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| Abstract | ||||||||||||||||||
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| In 1976 the Islamic Republic of Iran and a US company entered into a contract according to which the latter was to provide electronic communications equipment and related services for a military program. The contract was subject to the laws of Iran and United States. Iran did not pay a substantial part of the price for the work performed by the seller. In order to mitigate its damages, the seller sold to third parties the equipment not yet delivered after notifying Iran of its intention to do so.
The Tribunal, after establishing that the seller had the right to sell the undelivered equipment in mitigation of its damages under the laws governing the contract, stated that such a right was 'consistent with recognized international law of commercial contracts', which the Tribunal (without giving further explanation) considered to be reflected by Art. 88 CISG. The Tribunal found that in the case at hand the conditions of Art. 88(1) CISG were satisfied: i.e. there was unreasonable delay by the buyer in paying the price, without the buyer giving satisfactory assurances that payment would be forthcoming, and the seller gave reasonable notice of its intention to sell with two letters to which the buyer never responded. Moreover, the Tribunal stated that the seller was entitled to deduct from the proceeds of the sale of the goods to third parties its reasonable expenses in carrying out the sales, including costs for the completion and modification of the equipment (Art. 88(3) CISG). |