- Russian Federation
- Second circuit Arbitrazh Court of Appeal
SERVICE CONTRACT FOR THE REPAIR OF PIPELINE - BETWEEN TWO RUSSIAN COMPANIES – REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET AND SUPPLEMENT APPLICABLE LAW (RUSSIAN LAW).
NOTION OF FORCE MAJEURE – REFERENCE TO ARTICLE 7.1.7 OF UNIDROIT PRINCIPLES
Claimant, a Russian construction company, entered into a contract with Respondent, a Russian company, for the repair of a pipeline. When Claimant, after carrying out the service, was not paid by Respondent, it brought an action against Respondent claiming the payment of the agreed price. Respondent invoked a supervening financial crisis as an excuse for its non-performance.
Both the Court of first instance and the Court of Appeal rejected Respondent’s argument on the ground that a party’s financial and economic crises could not be considered as force majeure, since it was not unavoidable and therefore lacked one of the essential characteristics of force majeure. In so doing the Courts based their decision not only on the relevant provisions of the Russian Civil Code but also on Article 7.1.7 of the UNIDROIT Principles of International Commercial Contracts.