Source: http://cisgw3.law.pace.edu/cases/050316r2.html
Timestamp: 2019-04-21 04:17:54+00:00

Document:
1.1 Taking into account that the action had been admitted to arbitration by the Tribunal before bankruptcy proceedings were commenced at the regional national arbitration court at [Seller]'s place of business, the Tribunal considered it possible to arbitrate and make an award on the action brought before it.
1.2 Since the places of business of the parties to the contract for the international sale of goods are located in States parties to the Vienna Convention 1980 [UN Convention on Contracts for the International Sale of Goods (1980), hereinafter CISG], and since [Buyer]'s claims can be considered on the basis of its provisions, the Tribunal rules that there is no need to establish a subsudiary statute and to apply provisions of a national legislation.
1.3 Although the difference in price between substitute transactions and the initial contract concluded with the [Seller] is indicated by the [Buyer] as the loss it suffered, the [Buyer] failed to submit any evidence that it concluded substitute transactions. The claims of the [Buyer] in this part are therefore not granted.
The action was brought by [Buyer], an Italian organization, against [Seller], a Russian organization, in connection with an incomplete delivery and incomplete return of the advance payment paid by the [Buyer] under an international sales contract concluded by the parties on 4 June 2003.
- Recovery of the losses suffered by the [Buyer] because of the incomplete delivery as well as recovery of the arbitration fee.
As evidence of the suffered losses the [Buyer] presented contracts with third parties, which it interpreted as substitute transactions.
2.2 The [Seller] did not submit a statement of defense and its representatives did not take part in the arbitration hearings. The materials of the case and the summons to the hearing were not handed over to the [Seller] and were returned to the Tribunal because the [Seller]'s organization was liquidated.
"Should the parties fail to settle all disputes and differences amicably, these disputes and differences are subject to settlement by the International Commercial Arbitration Tribunal in Moscow at the Chamber of Commerce and Industry of the Russian Federation [the Tribunal] in accordance with its rules and usages. Awards by this Tribunal will be final and binding on both parties. Russian is the language of the arbitration. The Tribunal shall be composed of three arbitrators."
Taking into account the above, pursuant to arts. 1 and 16 of the Law of the Russian Federation "On International Commercial Arbitration" and section 1 (2), (3), and (5) of the Rules of the Tribunal, the Tribunal declared itself competent to arbitrate the present case.
Turning to the question of arbitrating the case and making an award in the absence of the [Seller]'s representatives, the Tribunal established that materials of the case, rulings, and the summons to the hearing were sent to the [Seller] via [messenger service].
In accordance with section 2 (2) of the Rules of the Tribunal, the statement of action, the statement of defense, summons, and rulings shall be sent by registered letter or any other means which provides a record of the attempt to deliver a corresponding mailing.
In such circumstances, the Tribunal concluded that the [Seller] was duly notified of the time and place of the arbitration hearing. At the same time, the Tribunal states that no written application for postponing of the hearings of the case were received from the [Seller].
Taking into account the above and [Buyer]'s application to arbitrate the case in the absence of the [Seller], in accordance with art. 25 of the Law of the Russian Federation "On International Commercial Arbitration" and section 28(2) of the Rules of Tribunal, the Tribunal concludes that non-appearance of the [Seller] does not preclude the arbitration of the case and making an award and considers it possible to conduct the arbitral procedings in the absence of [Seller]'s representatives.
Considering the merits of the case, the Tribunal found that the statement of action had been admitted to arbitration by the Tribunal before 21 May 2004, that is prior to the bankruptcy proceedings commenced by the regional national arbitration court at [Seller]'s place of business in relation to [Seller]'s bankruptcy. In such circumstances, the Tribunal considers it possible, by virtue of art. 63 of the Law of the Russian Federation "On Insolvency (Bankruptcy)" of 26 October 2002 [�], to arbitrate the present action and make an award taking into account that the [Buyer] did not submit any application for suspension of the proceedings at the Tribunal.
Turning to the matter of law applicable to the relations under the contract between the parties, the Tribunal found that in their contract there is no reference to the applicable law.
