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CISG CASE PRESENTATION

Russia 11 August 1999 Arbitration Court [Appellate Court] for the Moscow Region [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990811r1.html]

Primary source(s) of information for case presentation: Alexandre Muranov

Case Table of Contents


Case identification

DATE OF DECISION: 19990811 (11 August 1999)

JURISDICTION: Russian Federation

TRIBUNAL: Federal Arbitration Court for the Moscow Region [Cassation Instance]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: KG-A40/2426-99

CASE NAME: G.M. Pfaff Aktiengeselshaft v. Inter Trading and Service Limited

CASE HISTORY: 1st instance Arbitration Court for the City of Moscow (A40-44778/98-45-644) 5 April 1999; 2d instance Appellate Division of the Arbitration Court for the City of Moscow 31 May 1999 [reversed and remanded]

SELLER'S COUNTRY: Germany (claimant)

BUYER'S COUNTRY: [-] (respondent)

GOODS INVOLVED: Equipment


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: [-]

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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 (Russian): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Federal Arbitration Court for the Moscow Circuit

Case No. KG-A40/2426-99 of 11 August 1999

Translation by Yelena Kalika [*]

Resolution
of Cassation Board on lawfulness and reasonableness of decision of Arbitration Court

The company "G.M. Pfaff Aktiengeselshaft" (Germany) commenced an action with the Arbitration Court for the City of Moscow. The claim was brought against "Inter Trading and Service Limited" to recover:

-   Deutsche Mark [DM] 496,515.68 and US $100,839.97 of the debt for goods delivered under a contract of 1 April 1998,
- DM 23,958.97 and US $4,593.82 of annual interest on the sum in arrears from the [first] day of the delay in payment to 31 December 1998,
- 10% bank interest on the sum of debt from 1 January 1999 until the date of payment.

By the decision of the Arbitration Court for the City of Moscow of 5 April 1999 on case No. A40-44778/98-45-644 the claim was denied. The court stated that it rejected the claim because the parties violated the requirements of the UN Convention as to the form of a transaction as well as because there was no evidence that the Respondent received the goods.

By the resolution of the Appellate Division of the Arbitration Court for the City of Moscow of 31 May 1999 the decision of the court of 5 April 1999 on case No. A40-44778/98-45-644 was upheld on the same grounds.

In his Cassation Complaint regarding the decision of 5 April 1999 and resolution of the Appellate Division of the Arbitration Court for the City of Moscow of 31 May 1999 on case No. A40-44778/98-45-644, the Claimant asks the court to reverse the said judicial acts as made with violations of substantive and procedural laws.

In his reply to the Cassation Complaint, the Respondent asks the court to uphold the said judicial acts and to deny the Cassation Complaint.

At the hearing held by the Cassation Board, the Claimant's representative made an argument in support of the Cassation Complaint. The Respondent's representative asked to uphold the judicial acts as lawful and reasonable. The Respondent's representative based his position on the arguments stated in the reply to the Cassation Complaint.

After reviewing the materials of the case and discussing the arguments stated in the Cassation Complaint and after hearing the arguments made by the representatives of the Claimant and Respondent, the Cassation Board came to the conclusion that the contested judicial acts should be reversed for the following reasons:

-   When denying the claim, the court reasoned that the Claimant did not submit sufficient proof of reasonableness of his claim.
 
- The court established that, in accordance both with orders placed by the Respondent and with the Claimant's confirmations, the Claimant made deliveries of goods and issued invoices to the Respondent. There is proof of orders and confirmations in the materials of the case.
 
- The court decided that there was no international commercial transaction between the parties since the offer and acceptance were sent via fax. The fax messages in the materials of the case are presented in unnotarized copies.

The court also found that the Claimant failed to present evidence that the Respondent received the goods. [The court stated] that the acknowledgement of the debt by the Respondent could not be taken into consideration since in the Respondent's letters there was no reference to any agreement between the parties to deliver goods.

The Cassation Board cannot find the judicial acts reasonable for the following reasons:

-   Taking into consideration the provisions of the Vienna Convention 1981 [Translator's note: The "Vienna Convention 1980", i.e., the CISG, appears to have been intended] and after evaluating the documents submitted by the Claimant to prove that the contract had been made, the court found that there was no commercial transaction between the parties. Such conclusion of the court seems to be correct. It was based on the fact that the Claimant failed to submit any documents meeting the requirements of Article 60 of the Russian Federation Arbitration Procedure Code which would prove the existence of the contract.
- Thus, the relationships between the parties were not contractual.

The court found that the bill of lading submitted with the materials of the case did not evidence that the goods were set aside for the Respondent as part of an international commercial transaction because [this bill of lading] did not contain any reference to a transaction between the Claimant and Respondent within the frame of the agreement of 1 April 1998. [The bill of lading] did evidence that the goods were shipped to Finland.

Such conclusion of the court contradicts the fact, which was established earlier, that there was no international commercial transaction between the parties. Moreover, the court did not take into account that the Claimant was identified as a recipient in the bill of lading and that the goods were shipped to Finland in accordance with the Respondent's instructions. The letters submitted with the materials of the case contain such instructions. As evidenced by the waybills submitted with the materials of the case (see volume 2, p. 122-124), The Claimant did not make either any further delivery of the goods or their delivery to Moscow.

The court's conclusion, that the Respondent could not pay the invoices in accordance with the confirmation of Commerce Bank (volume 2, p. 103-110) since he had no hard currency account, is also incorrect (see the invoices submitted with the materials of the case). Such confirmation evidences that the funds were transferred from the Respondent's accounts abroad. Neither presence nor absence of a hard currency account in the Russian Federation has anything to do with such confirmations.

Considering such circumstances, the Cassation Board is of the opinion that the contested judicial acts are not sufficiently reasonable. Therefore, they must be reversed. The case must be remanded to the lower court.

On remand, the court should take the above into consideration and establish the facts that have to be proved. The court should also determine the relationships between the parties, taking into consideration all the materials presented, and resolve the dispute by applying all the relevant rules of substantive and procedural laws.

Pursuant to Article 175 of the Russian Federation Arbitration Procedure Code, the Federal Arbitration Court for the Moscow Circuit

HOLDS:

The decision of 5 April 1999 and resolution of the Appellate Division of the Arbitration Court for the City of Moscow of 31 May 1999 on case No. A40-44778/98-45-644 are reversed. The case is remanded to the lower court.


FOOTNOTE

* Yelena Kalika, a law student at the Pace University School of Law, has studied at the Moscow State Law Academy, interned with a Moscow law firm, and is a Research Assistant at the Pace Institute of International Commercial Law.

All translations should be verified by cross-checking against the original text.

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Pace Law School Institute of International Commercial Law - Last updated February 25, 2004
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