Data

Date:: 22-01-1997
Country:: Russian Federation
Number:: 155/1996
Court:: Tribunal of Int'l Commercial Arbitration at the Russian Federation Chamber of Commerce
Parties:: Unknown

Keywords

SELLER'S OBLIGATION TO DELIVER GOODS CONFORMING WITH THE CONTRACTUAL SPECIFICATIONS (ART.35 CISG) - SELLER'S OFFER TO DELIVER GOODS WITH DIFFERENT SPECIFICATIONS - BUYER'S DUTY TO OBJECT

BUYER'S OBLIGATION TO TAKE DELIVERY - FAILURE TO TAKE DELIVERY DUE TO AN IMPEDIMENT BEYOND BUYER'S CONTROL - BUYER NOT LIABLE FOR DAMAGES

DAMAGES (ART.74 CISG) - NEED OF BREACH OF CONTRACT BY THE OTHER PARTY AND OF MATERIAL LOSS

Abstract

According to the contract the buyer, a Russian trading company, bought 300 tons of table butter 82% fat content on CIP St. Petersburg terms and transferred an advance payment to the seller, a German firm. The buyer alleged that the seller had failed to deliver the goods in due time and that they were of inferior quality due to unconditional salt and fat content and also admixture of lead. The buyer stated that, instead of butter, margarine was actually delivered to him and rejected the goods claiming for damages caused by the delivery of non conforming goods, including the difference between the contractual price and price for margarine. The seller rejected the buyer's claim alleging, in particular, that the good's quality was certified by an independent laboratory in Germany and confirmed by a certificate of conformity. The seller submitted a counterclaim for damages requiring for compensation of the expenses caused by the buyer's failure to receive the goods.

Deciding the question of the conformity of the goods with the contract, the arbitration tribunal held, referring to the contract's supplement number 1, that the goods were termed there in Russian as "butter" and in English as "table butter". In supplement number 2 to the contract describing the quality of the goods in both English and Russian originals the goods were termed as "table butter, 82% fat content, fresh" whereupon in the seller's invoices they were specified as "animal fat butter". In his letter to the buyer the seller suggested that he would deliver two trailers of "absolutely equivalent English butter" citing on difficulties with delivery of Belgian butter. The specification for the butter enclosed to the letter by the seller was the specification for products of English firm "Pura Foods" termed as "Pura sub butter" with 80% fat content and 05-07% salt content.

The arbitration tribunal found that the claimant, having received the specification for Pura sub butter, could not have failed to notice the difference between the terms and some other descriptions of the substitute goods offered for delivery and those specified in the supplement number 2 but, however, agreed in his letter to the seller of 10 February 1995 with the goods and did not ask for a price reduction. On this ground the tribunal, under reference to Art. 35 CISG and para 459 of the German Civil Code, dismissed the buyer's plea for damages concerning the difference between the contract price and price for margarine, having taken into consideration the opinion of the independent laboratory experts who had qualified the goods stated in the supplement number 2 and Pura sub butter as "domestic margarine of standard quality".

The arbitration court rejected the seller's counterclaim for damages and noted inter alia that there were two basic issues proceeding from Art. 74 CISG to be taken into account in deciding the question of compensation of damages. First, there must be a contract breach by a party and second, existence of material loss, including loss of profit, suffered by the other party as a consequence of this breach. The arbitration tribunal found that there was no contract breach by the buyer who had fully paid the goods and customs fees pursuant to the contract but had no opportunity, however, to receive the goods due to an impediment beyond his control.

The buyer was rejected to obtain conformity certificate for the goods on the ground of non-conditional admixture of lead discovered by the quality service of the customs. Russian law provided for certifying the safety of the butter and margarine imported in to the Russian Federation. The terms of the contract did not contain the way of obtaining such a certificate, while legal rules in the buyer's country permitted to apply for expertise to St. Petersburg Center for Expertise and Certification, which had been done by the buyer. The seller argued the conclusion of the Center that had defined extra-concentration of lead in the goods citing on the results of the expertise in Germany. The tribunal noted that the conclusion of the Center presumed the seller's liability for the unconditional goods, while the seller failed, however, to contest the results of the expertise in the established procedure. In that regard the arbitrators found that they could not only ignore the expert's conclusion of the Center but also had no grounds to question it. The arbitration tribunal concluded that the buyer was non-liable and on this ground dismissed the seller's claim for compensation of damages.

Fulltext

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Source

Original in Russian:
- Unpublished

Abstract:
- Alexej G. Doudko}}