In view of the absence of an agreement between the parties as to the applicable law, in accordance with art. 28 of the Law [of the Russian Federation "On International Commercial Arbitration"] and section 13 (1) of the Rules of the Tribunal, the Tribunal arbitrates the disputes on the basis of the substantive law determined by the agreement between the parties and, when there is no such agreement, on the basis of the law determined by the Tribunal in compliance with the conflict of laws rules which it considers applicable. In all cases, the Tribunal makes an award in accordance with the terms of the contract and with account taken of the trade usages applicable to this contract.
According to art.15(4) of the Russian Constitution, if an international agreement of the Russian Federation contains provisions other than provisions of its [national] law, the provisions of the international agreement shall be applied.
Since both the Republic of Italy and the Russian Federation are States parties to the CISG and the parties' places of business are located in these States, in accordance with art. 1(1)(a) CISG, the relations between the parties are to be governed by the CISG.
In accordance with art. 7(2) CISG, all questions concerning matters governed by the CISG, which are not expressly settled in it are to be settled in conformity with the general principles on which the CISG is based, and when such principles are absent, in conformity with the law applicable by virtue of the rules of private international law.
Since the [Buyer] made only claims of recovery of the amounts paid by it for the goods and the amounts of losses and, at the same time, made no other claims, including claim for recovery from the [Seller] of the interest for making use of another's monetary funds (art. 78 CISG), the Tribunal holds that the rules contained, in particular, in Chapter II "Obligations of the seller" (art. 30-44) and Chapter V Section II "Damages" (art. 74-77), exhaustively regulate the subject matter of the present dispute and, thus, in order to regulate the relations between the parties under the contract there is no need to establish a subsidiary statute. Therefore, the Tribunal declines [Buyer]'s supposition that when considering its claim for recovery from the [Seller] of the losses it is possible to apply the law of the Russian Federation, in particular, art. 15 of the Russian Civil Code.
In performance of the contract, the [Buyer] transferred to [Seller]'s account in the specified bank an amount in US dollars by means of a payment order of 5 June 2003 as payment for the goods, which the [Seller] was obliged to deliver. In violation of clause 3 of the contract, the [Seller] failed to make a delivery and, at the same time, on 19 March 2004 the [Seller] returned to [Buyer]'s account only a part of the received advance payment.
In accordance with art. 30 CISG, the seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods as required by the contract and the CISG. As established by the materials of the case, the [Seller] did not perform any of these obligations.
Also, the Tribunal took into account the fact that the [Seller] did not submit to the Tribunal a statement of defense and that the [Seller] contested neither the merits nor the amount of the [Buyer]'s claims.
In such circumstances, the Tribunal concludes that [Buyer]'s claim for recovery of the main sum in arrears from the [Seller] is well-founded and is to be granted.
According to art. 75 CISG, if the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement of the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under art. 74 CISG.
The materials of the case and explanations of [Buyer]'s representative establish that the contract of 4 June 2003, non-performance of which is the subject matter of the dispute, was not duly avoided.
The Tribunal states that the contracts referred to by the [Buyer] as the substituting transactions had been concluded between the [Buyer] and a third party before 1 August 2003, which date commenced the term for [Seller]'s performance of its obligations to the [Buyer] under the disputed contract.
- It received the goods from a third party as well as payment for these goods and resold them to third parties as performance of its own obligations in a reasonable manner.
Therefore, the Tribunal finds no grounds to consider [Buyer]'s contracts for delivery with a third party as substitute transactions.
With this in mind, the Tribunal holds that [Buyer]'s claim for recovery of losses is not well-founded and shall not be granted.
According to section 6(2) of the Rules of Arbitration Expenses and Fees (Supplement to the Rules of the Tribunal), the arbitration fee to be recovered to the [Buyer] is imposed on the [Seller] in proportion to the amount of the satisfied claims.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the Republic of Italy is referred to as the [Buyer], and the Respondent of the Russian Federation is referred to as the [Seller].

References: art. 25
 art. 63
 art. 28
 art.15
 art. 1
 art. 7
 art. 15
 art. 30
 art. 75
 art. 74