China 25 February 1999 CIETAC Arbitration proceeding (Women's trousers case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990225c1.html]
DATE OF DECISION:
DATABASE ASSIGNED DOCKET NUMBER: CISG/1999/11
CASE HISTORY: Unavailable
SELLER'S COUNTRY: People's Republic of China (claimant)
BUYER'S COUNTRY: France (respondent)
GOODS INVOLVED: Women's trousers
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
74A [General rules for measuring damages: loss suffered as consequence of breach]; 78B [Rate of interest]
74A [General rules for measuring damages: loss suffered as consequence of breach];
78B [Rate of interest]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
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) 1999 vol., pp. 1580-1582
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Dong WU, CIETAC's Practice on the CISG, at nn.123, 184, Nordic Journal of Commercial Law (2/2005)Go to Case Table of Contents
|Case text (English translation)|
Women's trousers case (25 February 1999)
Translation [*] by LIN Zhongming [**]
Edited by John W. Zhu [***]
The China International Economic and Trade Arbitration Commission Shanghai Sub-Commission [hereafter, "Shanghai Sub-Commission"] accepted the present case according to:
|-||The arbitration clause in Sales Contract No. 94YCZB/9-007 between the Claimant [Seller],
China Zhejiang __ Company, and the Respondent [Buyer], France __ Company; and|
|-||The written arbitration application submitted by [Seller] on 8 July 1998.|
Since the amount in dispute in this case is less than renminbi [RMB] 500,000, according to Article 64 of the Arbitration Rules [hereafter, "Arbitration Rules"], the summary procedure is applicable.
Because the two parties failed to jointly appoint or to ask the Director of the Arbitration Commission to appoint the sole arbitrator in accordance with Article 65 of the Arbitration Rules, the Director of the Arbitration Commission appointed Mr. P as the sole arbitrator to form the Arbitration Tribunal to hear this case on 27 January 1999.
The Arbitration Tribunal examined the [Seller]'s arbitration application and evidence. [Buyer] failed to submit an arbitration defense. The hearing was scheduled on 25 February at the Shanghai Arbitration Sub-Commission, the [Seller]'s legal representative and attorney appeared at the hearing; however, [Buyer] failed to appear. Pursuant to Article 42 of the Arbitration Rules, the Arbitration Tribunal processed this case by default.
The [Seller] presented statements on the facts and the basis of this case and answered the questions raised by the Arbitration Tribunal. After the hearing, [Seller] submitted supplementary documents. The Arbitration Tribunal asked the Secretariat of Shanghai Arbitration Sub-Commission to send the additional materials to [Buyer] by mail, and gave the [Buyer] the opportunity to submit a defense or to request a second court session. The [Buyer] failed to respond within the proscribed period.
In accordance with Article 42 of the Arbitration Rules, the Arbitration Tribunal ruled on this case by default. The facts, opinion and arbitral award are as follows:
The [Seller] and the [Buyer] signed the aforesaid contract on 3 July 1994, by which the [Buyer] was to purchase women's trousers from the [Seller] on the following terms:
|-||Specifications: Polyester drawn textured yarn (PANTALOONS FEMMS EN 100% POLYAMIDE);|
|-||Quantity: 20,000 pair;|
|-||Unit price: US $3.70, CIF ANVERS; Total price: US $74,000.00;|
|-||Shipping date: 30 August 1994; Port of shipment: Shanghai;|
|-||Payment terms: D/P 60 days.|
The [Seller] shipped goods on 8 October 1994, but the [Buyer] failed to make payment before the due date, 9 December 1994. After urging the [Buyer] with no result, the [Seller] filed this arbitration application to Shanghai Sub-commission, asking that:
|(1)||[Buyer] should pay the price of the [modified quantity of] goods of US $14,003.76;|
|(2)||[Buyer] should pay the loss [interest on the amount owed] of US $7,388.38;|
|(3)||[Buyer] should bear the arbitration fee.|
[POSITION OF THE PARTIES]
The [Seller] alleges that:
After signing the contract, as requested by the [Buyer], the [Seller] modified the quantity, quality and unit price of the goods under the contract and postponed the shipment date. On 8 October, [Seller] delivered 3,154 pairs of women's trousers (PANTALOONS FEMMS EN 100% POLYAMIDE) by air (the unit price is US $4.44 and the total price is US $14,003.76). After being urged by the seller, on 28 August 1995, the [Buyer] promised to pay in installments; however, the [Buyer] has not made any payment. The [Seller] asserts that the contract between the parties is effective and that [Seller] has performed its obligations under the contract by delivering the goods as requested by the [Buyer]. The [Buyer] should pay for the goods on time, and should take the responsibility for failing to do so.
