- High Administrative Court of Ukraine
LONG-TERM CONTRACTS - SUPPLY CONTRACT - BETWEEN UKRAINIAN COMPANY AND KAZAKH COMPANY - UKRAINIAN LAW GOVERNING THE CONTRACT - REFERENCE BY PARTIES TO CISG AND UNIDROIT PRINCIPLES
FORCE MAJEURE - REFERENCE BY COURT TO CISG AND UNIDROIT PRINCIPLES IN SUPPORT OF SOLUTION ADOPTED UNDER UKRAINIAN LAW
Claimant, a Ukrainian company, had entered into a contract with a Kazakh company for the supply of petroleum products. In the course of the performance of that contract by the Kazakh company a force majeure occurred, as officially acknowledged by the Chamber of Commerce of the Rostov Region of the Russian Federation ("the Acknowledgment"), which prevented the Russian company from delivering the goods. As a result, Claimant could not register the contract in its accounts as performed, as required by Ukrainian legislation concerning operations in foreign currency.
When subsequently the Tax Authority performed an inspection of Claimant's accounts and discovered that Claimant had not properly registered the sales operation in question, it concluded that in this way Claimant had violated the deadlines for import operations as required from Ukrainian companies Ukrainian legislation concerning operations in foreign currency and for that reason issued a fine.
Claimant filed a suit against Respondent, a Ukrainian District State Tax Administration Authority, requesting the annulment of the fine that Respondent had issued.
Claimant argued that as the result the force majeure the Russian company was unable to deliver the goods and Claimant was prevented from requesting the payment of damages, and that for these reasons Claimant did not timely register the contract.
Respondent objected that it could not accept the Acknowledgment as valid evidence for the force majeure since it was not properly legalised and did not specify the date when the force majeure expired.
The Court of First Instance decided in favour of Claimant.
The Court recalled that, though the law governing the Agreement is Ukrainian law, the parties had also agreed that United Nations Convention on Contracts for the International Sale of Goods and UNIDROIT Principles of International Commercial Contracts shall apply, and pointed out that according to these two instruments the Kazakh company was excused when force majeure occurs. Consequently, Claimant could not claim damages nor demand the delivery of goods or a refund.
As to the arguments of Respondent regarding the requirement under the Ukrainian law to legalise the Acknowledgment, the Court stressed that this would apply only if an international treaty of Ukraine did not provide otherwise. According to article 13 of the Convention on Legal Aid and Legal Relations in Civil, Family and Criminal Cases, 1993, to which Ukraine and Russian Federation are parties, documents created or certified by an authorized person or agency in the prescribed form with the official seal in the country of one contracting party are adopted in the country of another contracting party without any special certification. Thus, the Court found Respondent's allegations as to the necessity of legalisation of the Acknowledgment to be unfounded.
Respondent appealed the decision, but the Court of Second Instance confirmed the decision.
The Court of Third Instance denied the appeal, reiterating and agreeing with the reasoning of the First and Second Instance Courts. In particular, the Court confirmed the findings of the Court of First Instance regarding the applicability of the UNIDROIT Principles to the case at hand and regarding the exemption of Kazakh company from liability due to the occurrence of force majeure. The Court also agreed with the previous instances that Respondent should have accepted the Acknowledgment as a proper document certifying the force majeure and consequently should not have fined Claimant.
Decision kindly provided by Olga Nalyvaichenko, Kiev.
Original in Ukrainian available at the Unified State Register of Court Decisions: http://www.reyestr.court.gov.ua/}}