Source: http://cisgw3.law.pace.edu/cisg/wais/db/cases2/980212bu.html
Timestamp: 2018-01-20 10:54:05
Document Index: 576415918

Matched Legal Cases: ['Art. 8', 'Art. 31', 'Art. 79', 'Art. 79', 'Art. 107', 'Art. 113']

Bulgaria 12 February 1998 Arbitration Case 11/1996 (Steel ropes case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980212bu.html]
DATE OF DECISIONS: 19980212 (12 February 1998)
CASE NUMBER/DOCKET NUMBER: 11/1996
GOODS INVOLVED: Steel ropes
Key CISG provisions at issues: Articles 7 ; 78 ; 79 [Also cited: Articles 30 ; 49 ; 53 ; 60 ; 77 ; 86 ]
7C22 [Recourse to general principles on which Convention is based: ruling that notice a prerequisite to entitlement to interest];
78A ; 78C [Interest on delay in receiving price: tribunal ruled that to obtain interest under CISG, a formal notice for payment by seller is necessary];
Descriptors: Exemptions or impediments ; General principles ; Interest
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=420&step=Abstract>
Original language (Bulgarian): Praktika Bulgarska turgovsko-promishlena palata (BTPP) 1998-1999, No. 3 [12-14], No. 5 [18-20]
Translation (English): Text presented below. (German): Dischlieva, Erste Entscheidungen zum UN-Kaufrecht aus Bulgarien [The first rulings on the CISG from Bulgaria], in: Michael R. Will ed., Rudolf Meyer zum Abschied: Dialog Deutschland-Schweiz VII, Faculté de droit, Université de Genève (1999) 192-201 [text presented below]; see also Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=420&step=FullText>
English: Liu Chengwei, Recovery of interest (November 2003) n.89; [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 134; Article 78 and rate of interest: Mazzotta, Endless disagreement among commentators, much less among courts (2004) [citing this case and 275 other court and arbitral rulings]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 para. 54 Art. 31 para. 85 Art. 79 paras. 17, 20; Carla Spivack, 27 Pennsylvania Journal of International Economic Law (Fall 2006) n.151 [commentary on Art. 79 issues]; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 566
Case No. 11/96 of 12 February 1998
The claimant [seller] and the respondent [buyer] concluded a contract for sale of steel ropes. The contract defines the quantity, the price and the manner of payment. The [seller] claims the price for the goods which were delivered but not paid for.
The principle objection of the [buyer] is that the [seller] breached their contract. The [buyer] asserts that after the conclusion of the contract, he asked the [seller] to stop delivering goods but the [seller] did not. The motives for the [buyer]'s request were: market conditions became worse, the [buyer] had problems with the distribution and the storage of the goods, the USA dollar quotation had increased. and the construction business had been in depression. In response to this: first, [buyer]'s request was informal and there was no evidence provided to prove it; second, it had not been defined for how long the delivery process should be stopped, who would carry the expenses for the storage and the preserving of the goods and how, when will be payment be made, etc. [Buyer]'s request for the suspension of deliveries was an offer to alter the terms of the contract. [Buyer]'s offer to have the deliveries suspended could have been accepted by the [seller], however, according to the stipulations of the contract and the CISG, the [seller] was not obliged to accept this offer. The difficulties listed by the [buyer] present part of the commercial risk that is carried by each party to the contract; this is an obligation that cannot be unilaterally transferred to the other party.
The listed circumstances that caused the [buyer]'s desire to have delivery suspended do not correspond to the requirements outlined in Article 79 of the CISG. The [buyer] is not in objective impossibility to accept the delivered goods and the described facts do not represent force majeure (acts of God, acts of third person, etc.). Such consequences are not unexpected. In the contract and in the CISG are provided special activities that had to be fulfilled in cases like this. The [buyer] did not undertake such actions. Consequently, it cannot be accepted that these impediments are a good reason for the [buyer] to ask the [seller] to stop the deliveries.
It must also be clear that at the time the [buyer] sent his request to the [seller] to have the deliveries suspended, a substantial part of the deliveries had already been made. The [buyer] claims that he had made a request for suspensions but he failed to present any proof to confirm this.
As it was already mentioned, the [buyer] claims that the [seller] failed to fulfill its contractual obligations because [seller] did not accepted [buyer]'s request for the suspension of the deliveries. The [buyer] claims also that [buyer] did not accept the title of the goods but was only keeping them. The Arbitral Tribunal does not agree. In a sales contract, a basic obligation of the seller is to transfer the property in the goods and to deliver the goods (Article 30 CISG). The main obligation of the buyer is to pay the price and to take delivery (Articles 53 and 60 CISG). It must be underscored that the [buyer]'s obligation to take delivery is one of his principal obligations. When refusing to take delivery of goods that correspond to the requirements of the contract, the buyer failed to perform one of his main contractual obligations.
The claim that the [buyer] was only keeping the goods (and the [seller] possesses the title) cannot be accepted by the Arbitral Tribunal. The dispute is about goods which the [buyer] purchased and received according to the concluded contract. The goods were in [buyer]'s disposition for four years and he sold the goods for prices freely determined by him.
