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CISG CASE PRESENTATION

China 25 December 1998 CIETAC Arbitration proceeding (Pig iron case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/981225c1.html]

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

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Case identification

DATE OF DECISION: 19981225 (25 December 1998)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1998/11

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: Switzerland (respondent)

GOODS INVOLVED: Pig iron


UNCITRAL case abstract

PEOPLE'S REPUBLIC OF CHINA: China International Economic & Trade
Arbitration Commission (CIETAC) 25 December 1998 (Pig iron case)

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/98],
CLOUT abstract no. 982

Reproduced with permission of UNCITRAL

Abstract prepared by Jean Ho

This case concerned the importance of specificity in the terms of a contract and the need to notify the other party once a decision to avoid the contract has been made.

The Chinese seller and Swiss buyer concluded a contract for the sale and purchase of 5,000 metric tons of Basic pig iron and 5,000 metric tons of Foundry pig iron. Under the contract, the buyer had to open an irrevocable Letter of Credit (L/C), and another L/C was to be opened concerning the import of 100,000 metric tons of Iron ore by the seller. The contract also provided for the delivery of 10,000 metric tons of Basic pig iron at a price to be mutually agreed, and 10,000 metric tons of Basic pig iron or Foundry iron also at a price to be mutually agreed. The Basic pig iron and the Foundry pig iron were to be supplied by two different factories named in the contract.

According to the seller, the buyer only performed its obligations with respect to the first 5,000 metric tons of Basic pig iron and subsequently compensated the seller for the first 5,000 metric tons of Foundry pig iron. In addition, the buyer did not [fulfill] its obligations with respect to the remaining 20,000 metric tons of Basic pig iron. This resulted in the seller having to resell the 10,000 metric tons of Basic pig iron to two other companies at a loss, and suffer further losses from its cancellation of an order for 10,000 metric tons of Basic pig iron from a domestic supplier. The seller claimed damages and interest as a result of the resale of the 10,000 metric tons of Basic pig iron, and costs incurred as a result of cancellation of the 10,000 metric ton Basic pig iron order.

The buyer alleged that the 10,000 metric tons of Basic pig iron which the seller eventually resold was in fact the subject matter of another sale and purchase contract concluded between them (see Case 981) The buyer also argued that the seller should not be allowed to claim losses due to the cancellation of the order of 10,000 metric tons of Basic pig iron since the domestic supplier was not the supplier agreed upon in the original contract.

The tribunal first considered whether a contract for the 20,000 metric tons of Basic pig iron had been concluded. It was decided that the first offer concerning 10,000 metric tons of Basic Pig Iron was "sufficiently definite" (article 14 (1) CISG) and it was accepted in accordance with article 23 CISG). However, the offer regarding 10,000 metric tons of Basic pig iron or Foundry pig iron was not "sufficiently definite" as there was uncertainty regarding the ultimate subject matter of the offer. Therefore, there was no offer, no acceptance and no contract concerning the remaining 10,000 metric tons of Basic pig iron.

Although the tribunal rejected the buyer's contention that the 10,000 metric tons of Basic pig iron that was resold formed the basis of the other contract between the parties since there was nothing in the latter contract to support the buyer's position, it held that the seller was nonetheless not entitled to losses incurred as a result of the resale. Documentary evidence showed that the seller and the buyer were still negotiating the price of these 10,000 metric tons of Basic pig iron. As the seller produced no evidence to show that it had avoided the original contract before the first resale by the seller took place, article 75 CISG did not apply to entitle the seller to claim damages because the seller's resale contracts with the two other companies were not concluded subsequent to an avoidance of the original contract.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 14(1) ; 23 ; 55 ; 74 ; 75 ; 77

Classification of issues using UNCITRAL classification code numbers:

14A12 [Criteria for an offer (basic criterion: intention to be found in case of acceptance): determination of quantity and price];

23A [Time of conclusion of contract: contract concluded when acceptance becomes effective];

55A [Enforceability of agreements that do not make provision for the price];

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

75A1 [Damages established by substitute transaction: resale by aggrieved seller];

77A Obligation to take reasonable measures to mitigate loss]

Descriptors: Offers ; Acceptance of offer ; Open-price contracts; Damages ; Cover transactions ; Mitigation of loss

