- Russian Federation
- Second circuit Arbitrazh Court of Appeal
SALES CONTRACT - BETWEEN TWO RUSSIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES AS A MEANS OF INTERPRETING OR SUPPLEMENTING APPLICABLE DOMESTIC LAW (RUSSIAN LAW)
SUPERVENING FINANCIAL CRISIS IMPEDING BUYER FROM PAYING THE PRICE - DOES NOT AMOUNT TO FORCE MAJEURE BECAUSE NOT AN UNAVOIDABLE EVENT - REFERENCE TO ARTICLE 7.1.7 UNIDROIT PRINCIPLES
Claimant, a Russian businessman, concluded a sales contract with Respondent, a Russian company. When Respondent failed to pay the price of the goods delivered by Claimant, the latter brought an action claiming the payment of the price plus interest on the amount due.
The Court of first instance held that Claimant was entitled to the payments requested. Respondent appealed against the decision, invoking a supervening financial crisis which prevented it from payment and amounted to a case of force majeure empting it from liability for its non-performance.
The Court of Appeal rejected the argument put forward by Respondent on the ground that a party’s financial and economic crises could not be considered as force majeure, since it was not unavoidable and therefore lacked one of the essential characteristics of force majeure. The Court based its decision not only on the relevant provisions of the Russian Civil Code but also on Article 7.1.7 of the UNIDROIT Principles of International Commercial Contracts.