Data

Date:: 00-07-2001
Country:: Arbitral Award
Number:: 11051
Court:: ICC International Court of Arbitration 11051
Parties:: Unknown

Keywords

LONG-TERM CONTRACTS - DISTRIBUTION AGREEMENT - BETWEEN AN ITALIAN MANUFACTURER AND TWO UNITED STATES COMPANIES - ITALIAN LAW AS THE LAW GOVERNING THE CONTRACT - ARBITRAL TRIBUNAL BASED ITS DECISION ON THE RELEVANT PROVISION OF THE ITALIAN CIVIL CODE ADDING THAT "SUCH SOLUTION IS CONSISTENT WITH THE RELEVANT CUSTOM OF INTERNATIONAL TRADE OF WHICH THE UNIDROIT PRINCIPLES ARE AN EXPRESSION"

QUESTION AS TO TIME FROM WHEN INTEREST IS DUE - INTEREST DUE AS FROM TIME THE PAYMENTS ARE DUE (SEE ARTICLE 1282 OF THE ITALIAN CIVIL CODE AND ARTICLE 7.4.9 OF THE UNIDROIT PRINCIPLES)

Abstract

Claimant, an Italian manufacturer, entered into a contract with Defendants, two Californian companies, according to which Defendants were to promote sales of Claimant's products and assist in the collection of payments from customers. When Defendants withheld certain amounts of money due to Claimant, Claimant commenced arbitration proceedings requesting payment by Defendants of the amount due plus interest and termination of the agreement for breach by Defendants.

The contract was governed by Italian law. In deciding in favour of Claimant, the Arbitral Tribunal ordered Defendants to pay interest on the amounts due as from the time they were due to Claimant, and in support of this ruling referred to the relevant provision of the Italian Civil Code (Article 1282) adding that "such solution is consistent with the relevant custom of international trade of which the UNIDROIT Principles are an expression". In particular the Arbitral Tribunal referred to Article 7.4.9 of the UNIDROIT Principles which it quoted in extenso.

Fulltext

Applicable law

'The parties have agreed that the dispute should be resolved in accordance with the Italian law.

However, the parties have taken issue on whether the Arbitrator should also take due consideration of the customs laws, duties and regulations of the United States. As a matter of fact, in its Answer to the Request for Arbitration, Respondents have submitted that the arbitration should “include issues for determination that involve the customs law, duties and regulation of the United States”.

The Arbitrator notes, however, that Respondents have failed to indicate, in any of their Submissions, which specific rules they refer to, and the reason why such rules should be applied as rules of law. Furthermore, this arbitration does not seem to involve any issue which would need to be resolved by applying U.S. rules of law.

Respondents having failed to provide any indication as to the U. S. regulations they referred to in their Answer to the Request for Arbitration, this case will be resolved in accordance with the law chosen by the parties, i.e. Italian law.

Nonetheless, the circumstance that the United States of America has increased customs tariffs on certain products may of course be taken into due consideration as a matter of fact.’

Interest

'In this case, Respondents'obligation is to refund to Claimant certain amounts of money paid by customers. Such obligation is a pecuniary obligation ("debito di valuta"), to which interest can be applied under either article 1224 or article 1282 of the Italian civil code. The difference between the two rules lies in the characteristics of the debt: Italian case law, in fact, considers that, if the amount of the debt was known, interest can be calculated from the date it was due according to article 1282 (“interessi corrispettivi”). Conversely, in case the amount of the debt needs a judicial assessment to be determined, interest accrues from the date when debtor was summoned to pay, according to article 1224 ("interessi moratori").

In this case, Claimant did not qualify, the nature of the claimed interest. The Arbitrator shall rule that interest are [sic] due from the date the amounts paid by Claimant's customers should have been returned, according to article 1282 of the Italian civil code. As a matter of fact, Italian case law considers that, when the debt can be calculated with a simple arithmetical calculation, the amount due is deemed to have been known. This is exactly the case here, as we have seen that a very simple calculation would have allowed Respondents to know exactly what they should have paid to Claimant. Respondents will therefore pay interest to Claimant from the date the amounts were due to Claimant, i.e. when they were paid to Respondents by Claimant’s customers.

Such solution is consistent with the relevant custom of international trade, of which the Unidroit principles are an expression. Indeed, article 7.4.9 of the Unidroit principle provides that:

if a party does not pav a sum of money when it falls due the aggrieved party is
entitled to interest upon that sum from the time when payment is due.

47. As to the date from which interest should be calculated, reference is made to the letters, dated March 17th 2000 and March 20th 2000 from Claimant to [customers]. Such letters show that the payments were due at different dates, from March to December 1999. Reference is also made to the copies of checks ..., which show that the amounts held by Respondents were due at different dates, from May to December 1999.

It is therefore necessary to set a date between March and December 1999. Given that the various payments received by Respondents seem to be equally distributed all along that period of time, and of similar amounts, it is appropriate to set the date from which interest will accrue to July lst 1999.

As to the rate of interest, reference has to be made to the legal rate provided by article 1284 of the Italian civil code. Such rate is 2.5% from July lst 1999 until December 31st 2000, and 3.5% from January lst 2001.'}}

Source

Excerpt in ICC International Court of Arbitration Bulletin, 2005 Special Supplement, pp. 86-87.}}