- Arbitral Award
- Belorussian Chamber of Commerce and Industry International Court of Arbitration
SALES CONTRACT - BETWEEN A BAHAMIAN COMPANY AND A BELORUSSIAN COMPANY - PARTIES AGREE ON APPLICATION OF BELORUSSIAN LAW - CISG APPLICABLE ACCORDING TO ART. 1(1)(B)
DELAYED PAYMENT OF THE PRICE - SELLER ENTITLED TO INTEREST (ART. 78 CISG) - APPLICABLE RATE TO BE DETERMINED IN ACCORDANCE WITH APPLICABLE DOMESTIC LAW - RATE OF INTEREST DETERMINED BY BELARUS NATIONAL BANK NOT APPLICABLE TO SALE CONTRACT IN DISPUTE
PLAINTIFF INVOKING RATE AS PROVIDED BY ART. 7.4.9 UNIDROIT PRINCIPLES - REQUEST DISMISSED BY ARBITRAL TRIBUNAL ON GROUND THAT UNIDROIT PRINCIPLES APPLY ONLY IF AGREED BETWEEN THE PARTIES
Plaintiff, a company incorporated in the Bahamas, concluded a contract with Defendant, a Belorussian company, for the sale of wheat (the Contract). Plaintiff duly delivered the wheat to Defendant as required under the Contract but Defendant paid only a part of the price. Plaintiff requested payment in full but Defendant refused.
Plaintiff commenced arbitral proceedings claiming, in addition to the balance owing, interest for the delayed payment. It also claimed for the payment of the penalty as provided in the Contract (0,15% per day if the payment is delayed for more than 15 days).
The Contract was silent as to the applicable law. The Parties agreed on the application of the law of Belarus. Under the Civil Code of Belarus in the case of a dispute involving foreign parties, the international treaties to which Belarus is party apply. Notwithstanding the fact that only Belarus but not the Bahamas was party to the CISG, the Convention was held applicable under Art 1(1)(b).
The Arbitral Tribunal held Plaintiff entitled to interest in accordance with Art. 78 of the CISG. Since the CISG does not determine the applicable rate of interest, it has to be determined in accordance with the applicable domestic law. However, as the rate of interest is determined by the National Bank of Belarus with respect to payments in Belorussian Rubles, it is not applicable to the sales contract in dispute. Plaintiff consequently referred to the UNIDROIT Principles for the determination of the rate of interest, but Defendant objected that the UNIDROIT Principles could only be applied when so agreed between the parties.
Plaintiff finally requested payment of interest according to the average bank rate for small and medium businesses in the period 1999-2000 as indicated by a Belarus bank engaged in international commercial transactions.
The Arbitral Tribunal decided in favor of Plaintiff and awarded interest of the amount claimed by Plaintiff.
Original in Russian:
available at http://spravka-jurist.com/base/part-ox/tx_fszwke.htm
Translation in English: