- Arbitral Award
- Belarusian Chamber of Commerce and Industry International Court of Arbitration
- ATT v. Armco
APPLICATION OF CISG - RULES OF PRIVATE INTERNATIONAL LAW REFERRING TO THE LAW OF A CONTRACTING STATE ( LAW OF REPUBLIC OF BELARUS) (ART. 1(1)(B) CISG)
SELLER'S RIGHT TO SUSPEND PERFORMANCE (ART. 71(1) CISG) - BUYER'S FAILURE TO FULFIL PAYMENT OBLIGATION
RIGHT TO SUSPEND PERFORMANCE- IMMEDIATE NOTICE TO OTHER PARTY (ART. 71(3) CISG)
NON-PERFORMANCE CAUSED BY OTHER PARTY´S CONDUCT - LOSS OF RIGHT TO REMEDIES (ART. 80 CISG)
A Belarusian seller and a Bulgarian buyer entered into a contract for the sale of refrigerators and deep freezers. After the buyer failed to pay for a portion of the goods received, the seller sued for the remaining purchase price. The buyer argued that its failure to pay was justified on the grounds that the seller had improperly suspended performance unilaterally and had delivered goods with latent defects.
The Court first found that CISG was applicable on the basis of the Belarusian Civil Code, since the applicable law was to be that of the country in which the contract had been concluded, i.e. Belarus, a Contracting State (Art. 1(1)(b) CISG).
As to the merits, the Court rejected the buyer’s argument that non-payment by the buyer was justified by the seller’s incomplete delivery of the goods. Under Art. 80 CISG, a party to a contract cannot rely on the other party’s lack of performance when lack of performance is due to its own acts or omissions. In the case at hand, the Court found that since the buyer had failed to pay for a significant amount of the goods already delivered, it could not rely on the seller’s subsequent refusal to deliver additional goods as an excuse for non-performance.
Furthermore, the Court found that suspension of performance by the seller was in accordance with Art. 71 CISG, which allows for a party unilaterally to suspend performance when it becomes apparent the other party will not fulfil its obligations. Indeed, the buyer had already accumulated a significant amount of debt towards the seller and had continually failed to make the monthly payments agreed upon, hence the seller was entitled unilaterally to suspend delivery of additional goods. The Court also found that the seller had given the buyer proper notice of its intent to suspend performance and there was no evidence that the buyer had given adequate assurance of his performance so that the seller was required to continue with contract performance.
The Court however found the buyer entitled to set off the amount owed to the seller by the warranty discount agreed upon in the contract for delivery of defective goods (2% of the purchase price).
Original in Russian:
- published in 3 Industrial and Trade Law Magazine, 97 (2002)
- available at the University of Pace website, http://www.cisg.law.pace.edu}}