- Arbitral Award
- International Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation
SALES CONTRACT - BETWEEN A RUSSIAN COMPANY AND A CANADIAN COMPANY
INTERPRETATION OF CONTRACTS - APPLICABLE DOMESTIC LAW (RUSSIAN LAW) REFERRING TO "TRADE USAGES" (ARTICLE 431 OF THE RUSSIAN CIVIL CODE) – APPLICATION OF THE UNIDROIT PRINCIPLES AS RULES WIDELY USED IN INTERNATIONAL PRACTICE
LINGUISTIC DISCREPANCIES BETWEEN TWO EQUALLY AUTHORITATIVE LANGUAGE VERSIONS OF THE CONTRACT (ARTICLE 4.7 OF THE UNIDROIT PRINCIPLES)
Claimant (a Russian company) and respondent (a Canadian company) concluded a sales contract drafted in both Russian and English, providing that both language versions were equally authoritative for the interpretation of its provisions. However, the Russian and English texts of the arbitration clause which constituted an integral part of the contract were contradictory in their wording. In the English version, the official title of the arbitration court which was to deal with any disputes arising from the contract was not given in full; in particular, it did not include any reference to the Organisation to which the arbitration court was attached (i.e., ICAC at the Russian Federation Chamber of Commerce and Industry).
When claimant brought an action before the arbitration court claiming breach of contract by respondent in accordance with claimant’s understanding of the text of the arbitration clause, respondent contested the court’s jurisdiction, referring to its own interpretation of which court had jurisdiction.
The Tribunal, in accordance with the parties’ agreement, applied the law of the Russian Federation, in particular Article 431 of the Civil Code which provides the rules for the interpretation of contracts and states that in determining the common intention of the parties, the Tribunal must take into account the literal meaning of the words and expressions used in the text; if, in this way, it were to prove impossible to determine the parties’ intention, the Tribunal must apply, in particular, trade usages. The Tribunal referred to this provision in its reasons for applying the UNIDROIT Principles. It held that it would be justifiable to take advantage of the rules expressed in this instrument, which are becoming widely used in international practice for the interpretation of commercial contracts. The Tribunal also noted that the practice of applying the UNIDROIT Principles was constantly quoted in foreign and Russian legal literature and was reflected in several published awards of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.
As to the problem of linguistic discrepancies in the present contract, the Tribunal found that the text had originally been drafted in Russian and afterwards translated into English. It referred to Article 4.7 of the Principles (Linguistic discrepancies) which stipulates that “where a contract is drawn up in two or more languages which are equally authoritative there is, in case of discrepancy between the versions, a preference for the interpretation according to a version in which the contract was originally drawn up.” The Tribunal ruled in favour of the interpretation that followed from the Russian language version of the contract.
Summary based on an article by Professor M. ROSENBERG, published (in Russian) in the Bulletin of the Highest Arbitration Court of the Russian Federation, 2002, No. 11.
Summary kindly supplied (in English) by Professor Alexander Komarov.}}