Consequently, the claim of the seller to be paid the contractual price of the delivered goods is reasonable. During the settlement of the dispute were defined: the quantity of goods sold and delivered; their price; the amount paid by the [buyer] and the amount of the unpaid balance. The assertion of the [buyer] concerning the suspension of the deliveries, the plea that force majeure circumstances exist, the claim that the buyer was only keeping the goods, etc., were thoroughly examined by the Arbitral Tribunal and considered to be unjustified. The claim of the [seller] for the payment of the contractual price is proved.
Articles 77 and 86 CISG
The [buyer] bases his objection on article 77 and article 86 of the CISG. He claims the expenses that he had made to mitigate the loss caused by the delivery of the goods despite his request for the suspension of the delivery. The claim of the [buyer] includes expenses for the import of the goods, transportation expenses, and storage and commission fees.
The Arbitral Tribunal finds the claim of the [buyer] unjustified. First, in order for Article 77 of the CISG to be applied, it is necessary to have a breach of contract. Second, the breach of contract must cause loss. Third, the party who relies on that breach must have taken measures for the mitigation of that loss. The [seller] was not in breach of contract. The [buyer] did not declare the contract avoided (Article 49 CISG). He took delivery of the goods, became the owner of the goods, and later sold 90% of the goods. Consequently, the [buyer] must pay the import expenses, the storage expenses and the expenses connected with the sale. The described facts do not correspond with the requirements provided in Article 77 and Article 86 of the CISG. In this particular case, Article 77 and Article 86 of the CISG cannot be applied.
The [buyer] claims a deduction for the sum that includes import expenses, transportation, and storage and commission expenses. This claimed deduction is unjustified. The contract concluded between the parties explicitly prescribes that all duties, rates and custom duties concerning the performance of the contract at the territory of the buyer's country must be paid by the buyer. That is also consistent with the general principle that, after passage of risk, transportation, storage and preservation expenses for the purchased goods must be paid by the buyer. In this particular case, the seller does not have an argument against the buyer and thus cannot claim compensation from the court.
According to Article 78 CISG, if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it. The Convention only defines the principle that the party in arrears owes interest, without determining the amount of that interest. First, a debtor is in arrears when his liability becomes subject to execution. Second, the creditor must invite the debtor to fulfill its liability voluntarily.
The [seller] did not claim for interest in his complaint. He only declares that a separate suit will be brought against the [buyer] for interest calculated according to the quarterly LIBOR. There is no evidence proving that the [seller] invited the [buyer] to satisfy its debt and pay the interest upon it voluntarily. Consequently, there is no evidence proving that the [buyer] is in arrears.
With the addition to the complaint received by the Arbitral Tribunal on 3 December 1997, the [seller] claims interest. The Arbitral Tribunal allowed this addition to the complaint with its ruling of 15 December 1997. After this act of the Arbitral Tribunal, the [buyer] is in arrears and owes the interest. The Arbitral Tribunal accepts that the [buyer] is in arrears from the date when the lawsuit was brought (3 December 1997), but not for the period before that date. With its addition to the complaint from 3 December 1997, the [seller] [creditor] cannot put in arrears the [buyer] [debtor] for a period preceding that date. This becomes clearer if we take into consideration the fact that according to the Convention, the amount of the interest is not defined and has to be determined by the contracting parties themselves or by other means. The innocent party cannot be in arrears for the period before an invitation is made to voluntarily pay.
The Arbitrate Tribunal allows [seller]'s claim for interest only for the period after the addition to the complaint (3 December 1997), but not for the prior four years.
* All translations should be verified by cross-checking against the original text. For purposes of this presentation, Claimant is referred to as [seller]; Respondent is referred to as [buyer].
Reproduced with permission of Michael R. Will ed., Rudolf Meyer zum Abschied: Dialog Deutschland-Schweiz VII, Faculté de droit, Université de Genève (1999) 192-201
Arbitration Case 11/1995, 12 February 1998
Dr. K. Popov - Vorsitzender, Tsv. Simeonov und Ana Milenkova - Beisitzer
2. Aus Vorstehendem folgt, daß der Einwand des Beklagten, die Klage sei infolge Ablaufs der Zweijahresfrist des Art. 107 ALB RGW unzulässig, von vornherein unbegründet ist. Aber selbst wenn man annähme, daß diese Frist in der Sache Anwendung findet, so wäre die Einwendung des Beklagten nicht begründet, weil die Frist durch das Unterschreiben des zweiseitigen Protokolls vom 2.3.95 unterbrochen wurde (Art. 113 ALB RGW). Mit diesem Protokoll haben die Parteien den genauen Umfang der Verpflichtung und die Zahlungsfristen für 1995 bestimmt, was zweifelsohne eine Anerkennung der Schuld darstellt, so daß von da an eine neue Frist zu laufen begann. Diese ist noch nicht abgelaufen.[page 195]
Dr. K. Popov - Vorsitzender, Tsv. Simeonov und Ana Milenkova - Beisitzer [page 201]