China 25 February 1999 CIETAC Arbitration proceeding (Cotton vest case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990225c2.html]
DATE OF DECISION:
DATABASE ASSIGNED DOCKET NUMBER: CISG/1999/10
CASE HISTORY: Unavailable
SELLER'S COUNTRY: People's Republic of China (claimant)
BUYER'S COUNTRY: France (respondent)
GOODS INVOLVED: Cotton vests
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. 1578-1580
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)|
Cotton vest case (25 February 1999)
Translation [*] by Meihua Xu [**]
Edited by John W. Zhu [***]
The China International Trade and Economic Arbitration Commission Shanghai Sub-commission (hereafter, the "Shanghai Sub-Commission") accepted this case according to:
|-||The arbitration clause in Contract No. 94YCZB/9-009 for the sale of cotton vests signed by
Claimant [Seller], China Zhejiang __ Company, and 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, 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. The [Buyer] did not submit a defense. On 25 February 1999, the Arbitration Tribunal held a court session at Shanghai Sub-commission. The seller's legal representative and agent attended the court session, but the [Buyer] was absent. 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 Arbitration Tribunal's questions. After the court session, the [Seller] submitted supplementary documents. The Arbitration Tribunal asked the Secretariat of the Shanghai Sub-commission to send the aforesaid supplementary document to the [Buyer] by mail, and gave the [Buyer] the opportunity to submit a defense or to request a second court session; however, the [Buyer] did not provide a response within the stipulated time.
According to Article 42 of the Arbitration Rules, the Arbitration Tribunal ruled on this case by default.
This case has been concluded. The Arbitration Tribunal has handed down its award on the basis of the facts and the law. The following are the facts, the Tribunal's opinion and award.
On 9 July 1994, the [Buyer] and the [Seller] signed the aforesaid sales contract, by which the [Buyer] was to purchase 3,840 cotton vests (PARKAS EN 100% SOIE) from the [Seller] on the following terms.
|-||Price: Unit price is US $12/piece, totaling US $46,080;|
|-||Delivery term: CIF by sea; the port of shipment is Shanghai;|
|-||Shipment period: 10 September 1994;|
|-||Payment term: D/P 60 days;|
The [Seller] shipped goods on 8 October 1994, but the [Buyer] failed to make payment before the deadline, 9 December 1994. After urging the [Buyer] with no result, the [Seller] filed this arbitration application to Shanghai Sub-commission, asking that:
1. [Buyer] pay the price of the [revised quantity of] goods of US $35,688.00;
2. [Buyer] pay the loss [interest on the amount owed] of US $18,857.54;
3. [Buyer] 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 of the goods under the contract and postponed the shipment date. On 8 October 1994, the [Seller] shipped 2,974 cotton vests by air, totaling US $35,688.00. But the [Buyer] did not pay for the goods. 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 fulfilled its contract obligations 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] did not deliver the goods following the quantity and shipping period
stipulated in the contract because the [Buyer] modified the quantity of the goods and
postponed the shipping period;|
|(2)||The second claim of the [Seller] should be US $18,089.53, i.e., actual loss =
payment in arrears × number of delayed months × loan interest (US $35,688.00 ×
44 × 11.52‰ = US $18,089.53);|
|(3)||The total amount the [Buyer] owes to the [Seller] is US $311,982.28, which the [Buyer] promised to pay in installments, including the US $35,688.00 under Contract No. 94YCZB/9-009 in this case.|
The [Buyer] did not present a defense.
II. OPINION OF THE ARBITRATION TRIBUNAL
1. Since the parties' places of business are in different Contracting States of the United Nations Convention on Contracts for the International Sales of Goods (hereafter, the "CISG"), the CISG should be applied.
2. Contract No. 94YCZB/9-009 between the [Buyer] and the [Seller] was legally formed. After examining the material submitted by the [Seller] and presented at the court session, the Arbitration Tribunal notes that the [Seller] failed to provide evidence to show that changes made to the quality and shipping period of the goods were requested by the [Buyer]: the [Seller] presented an air waybill, a packing list, and an invoice without the delivery document issued by the air carrier. However, the [Buyer] clearly admitted in its written promise sent to the [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, 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 $35,688 under the contract in this case is a part of the total amount the [Buyer] owes to the [Seller]. The parties had signed a total of six contracts in 1994, including Contract 94YCZB/9-009 with a combined total amount of US $311,982.28. The [Buyer] admitted that it owed the [Seller] US $311,984.98, which was US $2.70 more; that should be considered a calculation error.
The promise made by the [Buyer] indicates that the [Buyer] has received the goods delivered by the [Seller] and admitted the [Seller]'s delivery of the goods; therefore, the Arbitration Tribunal deems that the [Seller] has performed its obligation to deliver the goods. The [Buyer] provided no defense to the [Seller]'s request for payment; therefore, the [Buyer] has waived its right to make a defense, and should be liable for non-payment.
3. According to Article 74 CISG, which 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 …" and Article 78 CISG, which 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", the [Buyer] shall pay the price and the interest to the seller. 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 deems that it is reasonable to calculate interest based on bank interest on deposit; therefore, the interest on payment in arrears is: US $35,688.00 (price for the goods) × 4.93% (average annual interest rate) ÷ 12 months × 44 months = US $6,451.20.
4. The [Buyer] shall bear the arbitration fee.
III. THE AWARD
The Arbitration Tribunal rules that:
|(1)||[Buyer] shall pay to the [Seller] the price for the goods of US $35,688.00;|
|(2)||[Buyer] shall pay interest on the price of the goods of US $6,451.20;|
|(3)||[Buyer] shall bear the arbitration fee.|
The [Buyer] shall pay the aforesaid sum within 45 days of this award.
This is the final award.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the Peoples' Republic of China is referred to as [Seller] and 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].
** 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 a 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.
*** 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