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CISG Article 78: Endless disagreement among
commentators, much less among the courts

Francesco G. Mazzotta
July 2004

Appendix 1

Argentina
Australia
Bulgaria
Canada

ARGENTINA

1. Juzgado Nacional de Primera Instancia en lo Comercial No. 7 [National Commercial Court of First Instance], May 20, 1991, available at <http://cisgw3.law.pace.edu/cases/910520a1.html>.

Original language:     
Translation:
Spanish
Available

Court (translation):

"However, there is no express norm of the Convention which can indicate the source or origin of [the amount of] of interest when payment was agreed to at a fixed period of time. Payment of interest on such transactions is a widely spread and accepted practice in international commerce (art. [9(2)] 1980 Vienna Convention)."

2. Juzgado Nacional de Primera Instancia en lo Comercial No. 10 [National Commercial Court of First Instance], October 23, 1991, available at <http://cisgw3.law.pace.edu/cases/911023a1.html>.

Original language:     
Translation:
Spanish
Available

Court (translation):

"The payment of interest on a debt in dollars at an internationally recognized and used rate, such as the prime rate, is an accepted usage in international trade, even if it is not found to have been expressly agreed by the parties."

Unilex abstract:

"In order to ascertain whether the buyer was obliged to pay interest, the Court expressly referred to the international trade usages on the basis of Art. 9 CISG. In this respect the Court held that payment of interest, 'at an internationally known and used rate such as the Prime Rate', constitutes 'an accepted usage in international trade, even when it is not expressly agreed between the parties', then granting the seller recognizance for its credit for interest 'at the Prime Rate ... as required by the creditor', without specifying which Prime Rate it was, and applying a rate of 10 %. In the same decision, the Court also entitled another US seller, on the same grounds, to recover interest at the Prime Rate plus a spread of 2%, as provided in the contract."

3. Juzgado Nacional de Primera Instancia en lo Comercial No. 10 [National Commercial Court of First Instance], October 6, 1994, available at <http://cisgw3.law.pace.edu/cases/941006a1.html>.

Original language:     
Translation:
Spanish
Available

Court (translation):

"With respect to interest accruing on the credit deriving from the performance of the first sales contract, the Court gave recognizance to the credit for interest at the rate of 24%, that is corresponding to the rate agreed upon by the parties. The Court held this on the ground that CISG, as envisaged by its Art. 6, grants the parties with the widest possibility of determining the contents of their contract. With respect to interest accruing on the credit deriving from the performance of the second sales contract, the Court determined interest at the rate of 12%, as a rate generally recognized in international trade. In the Court reasoning, since CISG does not determine the interest rate, reference should be made to international trade usages 'which are assigned by CISG itself a hierarchical position higher than the very same CISG provisions (Art. 9 CISG)'."

4. Cámara Nacional de Apelaciones en lo Comercial de Buenos Aires [Second Instance Court of Appeal], July 21, 2002, available at <http://cisgw3.law.pace.edu/cases/020721a1.html>.

Original language:     
Translation:
Spanish
Unavailable

SUMMARY

Cases involving Article 78: 4
Cases for which an English translation is available: 3
Cases for which only an abstract was available: 0
Cases for which neither translation nor abstract was available: 1


AUSTRALIA

1. Supreme Court of Queensland, November 17, 2000, available at <http://cisgw3.law.pace.edu/cases/001117a2.html>.

Original language:      English

2. Supreme Court of Western Australia, January 17, 2003, available at <http://cisgw3.law.pace.edu/cases/030117a2.html>.

Original language:      English

Court:

"[Buyer] is entitled to damages for breach of contract and in negligence in the total sum of $AUD307,998.44. Vista is also entitled to interest on such damages at the rate of 6 per cent per annum, pursuant to s 32 [section 32] of the Supreme Court Act 1935 (WA), calculated from 10 December 1997 (when formal demand for damages was made following the third recall of the goods in question) until judgment."

SUMMARY

Cases involving Article 78: 2
Cases for which an English translation is available: 2
Cases for which only an abstract was available: 0
Cases for which neither translation nor abstract was available: 0


BULGARIA

1. Bulgarska turgosko-promishlena palata [Bulgarian Chamber of Commerce and Industry], April 24, 1996, available at <http://cisgw3.law.pace.edu/cases/960424bu.html>.

Original language:     
Translation:
Bulgarian
Available (English, German)

2. Bulgarska turgosko-promishlena palata [Bulgarian Chamber of Commerce and Industry], February 12, 1998, available at <http://cisgw3.law.pace.edu/cases/980212bu.html>.

