- Russian Federation
- Tribunal of Int'l Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry
INTERPRETATION OF STATEMENTS AND CONDUCT OF THE PARTIES (ART. 8(1) CISG): ACCORDING TO PARTY'S OWN INTENT WHERE OTHER PARTY KNEW OR COULD NOT HAVE BEEN UNAWARE OF SUCH INTENT
BUYER OBLIGED TO TAKE DELIVERY AND PAY FOR GOODS (ART. 53 CISG)
REMEDIES FOR BUYER'S BREACH OF CONTRACT (ART. 61 CISG)
RIGHT TO INTEREST IN CASE OF LATE PAYMENT
A Russian buyer and a German seller entered into a contract for the sale of industrial equipment. The contract provided that the equipment would be delivered no later than 30 July 2004, that Seller would install the equipment when both parties were ready for installation, and that the installation period would be ten weeks. The contract provided that in case of delay in putting the equipment into operation by the date set forth therein, the Seller shall pay 0.06% of the total contract price for each day of delay. Seller did not complete installation until 27 April 2005.
The buyer declared the contract terminated (avoided) under Article 49(1)(b) and Article 72 of CISG, and sought damages for the installation delay. It argued that the ten week installation period should be calculated from the delivery date (namely, 30 July 2004). The seller, however, argued that the week installation period should be calculated from the moment the parties were ready to begin installation, and that such a time was different from the delivery date mentioned in the contract. The seller asserted that the parties had agreed to specifically define the installation commencement term in a separate agreement, and that agreement had not been completed. The seller also alleged counterclaims for outstanding payments.
With respect to the applicable law, the Tribunal found that CISG governed the contract of the parties by virtue of Article 1(1)(a), because Russia and Germany are both parties to The Convention.
As to the merits of the case, The Tribunal relied on Article 8(1) of CISG and held that the parties intended to include a term in the contract to measure delay in putting the equipment into operation. To determine the length of delay, the Tribunal applied the relevant provisions of the German Civil Code.
As to the seller’s counterclaims for outstanding payments, the Tribunal found that seller issued two invoices which the buyer had not paid. Under Arts. 53, 59, 61, 62, 74 and 78 CISG, the Tribunal found that the buyer was obliged to pay the price of the goods and that the seller was entitled to claim payment of the price and damages caused by the breach of contract. Also, the seller was entitled to interest due to payment delay.
Original in Russian:
- published in Muranov (ed.), Text on the CISG, Wolters Kluwer (2007), pp. 195 - 214
- available at the University of Pace website, http://www.cisg.law.pace.edu/}}