After the hearing, the [Seller] submitted the following supplementary statement:
(1) The [Seller] acknowledged that it did not deliver the goods according to the quality, quantity, price and the shipping date set forth in the Sales Contract. The reason is that, upon [Buyer]'s request, [Seller] changed the quality and quantity of the goods and postponed the shipping date.
(2) The second claim of the [Seller] should be US $6,614.26, i.e., actual loss = payment in arrears × number of delayed months × loan interest (US $14,003.76 × 41 × 11.52‰ = US $661,426);
(3) The total amount the [Buyer] owes to the [Seller] is US $311,982.28, which the [Buyer] promised to pay in installments on 28 August 1995, including the US $14,003.76 under Sales Contract No. 94 YCZB/9-007 in the instant case.
The [Buyer] failed to present a defense.
2. OPINION OF THE ARBITRATION TRIBUNAL
(1) Since the parties' places of business are in different Contracting States of the Convention on Contracts for the International Sale of Goods (1980) [hereinafter: "the CISG"], therefore, the CISG shall be applied.
(2) Sales Contract No. 94 YCZB/9-007 was legally concluded between the [Seller] and the [Buyer]. The [Seller] alleged that it had changed the quality, quantity, unit price and postponed the shipping date upon the [Buyer]'s request, but the [Seller] failed to submit the evidence to prove this allegation. The [Seller] presented an air waybill, a packing list, and an invoice without the delivery document issued by the air carrier. Nevertheless, it is clearly stated in [Buyer]'s written promise sent to [Seller] on 28 August 1995 that
"In 1994, we JSLD International Company suffered severe economic loss due to internal management, with the result, we owe your company US $311,984.98 … we promise to pay US $20,000 before October 1995, to pay US $150,000 before the end of December, and to pay the remaining part before the end of June 1996."
After investigation, it was found that the US $14,003.76 under the contract in the present case was a part of the total amount the [Buyer] owes to the [Seller]. The [Seller] and the [Buyer] executed six sales contracts in 1994, including Sales Contract No. 94 YCZB/9-007 with a combined total amount of US $31,198.228. The [Buyer] acknowledged that the arrears should be US $311,984 altogether (US $2.70 more than the actual trade amount, however, this can be regarded as a calculation error). It is clear from the [Buyer]'s promise that the [Buyer] had received the [Seller]'s goods and accepted the actual delivery. Accordingly, the Arbitration Tribunal holds that the [Seller] had performed its obligation of delivering the goods. The [Buyer] provided no defense to the [Seller]'s claim for payment; therefore, the [Buyer] has waived its right to make a defense, and should be liable for non-payment.
(3) Article 74 CISG provides that:
"Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach."
Article 78 CISG stipulates that:
"If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it ..."
Accordingly, the [Buyer] should pay the [Seller] the price of goods and the interest. The [Seller] alleged that the interest on the price of goods should be calculated at the banks' interest rates on loans. However, the Arbitration Tribunal does not accept the [Seller]'s calculation of interest based on the bank loan interest rate just because the [Seller] manages its business by bank loan. The Arbitration Tribunal holds that it is reasonable to calculate interest at the rates on deposit. The interest on payment in arrear should be: US $14,003.76 (price of goods) × 4.93% (average annual interest rate) ÷ 12 (months) × 41 (months) = US $2,358.82.
(4) [Buyer] should bear all the arbitration fees.
(1) [Buyer] should pay the [Seller] the price of the goods: US $14,003.76;
(2) [Buyer] shall pay interest on the price of the goods of US $2,358.82;
(3) [Buyer] should bear all the arbitration fees.
The [Buyer] should pay the [Seller] the above amounts within forty-five days of this award.
This award is final.
* 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 France 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].
** LIN Zhongming, LL.M. China University of Political Science and Law. Major: International Economic Law.
*** 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.Go to Case Table of Contents