Original language:     
Translation:
Bulgarian
Available (English, German)

Court (translation):

"According to Article 78 CISG, 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 Convention only defines the principle that the party in arrears owes interest, without determining the amount of that interest. First, a debtor is in arrears when his liability becomes subject to execution. Second, the creditor must invite the debtor to fulfill its liability voluntarily. The [seller] did not claim for interest in his complaint. He only declares that a separate suit will be brought against the [buyer] for interest calculated according to the quarterly LIBOR. There is no evidence proving that the [seller] invited the [buyer] to satisfy its debt and pay the interest upon it voluntarily. Consequently, there is no evidence proving that the [buyer] is in arrears. With the addition to the complaint received by the Arbitral Tribunal on 3 December 1997, the [seller] claims interest. The Arbitral Tribunal allowed this addition to the complaint with its ruling of 15 December 1997. After this act of the Arbitral Tribunal, the [buyer] is in arrears and owes the interest. The Arbitral Tribunal accepts that the [buyer] is in arrears from the date when the lawsuit was brought (3 December 1997), but not for the period before that date. With its addition to the complaint from 3 December 1997, the [seller] [creditor] cannot put in arrears the [buyer] [debtor] for a period preceding that date. This becomes clearer if we take into consideration the fact that according to the Convention, the amount of the interest is not defined and has to be determined by the contracting parties themselves or by other means. The innocent party cannot be in arrears for the period before an invitation is made to voluntarily pay."

3. Bulgarska turgosko-promishlena palata [Bulgarian Chamber of Commerce and Industry], March 12, 2001, available at <http://cisgw3.law.pace.edu/cases/010312bu.html>.

Original language:     
Translation:
Bulgarian
Available (English)

Court (translation):

"The legal basis for the interest claim is article 78 of CISG, according to which if a party fails to pay the price that is in arrears, the other party is entitled to interest on it. According to article 59 of the CISG, the buyer must pay the price on the date fixed by or determinable from the contract and the CISG. The CISG does not define the amount of the interest in arrears. Considering that in this particular case the contracting parties did not stipulate the applicable law, the Arbitral Tribunal accepts that the substantive law of the plaintiff's country must be applied, because he owes the characterizing contractual obligation. According to Government Decree N 72/94 for the determination of the amount of the interest, quarter LIBOR for the US dollar is used plus 10 points. Considering the above, the Arbitral Tribunal finds the claim for the interest reasonable. The defendant is directed to pay to the plaintiff the interest over the main amount calculated until the date when the claim was brought to trial. The claim for the legal interest over the main amount, calculated from the day when the claim was brought to trial until its final payment, is also reasonable."

4. Bulgarska turgosko-promishlena palata [Bulgarian Chamber of Commerce and Industry], February 28, 2002, available at <http://cisgw3.law.pace.edu/cases/020228bu.html>.

Original language:     
Translation:
Bulgarian
Available (English)

SUMMARY

Cases involving Article 78: 4
Cases for which an English translation is available: 4
Cases for which only an abstract was available: 0
Cases for which neither translation nor abstract was available: 0


CANADA

1. Ontario Superior Court of Justice, August 31, 1999, available at <http://cisgw3.law.pace.edu/cases/990831c4.html>.

Original language:      English

Court:

"There shall be pre-judgment interest in accordance with s. 128 of the Courts of Justice Act from the date the cause of action arose, which I find to be from the date of the final invoice of April 16, 1996, as well as post-judgment interest."

2. Supreme Court of British Columbia, August 21, 2003, available at <http://cisgw3.law.pace.edu/cases/030821c4.html>.

Original language:      English

Court:

"Buyer] claims the sum of $12,331 in extra interest payments it made to its banker as a result of the interest rates on its operating and term loans being increased. The rate on the operating loan was increased from the bank's prime rate plus 0.875% to prime rate plus 1.375% in March 1999. The rate on the term loan was increased from prime plus 1.250% to prime plus 1.5% in November 2000.

There is no evidence as to why [Buyer] 's banker increased the interest rates. The interest rates charged on the two types of loans were changed at different times and they were not lowered after [Buyer] had a very profitable year in fiscal 2000. There is insufficient evidence for me to conclude that the interest rates were increased as a result of Kurtz's breaches of its contract with [Buyer].

I hold that [Buyer] has not proved a loss under this head of damages attributable to [Seller]'s breaches.

....

[Buyer] is also entitled to pre-judgment interest on its past losses. If the parties are unable to agree on the amount of pre-judgment interest, I direct that there be an accounting in respect of the interest before the registrar, who is to prepare a report and recommendation."

SUMMARY

Cases involving Article 78: 2
Cases for which an English translation is available: 2
Cases for which only an abstract was available: 0
Cases for which neither translation nor abstract was available: 0
Cases applying domestic law to determine the applicable rate: 2


Pace Law School Institute of International Commercial Law - Last updated November 15, 2004
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