- Arbitral Award
- International Court of Arbitration of the Chamber of Commerce and Industry of the Republic of Belarus
SALES CONTRACT - BETWEEN BELORUSSIAN COMPANY AND FRENCH COMPANY - BELORUSSIAN LAW AS GOVERNING LAW - APPLICATION OF THE CISG SINCE PARTIES SITUATED IN TWO CONTRACTING STATES (ART. 1(1)(A) CISG)
RIGHT TO INTEREST - RATE OF INTEREST NOT DETERMINED BY CISG - REFERENCE BY PLAINTIFF TO ART. 7.4.9(2)UNIDROIT PRINCIPLES - COURT DECIDING ACCORDINGLY
Plaintiff, a French company, concluded a sales contract with Defendant, a Belarusian company. Plaintiff delivered the goods to Defendant as required under the contract but Defendant paid only part of the price.
Plaintiff initiated arbitration proceedings claiming in addition to the balance owed payment of interest for delayed payment.
Plaintiff alleged that the applicable law in the case at hand was the Civil Code of Belarus of 1964 and the CISG, as both countries, where the parties had their places of business, were Contracting Parties to the CISG. Furthermore, Plaintiff argued that the payment of interest should be regulated by the relevant provisions of the CISG and the UNIDROIT Principles.
Defendant agreed that the law of Belarus, in force at the time of the conclusion of the contract, and the CISG were applicable to the case at hand. However, Defendant requested that Plaintiff’s claims be rejected since Plaintiff had breached its contractual obligations thereby causing a loss to Defendant of an amount exceeding the amount of Plaintiff’s claims. In particular Defendant alleged that Plaintiff had failed to pack the goods properly and had delivered goods which did not comply with the contract specifications. And since Plaintiff itself had acknowledged the defects of the goods and had offered to settle the dispute by mutual agreement, Defendant was entitled to the price reduction and damages.
The Arbitral Tribunal rejected Defendant’s counterclaims. Indeed according to the contract Defendant was aware “of the fact that the goods represent the remainder of the line and that they may contain small defects and damages of the package” and with respect to the non-conformity of the goods to the contract specifications, the Arbitral Tribunal held that it was irrelevant since it concerned only customs clearance, which is different in each country. In any case Defendant had failed to give a notice of the defects within the time prescribed by the contract and by Art. 39 of the CISG.
The Arbitral Tribunal held that Plaintiff was entitled to interest according to Art. 78 of the CISG and awarded interest at the rate of 3% per annum as claimed by Plaintiff on the basis of the relevant information supplied by a Belarus commercial bank. In so doing the Arbitral Tribunal pointed out that the rate in question complied with the requirements of Art 7.4.9 (2) of UNIDROIT Principles 1994.