Date: 00.00.1989
Country: Arbitral Award
Number: 5713/1989
Court: ICC Court of Arbitration - Paris
Parties: Unknown
A seller and a buyer concluded in 1979 three contracts for the sale of goods. As agreed, the buyer paid, upon presentation of the shipping documents, 90% of the price with the balance to be paid later. The goods of the second contract did not conform with the contract specifications. After treating the goods in order to make them more saleable, at considerable expense, the buyer sold the goods to third parties. The seller commenced arbitration proceedings claiming the balance of the purchase price (10%) remaining due under each of the contracts. The buyer counterclaimed alleging that the seller's claim should be set off against its direct losses, financial costs and lost profit and interest.

As the contract contained no choice of law clause, the court determined the applicable law in accordance with Art. 13(3) ICC Rules, and found that the law of the country of the seller was the proper law governing the contract. According to Art. 13(5) ICC Rules the court was required to take account of the relevant trade usages. The court found: '[that] there is no better source to determine the prevailing trade usages than the terms of the United Nations Convention on the International Sale of Goods of 11 April 1980, usually called the 'Vienna Convention'. This is so even though neither the [country of the Buyer] nor the [country of the Seller] are parties to that Convention.' The court held that CISG reflected the generally recognised trade usages regarding the matter of non conformity of the goods in international sales.

Referring to Art. 38(1) CISG, the court found that the buyer had examined the goods within as short a time as practicable, in this case before shipment, and had given notice of the lack of conformity to the seller within a reasonable time (8 days after publication of the expert's report of the examination) (Art. 39(1) CISG). Further the court held that the seller was not entitled to rely on the provisions of Arts. 38 and 39 CISG as it knew or it could not have been unaware of the lack of conformity and did not disclose the lack of conformity to the buyer (Art. 40 CISG).

The court awarded the seller the full amount claimed and set it off against part of the counterclaim of the buyer.