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Chinese): Zhong Guo Guo Ji Jing Mao Yi Zhong Cai Wei Yuan Hui Cai Jue Shu Hui Bian [Compilation of CIETAC Arbitration Awards] (May 2004) 1998 vol., pp. 3040-3046

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Dong WU, CIETAC's Practice on the CISG, at nn.52, 102, 145, 147, 168, 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

Pig iron case (25 December 1998)

Translation [*] by LIU Ping [**]

Edited by John W. Zhu [***]

The China International Economic and Trade Arbitration Commission (hereafter, the "Arbitration Commission") accepted this case according to:

   -    The arbitration clause in Contract No. 021-96-14418-P entered into by and between the Claimant [Seller], Shanxi__ Import and Export Company, and the Respondent [Buyer], Switzerland International Company, on 12 April 1996; and
 
   - The written arbitration application submitted by [Seller] on 12 May 1998.

The Arbitration Rules of the Arbitration Commission which took effect on 10 May 1998 (hereafter, the Arbitration Rules) shall apply to this case.

On 27 July 1998, Mrs. A, the arbitrator appointed by [Seller], Mr. D, the arbitrator appointed by the [Buyer], and Mr. P, the Presiding Arbitrator appointed by the Chairman of the Arbitration Commission since the two parties failed to jointly appoint or ask the Chairman of the Arbitration Commission to appoint a Presiding Arbitrator within the stipulated time, formed the Arbitration Tribunal to hear this case.

The Arbitration Tribunal held a court session on 14 September 1998 in Beijing. Both parties sent their attorneys to attend this court session. During the court session, they made statements on the legal and factual issues of this case, answered the Tribunal's questions and presented arguments. After the court session, both parties filed supplemental exhibits.

This case has been concluded and the Arbitration Tribunal has handed down this award on the basis of facts ascertained at the court session and other written materials.

The following are the facts, the Tribunal's opinion and award.

I. FACTS

On 12 April 1996, [Seller] and [Buyer] concluded a contract for [Seller] to sell and [Buyer] to purchase basic and foundry pig iron (hereinafter: the April Contract), with the amount and other contractual specifications as follows:[1]

"MATERIAL: Basic / Foundry Pig Iron in ingots.

QUANTITY: 10,000 metric tons, +/- 5% to be mutually agreed (5,000 MT each quality)

From September 1996 onward the Seller will deliver 20,000 MT Basic Pig Iron and to be mutually agreed 10,000 MT either basic or foundry pig iron in lots of min 5,000 MT per month, price to be mutually agreed between parties, other terms and conditions as per this contract.

ORIGIN: Shoucheng Iron Factory, Yicheng County, Shanxi (for Basic) (hereinafter: Y Factory), and Lanshan Iron Factory, Quwo County, Shanxi (for Foundry) (hereinafter: Q Factory), P.R. of China.

PRICE: US $147. / 153. per metric ton of material FOB ST Xingang for Basic grade / Foundry grade, respectively.

SHIPMENT: June 1996

PAYMENT: Buyers to open an irrevocable at sight Letter of Credit in favour of Sellers with a first class international bank payable 100 pct in US dollars against presentation of customary clean shipping documents at counters of advising bank. Value of 1/c for 105 pct of the contract value.

L/C to be opened within five working days of both fe ore and this contract been sighned [sic.]. Workability of this letter of credit is subject to Sellers having opened a fully operative acceptable (by Buyers) irrevocable letter of credit by latest 15 May 1996 covering agreed Iron Ore purchase."

POSITION OF THE PARTIES

[A] [Seller]'s claim

For the 5,000 MT out of the first 10,000 MT provided in [the April Contract], [Buyer] opened the L/C and sent a ship to pick up the goods on schedule. However, [Buyer] did not perform its obligations regarding the other 5,000 MT, and therefore paid damages in the amount of US $40,000 to [Seller].

For the additional 20,000 MT under [the April Contract], [Buyer] has never opened the L/C, nor arranged any ship to transport the goods. As a result, [Seller] had to resell the 10,000 MT pig iron which [Seller] had prepared [for Buyer]. The resale was to Hong Kong Company ___ (hereinafter: Hong Kong Company) and Korean Company ___ (hereinafter: Korean Company). [Seller] suffered losses due to the price differences. [Seller] sent faxes to [Buyer] many times, urging [Buyer] to reply to its unperformed obligations. However, [Buyer] has never replied. To mitigate its losses, [Seller] had to cancel its order of the other 10,000 MT from Domestic Supplier ___ (hereinafter: X Factory) and suffered additional losses.

