Source: http://cisgw3.law.pace.edu/cases/970529r1.html
Timestamp: 2019-04-22 18:21:38+00:00

Document:
1.1 Whereas the contract contained a provision on the application of Russian material law to the relations of parties, the Tribunal of International Commercial Arbitration (hereinafter Tribunal) found that the Vienna Convention 1980 (CISG), which is a constituent part of Russian legal system by virtue of Art. 15(4) of the Russian Federation Constitution, is applicable to the dispute between parties, since the parties have their main businesses in the territories of Contracting States of the CISG. According to Art. 7(2) CISG, issues, not covered in the contract nor governed by the CISG shall be settled by subsidiary application of Russian civil law.
1.2 As subsidiary law, the Tribunal applied Art. 395 of the Russian Federation Civil Code and previous practice regarding methods of payment in foreign currency to determine the amount of interest that should be recovered on the basis of Arts. 78 and 84 CISG.
The action was brought by the [Buyer], a Russian company, against the [Seller], a Dutch company, in connection with a short delivery of goods for which the [Buyer] had made a pre-payment under a contract concluded between the parties in September 1995.
[Buyer]'s claims included recovery of the pre-paid sum for the undelivered goods; recovery of a penalty provided for in the contract; recovery of interest for use of money; and compensation of arbitration fees and other expenses in connection with the arbitration.
3.1 The material laws of Russia shall be applied to the parties' relations to settle their dispute in accordance with contract clause 9. Russia and the Netherlands are Contracting States of the CISG. The CISG is a part of the Russian legal system (Art. 15(4) of the Russian Federation Constitution). Thus, this Convention should be applied to the relations of the parties under the present contract. In accordance with Art. 7(2) CISG, Russian civil law should be applied to issues, neither covered in the contract, nor governed by the CISG, and which cannot be settled on the basis of general principles of this Convention.
3.2 The case materials prove that [Seller], having received prepayment, did not ship to [Buyer] the goods on the sum in dispute. The [Seller] did not challenge the sum claimed by [Buyer]. Considering these circumstances, the Tribunal concluded that [Seller] shall pay the [Buyer] the sum of the principal debt as a recovery of the prepayment received from the [Buyer]. This obligation of [Seller] follows from Art. 53 CISG.
3.3 The case materials also prove that [Seller] committed delays of delivery of a few lots of goods, paid by the [Buyer], thus the [Seller] is obliged to pay the [Buyer] a penalty in the amount of 0.5 percent for each week of delay, providing that the total sum of the penalty shall not exceed 8 percent of the cost of undelivered goods. In this connection, the [Seller] must pay the [Buyer] the penalty calculated by [Buyer].
3.4 In accordance with Arts. 78 and 84 CISG, when seller is obligated to return the price for the goods, he shall also pay interest on sum, calculated from the day of payment of the price. Since the CISG does not provide the amount of interest to be paid by [Seller] in this case, the Tribunal, to solve this issue, referred to Russian civil laws, subsidiary applied to the relations of parties under the present contract.
On the basis of Art. 395 of Russian Federation Civil Code, the annual interest shall be calculated based on a banking credit rate at the place of creditor on the date of payment of financial obligation, or of its part.
With this, when granting the debt, the Tribunal may allow the claim of the creditor on the basis of the banking credit rate on the date of filing the claim or on the date of rendering the judgment. According to the practice of Tribunal regarding payments to be made in foreign currency, the average banking rate at the place of creditor shall be applied to such cases. Since, at the time of rendering of judgment, the average banking rate was 15 percent per annum, the Tribunal found it reasonable to apply this rate and put on [Seller] the obligation to pay interest in this amount on the sum of principal debt since 23 November 1995 to the date of actual payment.
3.5 According to paras. 4(1) and 9 of the Rules of Tribunal on Arbitration Fees and Expenses, which is an Annex to the Rules of Tribunal, the Tribunal granted the claim of [Buyer] regarding the expenses on arbitration proved by [Buyer].
* This is a translation of data on Proceeding 439/1995, dated 29 May 1997, of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, reported in Rozenberg ed., Arb Praktika (1996-1997) No. 60 [205-206].
All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Russia is referred to as [Buyer] and Respondent of Netherlands is referred to as [Seller].

References: Art. 15
 Art. 7
 Art. 395
 Art. 7
 Art. 53
 Art. 395