- Russian Federation
- Tribunal of Int'l Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry
BUYER'S OBLIGATIONS - PAYMENT OF PRICE (ART. 53 CISG)
SELLER'S RIGHT TO REQUIRE PAYMENT (ART. 62 CISG)
RIGHT TO DAMAGES (ART. 74 CISG) - DAMAGES SUFFERED BY SELLER BECAUSE OF BUYER'S FAILURE TO RETURN DEFECTIVE GOODS - BURDEN OF PROOF ON THE SELLER
RATE OF INTEREST (ART. 78) - TO BE DETERMINED BY DOMESTIC LAW GOVERNING THE CONTRACT IN THE ABSENCE OF CISG
A German seller and a Russian buyer entered into a contract for the sale of equipment. The contract provided that the buyer would pay for the goods in two instalments, whilst the seller would guarantee the equipment against defects for a given period of time. After delivery, the buyer reported to the seller that some parts of the goods were defective. Thus, the seller replaced those parts with others free of defects. Subsequently, the buyer failed to make the second payment. The seller then claimed against the buyer for the payment of the outstanding price, along with interest for the use of third party's monetary funds and reimbursement of the costs for replacement, having the buyer failed to return the defective parts.
Since the contract did not contain any provision on the applicable law, the Arbitral Tribunal decided to apply CISG according to its Art. 1(1)(a). As to the questions not covered by the Convention and which could not be resolved in accordance with its general principles, the Tribunal stated that German law should apply.
As to the merits, the Tribunal considered the seller’s claim for payment of the outstanding price as grounded pursuant to Arts. 61 and 62 CISG, as the seller had delivered the goods in accordance with the contractual terms and, therefore, the buyer had to pay for the goods in accordance with Art. 53 CISG.
Moreover, the Tribunal noted that failure to return the defective goods by the buyer gave the seller the right to claim damages under Art. 74 CISG; yet, since no proof of damages was given by the seller, its claim was dismissed.
Finally, the Tribunal acknowledged the seller's right to interest for the use of third party's monetary funds. In this respect, since Art. 78 CISG does not determine the rate of interest or the procedure for its recovery, the Tribunal applied German law.
Original in Russian:
- published in M.G. Rozenberg, Praktika Mezhdunarodnogo kommercheskogo arbitrazhnogo suda pri TPP ZA 2006 g., Statut, 2008, Case No. 47, pp. 352-356
- available at the University of Pace website, http://www.cisg.law.pace.edu/}}