Accordingly, [Seller] makes the following requests:

     (1) For [Buyer] to compensate [Seller] for [Seller]'s direct economic losses caused by [Buyer]'s breach, namely, the difference between the price under [the April Contract] and the price in the resale, in the amount of US $119,432.25, plus interest;

     (2) For [Buyer] to compensate [Seller] for [Seller]'s direct economic losses caused by [Buyer]'s breach, namely, [X Factory]'s claim against [Seller] in the amount of RMB 925,834.05 (equivalent to US $111,546.28), plus interest;

     (3) For [Buyer] to bear the arbitration fees.

[B] [Buyer]'s reply

1. Out of the 10,000 MT goods under [the April Contract], 5,000 MT of the goods have been delivered but not the other 5,000 MT. However, [Buyer] has made compensation for the other 5,000 MT. Therefore, both parties should not have any dispute on the first 10,000 MT pig iron.

2. On 12 December 1996, to realize both parties' intent to trade the second 10,000 MT pig iron under the April Contract, [Buyer] and [Seller] concluded a contract No. 021-96-23806.001P for [Buyer] to purchase from [Seller] 10,000 MT basic pig iron at the price of US $136 per MT FOB ST Xingang (hereinafter: the December Contract). Because [Seller] did not perform this [December Contract], the relevant dispute is currently arbitrated before the ... Arbitration Commission.

3. Shortly after the conclusion of [the December Contract], [Buyer] bargained continuously with [Seller] with regard to the last 10,000 MT basic pig iron [under the April Contract]. To facilitate this deal, [Buyer] prepared the text of the contract, with a price quotation of US $144 per MT and a shipping date of April 1997. On 24 February1997, [Buyer] signed the contract and faxed it to [Seller] (hereinafter: [Buyer]'s February Contract). However, ultimately [Seller] refused to sign, alleging that the price was too low.

4. In response to [Seller]'s allegation that it had to resell the [second] 10,000 MT basic pig iron which it had purchased from [X Factory] to [Hong Kong Company] and [Korean Company], and that it also had to cancel its order of the remaining 10,000 MT basic pig iron from [X Factory], [Buyer] submits that in this case [the April Contract] only provides for two suppliers, namely [Y Factory] for basic pig iron and [Q Factory] for foundry pig iron. The basic pig iron purchased or ordered by [Seller] from [X Factory] is irrelevant to [the April Contract].

Therefore, [Buyer] requests the Arbitral Tribunal to reject [Seller]'s requests.

[C] [Seller]'s rebuttal

1. [The December Contract] signed by [Seller] and [Buyer] on 12 December 1996 is for another deal, and therefore irrelevant to [the April Contract] in dispute.

2. At the same time when both parties signed [the April Contract], they also signed another contract for [Seller] to import 100,000 MT iron ore (hereinafter: the Iron Ore Contract), and the condition for payment under [the April Contract] also provides that the issuance of the L/C under [the April Contract] is conditional upon the issuance of the L/C for the 100,000 MT iron ore. The purpose for [Seller] to import iron ore is to export pig iron. However, after completion of the import of the 100,000 MT iron ore, [Buyer] never mentioned the export of 20,000 MT pig iron.

[D] [Buyer]'s surrebuttal

1. Under [the April Contract], only the price for the 10,000 MT pig iron was fixed, and the price for the remaining 20,000 MT pig iron was "to be mutually agreed." Therefore, the contract for the sale and purchase of the 20,000 MT pig iron has not been concluded, and neither party is bound thereunder.

2. By referring to the contract to import 100,000 MT iron ore, [Seller] intends to prove that its importation of iron ore belongs to the business of "processing of supplied materials" or "processing of purchased materials",[2] that it will sell to [Buyer] the pig iron processed out of the iron ore, that [X Factory] is the company responsible for processing, and that accordingly [Buyer] should unconditionally accept the 20,000 MT pig iron supplied by [X Factory]. [Buyer] submits that [the April Contract] is not a contract for "processing of supplied materials" or "processing of purchased materials", and therefore [Buyer] should not be compelled to unconditionally accept pig ion produced by [X Factory].

