Data

Date:
26-05-2011
Country:
Belarus
Number:
942/48-10
Court:
International Court of Arbitration at the Belarusian Chamber of Commerce and Industry
Parties:
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Keywords

BUYER'S RIGHT TO REDUCE PRICE (ART. 50 CISG)

Abstract

[CLOUT Case n.1543 ; abstract prepared by Jan Iosifovich Funk and Inna Vladimirovna Pererva, National Correspondents].

The Belarusian seller (the plaintiff) and the German buyer (the defendant) concluded a contract according to which the plaintiff, in accordance with the defendant’s working construction documentation, produced and supplied goods to the defendant. The defendant made an advance payment in the amount of 50 per cent of the value of the goods, but refused to pay the outstanding 50 per cent, stating that that amount represented a commensurate reduction in the price of the goods, which had been supplied with defects, on eliminating which the buyer had spent the corresponding amount of money. In the defendant’s view, the goods supplied did not conform to the quality requirements of the contract. However, the defendant was unable to corroborate the substance of the said defects, but pointed out that some of the defects had been observed by the consignee immediately after receipt of the goods, and a part of the defects had been revealed by the consignee at a later date.

In reply to the defendant’s argument, the plaintiff stated that, under the terms of the contract, acceptance of the quantity and quality of the goods had been carried out at the seat of the plaintiff by the representative of the defendant and no claims were made concerning the goods. Further, the defendant had failed to provide evidence on the amount of the costs incurred in eliminating the defects, and had merely informed of the reduction in the value of the goods commensurate with the damage.
Settling the dispute on the merits, the arbitral tribunal was guided by the CISG, as
the parties to the contract had their place of business in States Parties to the
Convention.
Having heard the arguments of both parties, the arbitral tribunal noted that, under
Article 50 CISG, if goods did not conform with the contract, the buyer could reduce
the price in the same proportion as the value that the goods actually delivered had at
the time of the delivery bore to the value that conforming goods would have had at that time. However, the defendant had not met the requirements of Article 50 CISG, as the actual value of the goods delivered at the time of the delivery had not been demonstrated. In addition, the defendant had not provided evidence to corroborate either the costs incurred in eliminating the defects in the goods or the substance of those defects.
Thus, the arbitral tribunal did not take into account the defendant’s argument that a
part of the goods supplied by the plaintiff were defective, all the more so as the
goods were not returned to the plaintiff but were sold by the defendant pursuant to
its contracts with other contractors.
On the basis of the foregoing, and also in connection with the failure to demonstrate
the reduction in the value of the actually delivered goods at the time of delivery in
proportion to the value which those goods had at the time the contract was
concluded, the arbitral tribunal rejected the application of Article 50 CISG to the
relations between the parties.

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