Russian Buyer (Claimant) claimed from Indian Seller (Respondent) damages for non-delivery of the goods. Among others Claimant asked for the interest on the amount of the price paid in advance in Indian currency.
The law applicable to the contract was CISG.
Since the parties disputed the applicable rate of interest and CISG did not regulate this question the Arbitration Court, noting that the issue is not addressed in CISG, referred to Article 395 of the Russian Civil Code which provides that the rate of interest is to be determined according to the rate of bank interest on the day of performance of the monetary obligation at the place where the creditor is located. However, since in the Russian Federation, i.e. the place where the creditor was located, there is no rate of bank interest for Indian currency, the Arbitration Court decided to apply the international trade practice adopted in such cases as reflected in the UNIDROIT Principles of International Commercial Contracts. And since Article 7.4.9 (paragraph 2) of the UNIDROIT Principles provides that the rate of interest shall be the average bank short–term lending rate to prime borrowers prevailing for the currency of payment at the place for payment, or where no such rate exists at that place, then the same rate in the State of the currency of payment, the Arbitration Court applied the corresponding rate of interest used by the Reserve Bank of India. |