- Russian Federation
- Tenth Arbitration Appeal Court- Moscow
BUYER'S OBLIGATIONS - PAY THE PRICE OF THE GOODS (ART. 53 CISG) - SELLER'S RIGHT TO REQUIRE PERFORMANCE OF SELLER'S OBLIGATIONS (ART. 62 CISG)
RIGHT TO INTEREST (78 CISG9- INTEREST RATE - TO BE DETERMINED ACCORDING TO THE OTHERWISE APPLICABLE LAW
[CLOUT Case 1364; abstract prepared by A. I. Muranov, National Correspondent, D. L. Davydenko and K. A. Bulkina]
A German trader (the seller) lodged a claim against a Russian State-owned
enterprise (the buyer) to recover a debt for products delivered. The court of
first instance allowed the claim in full.
In its appeal to the Tenth Arbitration Appeal Court (the court of second instance),
the buyer requested the reversal of the decision, citing violations of substantive and
procedural law and the fact that it had fully complied with its contractual
obligations within the period specified by the additional agreements of the parties.
The court of appeal upheld the decision of the court of first instance, on the
The seller and the buyer had concluded a series of contracts for the purchase of
silicon. However, the buyer had not paid for the delivered goods within the
prescribed period. Subsequently, the parties had entered into a number of additional
agreements. The goods had been paid for at a later date than was provided for in the
contract, and not in full, as confirmed by the parties.
Given that the claimant and the respondent had their place of business in States
parties to the CISG, its provisions were applicable to their contractual relationship
(article 1(1) CISG). According to article 7(2) CISG, issues not regulated by the
Convention are to be settled by the law of the State applicable to the relationship of
the parties. In the case at hand, German law was applicable to the issues not
regulated by the Convention as the law of the State of the seller, according to the
Russian conflict-of-laws rules.
Under article 53 CISG, the buyer must pay the price for the goods and take delivery
of them as required by the contract and the Convention. According to 61(1) (a)
CISG, if the buyer fails to perform any of its obligations, the seller is entitled to
require the buyer’s performance (articles 62-65 CISG).
Since in the case at hand the respondent had not paid in full for the goods delivered
to it, pursuant to articles 53 and 62 CISG, the court of first instance had rightly
allowed the claimant to recover the debt from the respondent.
Under article 78 CISG, if a party fails to pay the price or any other sum that is in
arrears, the other party is entitled to interest on it, without prejudice to any claim for
damages recoverable under article 74 CISG. Despite the fact that the Convention
provided for the possibility of recovering interest if the buyer fails to pay for the
goods, the court of appeal noted that the Convention does not specify the amount,
the method of calculation or the other conditions necessary for the calculation of interest. German national law was thus to be applied to determine the interest. The
interest calculation had been checked by the court and found to be correct.
The buyer’s argument concerning the seller’s non-compliance with the complaints
procedure for dispute settlement could not be accepted, as neither the disputed
contracts nor the Convention contained any provisions for mandatory compliance by
the parties with the pretrial complaints procedure for dispute settlement.
Case law on UNCITRAL texts (http://www.uncitral.org/uncitral/en/case_law.html)