II. OPINION OF THE ARBITRAL TRIBUNAL

1. Applicable law

[The April Contract] is silent on the applicable law. China, as [Seller]'s place of business, and Switzerland, as [Buyer]'s place of business, are both Contracting States to the United Nations Convention on Contract for the International Sale of Goods (hereinafter: the CISG). Therefore, the CISG is the law applicable to this case.

2. Interpretation of the wording of [the April Contract]: "[F]rom September 1996 onward ... other terms and condition as per this contract"

The Arbitral Tribunal is of the opinion that since both parties have no dispute regarding the first 10,000 MT pig iron delivered in June 1996 under [the April Contract], there is no need to adjudicate this issue. The Arbitral Tribunal will only deal with the goods to be delivered after September 1996 under [the April Contract].

The original wording of the relevant part of [the April Contract] is:

"From September 1996 onward the Seller will deliver 20,000 MT Basic Pig Iron and to be mutually agreed 10,000 MT either basic or foundry pig iron in lots of min 5,000 MT per month, price to be mutually agreed between parties, other terms and conditions as per this contract."

Given these words and the statements by both parties, respectively, there are two possible interpretations: 20,000 MT plus 10,000 MT, or 10,000 MT out of 20,000 MT.

Upon questioning by this Arbitral Tribunal during the hearing, both parties replied orally that it should be interpreted as 10,000 MT out of 20,000 MT.

Accordingly, the Arbitral Tribunal holds that the true intention of both parties under [the April Contract] is that the total amount of 20,000 MT pig iron should be supplied after September 1996, including:

     (1) 10,000 MT basic pig iron, price to be mutually agreed;

     (2) 10,000 MT basic pig iron or foundry pig iron as to be mutually agreed, price to be mutually agreed as well.

3. Was a contract concluded for the 20,000 MT pig iron?

[Seller] and [Buyer] have opposite opinions on this issue. [Seller] claims that such contract was concluded, while [Buyer] disagrees.

Generally, a contract results from one party's acceptance of the offer by the other party. Based on this principle, this Arbitral Tribunal examines the two parts of the 20,000 MT pig iron as follows:

     (1) For the part on "10,000 MT basic pig iron, price to be mutually agreed" (insertion by the Arbitral Tribunal: to distinguish from the undisputed "the first 10,000 MT pig iron" to be delivered in June 1996, this 10,000 MT is referred by this Arbitral Tribunal as "the second 10,000 MT pig iron"), the subject matter is definite, i.e., basic pig iron, and it is only the price that is not determined. Both parties agree that the price is "to be mutually agreed". According to Article 14(1) of the CISG, this should be regarded as a "sufficiently definite" "proposal" and constitutes an offer. Then, after [the April Contract] was signed, according to Article 23 of the CISG, the contract should be regarded as concluded.

     (2) For the part on "10,000 MT basic pig iron or foundry pig iron as to be mutually agreed, price to be mutually agreed as well" (insertion by the Arbitral Tribunal: this 10,000 MT is referred to as "the third 10,000 MT pig iron"), it is not determined whether the subject matter is basic or foundry pig iron. According to Article 14(1) of the CISG, this part should not be regarded as a "sufficiently definite" "proposal", and therefore does not constitute an offer. Since there is no offer, there is no problem of acceptance. Although this part is also included in [the April Contract], no contract shall be deemed to have been concluded for this part.

In fact, the above-mentioned interpretation of the Arbitral Tribunal is reflected by a fax sent by [Buyer] to [Seller] on 16 December 1996:

"But we still have another 10,000 MT BPI which should be shipped out according to our [April Contract]. We even want more tonnage to be shipped ..."[3]

Hence, the right interpretation should be that the contract for "the second 10,000 MT pig iron" is concluded, but not for "the third 10,000 MT pig iron".

4. Issues under [the December Contract]

This [December Contract] was signed by both parties for the sale and purchase of 10,000 MT basic pig iron. The Arbitral Tribunal notes that in its reply, [Buyer] attempted to show that this [December Contract] was indeed to implement the deal of "the second 10,000 MT pig iron" of the [April Contract]. [Seller] disagreed on this strongly.

