- Russian Federation
- Supreme Arbitrazh Court of the Russian Federation
REPAIR SERVICE CONTRACT - BETWEEN AN UKRAINIAN COMPANY AND A RUSSIAN COMPANY
REFERENCE TO UNIDROIT PRINCIPLES IN SUPPORT OF THE SOLUTION ADOPTED UNDER APPLICABLE DOMESTIC LAW (RUSSIAN LAW)
DAMAGES - FORSEEABILITY OF HARM - REFERENCE TO ARTICLE 7.4.4 UNIDROIT PRINCIPLES
Claimant, an Ukranian company, entered into a contract for the repair of a ship with Respondent, a Russian company. Following an alleged failure by Respondent to perform its obligations under the contract, Claimant failed a suit claiming a reduction of the price to be paid for the repair as well as damages for the losses it had suffered as a result of the breach.
The Court of first instance decided in favour of Claimant, but the Supreme Commercial Court Court of the Russian Federation reversed the decision granting Claimant only the requested reduction of the price but damages.
In support of its decision the Supreme Court pointed out that according to the applicable Russian law damages can only be awarded for a harm that was foreseeable and recalled that the principle of the limitation of recoverable harm to that which is foreseeable by the party in breach is expressly stated also in Article 7.4.4 of the UNIDROIT Principles. In the case at hand the Supreme Court found that Respondent could not know the Ukrainian currency exchange regulations and foresee the losses which Claimant would suffer as a result of their violation.