your duty under the contract. We reserve the right to claim for damages, if our client refused to take the goods due to the lack of compliance after the inspection when the goods arrive to the destination."

This shows that [Buyer] reserves the right to inspect the goods when the goods arrive at the destination port. However, on the basis of the following reasons, the Arbitration Tribunal cannot uphold [Buyer]'s assertion that the goods have defects.

     First, [Buyer] asserts that in the parties' correspondence, [Seller] admitted the goods have defects. However, [Buyer] did not point out in which correspondence and how [Seller] admitted the defects. The Arbitration Tribunal does not find [Seller] clearly expressed that the goods were not in compliance with the contract in the correspondence. It is true that [Buyer] always asserts that the goods are not in compliance with the contract. However, that is the [Buyer]'s assertion, not [Seller]'s. Furthermore, although [Seller] expressed many time in the correspondences that he would be willing to deduct some of the contract price so that [Buyer] could make the payment, this is just an intent to make an agreement, not an admission that the goods have defects. In addition, such an expression is not a promise to compensate [Buyer] for the loss. Accordingly, this expression is an offer to make an agreement. For the expression to be binding, two conditions must be satisfied; first, [Buyer] has to accept the offer; second, when [Buyer] accepted [Seller]'s suggestion, the parties reach an agreement, and then [Buyer] shall pay the remaining part of the contract price after the agreed amount is deducted; [Seller]'s promise to deduct the contract price was on the condition that [Buyer] fulfills his promise to make the payment. In this case, these two conditions are not fulfilled.

     Second, according to international trade customs, [Buyer] must provide a certificate of inspection issued by a qualified inspection organization if he claims for damages due to non-complying goods. However, [Buyer] has not provided such a certificate of inspection.

In sum, the Arbitration Tribunal holds that GIPITEX's certificate conflicts with the above statement; the certificate states that the goods are in good condition. According to the principle, "the party who makes the claim, bears the burden of proof," the Arbitration Tribunal cannot uphold [Buyer]'s assertion that the goods have defects, because [Buyer] did not submit evidence contrary to the above certificate.

5. [Seller]'s claims

As to [Seller]'s claim for the contract price, according to the above opinion in 3 and 4, the Arbitration Tribunal holds that [Buyer] shall pay [Seller] the price deducting for the demurrage and other corresponding loss because the export license was mailed late. The Arbitration Tribunal notes that on 6 April 1995, [Buyer] faxed to [Seller] asserting that the airport demurrage due to late mailing of the export license is US $4,800. The Arbitration Tribunal holds that this amount is reasonable. The Arbitration Tribunal cannot uphold [Buyer]'s claim for the discount [Buyer] gave to his client due to late manufacturing and late delivery which was caused by late mailing of the export license, because [Buyer] did not provide evidence of this. Accordingly, the Arbitration Tribunal holds that it is reasonable to deduct US $4,800 from the contract price to compensate [Buyer] for the demurrage and related loss; thus, [Buyer] shall pay [Seller] the contract price, US $88,234.70 (US $93,034.70 less US $4,800).

As to [Seller]'s claim to have [Buyer] compensate the loss of interest, the Arbitration Tribunal holds that it is reasonable for [Buyer] to pay [Seller] interest, US $19,402.81 (US $88,234.70 X 7.33% X 3 years). As to [Seller]'s claim for the expenses incurred due to this arbitration, according to article 59 of the Arbitration Rules, the Arbitration Tribunal holds that it is reasonable for [Buyer] to compensate [Seller] for this loss, US $10,763.75 (US $88,234.70 + US $19,402.81 X 10%). Because [Seller] expressly gave up the amount which exceeds US $10,000, the Arbitration Tribunal holds that [Buyer] shall pay [Seller] US $10,000.

6. The arbitration fee

[Buyer] shall bear the entire arbitration fee.

AWARD

The Arbitration Tribunal makes the following award:

1. [Buyer] shall pay [Seller] the contract price, US $88,234.70;

2. [Buyer] shall pay [Seller] the loss, US $10,000;

3. [Buyer] shall bear the entire arbitration fee. [Seller] has paid the arbitration fee in advance. Thus, [Buyer] shall pay [Seller] RMB ___ .

4. [Buyer] shall pay the above amount before 31 December 1998; otherwise, the interest shall be added at an annual rate of 7%.

This is the final award.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the People's Republic of China is referred to as [Seller]; Respondent of Italy is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].

** Zheng Xie, LL.M. Washington University in St. Louis, LL.M., BA in Economics, University of International Business and Economics, Beijing.

*** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

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