- Russian Federation
- Tribunal of Int'l Commercial Arbitration at the Russian Federation Chamber of Commerce
EXEMPTION FOR NON PERFORMANCE (ART. 79 CISG) - NON PERFORMANCE BY SELLER'S SUPPLIER - SELLER MUST PROVE THAT IMPEDIMENT IS BEYOND ITS CONTROL AND UNFORESEEABLE
DAMAGES (ART. 74 CISG) - DIFFERENCE BETWEEN CONTRACT PRICE AND PRICE IN SUBSTITUTE TRANSACTION
[Abstract: CLOUT case 140]
A contract was concluded between a Russian seller and a German buyer for the supply of a specific quantity of chemical products within a period of time specified in the contract (fourth quarter of 1992). The goods were not delivered to the buyer within the specified period. From January to May 1993, the buyer repeatedly informed the seller that it insisted on the goods being delivered in accordance with the contract concluded and was ready to extend the time-limit for delivery. In May 1993, the buyer informed the seller that, as a result of the latter's breach of its contractual obligations, the buyer had purchased the goods specified in the contract from a third party. In May 1994, the buyer sued the seller for breach of contract, claiming compensation for damages suffered as a result of the seller's failure to honor the contract, such damages consisting in the difference between the price of the goods established in the contract and the price at which the buyer was obliged to purchase the goods from the third party.
In its reply to the claim, the seller maintained that it should be discharged from liability on the grounds that it had been unable to deliver the goods for reasons beyond its control, namely because of an emergency production stoppage at the plant manufacturing the goods specified in the contract.
Referring to Art. 79 CISG, the tribunal decided that the seller (respondent) was unable to prove the facts that would have discharged it from its liability for non-performance of its obligations since refusal on the part of the manufacturer of the goods to supply them to the respondent could not be deemed sufficient grounds for such discharge from liability. The respondent should bear liability for failure to fulfill its obligations on the additional grounds that it was unable to establish that it could not reasonably be expected to take account, in concluding the contract, of the obstacle preventing its compliance with the contract or to avoid or surmount that obstacle or its consequences.
With regard to the amount of compensation for the damages, the tribunal considered that establishing the extent of damages on the basis of the difference between the contract price and the replacement purchase price was consistent in this instance with the provisions laid down in Art. 74 CISG for determining the amount of damages. In addition, account was taken of the fact that the respondent (seller) was not able to establish that the buyer would have been able to purchase the goods at a lower price when making the second purchase in replacement of the first.
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Original in Russian:
Abstract: CLOUT Case 140, in A/CN.9/SER.C/ABSTRACT/10, 16 August 1996, reproduced with kind permission of the Secretary, United Nations Publications Board}}