- Arbitral Award
- ICC International Court of Arbitration 9771
SALES CONTRACT - BETWEEN AN ITALIAN AND TWO CYPRIOT COMPANIES - DELIVERY OF NON-CONFORMING GOODS - CLAIM FOR DAMAGES INCLUDING INTEREST ON DAMAGES FROM THE TIME OF BREACH - REFERENCE IN CLAIM TO ARTICLE 7.4.10 OF THE UNIDROIT PRINCIPLES
CONTRACT SILENT AS TO THE APPLICABLE LAW - ARBITRAL TRIBUNAL DECIDES IN FAVOUR OF CLAIMANT WITHOUT EXPRESSLY REFERRING TO EITHER A PARTICULAR DOMESTIC LAW OR TO THE UNIDROIT PRINCIPLES
Claimant, an Italian company, sued Defendants, two Cypriot companies, for damages for their failure to deliver goods in conformity with the contractual specifications. Claimant requested, among others, interest on the amount of damages claimed from the time of the breach of the contract and, in support of such request, it referred to Article 7.4.10 of the UNIDROIT Principles.
The contract was silent as to the applicable law nor did the Arbitral Tribunal determine any domestic law as the applicable law. Without expressly referring to the UNIDROIT Principles, the Arbitral Tribunal decided that Claimant was entitled to interest on the damages claimed.
The Sole Arbitrator makes the following determination in regard to the damages claimed.
In these proceedings the Claimant has claimed damages, which have been denied by the Defendants as follows:
(i) Loss of profit
The Claimant claims that it has suffered a loss relating to the reduced value of the goods delivered which it was unable to sell at the original price had the goods been in conformity with the contractual specifications. The Claimant has produced evidence in the form of invoices to, and correspondence with, its customer..., which state that the originally agreed purchase price was 80 USD/MT and that this price was reduced and finally determined to be 48.50 USD/MT, thus creating an aggregate loss of USD 89,652.94 to the Claimant as compared to its initial sale.
The Sole Arbitrator is satisfied that the Claimant in fact sold the goods delivered at a loss as evidenced by the documents presented in these proceedings.
The Defendants have not objected to these calculations specifically per se but only in general tenns stating that it was unclear what amount was claimed.
The Claimant has admitted that from such amount the Defendants have already settled USD 30,000 and that the Defendants further should be credited the waiver made by [Defendant 2] for the Defendants for additional payment of the remaining 10% for the delivery amounting to USD 8,716.43 as specified in the invoice for such amount. Thus the Claimant effectively is claiming USD 50,936.51 in these proceedings.
The Sole Arbitrator finds that the Claimant shall be entitled to recover damages for the loss suffered due to the lack of quality of the goods with an amount of USD 50,936.51.
The Claimant has alleged that the Defendants during the negotiations following the discovery of the defective delivery of the goods accepted that the Claimant had suffered damages in the amount of USD 80,000 and also undertook to compensate such losses. The Claimant has maintained that this is evidenced by the payment of USD 30.000. The Sole Arbitrator cannot, against the objection of the Defendants and failing any substantial evidence in support thereof, find that the Defendants have made such an undertaking.
In addition, the Claimant requests interest on the advance payment originally made to the Defendants in the amount of USD 154,473.75 from the date of the termination of the Contract or alternatively from the date of the Claimant's request for repayment and interest on the amount USD 89,652.94 from the time of the breach of Contract in accordance to Article 7.4. 10 of the UNIDROIT Principles of International Commercial Contracts.
In the alternative the Claimant claims interest on the damages in general.
On the issue of interest the Claimant has not stated any reason why it should be entitled to interest on the amount of USD 154,473.75. Even less so is there any motivation why interest should be calculated from the Claimant's request for reimbursement of the amount paid as advance payment in view of the fact that the Claimant did not, in the opinion of the Sole Arbitrator prove that it did terminate the Contract and retum the goods. Instead the Claimant has claimed damages in these proceedings. This claim for interest on the advance payments is denied. The Sole Arbitrator finds that interest may only be calculated on the damages claimed.
(iii) Other damages
Finally, the Claimant has claimed "other damages" for the loss of reputation to be determined in these proceedings. The Claimant has requested the Sole Arbitrator to resolve this issue on the basis of "ex aequo et bono".
According to the ICC Rules an arbitrator may not base any decision on the principle of "ex aequo et bono" unless expressly authorised. This is furthermore repeated in the Terms of Reference agreed and signed between the parties in these proceedings. No such agreement has been made. In addition, no other damages or the loss of reputation have been presented or evidenced in these proceedings either to the amount or otherwise. In any arbitration it is a fundamental principle that each party shall have the possibility to present its case and to respond to any claim made against it. Should the Sole Arbitrator award other damages then the Defendant would clearly not have been given such opportunity.
The Sole Arbitrator therefore has no basis on which to determine, or even less award, any damages under this heading. The claim for "other damages" is therefore denied.}}
Excerpt in ICC International Court of Arbitration Bulletin, 2005 Special Supplement, pp. 76-77.}}