Russia 2 August 1999 Arbitration proceeding 516/1996 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990802r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 516/1996
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (respondent)
BUYER'S COUNTRY: Germany (claimant)
GOODS INVOLVED: Goods
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:
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Russian): Rozenberg, Praktika of Mejdunarodnogo Commercheskogo Arbitrajnogo Syda: Haychno-Practicheskiy Commentariy [Practice of the International Commercial Arbitration Court: Scientific - Practical Comments] Moscow (1999-2000) No. 28 [148-149]
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
Translation [*] by Yelena Kalika [**]
1. SUMMARY OF RULING
1.1 Taking into consideration that Russia and Germany, where the commercial enterprises of the parties to the contract are located, are CISG Contracting States, this Convention governs the relationships between the parties as stipulated by the parties during the proceeding. Pursuant to the conflict of laws provision of Russian law (Article 166 of the USSR Principles of Civil Laws 1991) and Article 7(2) CISG, Russian civil law applies subsidiary as the law of the Seller's state.
1.2 The Tribunal did not take into account the Respondent [Seller]'s assertion that he had a right to increase the price of the goods because the [Seller]'s suggestion [that the price be increased] stated in the draft amendment to the contract was not signed by the Claimant [Buyer]. To modify the payment terms in the contract (100% advance payment vs. 50% advance payment) an agreement of the parties was required. There was no such agreement here. Therefore, when resolving the dispute, the terms of the contract signed by both parties were taken into account.
1.3 The Tribunal found that the [Buyer]'s failure to make a 50% advance payment for the goods did not relieve the [Seller] from his obligation to make delivery as agreed upon in the contract because the contract did not set forth the [Seller]'s right to suspend its performance. The Tribunal took into account that it clearly followed from the [Seller]'s letters that the [Seller]'s intention to increase the price of the goods was the reason for the suspension of delivery.
1.4 The [Buyer]'s claim to recover his losses in the amount equal to the difference between the contract price and the price at which his customer purchased the goods from other suppliers was sustained.
2. FACTS AND PLEADINGS
The claim was brought by the German [Buyer] against the Russian [Seller] in connection with partial non-delivery of the goods under the international sale contract made by the parties on 19 January 1994. The [Buyer] claimed recovery of the losses suffered in this connection.
3. TRIBUNAL'S REASONING
The Tribunal's award contained the following main points.
3.1 The Tribunal's competence was based on the arbitration clause in the contract.
3.2 The relationships of the parties are governed by the CISG because Russia and Germany are CISG Contracting States and since the parties do not object. Pursuant to Article 7(2) CISG and the conflict of laws provision of Russian law, Russian law applies subsidiary as the law of the seller's state.
3.3 Since the fact of partial non-delivery of goods was proven by the materials of the case and is not contested by the [Seller] and since the [Seller]'s assertion that he had a right to increase the price and to suspend delivery was not proven, the [Buyer]'s claim to recover losses suffered from the [Seller] was sustained. The Tribunal took into account the following. First, the draft amendment to the contract, which was prepared by the [Seller] and set forth the [Seller]'s right to increase the price, was not signed by the [Buyer]. Second, the contact did not set forth the [Seller]'s right to suspend its performance because of [Buyer]'s failure to make a 50% advance payment for the goods to be delivered. As followed from the [Seller]'s letters, the factual reason for the suspension of delivery was the [Seller]'s intention to increase the price of goods. Third, an agreement of the parties was required to modify the terms of payment stated in the contract (i.e., the requirement of 100% advance payment).
3.4 The [Buyer]'s losses were calculated based on evidence of his payment to his customer of the difference between the price of goods under the contract with the [Seller] and the price at which the customer purchased the goods from other suppliers.
* This is a translation of the award in proceeding 516/1996, dated 2 August 1999, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry reported in: Rozenberg ed., Arb. Praktika 1999-2000, No. 28 [148-149]. All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Germany is referred to as [Buyer] and Respondent of the Russian Federation is referred to as [Seller].
** Yelena Kalika, JD Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Moscow law firm, and is an Associate at the Pace Institute of International Commercial Law.Go to Case Table of Contents