Source: http://www.cisg.law.pace.edu/cisg/wais/db/cases2/970212r1.html
Timestamp: 2019-04-19 12:54:07+00:00

Document:
1.1 The Tribunal of International Commercial Arbitration (hereinafter Tribunal) found Russian law applicable to the dispute arisen from an international sales contract concluded between a Russian company and a Latvian company in March 1994 since the parties chose Russian law at conclusion of their contract. By virtue of Art. 1(1)(b) of the Vienna Convention 1980 (CISG) and according to Art. 15 of the Russian Federation Constitution and Art. 7 of the Russian Federation Civil Code, the Tribunal applied the CISG to parties' relations.
1.2 Having admitted the causal nexus between the expenses incurred by [Seller] under the credit contract concluded between him and a bank, and a sales contract with a [Buyer], the Tribunal granted the [Seller]'s claim to have [Buyer] compensate him those expenses in a part that exceeds the amount of penalty that was allowed in favor of [Seller] under provisions of the contract.
1.3 Since the [Buyer] did not file a counterclaim, did not present a calculation of the penalty, nor proved the losses he incurred, on compensation of which, in his belief, [Buyer] is entitled, the Tribunal cannot consider these claims in the present dispute.
The matter of the action, brought by the [Seller], a Russian company, against the [Buyer], a Latvian company, was a claim to recover the price for the goods delivered to [Buyer] under the contract concluded in March 1994. The [Buyer] paid a prepayment in the amount of part of the cost of the goods, later he paid only a small part of the remaining debt. Having admitted the debt, the [Buyer] pointed to a chain of breaches of contract by the [Seller].
The claims of [Seller] included: recovery of the principal debt; recovery of a contract penalty for the delay in payment; compensation of losses incurred in connection with payment of interest to the bank under a credit contract concluded because of the delay in payment by [Buyer]. Objecting to the claims, the [Buyer] referred to the fact that because of breaches of contract committed by [Seller] the [Buyer] incurred significant losses. Besides this, in connection with delay of delivery, committed by [Seller], the [Buyer] is entitled under the contract to claim from [Seller] a penalty. In [Buyer]'s belief, the sum of penalty, calculated by [Seller] and [Buyer]'s claim of penalty may be set-off and mutually settled.
According to the statement of the [Seller]'s representatives, the [Seller] did not receive any claims from [Buyer] as to the quality of goods or the term of delivery.
Other alleged explanations of the reasons why the goods had not been paid for by [Buyer] were also not proved by documents.
3.1 The competence of the Tribunal follows from the contract of the parties which provides for arbitration of disputes by the Tribunal of Arbitration at the Russian Federation Chamber of Commerce and Trade that was renamed Tribunal of International Commercial Arbitration by the Russian Federation Supreme Council's Decision of 7 July 1993.
3.2 The parties in their contract chose Russian material law as applicable. Since, by virtue of Russian Federation Constitution Art. 15 and Civil Code Art. 7, the Russian legal system includes international treaties to which the Russian Federation is a Contracting State, the Vienna Convention 1980 (CISG) is applicable to the relations of parties (CISG Art. 1(1)(b)).
3.3 The [Seller]'s claim to recover the principal debt shall be granted on the basis of Art. 62 CISG.
3.4 [Seller]'s claim to recover a penalty for delay of payment is based on a contractual provision and, therefore, shall be granted in accordance with contract and Art. 330 of the Russian Federation Civil Code. [Buyer]'s objections in this regard are connected with his statement about the delay of delivery of goods from [Seller]'s side and his right to penalty and compensation of losses, incurred because of delay of delivery cannot be considered in the present dispute since the [Buyer] did not file a counterclaim, did not present a calculation of the sum of penalty, nor did [Buyer] proved the losses incurred.
3.5 Having admitted the causal nexus between the expenses incurred by [Seller] under the credit contract concluded between him and a bank, and a sales contract with a [Buyer], and having reviewed the evidence presented by [Seller] on the sums paid by him under the credit contract, the Tribunal concluded that, according to Art. 394 of the Russian Federation Civil Code, [Seller]'s losses in this connection shall be compensated in a part that exceeds the amount of penalty for the delay of payment.
* This is a translation of data on Proceeding 261/1995, dated 12 February 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. 49 [175-176].
All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of Russia is referred to as [Seller] and Respondent of Latvia is referred to as [Buyer].

References: Art. 1
 Art. 15
 Art. 7
 Art. 15
 Art. 7
 Art. 1
 Art. 62
 Art. 330
 Art. 394