Source: http://cisgw3.law.pace.edu/cases/040219r1.html
Timestamp: 2019-04-19 14:43:32+00:00

Document:
Yes. Contract provided that case governed by Russian substantive law. Pursuant to Article 1(1)(b), the tribunal applied the CISG.
1.1 Since the contract of international sale and purchase concluded by the parties envisages application to their relations of Russian substantive law, by virtue of art. 15 of the Constitution of Russian Federation and article 1(1)(b) of the Vienna Convention of 1980, the Tribunal holds that the dispute of the parties is subject to adjudication on the basis of this Convention, which is a part of the Russian substantive law. Norms of the Russian civil legislation are to be applied as the subsidiary statute.
1.2 The claim of the [Seller] to recover from the Respondent [Buyer] the main sum in arrears, confirmed by the appropriate evidence, with addition of the contract penalty, voluntarily reduced by the [Seller] to the sum of the main debt, was satisfied. It is held that such acts of the [Seller] comply with the art. 333 of the Russian Civil Code, which provides for the reduction of the contract penalty in case of its obvious disproportion with the outcomes of the violation of the obligation.
1.3 The claim of the [Seller] to recover interest for the use of funds for the period from the date the arbitral award till the day of the actual repayment of debts was left without consideration, taking into account that [Seller] had not paied at all the arbitration charges for the claim brought on the present grounds.
The claim was lodged by the USA firm against the Respondent [Buyer] company, located in the British Virgin Islands, in connection with partial non-payment for goods delivered according to a contract concluded by the parties on 15 December 2000. Having presented the documents confirming the fact of the fulfillment of the delivery obligations (goods acceptance-conveyance act and invoices) as well as of the partial payment (accounts revise act signed by the representatives of both parties), the [Seller] demanded to recover from the [Buyer] the main sum in arrears with the addition to it of the contractual penalty and interest per annum for the period from the date of the arbitral award till the day of the actual repayment of debt.
The sum of the penalty under the contract, exceeding in 6.5 times the main sum in arrears, was reduced by the [Seller] to the sum of the main debt.
The [Buyer] did not present explanations in respect to the claim and his representatives did not appear at the hearings of the ICA Tribunal (hereinafter: Tribunal).
The contract presented by the [Seller] in the claim (para. 13.2 of the Supplement #1 to the contract) provides that in case of the failure to achieve mutually acceptable solution, disputes, differences or claims arising from the contract or in connection with it or its violation, termination or invalidity are subject to the settlement at the International Commercial Arbitration Tribunal at Chamber of Commerce and Industry of the Russian Federation.
The Tribunal acknowledges itself competent to adjudicate the present dispute by virtue of the arbitration clause of the contract, considering that the present dispute falls within the scope of the object and subject jurisdiction of the Tribunal, and guided by para. 1, art. 16 of the Law of Russian Federation "On International Commercial Arbitration" and para. 1 of the Rules of the Tribunal.
Having considered the issue of the absence of the representatives of the [Buyer] at the hearing of the 15 January 2004, the Tribunal has found that the [Buyer] was properly informed about the date and place of the hearings via registered letter with delivery notification (paras. 12(2) and 23(1) of the Rules of the Tribunal). The above is confirmed by the notification of delivery of 9 December 2003 to the [Buyer] of the summons regarding the appointment of the hearings of the case on 15 January 2004 at 15:00 and 30 December 2003 - on the reschedule of the hearings of the case at 10:00 of the same date.
In the same way, the [Buyer] on 27 June 2003 was notified about the claim lodged against him with the enclosure of the complete set of the claim papers as well as on the 1 October 2003 - about appointment of the hearings of the case on 3 December 2003, which is confirmed by the delivery notification in the materials of the case.
In this connection and by virtue of art. 25 of the Law of Russian Federation "On International Commercial Arbitration" and para. 28(2) of the Rules of the Tribunal, the latter has found it possible to consider the present case in the absence of the representatives of the [Buyer].
Addressing the issue of the law applicable to the relations of the parties, the Tribunal has holds that, by virtue of the para.1, art. 28 of the Law of Russian Federation "On International Commercial Arbitration" and para. 13(1) of the Rules of the Tribunal, it settles disputes according to the norms of law chosen by the parties to be applicable to the merits of the dispute. In present case in the para.13.2 of the Supplement #1 to the contract parties have chosen Russian substantive law as the applicable law.
