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| Abstract | ||||||||||||||||||
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| A Serbian seller and an Albanian buyer concluded a contract for the sale of medicaments. Under the contractual terms, the buyer had to pay for the goods within forty-five days from delivery. As the buyer failed to pay in due time, the seller commenced arbitral proceedings pursuant to the arbitration clause in the contract.
First of all, the sole arbitrator held that, since the parties had chosen Serbian law as the one governing the contract, CISG was to be applied as part of the law of Serbia, a Contracting State (Art. 1(1)(b) CISG). In reaching such a conclusion, the arbitration referred to relevant foreign case law as a means to achieve a uniform interpretation and application of the Convention according to its Art. 7(1). Moreover, the Court found that, although CISG does not cover distributorship agreements, it is commonly recognized that it is applicable – as in the present case - to individual contracts concluded under the distribution agreement. As to the merits, the sole arbitrator pointed out that evidence established that the buyer had received the goods but failed to pay for the amount invoiced within the agreed forty-five day period. As a result, the seller's request for payment of the contract price had to be recognized pursuant to the contract terms as well as Art. 62 CISG. The seller was also awarded interest on the purchase price in accordance with Art. 78 CISG. After recalling that this article does not provide for the applicable interest rate, the sole arbitrator pointed out that the seller’s request to apply the ‘domicile’ interest rate for the sums requested in Euros was to be evaluated according to the CISG's general principle of full compensation, and the other general principle under which compensation should not put the creditor in a better position than he would have been if the contract had been performed. Having this in mind, the sole arbitrator considered the recourse to Serbian law not being appropriate in this case, given that such law only regulates local currency and would lead to overcompensation if applied to sums expressed in Euros. In the arbitrator’s view, the applicable interest rate was rather the one regularly applied for savings such as short-term deposits in the first class banks at the place of payment (Serbia) for the currency of payment. After having examined the relevant interest rate figures and indicators, the appropriate rate was settled on 6% per year. |