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Reproduced with permission of  7 Vindobona Journal of International Commercial Law and Arbitration (2003) 1-62

Cases on CISG Decided in the Russian Federation

Djakhongir Saidov [*]

  1. Introduction
  2. Brief Overview of the Activity of International Commercial Arbitration Court
    (ICAC) at the Russian Federation Chamber of Commerce and Industry
  3. Sphere of Application and General Provisions
    3.1 Application of the Convention (Article 1)
    3.2 Article 2 (Exclusions from Convention)
    3.3 Article 3 (Contracts for Services or for Goods to Be Manufactured)
    3.4 Article 4 (Substantive Coverage of Convention)
    3.5 Article 7 (Good Faith and General Principles)
    3.6 Article 8 (Interpretation of Statements and Conduct of a Party)
    3.7 Article 9 (Usages and Practices)
    3.8 Form of the Contract (Articles 11, 12, 29)
  4. Formation of Contracts (Articles 14-24)
  5. Sale of Goods
    5.1 General Provisions (Articles 25-29)
    5.2 Obligations of the Seller (Articles 30-43)
    5.3 Buyer's Duty to Examine the Goods and Give a Notice of Lack of Conformity of the Goods (Articles 38, 39)
    5.4 Buyer's Remedies (except for Damages)
          5.4.1 Specific Performance
          5.4.2 Avoidance of the Contract
    5.4.3 Reduction of the Price
    5.5 Delivery of Excess Quantity of the Goods
    5.6 Obligations of the Buyer and Remedies of the Seller (except for Damages)
          5.6.1 Payment of the Price and Taking Delivery of the Goods (Articles 53, 54, 60)
          5.6.2 Determination of the Price under Article 55
          5.6.3 Seller's Right to Require the Buyer to Perform (Article 62)
          5.6.4 Seller's Right to Avoid the Contract (Article 64)
    5.7 Passing of Risk (Articles 66-70)
    5.8 Anticipatory Breach and Instalment Contracts (Articles71-73)
    5.9 Damages
          5.9.1 Definition of 'Damages'
                    (1) Division on 'Real Loss' and 'Loss of Profit'
                    (2) Future Losses
          5.9.2 Types of Damages
                    (1) 'Real Loss'
                    (2) Loss of Profit
                    (3) Losses Caused by Changes in the External Value of Currency
                    (4) Non-Material Loss
                    (5) Legal Expenses
          5.9.3 Methods of Limiting Damages
                    (1) Causation
                    (2) Foreseeability
                    (3) Mitigation
                    (4) Certainty
          5.9.4 Calculation of Damages (Articles 75, 76)
    5.10 Interest (Article 78)
    5.11 Impediment Excusing a Party from Damages (Article 79)
  6. CISG and the UNIDROIT Principles of International Commercial Contracts
  7. Conclusion

1. INTRODUCTION

The USSR became a party to the UN Convention on Contracts for the International Sale of Goods 1980 (CISG) on 1 September 1991. Since 24 December 1991, the Russian Federation has continued the membership of the USSR in the United Nations. In accordance with the United Nations Charter, the Russian Federation has acquired all rights and obligations of the USSR under multilateral treaties deposited with the Secretary-General of the UN. Russia is therefore a successor to the membership of the USSR in the CISG.[1] In accordance with Article 15(4) of the Constitution of the Russian Federation, the Convention has become a constituent part of the legal system of the Russian Federation which has the priority over national legislation.[2] [page 1]

A great number of cases have been decided on the basis of the Convention during the period of Russia's participation in the Convention. There are two reasons for this. First, international sales contracts are the most widely spread type of transactions entered into by Russian companies in the field of international economic activity. Secondly, the scope of application of the Convention is wide, and cases where the parties have excluded it have been rare.[3]

The purpose of this article is to carry out a survey of cases on the CISG that have been decided in the Russian Federation. Taking into account the significant number of cases that have been decided in Russia as well as the need to promote uniformity in application of the Convention, it is important that non-Russian speaking lawyers have access to Russian cases.[4] In this regard, this work is intended to present an overview of Russian cases dealing with various issues under the CISG and to serve as a source of information on the way in which a number of issues under CISG have been dealt with by Russian Arbitral Tribunals and Courts.

This work will show that many of the Russian cases on the CISG were based upon interesting facts and dealt with some important issues within the CISG. At the same time, several critical points need to be made.

First, at least on the basis of the materials that were available to this author, it can be said that some of the decisions neither set out the facts in necessary detail nor presented the reasoning with sufficient clarity. This aspect complicated analysis of some decisions. Secondly, this work will demonstrate the examples where the CISG has been incorrectly interpreted and applied. Finally, some of the cases will present instances where the 'international character' of the Convention has not been respected.

The list of cases referred to in this work is far from exhaustive. Only cases which were available and which the author regarded as the most important are included. [page 2]

2. BRIEF OVERVIEW OF THE ACTIVITY OF INTERNATIONAL COMMERCIAL ARBITRATION COURT (ICAC) AT THE RUSSIAN FEDERATION CHAMBER OF COMMERCE AND INDUSTRY

Since most Russian cases on CISG were heard by the International Commercial Arbitration Court (hereinafter referred to as 'ICAC') at the Russian Federation Chamber of Commerce and Industry [5] (although references will be made to court decisions as well), it seems necessary to provide a brief overview of the activity of the ICAC.

The ICAC is a permanently acting independent arbitration institution. The ICAC is one of the oldest and leading international arbitration institutions in the world.[6] It has been functioning since 1932. Previously, it was called the Foreign Trade Arbitration Commission (up to 1988), and the Arbitration Court (up to 1993). From 1993, it has been functioning under its present name.[7] The legal basis for activity of the ICAC consists of the Law of the Russian Federation on 'International Commercial Arbitration'[8] and the Statute 'On the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation'.[9] The Rules of the ICAC entered into force on 1 May 1995.[10]

The ICAC hears the disputes in connection with contractual and other civil legal relationships arising out of international economic and trade relations if a place of business of at least one of the parties is situated in a country other than Russia. The ICAC also hears the disputes of the enterprises with foreign investments and international associations and organisations established on the territory of the Russian Federation which arise between themselves, their disputes with other subjects of law of [page 3] the Russian Federation as well as the disputes between their shareholders (participants).[11]

3. SPHERE OF APPLICATION AND GENERAL PROVISIONS

3.1 APPLICATION OF THE CONVENTION (ARTICLE 1)

In a considerable number of cases, the ICAC has applied the Convention by virtue of Article 1(l)(a) CISG.

For example, in one case [12] a Russian seller brought a claim against a German buyer in connection with non-payment of the latter for the goods supplied under the framework contract. The ICAC Tribunal decided that, since both the Russian Federation and the Federal Republic of Germany in which the parties had their places of business, were the Contracting States, the Vienna Convention should govern the dispute by virtue of its Article l(1)(a). The Convention has been applied in an analogous manner in many other ICAC cases.[13]

In several cases the ICAC, taking into consideration the provisions of Article 100 CISG, held that the CISG could not govern the disputes in question. For example, in a dispute between the parties whose places of business were in Russia and Bulgaria, the ICAC found the CISG inapplicable. The Tribunal held that although Russia and Bulgaria were Contracting States at the moment of bringing the claim and trying of the dispute, [14] at the moment of the conclusion of the contract (April 1991), both Russia and Bulgaria were not parties to the CISG. Therefore, the CISG could not govern the relationships arising out of the contract in question.[15]

An analogous approach was taken in a dispute between a Polish seller and a Russian buyer. On the basis of the fact that the contract between the parties had been concluded in 1994 and Poland had become a CISG Contracting State on 1 June 1996, the ICAC [page 4] Tribunal correctly decided that the Convention could not govern the relationships under this contract.[16]

Case No 142/1994 [17] also involved the issues of applicability of the Convention under Article l(l)(a). In this case the Tribunal established that the conclusion of the contract was contingent upon a certain condition specified in the contract. Although at the moment of signature of the contract, the country in which the respondent had its place of business was not a CISG Contracting State, the respondent's State became a party to the Convention by the time when the condition was satisfied. The ICAC regarded the moment when the condition in question was satisfied as being decisive and, accordingly, ruled that the Convention should govern the dispute by virtue of Article 1(l)(a).[18]

It is argued that the decision is correct because the parties' agreement in relation to the moment of the contract's entering into legal force had to be respected. The question, of course, can arise as to the validity of such an agreement -- a matter which is not governed by the Convention.[19] If, in the case under consideration, it were the law of the Russian Federation which governed the issues outside the scope (and it seems that this was the case), then such an agreement would be regarded as valid.[20]

On a number of occasions, the ICAC Tribunal has applied the Convention by virtue of Article 1(1)(b).[21] For example, in a dispute between the parties which had their places of business in Russia and the United Kingdom, the CISG was found to be applicable. Having applied a conflict of law rule provided for in Article 166 of the Fundamentals of Civil Legislation 1991,[22] the Tribunal held that civil law of Russia (the seller's country) applied to the contract. At the same time, the ICAC took into account the fact that Russia was a party to the CISG,[23] and ruled, therefore, that since the parties had not excluded the applicability of the Convention, it was applicable to the dispute on the [page 5] basis of Article l(1)(b).[24] Similarly, in a dispute between a Russian firm and a Portuguese company,[25] the CISG, according to Article 1(1)(b), was the law governing the dispute since Russian law was applicable to the dispute by virtue of a norm of private international law.[26] Several other cases have reached similar conclusions.[27]

In a number of the ICAC cases, the law of a CISG Contracting State has been chosen as the applicable law. In this regard, it is noteworthy that the prevailing view among commentators is that if the law chosen by the parties as the law governing the contract is that of a Contracting State, then such an agreement should be the basis for applying the Convention. [28] In a similar vein, the ICAC has consistently ruled that where the law chosen by the parties was the law of a Contracting State, the Convention should apply.[29]

In most of the cases in which Russian law was applicable, and where the CISG was applied as the governing law, the ICAC emphasised the fact that the Convention was considered to be part of the legal system of the Russian Federation and had a priority [page 6] over domestic rules by virtue of Article 15 of the Constitution and Article 7 of the Civil Code of the Russian Federation.

In some cases, however, where parties chose Russian law, the CISG was held to be inapplicable. In one such case,[30] the agreement of the parties provided for application of 'Russian legislation'. The Tribunal interpreted this provision in the contract as excluding application of the CISG. The reason for this decision was that self-executing international treaties (i.e. the treaties for the applicability of which no adoption of an internal act is required) are regarded as being part of the 'legal system' of the Russian Federation, but not as being part of the Russian 'legislation'.[31]This can probably be explained by the fact that the term 'civil legislation' is defined narrowly in the Russian Civil Code. According to Article 3 of the Code, 'civil legislation' includes only the Civil Code and the federal laws adopted in accordance with the Civil Code.[32]

In Case No 442/1993,[33] the Tribunal had to give interpretation to the parties' agreement providing for the application of 'international legislation' to their contract. Having noted that the places of business of the parties were in two Contracting States, the ICAC concluded that it had been the parties' intention to have their disputes governed by the Convention.

