- Arbitral Award
- ICC Court of Arbitration - Paris
APPLICATION OF CISG BASED ON CHOICE OF PARTIES (ART. 1 CISG)
RIGHT TO INTEREST - INTEREST RATE (ART. 78 CISG) - STATUTORY RATE DETERMINED BY LAW OF CREDITOR'S COUNTRY
COMPOUND INTEREST NOT AWARDED
A US buyer entered into a contract with a seller. A dispute arose between the parties concerning the seller’s failure to supply the agreed products.
The parties agreed that their contract was governed by CISG.
The arbitrator held that the seller was entitled to compensation for lost profits. According to Art. 78 CISG, the arbitrator also awarded interest on the sums due.
As CISG does not determine the rate of interest, the arbitrator decided to apply the legal rate of the place of business of the seller (Washington D.C.), in order to put the aggrieved party in the situation in which it would be if the damaging circumstance had not occurred. Furthermore the arbitrator held that compound interest was not awarded considering first that compound interest is not customary in international trade, and than that Art. 78 CISG does not provide a sufficient basis for such a claim.
Published in English (excerpt):
ICC International Court of Arbitration Bulletin, Vol. 15, n.1, Spring 2004, pp. 91-92.}}