- Russian Federation
- N 437/08
- Supreme Commercial Court of Russian Federation
- Kitey minor private enterprise v. Temryukmortrans LLC
SERVICE CONTRACT FOR THE REPAIR OF A VESSEL BETWEEN RUSSIAN COMPANY AND UKRAINIAN SHIPYARD - REFERENCE TO UNIDROIT PRINCIPLES TO SUPPLEMENT APPLICABLE DOMESTIC LAW (RUSSIAN LAW)
PRINCIPLE OF LIMITATION OF LIABILITY TO FORESEEABLE LOSS - REFERENCE TO ART. 7.4.4 UNIDROIT PRINCIPLES
Defendant, a Russian company, entered into a contract with Claimant, a Ukrainian shipyard, for the repair of a vessel. When Defendant delayed the payment of the price, Claimant brought an action not only for the recovery of the outstanding debt for the repair of the vessel, but also for damages resulting from payment of a fine imposed by Ukrainian currency control authorities for failure to timely obtain the foreign currency proceeds.
The court acknowledged that under the applicable Russian law the defaulting party must compensate the losses incurred by the other party. However, it dismissed Claimant´s claim for the recovery of the fine imposed by Ukrainian currency control authorities for failure to timely obtain the foreign currency proceeds invoking the “foreseeability of harm” doctrine as laid down in Art. 7.4.4 in the UNIDROIT Principles, according to which the defaulting party is liable only for harm which it foresaw or could reasonably have foreseen at the time of the conclusion of the contract as being likely to result from its non-performance. The Court found that in the case at hand the contract did not impose an obligation on Defendant to take into account the Ukrainian foreign currency requirements nor could Claimant reasonably have foreseen the harm Claimant suffered as a result of their violation.