Data

Date:
00-00-1995
Country:
Arbitral Award
Number:
Court:
CIETAC China International Economic and Trade Arbitration Commission
Parties:
Unknown

Keywords

DAMAGE TO GOODS DUE TO AN OMISSION OF THE SELLER (ART. 66 CISG)

LACK OF CONFORMITY OF GOODS - TIME OF EXAMINATION (ART. 38 CISG) - WITHIN A FEW DAYS AFTER DELIVERY AND REDISPATCH OF THE GOODS - TIMELY EXAMINATION

INTEREST (ART. 78 CISG) - RIGHT TO INTEREST IN CASE OF LATE PAYMENT OF DAMAGES BY THE SELLER

Abstract

In 1992 a Californian buyer and a Chinese seller agreed on the sale of 10,000 kg of jasmine aldehyde (jasminal), CIF New York. After signing the contract, the buyer warned the seller by fax that the goods were subject to deterioration at high temperatures. The buyer explicitly asked the seller to inform the carrier accordingly and to make sure that the jasminal would be stored in a relatively cool place during transport. The buyer also asked to have the jasminal transported as far as possible on a direct line. The seller raised no objections but replied that the temperature at the port was appropriate and could not endanger the goods. When the jasminal, after passing through Hong Kong, was unloaded in New York, a large part had melted and leaked due to excessive heat during the voyage. A few days later the jasminal was shipped on to the end user who refused to accept it. The buyer at that moment informed the seller about the damage and caused the goods to be examined on the same day. The parties then reached a settlement agreement under which the seller was to pay US$ 60,000 as damages, of which US$ 20,000 had to be paid in cash within a fixed date, whilst the remainder was to be compensated in further transactions between the parties by the seller's renouncement of commissions and profits. The seller, however, did not pay US $ 20,000 nor could any further transactions between the parties be concluded. The buyer brought an action before an Arbitration Commission claiming payment of US $ 60,000 plus interest as well as damages for the economic loss caused by the seller's failure to pay the agreed sum.

The Arbitrators held that the seller was responsible for the damage to the goods according to Art. 66 CISG. Notwithstanding the CIF clause, which means that risk passes to the buyer with the goods crossing the railing of the ship, in this case the parties had entered into a separate special contractual agreement with regard to the temperature problem during transport. As the seller had not given appropriate directives to the carrier and had sent the jasminal via Hong Kong instead of assigning a direct ship, it had not complied with its separately determined contractual duties. The damage therefore was caused by an act or omission of the seller, as required by Art. 66 CISG.

The Arbitrators, in determining whether the goods had been inspected within the time limits of Art. 38 CISG, observed that the buyer's course of action - examination within a few days after the goods were unloaded at the port of destination though the goods were shipped on to the end user - could not endanger its claims.

Since it had become apparent that the seller did not intend to transact any further business with the buyer in order to compensate part of the damage, the Court held that the buyer was entitled to the payment of US$ 60,000. In addition, the Court awarded the buyer an annual interest of 5% on US$ 20,000 as from the date payment was due. The buyer's claim for economic loss was not upheld by the Court, because the buyer had not provided sufficient proof thereof.

Fulltext

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Source

Excerpt of judgement in English:
- Law Yearbook of China (Peking) 1995, 922-926

Source and English translation:
- Prof. Dr. F. Münzel, Max-Planck-Institut für ausländisches und internationales Privatrecht, Hamburg, Germany}}