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CISG CASE PRESENTATION

China 20 May 1999 CIETAC Arbitration proceeding (Red tiles case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990520c2.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 19990520 (20 May 1999)

JURISDICTION: Arbitration ; China

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

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1999/24

CASE NAME: Unavailable

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: Singapore (respondent)

GOODS INVOLVED: Red tiles


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 78

Classification of issues using UNCITRAL classification code numbers:

53A [Buyer's obligation to pay price of goods];

78B [Rate of interest]

Descriptors: Price ; Interest

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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) 1999 vol., pp. 1966-1968

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Dong WU, CIETAC's Practice on the CISG, at nn.36, 192, 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

Red tiles case (20 May 1999)

Translation [*] by LIN Zhongming [***]

Edited by John Zhu [***]

The China International Economic and Trade Arbitration Commission [formerly known as "the Foreign Trade Arbitration Committee of the China Council for the Promotion of International Trade ", renamed as "the Foreign Economic and Trade Arbitration Committee of the China Council for the Promotion of International Trade ", and renamed as the present name, hereafter, the "Arbitration Commission"] accepted the present case according to:

   -    The arbitration clause in nineteen sales contracts (including Sales Contract No. SXTC970101) concluded between the Claimant [Seller], Shanxi ___ Export & Import Company, and the Respondent [Buyer], Singapore ___ Company from 1 January 1997 to 20 July 1998; and
 
   -    The written arbitration application submitted by [Seller] on 4 November 1998.

The Secretariat of the Arbitration Commission sent the Arbitration Notice and related documents to both parties by registered letter and by ZIP Express. The [Seller] received the Notice and appointed an arbitrator; the [Buyer] signed for the Notice but failed to appoint an arbitrator within the stipulated period.

[Seller] appointed Mr. A as an arbitrator, the Director of the Arbitration Commission appointed Mr. P as the presiding arbitrator, and appointed Mr. D as an arbitrator for the [Buyer] pursuant to Articles 24 and 26 of the CIETAC Arbitration Rules [hereafter, "Arbitration Rules", effective on 10 May 1998. The three arbitrators above formed the Arbitration Tribunal on 7 January 1999.

The Secretariat of the Arbitration Commission sent the Notice of the formation of the Arbitration Tribunal to both parties by registered letter and by ZIP Express on 7 January 1999. The [Seller] received the Notice and [Buyer] signed for the Notice on 11 January 1999.

The Secretariat of the Arbitration Commission arranged the hearing of this case in Beijing on 10 March 1999.

The Secretariat of the Arbitration Commission sent the Notice of the date of hearing to both parties by registered letter and by ZIP Express on 28 January 1999. The [Seller] received the Notice and entrusted its attorney to appear at the hearing on time. The [Buyer] signed for the Notice on 3 February 1999, but failed to appear at the hearing and to state the reasons for such absence to the Arbitration Tribunal and/or the Arbitration Commission.

The Arbitration Tribunal proceeded with the hearing by default in accordance with the Article 42 of the Arbitration Rules as scheduled in Beijing. The [Seller] stated the facts and answered the questions raised by the Arbitration Tribunal.

After the hearing, the Secretariat of the Arbitration Commission sent (99) CIETAC No. XXX Letter and the supplementary arbitration documents submitted by the [Seller] after the hearing to the [Buyer] by ZIP Express. The Letter was to inform the [Buyer] that any objection or request to the arbitration procedure such as submitting materials or requesting a second hearing should be raised within ten days after receiving this letter. If the [Buyer] failed to do so within the specified period, the Arbitration Tribunal would proceed with the arbitration.

The [Buyer] signed for the aforesaid documents on 30 March 1999, but failed to reply.

This case has now been concluded. The Arbitration Tribunal has handed down its award within the period stipulated in Article 52 of the Arbitration Rules.

The facts, opinion of the Arbitration Tribunal and arbitral award are as follows:

1. FACTS

The [Seller] and the [Buyer] concluded twenty-seven contracts for the sale of red tiles since March 1996. Seven transactions in 1996 were paid for by letter of credit without dispute. Since January 1997, the parties changed the terms of payment to telegraphic transfer, and since then the parties concluded and performed thirteen contracts. Then, since 26 February 1998, the parties changed the terms of payment back to letter of credit in the last six contracts signed after Contract No. SXTC980102. There is no dispute over the other five contracts except for Contract No. SXTC 980109, the last contract, which was concluded on 7 September 1998 and was not performed till now.