In this Tribunal's opinion, there is no provision, annotation, explanation or wording in the text of the [December Contract] that can be interpreted to mean that the pig iron under the [December Contract] is actually "the second 10,000 MT pig iron" of [the April Contract]. Neither can this meaning be shown from both parties' communications. Therefore, [Buyer]'s claim has no sufficient grounds, and therefore cannot be upheld.

5. Issues under [the Iron Ore Contract]

This is a contract for [Buyer] to sell and [Seller] to purchase 100,000 MT iron ore. [Seller] particularly submits that:

(1) The purpose for [Seller] to import iron ore was to export pig iron;

(2) The issuance of L/C in [the April Contract] is related to and conditional upon the issuance of L/C in [the Iron Ore Contract].

This Arbitral Tribunal understands [Seller]'s desire to import iron ore for the purpose of exporting pig iron. However, unless there is definite agreement in the relevant contract(s), or there is a separate contract to relate [the April Contract to the Iron Ore Contract] such as a contract for "processing of supplied materials" or "processing of purchased materials", the importation of iron ore and exportation of pig iron are independent trading activities, and there is no trading nor legal relationship in-between, except for the relationship between raw materials and processed products.

[Seller]'s statement that "the issuance of L/C in [the April Contract] is conditional on the issuance of L/C in this [Iron Ore Contract]" is not in line with the wordings of [the April Contract]. The relevant part of [the April Contract] states that "L/C to be opened within five working days of both iron ore and this contract been signed [sic.]". This means that the time for issuance of L/C in [the April Contract] should be within five working days after [the April Contract] and [the Iron Ore Contract] are signed. This is only a time restriction, and no other meaning should be implied. Therefore, [the Iron Ore Contract] is irrelevant to this case.

6. Problems in relation to "the second 10,000 MT pig iron"

In this case, the [April contract] was concluded and is binding on both parties. Therefore, both parties are obliged to fix the price [for the second 10,000 MT pig iron] by mutual negotiation and to make the relevant part of [the April Contract] capable for actual performance. By referring to CISG Article 55, [Seller] attempts to deny the need to negotiate the price. The condition for Article 55 to apply is: no expressly or implicitly fixed price, or no provision on the method to determine the price. However, in [the April Contract] in dispute, both parties have provided that the price is to be determined by mutual negotiation. Therefore, Article 55 is not applicable. The price can only be determined by both parties' negotiation.

This Arbitral Tribunal notes that in this aspect both parties submit exhibits, such as faxes sent between them at that time. As shown by these exhibits, both parties did experience a long bargaining process.

This Arbitral Tribunal pays special attention to the following two exhibits submitted by [Buyer]:

     (1) [Buyer's February Contract], unilaterally signed by [Buyer] and forwarded to [Seller] by [Buyer]'s representative office on 25 February 1997; and

     (2) The fax sent by [Seller] to [Buyer]'s Beijing representative office on 28 February 1997 with the wording "Re: 5000MT BPI"(hereinafter: Seller's February fax).

From the two documents exchanged between the parties within just three days, it can be shown that the price difference is quite small: [Seller] asked for US $145 per MT; [Buyer] requested US $144 per MT; and both prices are FOB ST Xingang. However, in [Seller's February fax] [Seller] reduced the amount of goods to MT 5,000, while the amount of "the second 10,000 MT pig iron", namely 10,000 MT, had already been fixed in [the April Contract] and therefore was not subject to mutual negotiation.

Therefore, the reason why "the second 10,000 MT pig iron" in [the April Contract] was not performed is that both [Seller] and [Buyer] have improper activities and mistakes.

[Seller] submits to this Arbitral Tribunal that there were two "firm offers" that it sent to [Buyer]'s Beijing representative office on 19 and 21 August 1996 respectively, and attempts to show that [Seller] did contact [Buyer] to negotiate the price in accordance with [the April Contract] on time, but [Buyer] made no response. However, this Arbitral Tribunal finds that the product specification listed by [Seller] in these two firm offers is sulfur maximum 0.06% (S: 0.06 pet max.), while [the April Contract] provides for maximum 0.05% (S 0.05% max). The specifications are different. Apparently, these two firm offers are not firm offers to [the April Contract]. [Buyer]'s improperness and mistake is mainly that it actually acted as late as November/December 1996, whereas [the April Contract] provides for "[F]rom September 1996 onward". Intensive bargaining by both parties occurred from December 1996 to February 1997. However, in the situation in which the parties have only a minor difference with respect to price, [Seller] did not reply to [Buyer's February Contract] sent three days before, nor to the specific proposals therein, but reduced the already fixed amount [i.e., 10, 000 MT] by half [i.e., to 5,000 MT] by sending out another "offer" by itself.