At the same time, since the substantive law of the Russian Federation, in accordance with art. 15 of the Constitution of the Russian Federation and art. 7 of the Russian Civil Code, includes international agreements to which the Russian Federation is a party as a component part of the Russian legal system, the Vienna Convention of 1980, in accordance with para. (1)(b), art. 1 of the Convention, is to be applied to the relations of the parties.
Thus, the Tribunal has determined that according to the art. 7(2) of the Convention the provisions of the Convention are to be applied to the contractual relations of the parties. Russian civil legislation is applied to the issues not regulated or incompletely regulated by the Convention.
Considering the merits of the claims, the Tribunal found that the [Seller] had fulfilled his obligations under the contract, i.e., the [Seller] had delivered to the [Buyer] goods provided by the contract in the amount and cost indicated in the writ. The fact of the delivery by the [Seller] of the goods in indicated amount and cost is confirmed by the goods acceptance-conveyance act as well as by the accounts revise act as of 31 December 2001.
The [Buyer] with delays has paid partially for the goods delivered. The remaining arrears constitutes the sum in US dollars claimed to be recovered, which is confirmed by the accounts revise act for the goods delivered in 2001 under the contract as of 31 December 2001, signed by the [Seller] and the [Buyer].
Therefore, the [Seller] has proved the fulfillment of his obligations envisaged in art. 30 of the Vienna Convention of 1980 and non-fulfillment by the [Buyer] of the obligation to pay in time and in full for the goods delivered by the [Seller], envisaged in art. 53 of the Convention.
Although notified about the claim being brought, the [Buyer] did not present to the Tribunal any objections to the merits of the dispute or explanations. Therefore, the Tribunal has grounds to conclude that the [Buyer] does not contest either the fact of the delivery of the goods by the [Seller] or his indebtedness to the [Seller] in the sum indicated in the claim.
Basing on the above, the Tribunal has concluded that the claim of the [Seller] to recover from the [Buyer] the main sum in arrears is well-founded and is subject to satisfaction.
According to articles 12 and 330 of the Russian Civil Code, the claim of the [Seller] for payment of the contract penalty in the form of fine is to be satisfied as well. The claim is based on the para. vi of the contract and para.10.3 of Supplement # 1 to the contract envisaging that if the payment of the goods delivered is delayed, the [Buyer] shall pay a fine in the amount 0.3% from the sum of the uncollected payments for each overdue day during the first 20 days of delay and 0.5% for each subsequent overdue day.
The calculation of the fine as of 15 April 2003 presented in the claim for the delay of the payment for the natural gas delivered complies with the procedure for the calculation of the fine defined by the [Seller] and [Buyer] in the contract. The general amount of the fine constitutes a sum in the US dollars exceeding the sum of the main debt 6.5 times.
By virtue of art. 333 of the Russian Civil Code, the Tribunal has found that the request of the [Seller], stated in the claim, to reduce the sum of the fine to be paid by the [Buyer] to the amount of the main sum in arrears is well-founded.
The claim of the [Seller] to recover from the [Buyer] interest for the use of the unlawfully held funds of another for the period from the day of the passing of the arbitral award till the day of the actual repayment of debts based on the LIBOR rate at the date of the arbitral award is presented to the Tribunal without payment of the corresponding arbitration fee. In view of that, the Tribunal leaves this claim of the [Seller] without consideration, which does not deprive the [Seller] of the right to address the Tribunal with a proper claim afterwards.
Since in compliance with para. 6.1. of the Regulations on Arbitration Expenses and Fees (Supplement to the Rules of the Tribunal) the arbitration fee is imposed on the party against which the arbitral award was passed, the fee paid by the [Seller] is subject to recovery from the [Buyer].
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the United States is referred to as [Seller] and Respondent of the British Virgin Islands is referred to as [Buyer].

References: art. 15
 art. 333
 art. 16
 art. 25
 art. 28
 art. 15
 art. 7
 art. 1
 art. 7
 art. 30
 art. 53
 art. 333