It may be argued that the term 'international legislation' should be interpreted in a wider sense which would include other sources of international commercial law (such as lex mereatoria, for instance). It is submitted, however, that the ICAC decision is correct. [page 7]

The term 'international legislation' seems to imply an authority of State(s).[34] If this is so, then other international sources of regulation which could potentially apply to an international sales transaction (such as the UNIDROIT Principles, for instance) and which are not based on an authority of State(s), would not be applicable. This is certainly not the case with the CISG, as it is an 'international treaty' within the meaning of Article 2 of the Vienna Convention on the Law of Treaties.[35]

In any event, if it is at all possible to use such terms as 'international legislation', the CISG is, certainly, a part of it, and there is no reasonable way of interpreting this agreement as excluding the Convention (unless it expressly excludes the Convention). Since the conditions of applicability of the Convention were clearly met in this case, its applicability by virtue of Article 1(1)(a) seems justifiable.

In another ICAC case.[36] however, a choice of law clause containing a reference to 'international law provisions' was disregarded by the Tribunal, as this clause was found to be imprecise. The CISG was applied not on the basis of this clause, but by virtue of Article 1(1)(a). In contrast with the clause in the previous case, this clause seems to be broader in scope and could be interpreted as comprising not only international sources based on the authority of State(s), but also 'soft law' sources. Although the decision to disregard the clause may seem justifiable from a practical point of view, it can, nonetheless, be argued that thorough examination of the choice of law clause should have been carried out.[37] Such an examination could have revealed, for example, that it was the parties' intention to choose other sources of international commercial law. [page 8]

3.2 ARTICLE 2 (EXCLUSIONS FROM CONVENTION)

Several cases have concerned application of Article 2(e) CISG.

In one case,[38] the Ministry of Defence of the Russian Federation entered into a contract for the sale of a submarine to a Canadian company. The submarine, which was excluded from the list of the Russian Navy, was to be used as scrap-iron. The buyer, however, breached the contract by opening a submarine as a public exhibit. Considering the seller's claim for an order requiring the buyer to demolish the submarine, the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation examined the issue of the applicability of the CISG. The Commission ruled that the Convention did not apply to the dispute by virtue of Article 2(e). In the opinion of the arbitrators, the submarine had been excluded from the list of the Russian Navy because of loss by this submarine 'of its Navy vessel status and for loss of that part of its specific functional descriptions, which brought about that status'. Nevertheless, it still had general qualities (although limited) of a sea vessel. Therefore, the arbitrators ruled that 'as long as this submarine [had] the possibility to be afloat, though with assistance of other exterior appliances, it [was] to be regarded as a sea vessel'.[39] According to this interpretation, a sea vessel within the meaning of Article 2(e) CISG also includes 'inoperative' sea vessels even those excluded from the Navy list as well as from the registry. A possibility that a vessel can be afloat will suffice for it to fall under Article 2(e).[40]

In another case,[41] a Russian company sought payment of the part of the price unpaid by a Korean firm for the sea vessel delivered by the former under the contract. As in the previous case, the seller claimed that the vessel was to be used as iron-scrap, of which the buyer had been informed. Relying upon Article 2(e) CISG, the Tribunal ruled that the CISG was inapplicable to the dispute. [page 9]

It is submitted that the approach taken in these cases should not be followed. The contracts in question were not contracts for sale of a vessel. They were, in essence, contracts for sale of iron-scrap. It is argued that the purpose of the transaction cannot be irrelevant for interpretation of Article 2(e) CISG. The fact that, in these cases, a vessel was not intended to be used as a means of transport should have indicated that a vessel did not fall within Article 2(e).[42]

3.3 ARTICLE 3 (CONTRACTS FOR SERVICES OR FOR GOODS TO BE MANUFACTURED)

Article 3 CISG has also been a subject of a discussion in several ICAC cases.

In case No 347/1995,[43] the ICAC had to apply Article 3(l) CISG to a contract between Russian and Slovak companies. The contract was for reprocessing of raw materials delivered from Russia in Slovakia and supply of the goods produced from the materials, back to Russia. The Tribunal found Slovak law to be the governing law because the Russian party had assumed an obligation to supply a 'substantial' part of the materials necessary for manufacture of the goods.

In another case,[44] the seller, in addition to its obligation to supply equipment, undertook an obligation to render a number of services such as construction work, balancing and commissioning, geodetic work, feasibility study of the project. The ICAC determined that the price of the equipment amounted to more than fifty percent of the entire price of the contract. Therefore, the Tribunal held that the dispute was to be governed by the CISG.[45]

3.4 ARTICLE 4 (SUBSTANTIVE COVERAGE OF CONVENTION)

In a number of cases, the ICAC had to deal with the issues of validity of an international sales contract. As provided for in Article 4 CISG, the ICAC has ruled that the issues of [page 10] validity were not governed by the Convention and applied relevant rules of domestic legal systems.

In one case,[46] the question arose as to the validity of the contract which did not contain a provision on the price for the goods. Since according to Article 4 issues of validity were not governed by the CISG, the ICAC decided that the matter had to be decided on the basis of Russian law which was applicable to the contract.

As has been said by some commentators, the principle that the CISG does not deal with issues of validity 'finds an echo in Article 55' which deals with situations where the contract has been concluded without any indication as to the price.[47] There is an opinion that open price terms should be interpreted on the basis of the intentions of the parties which may indicate that the parties intended the contract to be validly concluded even without an indication as to the price.[48] Nevertheless, this decision seems justifiable, as Article 55 provides for a possibility of a contract with an open price term only in cases where the contract has been validly concluded. As follows from the legislative history of the CISG, this provision was designed not to 'disturb the rule of [the] domestic law that provision for the price in an agreement was a requisite for a valid contract'.[49] Therefore, the Tribunal's decision to determine the validity of the contract according to national law did not contravene the Convention's regime.[50]

Case No 55/1998 [51] concerned an issue of whether the requirement with respect to the writing form was observed. In this case, the parties disagreed as to the validity of the changes made to the contract by means of facsimile messages. Having stated that the validity should be determined under national law,[52] the ICAC noted that the CISG did not govern the issues of validity of the contract and did not contain any general principles 'which could serve as the basis for resolving the issue of validity of the contract'.[53] [page 11]

This decision raises a debatable issue as to the role of Article 13 CISG in situations where a State's requirements as to form are applicable to a case governed by the Convention.[54] Since the Tribunal did not discuss potential applicability of Article 13 [55] and relied on relevant provisions of national law, it seems to have taken the view that Article 13 permitted the use of domestic law for interpretation of a writing requirement.[56]

Similarly to the issues of validity of the contract, the Convention does not govern the passage of property in the goods sold.[57] Therefore, the ICAC has resolved the questions relating to the property in the goods in accordance with applicable domestic law. For example, in a case No 328/1994,[58] the moment of passage of property right in the contract goods was determined under Article 50 of the Fundamentals of Civil Legislation, 1991.

3.5 ARTICLE 7 (GOOD FAITH AND GENERAL PRINCIPLES)

The status of good faith is probably one of the most hotly debated issues within the CISG. The ICAC cases support those who believe that good faith represents a general principle underlying the Convention and a general duty imposed on the parties to the contract.[59] [page 12]

In a number of cases, the ICAC has expressly recognised good faith as being a general principle underlying the Convention.[60] Based upon this view, the ICAC has regarded the parties to the contract as being under an obligation to act in accordance with the principle of good faith. In one case, for example, the respondent was found to have been in breach of this duty and was, accordingly, held liable for the consequences of such a breach.[61]

The question may arise as to what was the basis for the ICAC's decisions to treat good faith as a general principle and a duty imposed by the parties. It has been said that there are two ways in which good faith can be applied as a principle and a duty in cases governed by the Convention. First, Article 7(l) can be read literally. This would mean that good faith will not be regarded as a general principle or a general obligation imposed on the parties, as, according to this provision, good faith represents only a criterion for interpreting the Convention.[62] In such a case, good faith can be found to be a general principle in the meaning of Article 7(2) which will impose an obligation to act in good faith. Alternatively, Article 7(1) might not be read literally. The interpretation criterion of the need to observe good faith can be construed as imposing a good faith obligation on the parties to the contract.[63]

The ICAC decisions do not give us a clear answer to the question. It is suggested that the ICAC has taken the latter approach. In almost all decisions in the cases referred to above references were simply made to Article 7.[64] It seems reasonable to assume that had the Tribunal taken the former approach and referred to Article 7(2), it would have supported its conclusions with some other provisions of the CISG which can serve as manifestations of a general principle of good faith. On the other hand, statements declaring good faith as a general principle and an obligation imposed on the parties, not supported by any argumentation and accompanied by direct references to Article 7 seem [page 13] to indicate that it was paragraph (1) (in which good faith is expressly mentioned), rather than paragraph (2), that was relied upon.

Further, it should be noted that some arbitrators of the ICAC have criticised those parties who, in defence of their positions, have relied upon the provisions of both the CISG and national law at the same time. This criticism is largely based on Article 7(2) which, in the arbitrator's view, requires clear-cut delineation of the scope of application of the CISG and national law.[65] However, contrary to the arbitrator's statement, in a number of cases the ICAC -- along with relying upon the provisions of the CISG -- referred to the provisions or doctrines of different domestic rules regulating the same matter.

Thus, in one case where the principle of good faith was applied, the ICAC referred not only to Article 7, but also to Article 242 of the German Civil Code.[66] In Case No 238/98, the ICAC referred to both Article 74 CISG and Article 15 of the Russian Civil Code as being the legal basis for the claim for loss of profit.[67] Likewise, in Case No 302/1996,[68] where the claimant conduct was not found to be in line with the 'duty' to mitigate, reference was made not only to Article 77 CISG, but also to Article 404 of the Russian Civil Code.

Although such references did not affect the results of the decisions, it is submitted, nevertheless, that such parallel referencing to both the provisions of the CISG and corresponding provisions of domestic legal systems is inadmissible. First, as noted above, Article 7(2) clearly delimits the scope between the CISG and national law. Provisions of national law can be referred to only when the issue is either not governed by the CISG, or is governed by the CISG, but there are no general principles to solve the matter.

