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| Abstract | ||||||||||||||||||
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| A Chinese state owned factory (seller) and a US corporation (buyer) concluded a series of contracts for the sale of headwear through a Chinese intermediary. From the end of 1998, the parties started contracting directly with one another by using a contract form that contained a ninety-day credit limit and an arbitration clause. Since the buyer failed to pay the amounts due under the sale contracts, the seller filed an application for arbitration with the China International Economic and Trade Arbitration Commission (CIETAC).
By applying Arts. 25 and 53 CISG, the Arbitral Tribunal found the buyer liable for breach of contract. Then the seller filed an action before the Kansas District Court in order to obtain recognition and enforcement of the award pursuant to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The buyer counterclaimed that it had no direct contractual relationship with the seller. After finding that the parties did not contest the application of CISG, the Court rejected the buyer’s argument, based on Art. 8(1) CISG, that it intended to treat the contract forms between itself and the seller as mere confirmations of orders between itself and the intermediary and that such an intention was known to the seller. In fact, the buyer did not provide any evidence thereof. Nor could a reasonable person in the same circumstances of the seller have interpreted the contract forms as mere confirmation of orders (Art. 8(2) CISG), since the forms exchanged between the parties from the end of 1998 onwards did not mention the intermediary and referred to the parties, respectively, as buyer and seller. Furthermore, the statements and conduct of the buyer clearly indicated its intent to be bound by the contracts with the seller. Therefore, the Court granted recognition of the arbitral award. |