- Arbitral Award
- International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation
SHARE PURCHASE AGREEMENT - BETWEEN A CYPRIOT COMPANY AND AN AUSTRIAN COMPANY - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW (RUSSIAN LAW) - UNIDROIT PRINCIPLES DEFINED AS "A DOCUMENT OF UNIFICATION OF PRIVATE LAW WHICH IN THE PRACTICE OF MAJORITY OF INTERNATIONAL ARBITRATION CENTRES INCLUDING THE ICAC IS CONSIDERED AS A RECOMMENDED DOCUMENT REGULATING GENERAL ISSUES OF THE PERFORMANCE OF INTERNATIONAL CONTRACTUAL OBLIGATIONS".
PAYMENT OF MONETARY OBLIGATION BY FUNDS TRANSFER - TIME AT WHICH THE DEBTOR'S OBLIGATION IS DISCHARGED - NOT EXPRESSLY ESTABLISHED BY RUSSIAN CIVIL LEGISLATION - REFERENCE TO ART. 6.1.8 (2) UNIDROIT PRINCIPLES
"A claimant, a Cypriot company, filed a lawsuit with the International Commercial Arbitration Court of the Russian Federation Chamber of Commerce and Industry (ICAC) against a defendant, an Austrian company, for collection of purchase price for shares in accordance with the terms of the share purchase agreement (SPA). The SPA for shares provided that Russian law was the law governing the contract.
The court’s reasoning is explained below.
The ICC received a statement of claim of the Cyprus Company (the claimant) against the Austrian company (the defendant) for recovery of the debt.
As it follows from the statement of claim and the documents attached thereto, on 14 June 2012 the claimant and the defendant entered into a contract for the sale of shares in the limited liability company (the Contract), according to which the claimant (seller) was obliged to transfer the shares in the limited liability company, registered in the territory of the Russian Federation, with the nominal value of X rubles, which represented 18.96 per cent of the share capital of the limited liability company (the share).
In the statement of claim, the claimant submitted that the ICAC had the competence to hear the dispute, the legislation of the Russian Federation was the applicable law and nominated the arbitrators.
The ICAC stated that in the civil legislation of the Russian Federation there were no direct indications as to when the monetary obligation should be deemed to have been performed when the payments were made by payment orders – on the date when the funds were wrote off from the debtor’s account or on the date when the funds were debited to the creditor’s account. State arbitrazh courts proceeded from rule that creditor’s bank should be deemed as a proper place of performance of the monetary obligation, the date of performance of monetary obligation was the date when the funds were debited to the creditor’s account, and not the date when the funds were wrote off from the debtor’s account (Resolution of the Seventeenth Arbitrazh Appeal Court as of 18.10.2012 N PAP-10585/2012-GK in case N A50-7303 / 2012).
Considering that payments between the parties were made through two foreign banks, the ICAC concluded that it is possible to apply the UNIDROIT Principles (1994), a document of unification of private law, which in the practice of majority of international arbitration centres, including the ICAC, is considered as a recommended document, regulating general issues of the performance of international contractual obligations.
According to paragraph 2 of Article 6.1.8 of the UNIDROIT Principles, in case of payment by a transfer the obligation of the obligor is discharged when the transfer to the obligee’s financial institution becomes effective. Thus, the monetary obligation to pay the purchase price for a share should be considered as performed by the defendant 3 September 2012, when the funds were debited to the claimant’s bank account. The defendant himself adhered to the same position, the defendant’s representative at the arbitration hearing admitted that they had been in arrears in paying the first price for three days."
(cf. S. Petrachkov / A. Bekker in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 227-228)