In addition to that, it seems that this issue is not only a matter particular to Article 7(2). Article 7(1) provides for international character of the Convention. The Convention represents a Code of international nature which should be regarded as self-sufficient. As [page 14] long as the matter is governed and capable of being resolved by the CISG, no recourse to national law (in whatever form) can be admissible.[69]

The next ICAC decision which needs to be mentioned in this context is the decision taken in Case No 302/1996.[70] In this decision, the ICAC stated that 'on the basis of Article 7 of the Vienna Convention and requirement of "observance of good faith in international trade", international arbitration practice has come to the conclusion that Anglo-American principle of estoppel or German Verwirkung could be applied to contracts of international sales'.[71]

The decision can be criticised on several grounds:

First, the critical points made above as to the inadmissibility of referring to applying national concepts in relation to the issues capable of being resolved by the CISG are applicable to this case as well. It is argued that such references to domestic concepts are inadmissible. Even if it is possible to develop such a principle on the basis of the provision in Article 7(l), its essence cannot be defined from the standpoint of or with reference to domestic legal concepts. No meaning in which a particular notion is used in some national law can be read into the concept which is provided for by the Convention or is said to exist (as is the case here) in the Convention's legal framework.

The second critical point pertains to application of a principle of estoppel in this case. The ICAC, in this case, has come to the conclusion as to the applicability of estoppel basing itself upon the 'need to observe good faith'. It seems that more thorough analysis should have been carried out before such conclusions could be made. As. some authors suggest,[72] before any principle can be said to exist in the Convention, other CISG provisions as well as its overall context should be examined. Therefore, a simple statement that estoppel is based upon good faith cannot suffice. [page 15]

Finally, taking into account Article 7(1) which calls upon the 'need to promote uniformity' in interpretation of the Convention, it can be said that international arbitration practice can potentially serve as a strong support for certain conclusions. However, it is argued that such statements as 'international arbitration practice has come to the conclusion' can be regarded as unsubstantiated if they are not supported by cases decided by other arbitration institutions indicating a clear trend in taking the said position. In this decision, no references were made to other relevant decisions.[73]

3.6 ARTICLE 8 (INTERPRETATION OF STATEMENTS AND CONDUCT OF A PARTY)

The ICAC has considered a number of interesting cases in which Article 8 was applied.

Article 8 CISG refers to the interpretation of statements and conduct of the parties. It is silent as to the interpretation of the contract.[74] However, the prevailing view is that the provisions of Article 8 are equally applicable to the interpretation of the contract.[75] In line with this view, the ICAC, in Case No 224/1993,[76] came to the conclusion that Article 8 was applicable to the interpretation of the contract embodied in one document and signed by both parties. This conclusion was based on the opinion that the 'contract represented expression of each party's will'.[77]

Another ICAC case concerned the interpretation of terms of delivery over which the parties disagreed.[78] In this case, a Russian buyer brought a claim against an Indian seller. The buyer sought recognition that its avoidance of the contract was valid.[79] [page 16]

According to the contract, 7000 metric tonnes of the goods (+/- 2%) were to be loaded on the vessel specifically chartered for the purpose of transporting the contract goods. The chartered vessel could not be used for transportation of any other cargo. The buyer argued that it was entitled to avoid the contract because the seller refused to perform its obligation as to the 'exclusive' use of the vessel, i.e. its use for the purpose of transporting only the contract goods. The seller, on the other hand, argued that the buyer had misinterpreted the provision on the 'exclusive' use of the vessel. In the seller's opinion, the contract excluded the possibility of using the vessel for transportation of other types of goods, but allowed the use of the vessel for delivering the goods of the same kind to other buyers. Therefore the seller chartered the vessel for transportation of 12000 tonnes of goods of the same kind (7000 tonnes of the goods to be delivered to this buyer, and 5000 tonnes to be delivered to another buyer). In addition to that, the seller argued that since the destination port was referred to, in the contract, as the 'first port of unloading', the possibility of transportation of other goods was presupposed. The buyer, in turn, alleged that such a provision was needed in case the goods had to be unloaded in several ports.

In its decision, the Tribunal referred to paragraphs (1) and (3) of Article 8 CISG. First, the ICAC established the buyer's intent in the light of other provisions of the contract. The Tribunal ruled that in having inserted the provision as to the 'exclusive' use of the vessel, the buyer intended to secure the quality of the goods which were foodstuffs, by means of preventing the possibility of contamination of the goods by other goods of unknown quality placed nearby. In the Tribunal's opinion, such an intention was confirmed by the contract provisions entitling the buyer to inspect all the goods prior to loading for the purpose of establishing whether or not the goods were contaminated by pests, and to give permission to load the goods.

Secondly, as required by Article 8(3) CISG, the ICAC took into account the relevant circumstances surrounding the case. In particular, the Tribunal examined the practices established between the parties as well as practices in the trade sector in question. It stated that such a provision had been used neither in practices between the parties, nor in the relevant trade sector. Therefore, its inclusion into the contract served as evidence of its being of 'specific and atypical' character. Having established the buyer's intent and taken into account the said circumstances, the ICAC held, on the basis of Article 8(1), that the seller 'could not have been unaware of the buyer's intent to exclude use of the vessel for transportation of goods other than the contract goods'.[80] [page 17]

So far as the seller's argument that the contract allowed the use of the vessel for delivering the goods of the same kind was concerned, the Tribunal held that such a construction contradicted the meaning and express provisions of the contract which unambiguously indicated the buyer's intention to use the vessel exclusively for transporting the contract goods. The ICAC stated that 'the seller had consented to the inclusion of the condition on the 'exclusive' vessel, and a reasonable person of the same kind acting in the same capacity, could not have been unaware of the buyer's intention [...]'.[81]

Since the Tribunal used a criterion of a 'reasonable person of the same kind', it may seem at first sight that the ICAC based itself on an 'objective' interpretation contained in Article 8(2).[82] In this regard, it must be noted that if the Tribunal intended to apply Article 8(2), the reasons for applying Article 8(2) were not clear. As follows from Article 8(2), it can only be used if the provision in Article 8(1) is not applicable, i.e., where the seller neither knew nor could have been aware of the buyer's intention.[83] It is not clear why the standard in Article 8(1) could not be applied in relation to this issue. The above reasoning based on Article 8(1) should have been applied to this point. Most importantly, however, the Tribunal seems to have 'combined' the standards of paragraphs (1) and (2) of Article 8. This is inadmissible, as Article 8 expressly establishes the order in which they are to be used.[84] The rule for interpretation in Article 8(1) is based upon the party's intent of which the other party knew or could not have been unaware. The rule in Article 8(2) is based not on the intent but on the understanding of a reasonable person of the same kind of the other party's statement and conduct. The Tribunal, in its statement quoted above, refers to both standards at the same time -- 'a reasonable person of the same kind ... could not have been unaware of the buyer's intention' (emphasis added). Clearly, such a combination is something that the Convention does not permit.

Finally, as regards the seller's argument with respect to the contract provision referring to the destination port as 'the first port of unloading', the ICAC ruled that this provision could not be construed in contradiction with express provisions on exclusive use of the vessel. [page 18]

In, another case,[85] the parties disagreed as to the construction of the buyer's instructions to suspend shipment of the goods until further instructions. In the seller's opinion the instructions related only to the month in which they were given; that is why the seller thought it could ship the goods in the following month. The buyer refused to accept this delivery. In its decision, the Tribunal referred to Article 8(1). At the same time, the Tribunal took into account the provision in Article 8(2). As required by Article 8(3), the Tribunal also examined relevant circumstances surrounding the case. In particular, it was found that seller had been aware of the fact that the plant in which the contract goods were to be reprocessed had encountered certain problems. Thus, having taken account of all mentioned factors, the Tribunal ruled that the seller, having shipped the goods, had acted on its own risk.

One critical point must be mentioned in relation to this decision. The point again relates to the scheme prescribed by Article 8. This Article does not permit the use of both paragraphs (1) and (2) of Article 8 concurrently. As mentioned above, paragraph (2) can only be used if paragraph (1) is not applicable. Therefore, the Tribunal's reliance upon Article 8(1) and, at the same time, referring to Article 8(2), seems inadmissible.

In Case No 373/1995 [86] the Tribunal based its decision on the provisions of Article 8(1) and took into consideration relevant circumstances surrounding the case. In this case, the parties disagreed as to the quantity of oil which was to be delivered under the contract. The contract provided that the seller had an obligation to deliver 'up to 2,000,000' metric tonnes of oil. The seller actually delivered 835,000 metrical tons of oil. The buyer argued that it was entitled to compensation for losses caused by the seller's failure to deliver 2,000,000 metrical tonnes.

The Tribunal took into account previous communications between the parties. It was established that the said provision as to the quantity was proposed by the seller. In making this proposal, the seller explained that the 'quantity of oil that he had to deliver to the buyer would be most likely less than 2,000,000' tonnes. Therefore, the Tribunal came to the conclusion that the buyer knew of the seller's intent to deliver the quantity less than 2,000,000 tonnes. In addition to that, the practices established between the parties were examined. It was found that the practice between the parties had been to fix a quantity at option 'plus-minus 10%'. In the opinion of the ICAC, the fact that the parties had not followed this practice in the transaction in question served as another [page 19] evidence of the seller's intent to deliver oil in the quantity less than 2,000,000 tonnes. Thus, the Tribunal rejected the buyer's counter-claim.

In Case No 224/1993,[87] one of the issues in dispute was the currency in which payment ought to have been made. One of the factors influencing the decision that the US dollars were the currency of payment was the conduct of the respondent. The ICAC held that the fact that the respondent (who later changed the terms of letter of credit) had initially opened the letter of credit in US dollars could serve as evidence that the respondent had based himself on the US dollars' being the currency of payment.[88]

3.7 ARTICLE 9 (USAGES AND PRACTICES)

On several occasions, the ICAC as well as some Russian courts had to deal with different aspects of the provision of Article 9.

In a few cases, Russian courts and the ICAC determined rights and obligations of the parties either under a trade usage that had been agreed to in the contract, or on the basis of practices that the parties have been found to have established between themselves.

In one case,[89] the central issue was whether or not the goods had been properly packed. The contract had been concluded on CIF terms. According to the claimant, however, the goods were packed in accordance with 'Free car' (railroad) terms. The goods which had been carried by sea, turned out to be of non-conforming quality. The claimant sought damages for the loss caused by the non-conformity of the goods. The Arbitration Court rejected the claim, 'referring, to the fact that the goods had been delivered in the proper way'. The Arbitration court neither considered the issue of applicable law, nor referred to the contract terms. The High Arbitration Court of the Russian Federation in its Information Letter stated that the Arbitration Court should have interpreted the terms of the contract. In the opinion of the High Arbitration Court, reference to CIF terms in [page 20] the contract meant that the parties had agreed to be bound by these terms, which represented usage of international trade. Therefore, on the basis of Article 9(l) CISG,[90] the court expressed the view that the parties had to abide by the terms of this usage.

