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| A seller and a buyer concluded a contract for the sale of goods. The contract contained a penalty clause providing for the payment of 2% of the contract price in case of non-delivery. A dispute arose when the price was paid but the goods were not delivered. The buyer started arbitral proceedings asking for damages pursuant to Arts. 45 and 74 CISG, as well as restitution of the price plus interest. The seller objected that it was not the owner of the goods at the time of conclusion of the contract and invoked force majeure. Moreover it argued that the buyer was in any case entitled not to the full amount of damages, but only to the amount fixed by the penalty clause.
The Arbitral Tribunal held that CISG was applicable pursuant to its Art. 1(1)(b), since the rules of private international law led to application of law of Germany, a Contracting State. As to the merits, the Arbitral Tribunal dismissed the buyer's claim concerning damages, stating that the inclusion of a penalty clause for nondelivery prevented the buyer from invoking the provisions on damages laid down in Art. 74 CISG. In order to ascertain the validity of the penalty clause, since it is a matter excluded from CISG in accordance with its Art. 4, the Arbitral Tribunal referred to the domestic law otherwise applicable to the contract (i.e. German law). However, the Tribunal held that the buyer was entitled to avoid the contract pursuant to Art.49 (1)(a) CISG, since non-delivery amounts to a fundamental breach of contract (Art. 25 CISG). Moreover, the buyer's declaration of avoidance was validly expressed according to Art. 26 CISG by sending a fax in which the buyer asked for restitution of price. The buyer was therefore awarded restitution of the price (Art. 81 (2) CISG), plus interest from the date the price was paid (Art. 84 CISG). As to the rate of interest, the Arbitral Tribunal, after having recalled that CISG does not contain any specific provision, applied German law as the law otherwise applicable to the contract. However, the Arbitral Tribunal rejected the buyer's claim to obtain damages for non restitution of the price by the seller under Art. 81 (2) CISG. In carrying out its analysis, the Arbitral Tribunal pointed out that the buyer's claim was based on a wrong interpretation of Art. 45 (1) CISG according to which the buyer is entitled to claim damages if the seller fails to perform any of its obligations under the contract or the Convention (emphasis added). Indeed, Art. 45 (1) CISG, when correctly read in conjunction with Art. 30 CISG, only entitled the buyer to damages for breach of primary obligations by the seller, which are those provided for in the contract or, in the absence of any specific stipulation, those laid down in Art. 30 CISG, and not to damages for breach of secondary obligations such as the obligation of restitution laid down in Art. 81 (2) CISG. On the other hand, the buyer was entitled to the amount set in the penalty clause plus interest, since the avoidance of the contract does not affect the validity of such a clause (Art. 81 CISG) Finally, the Arbitral Tribunal held that the seller could not rely on Art. 79 CISG alleging that it had entrusted a supplier with the task of acquiring the requested goods and the latter failed to do so. According to the Tribunal, since the goods sold were generic goods, the seller had to bear the risk of non-delivery by its own supplier. |