- Russian Federation
- Second circuit Arbitrazh Court of Appeal
SALES CONTRACT - BETWEEN TWO RUSSIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES AS A MEANS OF INTERPRETING OR SUPPLEMENTING APPLICABLE DOMESTIC LAW (RUSSIAN LAW)
SUPERVENING FINANCIAL CRISIS IMPEDING BUYER FROM PAYING THE PRICE - DOES NOT AMOUNT TO FORCE MAJEURE BECAUSE NOT AN UNAVOIDABLE EVENT - REFERENCE TO ARTICLE 7.1.7 UNIDROIT PRINCIPLES
Claimant, a Russian company, brought an action against Respondent, another Russian company, claiming the payment of the outstanding price of the goods it had delivered as well as the penalty as provided in the contract.
The Court of first instance held that Claimant was entitled to the payments requested. Respondent appealed against the decision, invoking a supervening financial crisis which prevented it from payment and amounted to a case of force majeure exempting it from liability for its non-performance.
The Court of Appeal rejected the argument put forward by Respondent 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. The Court based its 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.