An important factor in deciding whether or not a trade usage is applicable to the relationships between the parties to the contract is proof of the existence and applicability of the usage.[91] In this regard, it must be noted that the position of the ICAC has been that it is up to the party which relies upon a trade usage, to prove existence and applicability thereof.[92]

For example, in one case [93] the respondent alleged the existence of an international trade usage according to which reduction of the price must be offered when the goods do not conform to the specification. However, in the Tribunal's opinion, the respondent did not bring forward any convincing evidence proving applicability of such a usage in international trade, except for references to several examples. Therefore, the Tribunal held that there was no legal basis for application of the alleged usage.[94]

3.8 FORM OF THE CONTRACT (ARTICLES 11, 12, 29)

The USSR was among several countries which made a reservation under Article 96 CISG. Therefore, provisions of Articles 11 and 29 as well as Part II of the Convention that allow a contract of sale or its modification or termination by agreement or any offer, acceptance, or other indication of intention to be made in any form other than in writing will not apply to an international sales contract where one of the parties has its place of business in the Russian Federation. In this regard, it should be mentioned that on several occasions, the Russian courts have reaffirmed the rule that the contracts to which Russian companies were parties could only be modified by means of a written agreement.[95] [page 21]

4. FORMATION OF CONTRACTS (ARTICLES 14-24)

Against a background of numerous ICAC cases where the CISG was applicable, it can be said that very few cases have actually concerned the issues of formation of an international sales contract.

In Case No 304/1993,[96] one of the issues that had to be resolved was whether or not the contract had been concluded. In this case, the claimant offered to sell the goods to the buyer by means of sending a telex message. This message expressly provided for the goods and quantity thereof. However, neither the price nor the method for its determination were stipulated in the message. The only indication contained in the message was that the price was to be negotiated in future. Based on these facts, the Tribunal held that such a provision could not amount to a manner of determination of the price. It could only be regarded as an expression of the consent to determine the price in future. The Tribunal also added that Article 55 was not applicable to the case because the parties 'implied the necessity to reach an agreement on the price in the future'.[97]

In another case,[98] the respondent referred to Article 19 in relation to the subsequent actions of the persons authorised by the respondent, carried out after the conclusion of the contract.[99] Such actions included, in particular, signature of a document evidencing the approval of the contract. The Tribunal correctly dismissed such a reference to Article 19 by stating that the provision in this Article deals with the manner of the conclusion of the contract, and not with the consequences of approval of the validity of the contract which had already been concluded.

According to some ICAC arbitrators, the ICAC has recognised that it is the sender of either an acceptance or an offer, who bears the risk of distortion of the text sent by means of telegraph, teletype, or electronic means of communication.[100] Therefore, in a situation where, for example, the text of a buyer's offer containing specifications for the goods, is distorted in the process of its transfer through some means of communication, the seller who accepts the offer and delivers the goods manufactured according to the [page 22] 'distorted' specifications would not be held liable by the ICAC for losses suffered by the buyer as a result of the delivery of such goods.[101]

5. SALE OF GOODS

5.1 GENERAL PROVISIONS (ARTICLES 25-29)

In several cases, the ICAC has considered the issues regulated by the Convention under the heading 'general provisions'. However, not all of the provisions seem to have been dealt with. Most of the cases that will be referred to in this part of the work concerned the issues of fundamental breach of obligations and declaration of avoidance.

In a number of cases, Article 25 of the Convention providing for the concept of fundamental breach has been either discussed or simply referred to.

In one case, the facts of which have been described above,[102] the respondent (seller)'s refusal to perform its obligations as to exclusive use of the vessel and failure to ship the goods were considered as having amounted to a fundamental breach. In the Tribunal's opinion, the seller's failure to perform its obligations has 'cast doubt on the achievement of the purposes of the contract'.[103] Referring to Article 25 CISG, the ICAC ruled that under such circumstances, the seller's actions could entail such detriment to the claimant that it would be substantially deprived of what it was entitled to receive under the contract. In other cases where the seller was found to have committed a fundamental breach of the contract, the seller had either failed to deliver the goods [104] or delivered the non-conforming goods.[105]

As regards the cases in which the buyer was regarded as having committed a fundamental breach, it can be said that all these cases concerned the buyer's refusal to perform its obligation to pay for the goods. For example, in Case No 387/1995,[106] the [page 23] buyer, contrary to the contract and the CISG, made its payment obligation subject to a certain condition. The Tribunal, holding that a payment obligation is an unconditional obligation, ruled that the buyer's breach of its obligations could be regarded as a fundamental breach of contract in accordance with Article 25 CISG. Analogous decisions have been made in a number of other cases.[107]

In several cases, the ICAC discussed Article 26 CISG which provides that declaration of avoidance of the contract is effective only 'if made by notice to the other party'.[108]

In Case No 196/1997 [109] the ICAC had to determine whether the message sent by the respondent to the claimant represented a declaration of avoidance of the contract. In this message, the respondent asked the claimant to cease shipment of the goods until issues relating to the price for the goods were resolved. The price for the contract goods dropped and the sub-buyers refused to accept the goods at the prices provided for in the contract between the parties. The Tribunal ruled that such a message could not amount to a notice of avoidance. In the Tribunal's opinion, the message contained not a declaration of avoidance, but a request not to ship the goods until the issues of price were resolved. The importance of this decision lies in the way in which Article 26 was interpreted. According to the decision, if the respondent had, in fact, made a decision to avoid the contract, the notice should have been given in a clear and unambiguous manner.[110]

Another ICAC case in which Article 26 was discussed raised the interesting question of whether commencing a claim can be regarded as a notice of avoidance. The decision in Case No 2/1995 [111] does not make it entirely clear what the Tribunal regarded as a notice of avoidance. The Tribunal stated that examination of the materials of the case led to the conclusion that 'in any event, the claimant by its claim, if not earlier, had demonstrated that it had considered the contract as avoided [...]'. Therefore, although it [page 24] is not clear what served as the notice of avoidance, it follows from this statement that the ICAC considered bringing forward a claim as a sufficient notice of avoidance.[112]

5.2 OBLIGATIONS OF THE SELLER (ARTICLES 30-43)

In several cases, the ICAC considered the issue of whether the parties acting as sellers had complied with their obligations of delivering conforming goods.

Case No 166/1995 [113] represents an interesting example of the application of Article 35 CISG. According to the facts, a Russian seller (the respondent) delivered goods to the buyer (the claimant) in Ecuador. After several days of use of the contract goods, defects were discovered. The defects excluded the possibility of using the goods in accordance with their purpose.

The respondent argued that one of the reasons for the appearance of the defects was use of the goods in the climatic conditions of the claimant's country. The Tribunal rejected this argument. It stated, that at the time of the conclusion of the contract the respondent could not have been unaware of the climatic conditions in which the goods were to be used. Therefore, under paragraph 1 Article 76 of the Fundamentals of Civil Legislation 1991, the respondent had an obligation to deliver goods of 'ordinary quality' conforming to the purpose of their use in particular conditions.[114] At the same time, the ICAC referred to Article 35(2)(b) by stating that 'the goods. [did] not conform with the contract if they [were] not fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract'.[115] [page 25]

So far as the 'ordinary quality' standard provided for in the Fundamentals of Civil Legislation was concerned, the Tribunal did not agree with the respondent and ruled that the goods did not conform to this standard. At the same time, the Tribunal referred to the provision in Article 35(2)(a) CISG.[116]

This decision in this case is questionable. It is not clear whether the Tribunal applied Russian law or the CISG to determine if the goods were conforming. The decision seems to imply that it was the national standard of 'ordinary quality' which served as the ultimate yardstick for evaluation of whether or not the goods were conforming.[117] If this conclusion is correct, it is submitted that a national standard could not be applied to a case governed by the CISG and where the CISG contains express provisions as to the standards for evaluating conformity of the goods. Although some commentators take the view that 'purposes for which goods would ordinarily be used' should be determined according to a national standard,[118] it is argued that these purposes should only be determined on the basis of interpretation of the contract.[119] Thus, no domestic standard can affect interpretation of Article 35(2).

If, however, the basis for the Tribunal's decision were Article 35(2), then no references to national law should have been made. No domestic rule can be referred to in cases where the CISG expressly provides a relevant provision.

Some ICAC cases have concerned the application of Article 36 CISG. For example, in one, case,[120] the parties to the dispute concluded a contract on FOB terms (INCOTERMS 1990). The seller performed its delivery obligations placing the goods on board the ship. However, during the process of unloading the goods from the railroad cars onto the pier and reloading them from the pier onto the ship, the seller failed to prevent the goods from being exposed to rain. The Tribunal relying on Article [page 26] 36(1) ruled that the seller was liable for deterioration of quality of the goods.[121] According to the FOB term, the risk of loss or damage to the goods passes from the seller to the buyer at the moment when the goods have been passed the ship's rail.[122] Therefore, the decision appears correct as the deterioration seems to have occurred before the risk passed to the buyer.

In addition to the obligation to deliver the goods in conformity with the standards laid down in Article 35 CISG, the seller also has an obligation to deliver the goods 'free from any right or claim of a third party, unless the buyer agreed to take the goods subject to that right or claim'.[123]One case decided by the ICAC represents an interesting example of the application of Article 41.

In Case No 99/1997,[124] a Polish seller imported a bus into Russia for use at an international exhibition that was taking place. The bus was registered by Russian customs in accordance with their 'temporary import' regime. According to this regime, the goods had to be removed from Russia by the end of the exhibition or registered in accordance with another regime. If a party importing the goods under the said regime fails to perform these obligations, it can be subject to liability established by the Customs legislation.

In the present case, the seller had an obligation to remove the bus from Russia by 18 June 1996. However, on May 21 1996, the seller concluded a contract of sale of the bus to a Russian buyer on DDU terms (INCOTERMS 1990). The bus was delivered,[125] but was subsequently seized by customs and placed in a customs warehouse until the necessary customs payments were made.

The Tribunal held that since the buyer did not know that the goods were subject to the temporary import at the time of the conclusion of the contract, the seller was in breach of its obligation to deliver the goods free from claims of third parties. In the Tribunal's opinion, the seller ought to have carried out proper customs legalisation of the goods by removing them from the 'temporary import' regime, and then delivered the goods to the point [page 27] provided for by the DDU terms of the contract.

5.3 BUYER'S DUTY TO EXAMINE THE GOODS AND GIVE A NOTICE OF LACK OF CONFORMITY OF THE GOODS (ARTICLES 38, 39).

In one case,[126] the contract concluded between the parties provided that examination of the goods was to be perfonned at the port of shipment.[127] Despite this provision, the Tribunal found that the inspection of the goods at the port of shipment was technically and economically unreasonable. Having recognised reasonableness as one of the general principles underlying the Convention and having evaluated the buyer's conduct on the basis of this principle, the ICAC held that postponement of the inspection of the goods until their arrival at the place of destination or at the consumers' places of business was reasonable. Finally, the Tribunal applied Article 38 CISG in order to approach this issue.

