- Arbitral Award
- ICC International Court of Arbitration ICC-FA-2021-070
INTERNATIONAL SALES CONTRACT - CONTAINING A CHOICE OF LAW CLAUSE ACCORDING TO WHICH “ANY LEGAL ISSUE RELATING TO THIS CONTRACT […] SHALL BE GOVERNED BY CISG AND TO THE EXTENT NOT COVERED BY THE CISG, BY REFERENCE TO THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS OF 1994 AND IF NOT COVERED BY THE FOREGOING SETS OF RULES OR THE PROVISIONS IN THIS CONTRACT, BY INTERNATIONALLY ACCEPTED GENERAL TRADE PRACTICES, AND IN FINAL INSTANCE BY THE LAW OF THE COUNTRY WHERE THE SELLER HAS HIS PRINCIPAL PLACE OF BUSINESS”
NO PROVISION OF THE UNIDROIT PRINCIPLES APPLIED
A dispute arose concerning the performance of two contracts for the sale of a certain quantity of mineral, due to a default of payment by the buyer.
In the final award, the Sole Arbitrator held that he had jurisdiction over all claims raised in the arbitration. The award also confirmed that the claims filed by the Seller, although relating to two separate contracts of sale, could be heard in a same arbitration. The Arbitrator noted that the arbitration clauses in the two contracts were similar and that there was no indication that the parties wished for claims under the arbitration agreements to be determined separately. The arbitrator also considered that the principle of good faith requires that any dispute between the parties must be resolved as quickly and efficiently as possible, avoiding additional costs.
On the merits of the claims, the Sole Arbitrator noted that the parties agreed that any disputed issues relating to the performance of the contracts shall, «in the first instance, be governed by the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (‘CISG’)» and «where legal issues cannot be resolved based on the rules set forth in the CISG, the UNIDROIT Principles of International Commercial Contracts of 1994 (‘UNIDROIT Principles’) or internationally accepted trade practices shall apply». The contracts provided the subsidiary application of «the law of the country where the Seller has his principal place of business».
Pursuant to art. 51 CISG, the Sole Arbitrator held that, since the shipment of partial deliveries was in accordance with the practice established between the parties to deliver the goods by lots, the buyer was not entitled to refuse to pay the seller on the grounds that the goods were only partially delivered. The partial delivery did not constitute a fundamental breach of contract in this case.
Having failed to comply with its obligation under the CISG to provide notice of non-conformity within a reasonable time, the Buyer had lost its right to object to the fact that the Seller had supplied a quantity of goods in excess of the deviation tolerance allowed by the contracts. Therefore, the Seller was entitled to the purchase price of the goods.
Finally, pursuant to the delivery term CIF (Cost, Insurance, and Freight) of the INCOTERMS 2000, as agreed by the parties, the Arbitrator affirmed that the Seller did not have to prove that the goods actually arrived at the ports of discharge in order to be entitled to payment of the purchase price.
The Arbitrator granted interest on the awarded sums at the contractually agreed rate of 7.5%, in accordance with article 78 CISG. In this regard, the Sole Arbitrator rejected Buyer's argument that the rate should be adjusted because it exceeded the standard rate applied by the National Bank of the Seller's principal business State. The arbitrator, while stating that this decision is in line with the prevailing legal opinion in this State, recalled that the interest rate agreed for late payment must not be confused with the interest rate applied by the national bank of the Seller's State.
(Abstract kindly provided by François Mansourati)
Stephan W. Schill (ed), Yearbook Commercial Arbitration 2021 - Volume XLVI, pp. 86 - 93}}