- 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
Two Russian companies entered into a sales contract. When the buyer failed to pay the price for the goods delivered, the seller brought an action against it claiming the payment of the whole amount of the price as well as of the interest the seller had to pay to third parties from which it borrowed the money not paid by the buyer.
The Court of First instance decided in favor of the seller and ordered the buyer to pay the seller the requested amount of money. The buyer appealed against the decision, arguing that it was prevented from paying the outstanding price of the goods it has received by a supervening financial crises which in its view amounted to a case of force majeure exempting it from liability for its non-performance.
The Court of Appeal rejected the argument put forward by the buyer 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.