The ICAC did not give effect to the parties' agreement. However, although Article 38 was ultimately relied upon, it was not the basis for the decision to override the agreement. It was the principle of reasonableness which was used as a justification for denying to give effect to the parties' agreement. Therefore, the reasons for referring to Article 38 are not entirely clear. It seems that since the parties' agreement was not given legal effect, Article 38 was applied by default.[128]

This decision raises several questions. Can reasonableness be regarded as a general principle underlying the Convention?[129] If the answer is 'yes', can a general principle of the Convention override the parties' agreement? Would the answer be different if freedom of contract is also regarded as a general principle of the Convention? If a [page 28] general principle can override the agreement, do the provisions of the Convention apply as if there were not agreement between the parties?[130]

In several decisions, the ICAC had to deal with Article 39 CISG which requires that '[t]he buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it'.[131]

In one case [132] the ICAC considered whether the notification of the defects in the goods beyond the time limit provided for in the contract could lead to dismissal of the buyer's claim. The contract provided a time limit for commencing a claim ('pretenziya') with respect to the quality of the goods. The Tribunal made it clear that the claim ('pretenziya') referred to in the contract had to be distinguished from the notice of non-conformity within the meaning of Article 39(l).

First, the ICAC stated that by contrast with Article 39 CISG, 'the term "pretenziya", under Russian law was applied as a synonym for a 'claim' which not. only contains information on the nature of the non-conformity but also determines the remedies chosen by the buyer from the ones provided for by the law and the contract'.[133] The Tribunal found that, in this case, the notification sent by the buyer not only contained information on the nature of the defects, but also made it clear which remedy the buyer was going to choose.

Secondly, the time limit fixed by the contract was to be calculated not from the date when the non-conformity was discovered or ought to have been discovered as required by Article 39(l) CISG, but from the date of the delivery of the goods.

Thus, on these grounds the Tribunal found that the contractual provision on commencing the claim ('pretenzii') was distinguishable from the notice on lack of conformity under Article 39(l). Even if these conclusions are correct, it is questionable whether further reference of the Tribunal to Article 44 CISG was admissible. [page 29]

The contract did not provide for the consequences of non-compliance with the time limit for the claim ('pretenzii'). The Tribunal, taking into account the factors mentioned above as well as Article 44 CISG, held that the buyer had a reasonable excuse for not having complied with the fixed time limit.

This holding is questionable. Article 44 is an exception to the buyer's duty to give a notice provided for in Articles 39(1) and 43(l) CISG. However, as shown above, in the present case, the ICAC did not regard the notification in question ('pretenziya') as representing a notice of non-conformity of the goods within the meaning of Article 39(1). It does not follow from Article 44 that it can be applied to situations other than those stipulated in Articles 39(1) and 43(l). Therefore, it seems incorrect to apply Article 44 as the basis for the excuse from the buyer's failure to bring forward the claim within the time limit, to the buyer's actions which are not covered by Article 39(1).

By contrast with this case, case No 256/1996 [134] appears to imply that the claims ('pretenzii') could be regarded as giving a notice of lack of conformity within the meaning of Article 39(1). According to the contract, the buyer had a duty to commence a claim ('pretenziyu') within thirty days from the date of delivery. In addition to that, the claim ('pretenziya') had to be supported by the documentation indicated in the contract which was to be issued by an independent organisation.

However, the buyer sent a telex of an inspecting organisation containing information on lack of conformity of the goods, after the thirty-day period had lapsed. Further, the buyer failed to provide the seller with some of the documents which were required by the contract and did not indicate whether the inspecting organisation was an independent company. On these grounds, the ICAC held that the buyer had failed to commence the claim in a due manner and ruled that, according to Article 39 CISG, the buyer had lost his right to rely on a lack of conformity.

The Tribunal's reliance on Article 39 in this case indicates that the Tribunal regarded commencing the claim ('pretenzii') as satisfying the requirement of a notice of lack of conformity within the meaning of Article 39(1). Thus, this ruling is inconsistent with the previously discussed decision.[135] [page 30]

5.4 BUYER'S REMEDIES (EXCEPT FOR DAMAGES)

5.4.1 SPECIFIC PERFORMANCE

The claims for specific performance have been rare in practice of the ICAC.[136] In one case, the Tribunal correctly applied Article 46(1) CISG, by ruling that the remedies of avoidance and demand for return of the purchase price were inconsistent with the right to claim delivery of substitute goods.[137] In another case, the buyer's claim for delivery of substitute goods was rejected because it could not return the defective equipment for substitution as was required by the contract and by the CISG.[138]

5.4.2 AVOIDANCE OF THE CONTRACT

In a number of cases, the parties acting as buyers have exercised the remedy of avoidance.

In one case [139] the seller's failure to deliver the goods was found to amount to a fundamental breach of contract. The Tribunal, therefore, held that the buyer had the right to avoid the contract by virtue of Article 49(1)(a). Likewise, in another case,[140] the buyer was held to have the right to avoid the contract pursuant to Article 49(1)(a) as a result of the seller's failure not only to deliver a significant part of the goods within the time period provided for in the contract, but also to complete this delivery after buyer's repeated requests.

The contract was also avoided in Case No 160/1997.[141] In this case, the seller failed to deliver the goods by the due date. The buyer fixed an additional period of time for the seller to perform its obligations in accordance with Article 47 CISG. Since the seller [page 31] failed to deliver the goods within the additional period of time, the Tribunal ruled that the buyer had the right to avoid the contract under Article 49(l)(b).

According to the facts of a case No 263/1997,[142] the seller delivered only part of the goods. The buyer in turn performed its obligation by making a down payment of ninety percent of the contract price. The Tribunal held that, by virtue of Articles 49, 51(2) [143] the contract was avoided, and the seller was under an obligation to return the amount paid by the buyer.[144]

In some cases, however, the Tribunal held that the buyer had lost its right to avoid the contract.

In a case No 196/1997,[145] the Tribunal recognised the buyer's right to avoid the contract after delivery of the goods. At the same time, the Tribunal stated that according to Article 49(2)(a), 'in cases where the seller has delivered the goods, the buyer loses the right to declare the contract avoided unless he does so, [...] in respect of late delivery, within a reasonable time after he has become aware that delivery has been made'.[146] The Tribunal considered whether the buyer had complied with this requirement.

The ICAC found that the buyer knew of the shipment of the goods [147] on 15 July 1996. In any event, the Tribunal established that the buyer was in the position to know of delivery on 27 July 1996 when the last consignment of the goods arrived at the place of destination. The Tribunal also found that the buyer's [page 32] declaration of avoidance [148] was made on 17 December 1996 and January 1997. On the basis of these facts, it was held that such a declaration was made beyond the reasonable period of time.

5.4.3 REDUCTION OF THE PRICE

The remedy of reduction of the price was discussed in few cases.

Case No 328/1994 [149] raises a question of whether or not the Tribunal can reduce the price on its own initiative. According to the facts of the case, the buyer in its counterclaim demanded only delivery of the undelivered part of the goods by the seller and damages for deteriorated quality of the goods. However, after having found that the quality of the goods did not conform to the contract, the Tribunal simply stated that it deemed it possible to reduce the price to be paid by the buyer.

This decision raises the question of whether it is possible for the Tribunal to reduce the price even without the buyer's exercise of this remedy. The wording of Article 50 provides that the 'buyer may reduce the price'. In other words, the remedy of reduction of the price is 'effectuated by the unilateral declaration of the buyer'.[150] Therefore, the fact that the Tribunal could reduce the price on its own initiative without the buyer's reliance on this remedy seems questionable.

The issue of reduction of the price was discussed in another ICAC case.[151]Although it is not clear what law was applicable to this case, it nevertheless seems appropriate to mention the case in this context.

According to the facts, the buyer claimed reduction of the price from the seller due to the fact that the goods were contaminated by a foreign matter. The Tribunal, however, denied the claim. It ruled that since the buyer had not incurred any expenses or costs as a result of contamination of the goods, and the goods had been resold under the prices [page 33] even higher than the prices for the conforming goods which the buyer had received from the seller under the same contract and subsequently resold, the claim could not be granted.

It is submitted that if this case were governed by the Convention, such a ruling would be incorrect. The buyer's right to reduce the price depends neither on whether any loss was suffered by the buyer, nor on any benefits that the buyer may have gained from the use of non-conforming goods.[152]

5.5 DELIVERY OF EXCESS QUANTITY OF THE GOODS

On some occasions, the ICAC had to consider the cases in which the seller delivered the goods in quantity greater than that fixed by the contract. In one case, for example, the seller demanded that the buyer pay for the excess quantity delivered. The seller argued that the buyer had accepted the excess quantity of the goods and had neither paid for nor returned them as had been agreed upon by the parties. In the proceedings, the buyer admitted that it had received and used the excess quantity of the goods. As required by Article 52(2) CISG,[153] the Tribunal ruled that since the buyer had accepted the delivery it had an obligation to pay for the goods at the contract rate.[154] [page 34]

5.6 OBLIGATIONS OF THE BUYER AND REMEDIES OF THE SELLER (EXCEPT FOR DAMAGES)

5.6.1 PAYMENT OF THE PRICE AND TAKING DELIVERY OF THE GOODS (ARTICLES 53, 54, 60)

Although Article 53 may be 'merely a summation of the particularized rules in the succeeding articles',[155] this provision is, probably, one of the most cited provisions in Russian cases.

First, this Article was referred to with a view to state the buyer's main obligations.[156]

Secondly, in numerous decisions, the ICAC relied on Article 53 in order to grant the sellers' claims for the unpaid price or the unpaid part of the price.[157] In some other cases, with a view to rule that the buyer must perform its obligations Article 53 was referred to alongside with reference to Article 62. CISG.[158] In this regard, a question may arise as to what is an appropriate legal basis for the decision ordering the buyer to perform. The two provisions are closely interconnected as there would be no right to [page 35] require payment of the price if there were no such an obligation in the first place.[159] However, it seems that reference to Article 62 is essential. This provision establishes the seller's right to require payment of the price (amongst other obligations). Therefore, where the seller claims payment of the price or the unpaid part of the price, grant of the claim would be the result of the successful exercise of the seller's remedy under Article 62. As to Article 53, due to its connection with Article 62 it can be referred to as well.

Finally, it must be noted that in one case, the Tribunal's reference to Article 53 was simply incorrect. In this case, the buyer claimed restitution of an advance payment made to the seller who subsequently failed to deliver the goods. The Tribunal held that the seller was under an obligation to refund the payment received from the buyer. The Tribunal added that such an obligation was based on Article 53 CISG.

