|
||||||||||||||||||
| Abstract | ||||||||||||||||||
| ||||||||||||||||||
| A German seller and a Spanish buyer concluded an agreement pursuant to which the buyer was to be the exclusive distributor in Spain of industrial equipment produced in Germany. Several individual sales contracts were then concluded between the parties. Four years later the German company informed the Spanish buyer that due to the insufficiency of the latter's sales it would sell its products in Spain through another company with whose parent it had recently merged. Thereafter, upon the buyer's refusal to pay for some of the deliveries, the seller filed arbitral proceedings. The buyer counterclaimed damages arising from breach of the exclusive distributorship agreement as well as from lack of conformity of certain products and failure to deliver spare parts.
The sole arbitrator held that CISG was not applicable to the distributorship agreement as such but to the individual sales contracts concluded pursuant to the distributorship agreement. The sole arbitrator found that the seller had a right to be paid for past deliveries. Furthermore the seller was awarded interest (Art. 78 CISG). Since CISG does not determine the interest rate, the sole arbitrator applied the German statutory interest rate, observing that German law was the law otherwise applicable to the contract and at the same time the law of the country in whose currency payment was to be made. As to the buyer's claim that the equipment was defective, the sole arbitrator held that the buyer had not provided sufficient evidence of the defects nor that timely and specific notice, as required by the contractual terms and by Art. 39 CISG, had been given. Finally, the sole arbitrator observed that the principle of good faith mentioned in Art. 7(1) CISG was applicable in the interpretation of CISG only, and was not to be referred to as a source of the parties' rights and duties as concerns the performance of the contract. Therefore, while under German law the mass producer of technical equipment is generally expected to provide spare parts according to the principle of good faith, no implied secondary obligation of the parties derives from the principle of good faith when CISG is applicable. Nevertheless, in the case at hand, as delivery of spare parts was considered to be a practice established between the parties under Art. 9 CISG, the seller was therefore obliged to comply within a reasonable time (Art. 33(c) CISG in connection with Art. 7(2) CISG). The buyer was therefore entitled to set-off part of the seller's claim with damages, including lost profits. |