After a long period of negotiation, the parties failed to settle the payment issue that arose out of the thirteen contracts with telegraphic transfer payment terms. Therefore, the [Seller] submitted the arbitration application.

The [Seller]'s position

Upon the [Buyer]'s request and promise, the [Seller] changed the terms of payment from letter of credit to telegraphic transfer on January 1997. Since then the [Seller] has never received the contract price on time. The entire accounts receivables for the goods delivered by the [Seller] were US $404,128.91. However, the [Seller] has only received US $341,990.09 from the [Buyer]. The payment in arrears is US $62,138.82. Although the contracts were performed continually, the [Buyer] did not pay the price by telegraphic transfer as stipulated in the contracts. And the [Buyer] only paid part of the accounts payable in arrears in response to [Seller]'s request for payment before the [Seller] shipped the next batch of goods. Therefore, it is impossible for the [Seller] to show specifically the accounts receivables under every single contract. The payment in arrears of US $62,138.82 aforesaid is the accumulative arrears amount for the thirteen contracts.

In the [Seller]'s opinion, both excuses raised by the [Buyer] for its non-payment of the contract price, namely the funds shortage and the devaluation of the Singapore dollar, were not justified. The [Buyer] has delayed the payment in arrears for a long time, which affected the [Seller]'s business; after the devaluation of the Singapore dollar, the [Seller] decreased the price so as to keep its goods competitive in Singapore.

For this reason, the [Seller] considered that the [Buyer] had no excuse for its failure to pay on time in accordance with the contracts.

The [Seller]'s arbitration claims are:

(1) [Buyer] should pay the contract price in arrears: US $62,138.82;

(2) [Buyer] should pay the interest on this amount from 18 February 1998 to 1 May 1999 (annual interest rate: 7.75%; interest period: one year, two months and fifteen days);

(3) [Buyer] should compensate the [Seller]'s costs for processing this case: totaling renminbi [RMB] 23,162.60:

   -    The expenses for the hearing: RMB 4,376.60;
   -    Other costs paid for this case, including telephone and fax fees, attorneys' fees: RMB 18,786.

(4) [Buyer] should pay the entire arbitration fee.

The [Buyer] failed to defend on the [Seller]'s statement of the facts and its arbitration claims.

2. OPINION OF THE ARBITRATION TRIBUNAL

After the hearing, the Arbitration Tribunal found unanimously that the facts of this case were clear and the evidence was authentic During the hearing, the [Seller] presented several originals of the contracts in dispute and other evidence.

As the countries of both parties, namely China and Singapore, are Contracting States of the Convention on Contracts for the International Sale of Goods (1980) [hereinafter: "the CISG"], the CISG shall be applied. According to the CISG, the contracts under this case are valid. To pay the goods is a fundamental obligation for the [Buyer] under the CISG. The unjustified excuses raised by the [Buyer] for its non-payment of the contract price are not acceptable to the Arbitration Tribunal. The [Buyer] should pay the [Seller] the price of the goods in arrears, totaling US $62,138.82

With respect to the [Seller]'s claim for interest, the Arbitration Tribunal deemed that the interest period for the calculation of the interest brought forward by the [Seller] -- from the date of payment in the last contract (No. SXTC980101) to 1 May 1999 -- is reasonable. The Arbitration Tribunal also accepts the interest rate sought by the [Seller], which was determined in reference to the annual loan interest rate published by the People's Bank of China on February 1999.

Considering Article 59 of Arbitration Rules and the facts of this case, together with the scope and amount of the actual costs raised by the [Seller] and the corresponding evidence presented by the [Seller], the Arbitration Tribunal ruled that the [Buyer] should compensate the [Seller] its costs in processing this case, totaling RMB 23,162.60.

The [Buyer] should pay the entire arbitration fees.

3. AWARD

The Arbitration Tribunal rules that:

      (1) [Buyer] should pay the [Seller] the price of the goods in arrears: US $62,138.82 plus the interest of US $5,819.04;

      (2) [Buyer] should compensate the [Seller] its costs for processing this case: RMB 23,162.60;

      (3) [Buyer] should pay the entire arbitration fees.

      (4) Within forty-five days of the effective date of this award, the [Buyer] should pay the [Seller] the total amounts of US $67,957.86 and RMB 56,651.10. If the [Buyer] fails to pay within the specified period, 8% annual interest for US $ and 6% annual interest for RMB shall be added.

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 Singapore 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.

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Pace Law School Institute of International Commercial Law - Last updated October 20, 2006
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