Clearly, Article 53 could not be referred to. First, this provision relates not to the seller's obligations but to those of the buyer. Secondly, Article 53 does not contain a provision as to refund of the price. The Convention has a specific rule to this effect -- Article 81(2) -- which ought to have been relied on in this case.[160]

5.6.2 DETERMINATION OF PRICE UNDER ARTICLE 55

Application of Article 55 of the Convention has been discussed in several ICAC decisions. However, the materials on these cases that were available to this author, present neither the facts in sufficient detail nor the reasons for the decisions.

According to the facts of one case,[161] the contract gave the buyer the right to alter the prices provided for by the contract after examination of quantity and quality of the goods. The buyer did not avail itself of this right. It argued, however, that the price had [page 36] to be determined under Article 55 because the contract did not provide a 'fixed' price. The Tribunal rejected this argument and held that in cases where the contract provided for the buyer's right to alter the price and where such a right had not been exercised, Article 55 could not be used to determine the price.

It is not clear what reasons led the Tribunal to such a conclusion. It could be that the price was implicitly fixed or made a provision for determining the price. In such a case, Article 55 could not apply.[162] However, this does not seem to have been the case as the Tribunal noted that Article 55 could not apply because of the buyer did not exercise its right to alter the price. The most reasonable explanation seems to be that the Tribunal interpreted the contractual provision as to the buyer's right to alter the price as an implicit agreement to derogate from Article 55.

In another case,[163] the contract concluded between the parties provided for the basic price for the goods having a minimum content of a certain indicator. There was no provision as to the price for the goods in which a content of the indicator was below the minimum level. In such a situation, pursuant to the contract, the price was to be agreed upon by the parties. In some of the delivered goods the level of content of the indicator was below minimum. In this situation, the ICAC deemed it possible to apply Article 55 to determine the price.[164]

It is not clear why the Tribunal deemed it possible to apply Article 55. Such a decision seems to run counter to the provision of the contract according to which in the situation that took place in the case, a price was to be agreed upon by the parties. It is submitted that Article 55 could only be applied where the parties intended to regard an open price contract as valid.[165] Therefore, a price could be determined according to Article 55 only if such a determination of a price stemmed from interpretation of the contract. The decision does not make it clear whether the Tribunal interpreted the agreement. On the basis of the information available, it seems that the parties' intention was not to leave [page 37] the price open, but to come to an agreement to this effect. In such a case, Article 55 could not be applied.

This decision appears to be inconsistent with the decision taken in a case No 304/1993 where Article 55 was held to be inapplicable in the situation where the parties have agreed to negotiate the price in future and failed to do so.[166]

5.6.3 SELLER'S RIGHT TO REQUIRE THE BUYER TO PERFORM (ARTICLE 62)

The ICAC cases where Article 62 has been referred to have concerned the seller's right to require payment of the price or an unpaid part of the price. In all these cases, the Tribunal recognised the seller's right to claim the purchase price or an unpaid part of the price and ruled that the buyer was under an obligation to pay.[167]

5.6.4 SELLER'S RIGHT TO AVOID THE CONTRACT (ARTICLE 64)

In a case 53/1998,[168] the Tribunal recognised that the seller had exercised its right to avoid the contract. In its decision, the ICAC referred to both the provision of the contract which entitled the seller to avoid the contract and Article 64 CISG. Although the decision did not expressly mention which provision of Article 64 was the basis for avoidance of the contract, it seems that it was paragraph (1)(a) that was relied upon. First, the buyer did not make any payments under the contract. Secondly, such a failure to pay was regarded by the Tribunal as a fundamental breach of contract. Finally, the seller did not exercise its right under Article 63 CISG.

In a case No 96/1998,[169] the Tribunal recognised that the seller had the right to avoid the contract under Article 64 because the buyer committed a fuundamental breach by having failed to pay for the goods. However, the seller had not exercised the right to avoid. [page 38] Thus, the Tribunal held that the contract was still in force and the buyer was under an obligation to pay.

5.7 PASSING OF RISK (ARTICLES 66-70)

The Convention's provisions on passing of risk have not been discussed much in Russian cases.

In a case No 487/1996,[170] the seller claimed payment of the unpaid part of the contract price. The buyer argued that it was entitled not to pay the full price because, the seller had failed to deliver all of the goods under the contract. The unpaid part of the price corresponded to the quantity of undelivered goods. The Tribunal held that the buyer lost the right to rely on the alleged short delivery because it failed to comply with the contractual requirement as to commencing the claim within the time fixed. At the same time, the Tribunal added that even if it were assumed that the seller had not, in fact, delivered the entire quantity of the goods, the seller could not have been held liable. The materials of the case contained no evidence that the loss of the part of the goods was due to an act or omission of the seller as required by Article 66 CISG.

Similarly, in case No 62/1998,[171] the buyer argued that the seller had not delivered the goods. The Tribunal rejected this argument on the basis of Article 66. In the Tribunal's opinion, the buyer failed to prove that the loss of the goods had been caused by acts or omission of the seller. Nor did the buyer prove that the seller had instructed the carrier to return the goods or sent the goods to third persons. The ICAC also noted that Article 67 CISG provided for the seller's obligation to identify the goods to the contract. The seller complied with this requirement by having presented the shipping documents.[172]

5.8 ANTICIPATORY BREACH AND INSTALMENT CONTRACTS (ARTICLES 71-73)

On some occasions, the parties have successfully exercised their rights under Article 71 CISG. [page 39]

Thus, in one case,[173] the seller suspended its obligation to deliver the goods pursuant to Article 71 after the buyer's failure to pay for the third instalment of the goods. The buyer argued that it was entitled not to pay for the third instalment because the seller had been performing behind the schedule, had suspended deliveries and had not given any information as to when deliveries would be resumed. The Tribunal seems to have supported the seller's counter argument that the buyer did not avail itself of the right under Article 71(3). After having received the notice of suspension of deliveries, the buyer could have provided the seller with adequate assurance of performance.

In another case,[174] however, the Tribunal did not support the seller's position that it had the right to suspend performance of its obligations because the buyer had failed to open a letter of credit. The Tribunal correctly held that the seller did not have this right as it failed to give the buyer a notice of suspension as required by Article 71(3).

In a case No 238/1998, the facts of which have been set forth above,[175] the Tribunal supported the buyer's treatment of the seller's breach as an anticipatory breach of contract under Article 72 CISG. Before the lapse of the period fixed for delivery the seller made it clear that it would not deliver the goods in accordance with the requirements of the contract. However, the buyer did not exercise its right under Article 72, i.e. the contract was not avoided before the due date for performance. The buyer avoided the contract after the expiration of the time limit for the seller's performance.

The seller was also regarded as having committed an anticipatory breach of fundamental nature in another ICAC case.[176] In this case, the seller undertook an obligation to manufacture equipment for the buyer. As was required by the contract, the seller provided the buyer with preliminary drawings on the basis of which the equipment was to be manufactured. The buyer concluded that the scheme was of 'low technical level' and the equipment that would be manufactured under this scheme could not be joined to the equipment of the buyer's customer. On these grounds, the buyer refused to approve the drawings and declared the contract avoided. The seller regarded the buyer's declaration of avoidance as unjustifiable and offered to elaborate the scheme further and agree on a new project. [page 40]

In the Tribunal's opinion, the buyer proved that the drawings contained serious defects and the buyer was entitled to avoid the contract under Article 72. The Tribunal did not discuss the requirement as to giving a notice under 72(2). It only stated that the seller failed to prove that it would be able to cure the defects on time and manufacture equipment in accordance with the contract. Therefore, it is not clear whether or not the buyer complied with its obligation to give a notice in order to permit the seller to provide adequate assurance of performance.[177]

The provisions relating to instalment contracts have also been referred to in some cases. For example, in one case,[178] the ICAC held that the buyer's failure to pay for the two instalments gave the seller good grounds to believe that analogous breaches would occur in relation to future instalments. Therefore, in the Tribunal's opinion, the seller had the right to avoid the contract under Article 73(2).[179]

5.9 DAMAGES (ARTICLES 74-77)

The ICAC cases are of particular interest in the context of the remedy of damages. Not only do they provide us with numerous examples of different forms in which losses may occur and of application of methods of limiting damages but also discuss some issues which are of importance for dealing with the issue of damages.

5.9.1 DEFINITION OF 'DAMAGES'

(1) Division on 'Real Loss' and 'Loss of Profit'

The ICAC has interpreted the notion 'damages' under the CISG as consisting of 'real loss' and 'loss of profit'.[180] In this regard, it must be pointed out that the Convention does not establish a category of 'real loss'. Presumably, the reason that the ICAC has used such a term is that this term is used in Article 15(2) of the Russian Civil Code. According to this Article, 'real loss' is defined as 'expenses, which a person whose right has been infringed, has incurred or will have to incur in order to redress the infringed right, loss or damage to its property'.[181] [page 41]

In essence, this can be said to be in line with the approach taken by the CISG. The latter defines damages as 'the loss, including loss of profit, suffered by the other party as a consequence of the breach'.[182] Therefore, the category of 'real loss' is analogous to 'the loss, excluding loss of profit, suffered as a consequence of the breach'. However, even if in substance the ICAC has given correct interpretation of the elements of damages under the CISG, it is nevertheless submitted that utilisation of terms used in a domestic legal system should not be permissible. Usage of domestic legal terminology is inconsistent with the Convention's 'international character' and the need to 'promote uniformity in its application'.

(2) Future Losses

One of the important questions in the context of damages under the CISG is whether or not future losses are recoverable. There has been no uniformity in relation to this issue in decisions taken by arbitral tribunals.[183]

In this regard, it should be noted that the ICAC has consistently ruled that Article 74 did not cover losses which have not yet been incurred but which would have to be incurred in future.[184] The main reason for this conclusion seems to be the Russian text of the Convention which uses past tense for the word 'suffered' ('ponesyon'). In addition to that, in decisions where this issue was discussed, the Tribunal seems to have been comparing the provision in Article 74 CISG with that in Article 15 of the Russian Civil Code which, as shown above, clearly specifies that recoverable losses include those which have been incurred or will have to be incurred. Absence of an express reference to future losses in Article 74 also may have led the ICAC to the said conclusion.

5.9.2 TYPES OF DAMAGES

(1) 'Real Loss'

The ICAC cases provide a good illustration of a great variety of forms which losses can have. For example, claims for compensation for the following forms of, what the ICAC [page 42] referred to as, 'real loss' have been granted: difference between the price for the goods not delivered by the seller and higher price for the substitute goods bought by the buyer;[185] expenses related to customs procedures, inspection of the goods, renting the warehouses, legalisation of documents; [186] difference between the import tariff applicable on the due date of delivery of the goods and that applicable when the goods were in fact delivered; [187] expenses incurred on servicing of the goods for the needs of a new buyer after the goods had not been accepted by the original buyer; [188] penalty paid to customs authorities (as a result of delay in payment by the buyer) for not transferring the amount in 'hard currency' on the seller's account within the time stipulated by the law.[189]

(2) Loss of Profit

Loss of profit has been claimed in a number of cases.

