- Arbitral Award
- International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation
SALES CONTRACT - BETWEEN A RUSSIAN SELLER AND A SWEDISH BUYER - SILENT AS TO THE APPLICABLE LAW – APPLICATION OF THE UNIDROIT PRINCIPLES CONSIDERED TO REFLECT INTERNATIONAL USAGES
AVOIDANCE OF CONTRACT FOR LACK OF AUTHORITY OF AGENT – NOTICE OF AVOIDANCE TO BE GIVEN WITHIN REASONABLE TIME AFTER AVOIDING PARTY KNEW OR COULD NOT HAVE BEEN UNAWARE OF RELEVANT FACTS (ART. 3.15 UNIDROIT PRINCIPLES)
A Russian seller and a Swedish buyer entered into a sales contract. Since the seller delivered only the first lot of the goods (ca. 20% of the total), the buyer commenced legal action requesting the seller to deliver the missing part of the goods or alternatively to pay damages for its failure to perform. The seller objected by invoking the invalidity of the contract due to the lack of authority of the company’s director who signed the contract.
The Arbitral Tribunal applied the UNIDROIT Principles which in its view are gradually gaining the status of internationally recognized trade usages.
As to the merits of the case, the Arbitral Tribunal decided in favour of the Swedish buyer. In rejecting the seller’s objection concerning the invalidity of the contract, it referred in particular to Article 3.15 of the UNIDROIT Principles, according to which notice of avoidance must be given to the other party within a reasonable time after the avoiding party knew or could not have been unaware of the relevant facts. In the case at hand the Russian seller had clearly failed to do so, since in the course of the performance it had never raised the issue of the alleged lack of authority of the company’s director and only during the arbitral proceedings, i.e. years after the conclusion of the contract, for the first time declared its avoidance.
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