7. About [Seller]'s requests

     (1) [Seller]'s first request is relating to "the second 10,000 MT pig iron" under [the April Contract].

[Seller] submits its contracts with [Hong Kong Company] and [Korean Company], concluded respectively on 30 October and 8 November 1996. As shown by the Bill of Lading submitted by [Seller] together with these two contracts, goods were shipped on 15 and 29 November 1996, respectively.

[Seller] requests [Buyer] to compensate the price differences. However, [Seller] has neither shown to the Arbitral Tribunal, nor submitted any evidence or exhibits to support the termination of [the April Contract] on or before October 1996. In fact, as investigated by the Arbitral Tribunal above, "the second 10,000 MT pig iron" in [the April Contract] was still subject to both parties' bargaining at that time and thereafter.

The Arbitral Tribunal notes that [Seller] sent a fax to [Buyer]'s Beijing representative office on 17 February 1997 with a statement that "since the price replied by your company is far from the price offered by our company, regretfully, we shall wait for another chance to cooperate."[4] Even if this statement can be understood as [Seller]'s intention to terminate [the April Contract], the contract was not terminated on or before October 1996 as well. Therefore, [Seller]'s request does not comply with Article 75 of the CISG, and is not supported by this Arbitral Tribunal.

     (2) [Seller]'s second request is relating to "the third 10,000 MT pig iron" in [the April Contract].

[Seller] submits a "purchase and sale contract" that it signed with its supplier [X Factory] on 15 July 1996 to purchase 20,000 MT basic pig iron, in order to prove that it has to pay damages to [X Factory] in the amount of 8% of the contract price for 10,000 MT basic pig iron.

This Arbitral Tribunal does not uphold [Seller]'s request for the following two reasons:

a. [X Factory], as a supplier, is not the supplier(s) provided in [the April Contract];

b. As held above, the contract for "the third 10,000 MT pig iron" was not concluded.

8. The arbitration fees

This Arbitral Tribunal does not uphold [Seller]'s requests, but based on the whole case, the [Buyer]'s performance are not without flaw, defect or mistake, and this is also a cause leading to this arbitration. Accordingly, the Arbitral Tribunal holds that [Seller] shall bear 90% of the arbitration fees and [Buyer] shall bear 10%.

III. THE AWARD

This Arbitral Tribunal holds that:

1. [Seller]'s first and second requests shall be dismissed; and

2. [Seller] bears 90% and [Buyer] bears 10% of the arbitration fees. Since [Seller] has paid the entire arbitration fee in advance, [Buyer] should pay [Seller] RMB XX within 45 days of this award; otherwise, a 6% annual interest shall be added.

This award is final.


FOOTNOTES

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

** LIU Ping, Lawyer, Baker & McKenzie, Beijing, People's Republic of China; LL.M., Harvard Law School, 2003-2004; Master of Civil and Commercial Law, Tsinghua University Law School (Beijing), 2000-2003.

*** John W. Zhu, LL.M. China University of Political Science and Law (National Graduate Scholarship); Bachelor of Law, Southwest University of Political Science and Law; Double Degree, English Literature, Sichuan International Studies University, Chongqing, China. Focus: International Economic Law.

1. Note by the Arbitral Tribunal: The contract is in English in origin, and this Arbitral Tribunal does not translate it.

2. Note by the translator: "Processing of supplied materials" and "processing of purchased materials" are two forms of processing arrangement available for foreign parties to do business in China. They generally involve the shipment from outside China of raw materials or semi-processed goods to a Chinese factory for processing and then the re-export of the processed products back to the foreign party.

The main difference between the two forms is that for "processing of supplied materials" the foreign party retains title to the imported materials and the processed products at all stages, while for "processing of purchased materials" the Chinese processing factory obtains title to the imported materials until the processed products are exported.

3. Original in English.

4. Original in Chinese, translated by editor.

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Pace Law School Institute of International Commercial Law - Last updated October 20, 2010
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