Source: http://cisgw3.law.pace.edu/cases/040412r1.html
Timestamp: 2017-04-24 05:30:44
Document Index: 576418347

Matched Legal Cases: ['art. 431', 'art. 403', 'art. 16', 'art. 431', 'art. 6', 'art. 3', 'art. 403', 'art. 453', 'art. 330']

Russia 12 April 2004 Arbitration proceeding 11/2003 [translation available] Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography CISG CASE PRESENTATION
[Cite as: http://cisgw3.law.pace.edu/cases/040412r1.html] Primary source(s) of information for case presentation: Case text
DATE OF DECISION: 20040412 (12 April 2004) JURISDICTION: Arbitration ; Russian Federation TRIBUNAL: Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry JUDGE(S): Unavailable CASE NUMBER/DOCKET NUMBER: 11/2003 CASE NAME: Unavailable CASE HISTORY: Unavailable
SELLER'S COUNTRY: Russian Federation (respondent) BUYER'S COUNTRY: Kazakhstan (claimant) GOODS INVOLVED: [-]
APPLICATION OF CISG: The contract states that "all disputes and disagreements are to be settled on the basis of actual legislation of the Russian Federation". Because the reference is to Russian legislation, as opposed to, for example, Russian law, the Tribunal construed this as an exclusion of the Convention. APPLICABLE CISG PROVISIONS AND ISSUES Key CISG provisions at issue: Article 6 Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO TEXT OF DECISION Original language (Russian): Rozenberg, Praktika of Mezhdunarodnogo kommercheskogo arbitrazhnogo suda pri TPP RF za 2004 g. [Practice of the International Commercial Arbitration Tribunal at the Russian Federation Chamber of Commerce and Industry for 2004] Moscow (2005) No. 18 [136-138]
1.1 Indication in the sale and purchase contract that disputes arising from it are settled on the basis of
Russian legislation is considered to imply existence of the agreement on application of Russian legislation
(not Russian law), which excludes application of the Vienna Convention of 1980 to the relations of the
parties. The conclusion of the Tribunal, as it is stated in the judgment, is based on the literal interpretation
of this agreement of the parties in compliance with art. 431 of the Russian Civil Code. 1.2 Non-fulfillment of obligations to the [Seller] by a third party entails responsibility of the [Seller]
to the [Buyer] by virtue of art. 403 of Russian Civil Code. Consequently, the sum of a prepayment as well as the contract penalty is collected from the [Seller]. 2. FACTS AND PLEADINGS
The claim was filed by a Kazakh company against a Russian firm in connection with non-delivery of goods
for which a one hundred per cent prepayment had been executed in accordance with conditions of an
international sale and purchase contract concluded by the parties on 23 April 2002. In view of non-delivery
of the goods over a long-term period, the [Buyer] in compliance with contract conditions has dissolved the
contract. [Buyer]'s claims included: return of the prepayment sum and payment of the contract penalty for
the delivery delay.
[Seller] has not presented explanations on the claims and his representatives have not participated in the
hearings of the Tribunal. In the course of pre-arbitration correspondence, the [Seller] has presented
apologies to the [Buyer] for failure to deliver the goods, explaining as the reason non-fulfillment of contract
obligations to the [Seller] by a third party.
Para. 6.2 of the contract provides that disputes and disagreements not settled by negotiations are to be
adjudicated at International Commercial Arbitral Tribunal at Chamber of Commerce and Industry of
Russian Federation (hereinafter referred to as Tribunal).
The present dispute falls within subject and object competence of the Tribunal, as foreseen in para. 1(2)
of the Rules of the Tribunal.
Based on the above and following art. 16 of Law of Russian Federation "On International Commercial
Arbitration" and paras 1(5) and 1(3) of the Rules of the Tribunal, the latter adjudges itself competent to
consider the present dispute.
3.2 Applicable law In para. 6.1 of the contract parties have stated that "all disputes and disagreements are to be settled on
the basis of actual legislation of the Russian Federation". Since Russia is party to the Vienna Convention
of 1980, in the present case basically the application of the provisions of this international treaty as part of
Russian law system would be possible. However neither on ground of materials of the case nor in the course of the hearings in the absence of
[Seller]'s representative could the Tribunal clarify the true will of the parties who included above mentioned
condition in their contract.
Under such circumstances Tribunal in accordance with art. 431 of the Russian Civil Code stated, basing
itself on the literal sense of the clause used by the parties, that this clause implies existence of the agreement
on application of specifically Russian legislation (not Russian law) and excludes application of the Vienna
Convention by virtue of its art. 6.
Considering the absence of the [Seller] at the hearings of the Tribunal, the latter has found that claim
papers and notification about hearings of the case on 10 March 2004 were sent to the [Seller] by registered
letters to the [Seller]'s last known location, however, they were returned by the post service with the note:
"Undeliverable". A search for [Seller]'s new address conducted by the [Buyer] by means of reasonable
inquiries, in particular addressing the Ministry of Taxation Inspection Board of Russian Federation, was not
successful. Taking the above into account and following art. 3(1) of the Law of Russian Federation "On International
Commercial Arbitration", the Tribunal concluded that written messages sent by the Tribunal, including
notification about the hearings of the case, are deemed to have been received by the [Seller]. Since by virtue of para. 28(2) of the Rules of the Tribunal non-appearance of the party properly notified
about date and place of the hearings does not impede the adjudication of the case and passing of the
judgment on the case, the Tribunal considers that the case can be heard in [Seller]'s absence.
3.4 Evaluation of [Buyer]'s claim to recover from the [Seller] sum of prepayment and contract
Considering the claims on the merits, the Tribunal stated that dispute between parties emerged due to
the non-delivery of the goods by the [Seller], for which the [Buyer] has transferred a one hundred per cent
prepayment. The [Buyer] has sought pre-arbitration settlement of the dispute (letters of 17 September 2002 and of 10
October 2002), however it did not succeed. The [Seller] has justified non-delivery of the goods by the
violation of contractual obligations to [Seller] by third parties and promised to return the money funds
[Buyer] had paid (letter of 19 September 2002).
By the complaint of 23 September 2002, the [Buyer] has notified the [Seller] about dissolution of the
contract on basis of paras 7.1 and 7.2 of the contract in view of the fundamental breach of contract
conditions by the [Seller]. Since the complaint was delivered to the [Seller] on 10 October 2002, according
to para. 7.2, the contract is considered dissolved as of that date. Pursuant to art. 403 of the Russian Civil Code, responsibility for the actions of third parties is conferred on
the debtor, in present case - [Seller]. By virtue of para. 5.4 of the contract and art. 453(5) of the Russian
Civil Code [Seller] is obliged to return the sum of prepayment to the [Buyer].
[Buyer]'s claim on payment of the penalty calculated for the period from 18 August till 25 November 2002
from the cost of the non-delivered goods is based on para. 5(2) of the contract and art. 330 of the Russian
Civil Code and is not contested by the [Seller]. The Tribunal considers that [Seller] has to pay to the
[Buyer] penalty in the claimed amount.
According to para. 6(1) of the Regulations on Arbitration Expenses and Fees, which is Supplement to
the Rules of the Tribunal, arbitration fee paid by the [Buyer] is to be reimbursed by the [Seller].
Institute of International Commercial Law - Last updated March 14, 2006