Data
- Date:
- 19-02-2023
- Country:
- Egypt
- Number:
- 1527/2021 (Final Award)
- Court:
- Cairo Regional Centre for International Commercial Arbitration (CRCICA)
- Parties:
- --
Keywords
CHOICE-OF-LAW CLAUSE IN FAVOR OF LAW OF A CONTRACTING STATE - CISG APPLICABLE
UNIFORM INTERPRETATION AND APPLICATION OF CISG (ART. 7(1) CISG) – RECOURSE TO INTERNATIONAL CASE-LAW AND SCHOLARLY WRITINGS
BUYER'S RIGHT TO AVOID (TERMINATE) CONTRACT - FIXING AN ADDITIONAL TIME FOR PERFORMANCE (ART. 47(1) CISG) - NOT NECESSARY IF SELLER EXPRESSLY REFUSES TO PERFORM (ART. 47(2) CISG)
DAMAGES IN CASE OF AVOIDANCE (TERMINATION) AND SUBSTITUTE TRANSACTION (ART. 75 CISG)
EXEMPTION FOR NON PERFORMANCE (ART. 79 CISG) - REFERENCE TO CISG ADVISORY COUNCIL OPINION NO.7 - SELLER NORMALLY NOT EXEMPTED FROM LIABILITY IF ITS SUPPLIER FAILS TO PERFORM THE CONTRACT WITH IT
Abstract
An Egyptian seller and an Italian buyer concluded a sales contract regarding a certain quantity of diammonium phosphate («DAP»). The contract contained an arbitration agreement and a choice-of law clause in favor of Egyptian law. A dispute arose when the seller made a partial delivery, alleging that its inability to perform the contract was caused by its supplier having entirely stopped production and supply because of technical problems in the production process and the continued price increases of the raw material.
After ascertaining that the arbitration agreement was effective between the parties, the Tribunal declared that CISG applied to the dispute as part of Egyptian law, considering that the parties had not expressed their intention to exclude the application of the Convention under Art. 6 and a generic choice of law referring to domestic law is understood, by most courts and tribunals worldwide, to include it.
The sole Arbitrator then stressed the fact that Article 7(1) plays a quintessential role in guiding national courts and arbitrators to an autonomous interpretation of the text as well as promoting uniformity in its application. In the latter respect, it confirmed the need to consider how the Convention is applied in other Contracting States, even more so when CISG-related court jurisprudence is absent on the issues at stake.
Furthermore, the Tribunal examined the issue of whether the seller could be exonerated from liability under Art. 79 CISG and the ICC Force Majeure clause incorporated into the contract. The Arbitrator rejected the argument, as it did not consider the increase of price and the halt of production by the supplier as sufficient grounds that qualified as exempting impediments. After noting that Art. 79 CISG and the ICC Force Majeure clause substantially adopt the same criteria as basis for the admissibility of one party’s liability exemption, the Arbitrator referenced international case law and the CISG AC Council Opinion no. 7 to support the conclusion that, as a rule, a seller bears the risk that third-party suppliers or subcontractors may breach their own contract with it. Therefore, the seller will not generally receive an exemption under Art. 79 CISG when its failure to perform is caused by the supplier’s default.
The sole Arbitrator then found that the seller’s partial non-performance amounted to a fundamental breach, hence there was no need for the buyer to fix an additional time for performance under Art. 47(1) CISG. Indeed, when a seller firmly and conclusively declares that it will not deliver the goods, or a part thereof, this justifies the buyer’s termination of the contract under Art. 25. The Tribunal also concluded that the declaration of avoidance of the contract had been effective, as it had been made by notice to the other party as stated in Art. 26 CISG.
The court also granted the buyer the right to recover damages as prescribed by Art. 75 CISG, and found that the buyer had taken all necessary measures to mitigate the loss resulting from the partial non-delivery as stated in Art. 77 CISG.
Finally, the Tribunall found that the buyer was entitled to the payment of interests under Art. 78 CISG, calculated according to Egyptian domestic law.
Fulltext
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Source
Original in English:
- available at www.cisg-online.org}}