For example, in a case where the seller failed to deliver the goods, the buyer was recognised as having suffered loss of profit in the amount of the difference between the contract price and the price at which the buyer would have resold the goods to third persons.[190] In another case, the ICAC awarded the buyer a compensation for loss of profit resulted from the fact that the line of production of finished goods had remained idle due to the defects in the goods not remedied by the seller.[191]

The decision in case No 238/1998 brings about an interesting question of whether the loss for which the ICAC granted compensation fell into the category of loss of profit. In this case, the buyer claimed loss of profit arguing that it could have deposited the money used for opening the letter of credit, to the bank under the deposit rate. Since, in the [page 43] Tribunal's opinion, the buyer proved the calculation of such an alleged profit, the buyer's claim was granted.

It seems that the buyer claimed compensation for loss of profit that it could have earned if there had been no contract. It is submitted that even if such a claim can be called 'loss of profit', it certainly needs to be distinguished from the category of loss of profit in its usual sense, i.e. profit that the injured party would have earned had there been no breach.[192] Compensation for loss of profit in its usual sense is based on the idea of protection of the so-called 'expectation' or 'positive' interest. The purpose of protecting 'expectation' interest is to put the injured party in the position in which it would have been had the contract been properly performed. In this case, compensation was not awarded for loss of profit in its usual sense. The buyer was not compensated for the profit that it would have earned had the contract been properly performed.

Nor does it seem proper to regard the loss in question as loss of a chance. Compensation for loss of a chance denotes compensation for loss of a chance to benefit not for the benefit itself.[193] As shown, in the case in question, the buyer was awarded the sum of the alleged profit.

Compensation for loss to which the ICAC referred to as 'loss of profit' was based on the entirely different idea. By awarding compensation for alleged losses that could have been earned had there been no contract, the Tribunal in fact put the buyer in the position in which it would have been had there been no contract, i.e. protected the buyer's 'reliance' or 'negative' interest. Therefore, the nature of the loss in question seems to be [page 44] more that of 'foregone opportunities'[194] where compensation was awarded for the benefit that could have been earned had the contract in question not been concluded.

Thus, this ICAC case is one of rare cases on CISG where the purpose of awarding damages was based on the protection of the 'reliance interest' and where compensation was awarded not only for expenses wasted as a result of the breach but also for the benefit that could have been earned had there been no contract. The main question that still needs to be answered, but examination of which would lie outside the scope of this work, is whether Article 74 allows recovery of such losses.[195]

(3) Losses Caused by Changes in the External Value of Currency [196]

The ICAC has developed a uniform approach to dealing with the situations where one of the parties suffered losses caused by the breach as a result of the change in the external value of its domestic currency. In a number of cases, it has been decided that such losses should not be compensated.

Thus, in one case, the claimant demanded damages in the form of a difference in the exchange rate caused by the fact that the government of its country had substantially raised the rate of the national currency in relation to the US dollars which were the contract currency. As a result, the return of an advance payment in US dollars by the respondent to the claimant caused the claimant loss in a national currency. The Tribunal held that the change in the internal rate of a national currency against US dollars is a creditor's domestic affair and rejected the claim.[197]

Similarly in another case, the ICAC rejected the claim for damages flowing from the change in the exchange rate between the Finnish mark (which seems to have been the [page 45] creditor's currency) and the US dollar which was both contract and payment currency.[198] Analogous results have been come to in a number of other cases.[199]

Presumably, the reasoning underlying these decisions was that where the creditor suffers loss in a situation where its domestic currency was not that of payment or contract, this loss should be regarded as a creditor's 'domestic affair' and should not lead to shifting the risk of a change in the creditor's domestic affairs onto a debtor. It is argued that such an approach should not be followed. The fact in itself that the creditor's currency, which is neither the currency of payment nor of contract, is involved should not preclude the exchange rate loss from being recoverable. There is nothing in the 'domestic affair' reasoning which could make it a legal principle. It is submitted that the proof of the loss and the methods of limiting damages are decisive factors in determining the need for and amount of compensation. If it is found that the requirements of limiting damages (foreseeability being of particular importance) [200] are met, there should be no reason why such losses should not be compensated. The only reason why this loss should not be compensated can be the finding based on the facts of the case, that either the loss itself was not proved or that one or more of the requirements of limiting damages were not met.[201]

(4) Non-Material Loss

The ICAC cases have dealt with some aspects of the problem of non-material loss.

In one case, one of the parties demanded compensation for 'moral harm',[212] Among several grounds for denial of this claim, was the Tribunal's holding that the Convention does not provide for recoverability of 'moral harm' in situations analogous to the situation in the case in question. [page 46]

Another ICAC case touched upon an interesting aspect of the problem of reputation.[203] The case concerned the issue of reputation not of a businessperson, but of the goods. In this case the buyer claimed loss of profit suffered as a result of a delay in selling and reduction of prices of the goods of the second instalment. The buyer maintained that this loss had been caused by the fact that the goods of the first instalment had been defective which, in turn, led to the loss of reputation of these goods on the market. The Tribunal rejected this claim on the grounds that the requirements of limiting damages (foreseeability, causation) were not met. However, it seems that had these requirements been met, the Tribunal would have allowed damages for loss of profit flowing from loss of reputation of the goods. Thus, the Tribunal's view was that loss of profit flowing from loss of reputation of the goods could, in principle, be recoverable under the CISG.

(5) Legal Expenses

The problem of recoverability of legal fees as damages under the CISG has been the subject of much discussion. There is no agreement among authors as well as in decisions of courts and arbitral tribunals as to whether or not legal expenses can be considered as recoverable damages under the Convention.[204] The cases of the ICAC will add support to those who believe that legal expenses cannot be regarded as part of compensable damages under the CISG.

In its decisions on recovery of legal costs, the ICAC has consistently relied upon the ICAC Regulation on Arbitral Expenses and Fees.[205] This seems to indicate clearly that the ICAC has treated the issue of recoverability of legal expenses as being outside the [page 47] scope of the CISG.

5.9.3 METHODS OF LIMITING DAMAGES

(1) Causation

In some cases, the claims were rejected because the causal link between the breach and the loss was not proved.

Thus, in one case, the buyer claimed reimbursement of expenses of storage of the goods.[206] The Tribunal held that the buyer had not proved that these expenses had been caused by the seller's breach. Moreover, the period of storage was a result of the factors other than the seller's breach, namely, level of demand for the goods on the market and the fact that the buyer was slow in taking all necessary measures.

In another case referred to above,[207] the ICAC held that the seller's breach in relation to the first instalment of the goods could not lead to infliction of serious damage on the reputation of the goods and create serious difficulties in the sale of the second instalment. Therefore, the Tribunal ruled that there was no causal connection between the seller's breach and damages claimed by the buyer.

(2) Foreseeability

The standard of foreseeability of damages has been discussed in several decisions of the ICAC.

In some cases, actual knowledge of a party in breach was decisive for determining whether or not the requirement of foreseeability was met. In one case,[208] for instance, the Tribunal found that the claimant had informed the respondent that the former had concluded the contract with a third person for resale of the contract goods. Therefore, when the claimant demanded compensation for loss of profit suffered due to its inability to perform the contract with the said third party because the respondent had failed to deliver the goods, the Tribunal held the respondent liable for damages. [page 48]

In some other cases, the party's experience and knowledge as a businessman indicated that the foreseeability standard was satisfied. In a case No 166/1995,[209] the Tribunal held that the seller's experience in carrying out of commercial activity allowed the seller to foresee the loss that the buyer would suffer as a result of the breach.

Case No 406/1998 [210] raises an interesting issue of whether the party in breach could be held liable for loss which the injured party did not in fact suffer, but which the party in breach ought to have foreseen. In this case, the claimant demanded compensation for loss of profit in the amount of the difference between the contract price and the price fixed in the contract concluded by the claimant with a third person. Namely, the claimant sought recovery of fifty percent of the contract price. The Tribunal stated that, in principle, the claimant was entitled to compensation for loss of profit. However, it found that the respondent did not know of the terms of the claimant's contract with a third party. Therefore, the respondent ought not to have foreseen that loss of profit would constitute as much as fifty percent from the contract price.

Nevertheless, the Tribunal fixed loss of profit in the amount of ten percent from the contract price. Such a conclusion was based on the fact that the contract was concluded on the CIF terms. The Tribunal stated that under the CIF terms, insurance should cover the contract price plus ten percent (i.e. one hundred and ten percent). The Tribunal further noted that the said ten percent reflected an expected profit margin of the buyer and were a general profit margin in international trade. On these grounds, the respondent was held liable for compensating the claimant for loss of profit in the amount of ten percent from the contract price.[211]

(3) Mitigation

In a number of cases, claims for damages were either denied or reduced because the parties claiming damages failed to take measures reasonable in the circumstances to mitigate the loss, These cases can serve as good examples of a variety of ways in which the party may be required to mitigate its loss in order to be entitled to claim for damages. [page 49]

In one case, the Tribunal stated that the buyer's mitigation measure ought to have been avoiding the contract and concluding a substitute transaction.[212] In another case, the mitigation measure that was considered reasonable in the circumstances was to contact the party in breach in order to receive information which could help alleviate the injured party's situation.[213] In a case No 385/1998,[214] the Tribunal held that the buyer ought to have mitigated by demanding that the seller return the price paid within the period stipulated by the contract.

Further, it should also be noted that, as was correctly pointed out by one arbitrator,[215] some of the decisions of the ICAC can be criticised for referring to relevant domestic rules along with relying upon Article 77. Thus, the ICAC referred to Article 404 of the Russian Civil Code along with referring to Article 77 CISG.[216] As stated above, such references to national law are inadmissible. Article 77 is self-sufficient, and references to corresponding provisions of national law cannot be made.

Finally, in some other cases, along with relying on Article 77 the ICAC referred to lex mercatoria. Article 7.4.8 of the UNIDROIT Principles was given as an example of the relevant principle of lex mercatoria.[217] It is submitted that such references to lex mercatoria and the UNIDROIT Principles were unnecessary in the present case. Article 77 is capable of resolving the issue of mitigation of loss, and such references seem to be superfluous.[218]

(4) Certainty

The question of how the issue of certainty of damages is to be treated under the Convention is unresolved. The decisions of the ICAC do not expressly state what standards of proof of damages the ICAC has been relying upon. On the basis of examination of a number of decisions of the ICAC, it is suggested that the question of [page 50] whether or not damages were proved has been determined at the discretion of the Tribunal.

For example, in one case, the Tribunal regarded the claim for compensation of the amount of loss of profit in question as 'just'.[219] Likewise, in another case, the amount of loss of profit claimed was deemed to be 'reasonable'.[220]

A legal ground for the Tribunal's relying on its discretion as a standard of proof of damages seems to be the Regulations of the ICAC which provide that evidence is assessed according to the arbitrators' conviction.[221] If these conclusions are correct, then the ICAC seems to have regarded the problem of certainty of damages as a procedural issue outside the scope of the CISG and, therefore, applied the relevant provision of the arbitration rules.

5.9.4 CALCULATION OF DAMAGES (ARTICLES 75, 76)

The ICAC has repeatedly denied claims based on calculations under Articles 75 and 76 in cases where the contract has not been avoided. The Tribunal correctly stated that methods of calculation provided for in the said provisions can only be relied upon where the contract has been avoided.[222]

In a number of cases the Tribunal awarded compensation for loss calculated under Article 75. For example, where the seller refused to deliver the goods and the buyer purchased substitute goods, the Tribunal awarded the buyer damages as the difference between the contract price and price of substitute goods.[223] Where the buyer failed to affect an advance payment and the seller avoided the contract and resold the goods to third parties, the seller was awarded the difference between the contract price and a price in a substitute transaction.[224] [page 51]

Article 76 was also the basis for calculation in some ICAC cases. For instance, in one case, the Tribunal granted the buyer's claim for the difference between the contract price and the current market price.[225]

However, in some cases such claims were denied. In case No 160/1997,[226] the buyer claimed both compensation for loss of profit in the amount of the difference between the contract price and the price it could have earned under the contract with a third party, as well as the difference between the contract price and a current market price. The ICAC correctly denied the claim based on Article 76. The Tribunal stated that compensation for loss of profit took account of the difference between the price in the contract with a third party and the original contract price and fully compensates the buyer for the loss suffered.

5.10 INTEREST (ARTICLE 78)

Interest has been said to perform a number of different functions.[227] In this regard, it must be noted that the ICAC has repeatedly emphasised the function of interest of counteracting the use of 'someone else's' money by the party delaying the payment.[228] In essence, such treatment of interest seems to be restatement of one of the main functions of interest -- counteracting unjust enrichment. The only critical comment that can be made in this context is that the term describing the concept seems to have been borrowed directly from Russian legislation and doctrine.[229]

As regards the controversial issue of whether the rate of interest should be determined according to the general principles underlying the CISG or applicable national law, the ICAC has treated the rate of interest as incapable of being determined by the general [page 52] principles of the Convention.[230] In majority of cases, the rate of interest was determined pursuant to applicable national law.[231] In some cases, however, the interest rate was determined in accordance with LIBOR rate. This was done where it was difficult to determine the rate in force in the country determined by rules of applicable law,[232] or where it was deemed acceptable to apply the LIBOR rate taking into account the requirements of applicable national law.[233] In one case, no domestic rules were applied, and the LIBOR rate was simply used as a yardstick for evaluation of the interest rate demanded by the claimant as the LIBOR rate was considered to be the rate usually applied in international trade.[234]

As to the date from which the interest was calculated, there was no particular date that was relied upon in all cases. Rather, the ICAC seems to have taken an approach of determining this date on the basis of the circumstances of each individual case.[235] In cases where the respondent had been given an extension of time for making the payment, the Tribunal held that interest could run only after the claimant's withdrawal of the extension.[236] In several cases, the relevant date was considered to be the due date for payment,[237] whereas in others it was either the date of sending a notice containing demand for payment to the other party or of bringing the claim to the Arbitration Tribunal.[238] [page 53]

5.11 IMPEDIMENT EXCUSING A PARTY FROM DAMAGES (ARTICLE 79)

The provisions of Article 79 have been discussed in many ICAC cases. In most cases, the ICAC did not recognise that impediments within the meaning of Article 79 had taken place.

Thus, in one case,[239] the buyer argued that its failure to pay the price had been caused by the crisis in financial and stock markets in South Korea. Having taken account of the exemption clause in the contract and requirements of Article 79, the ICAC rejected the buyer's argument. In another case,[240] the ICAC held that change in the conditions of sale of the goods in the market could not be the ground for exempting the party from liability. Such a circumstance, in the Tribunal's opinion, was an ordinary risk which ought to have been taken into account in carrying out commercial activity. In the similar vein, in a case No 255/1994,[241] the ICAC ruled that change in the state of the market could not serve as a ground for exemption.

In a number of cases, the ground for rejecting the argument that the event in question could exempt the party in breach from liability was the fact that the party foresaw or ought to have foreseen the event at the time of the conclusion of the contract.

In a case No 160/1997,[242] the seller argued that the strike was the impediment beyond its control. The Tribunal correctly held that the event could be regarded as such only where it could not have been foreseen. Pursuant to the facts of the case, the strike on which the seller relied as a ground for exemption had already started at the time of the conclusion of the contract. Therefore, the seller ought to have taken this event into account.[243]

In a case No 96/1998,[244] the respondent argued that it should have been exempt from liability because it did not have the official licence of the Bank of Russia. The Tribunal [page 54] rejected this argument by stating that the respondent ought to have foreseen that it would need such a licence in order to perform the contract.

Besides the events already mentioned, the following circumstances also were not recognised by the ICAC as 'force majeure': insolvency of the bank to which the buyer had an obligation to transfer an advance payment;[245] suspension of the work of the equipment, due to its reconstruction, which was used to manufacture the contract goods;[246] buyer's customers inability to pay for the goods which the buyer bought from the seller;[247] increase of salaries, tariffs, and prices in the seller's country.[248]

In a number of cases, the parties referred to a failure of third parties to perform the obligations under the contract, as a ground for exemption. In the following situations, the ICAC rejected references to third parties' failure to perform as circumstances exempting the parties from liability: failure of a third party to pay directly to the seller for the goods supplied under the contract concluded between the seller and the buyer; the failure of third parties to pay the buyer which resulted in the latter's inability to pay the seller; the failure to pay by the buyer's bank under the letter of credit against the documents presented by the seller which were in accordance with the contract and requirements of the letter of credit.[249]

In some other cases, the party alleging force majeure did not provide evidence sufficient for the events in question to have been regarded as exempting the party from liability. For example, in one case, the buyer failed to prove presence of the causal connection between the alleged force majeure and its failure to accept the goods on time. In addition to that, the buyer failed to provide sufficient documentary evidence which, in this case, ought to have been certificates of Chamber of Commerce either in the buyer's or seller's country.[250]

Finally, in cases where the contract provided for the list of force majeure circumstances, the ICAC did not recognise the events which were not included in the list as grounds for [page 55] exemption from liability.[251] The Tribunal seems to have taken the view that where the parties provide for a list of 'force majeure' events, such a list must be deemed as exhaustive.

It is submitted that no such rigid rule can exist in the CISG. Indeed, it may often be the case that where the parties have defined force majeure in the contract, they have in fact intended to derogate from Article 79. However, this will not be the case in all situations. It is argued that the issue should be resolved only on the basis of the interpretation of the contract.

5.12 ARTICLE 80 (FAILURE OF PERFORMANCE CAUSED BY OTHER PARTY)

ICAC case No 55/1998 [252] is interesting in terms of application of Article 80. In this case, the buyer did not pay for the goods, and the seller sought recovery of the purchase price. The buyer argued that the seller could not claim payment of the purchase price because the seller had sent the shipping documents not by post as was required by the contract, but by handing them over to the buyer's representative. The buyer further alleged that it had not received the documents. Therefore, it did not have an obligation to pay for the goods.

The Tribunal recognised that delay in payment was the consequence of the seller's breach of the contract. The Tribunal further held that if the seller had claimed damages for delay or interest, then the buyer's argument with respect to application of Article 80 CISG would have been justifiable. However, since the seller claimed recovery of the purchase price, the seller's breach could not exempt the buyer from its obligation to pay the purchase price. The seller delivered the goods to the buyer in accordance with the buyer's instructions. Although the buyer denied the fact that it had received the goods, evidence of the receipt of the goods by the buyer's representative was presented in the case. Furthermore, the Tribunal stated that the seller had repeatedly requested the buyer to pay for the goods, but the buyer had not been responding to such requests. Neither did the buyer respond after receipt of the materials accompanying the statement of claim which included the shipping documents. In the Tribunal's opinion, such conduct was [page 56] not in accordance with the principles of 'conscientious commercial partnership'. Thus, the buyer was ordered to pay the contract price.

At first sight, it may seem that the Tribunal's decision implied that Article 80 would apply to a claim for damages and interest, but did not apply to a claim for specific performance. However, this would not be correct because 'reliance upon the failure to perform' in the meaning of Article 80 includes any remedy, including specific performance.[253] In its reference to a potential applicability of Article 80 to a claim for damages and interest, the Tribunal spoke of the delay in payment. Indeed, the buyer could not pay until it received the documents.[254] Therefore, delay in payment was caused by the seller's failure to send the documents in accordance with the contract. But the seller's breach does not seem to have caused a complete failure to pay for the goods. The buyer received the shipping documents together with the materials of the case, and payment has been possible since that time. Thus, there was not causal connection between the seller's breach and buyer's complete failure to pay the price.

At the same time, the Tribunal's reference to the principles of 'conscientious commercial partnership', even if such principles were found to exist within in the CISG, seems irrelevant in the present case. The fact that the buyer's conduct was contrary to such principles did not in any way affect the issue of applicability of Article 80.[255]

5.13 EFFECTS OF AVOIDANCE (ARTICLES 81-84)

In some cases, the ICAC has reaffirmed the rule in Article 81(1), i.e. that avoidance of the contract releases the parties from their obligations and does not affect any rights and obligations of the parties consequent upon avoidance.[256]

In a number of cases, the Tribunal has recognised that the party was entitled to claim [page 57] restitution of what it supplied the other party under the contract. In most ICAC cases, such a right related to the return of the sums paid.[257]

Article 84 has been also applied in several cases. In those cases, the claimants were held to be entitled to interest on the sums which were to be refunded.[258]

5.14 PRESERVATION OF THE GOODS (ARTICLES 85-88)

Article 85 has been applied in several ICAC cases.

In one case,[259] for example, the seller was found not to have taken all measures necessary to preserve the goods. Consequently, liability for deterioration of quality of the goods was placed on the seller.

In another case, the ICAC seems to have treated the provision of Article 85 as being a 'right' of the seller.[260] Such interpretation of the provision is incorrect as under Article 85, taking reasonable steps to preserve the goods clearly represents an obligation, rather than a right.

Article 86 was applied in a case No 164/1996.[261] In this case, the buyer was found not to have complied with Article 86(1). The buyer who sought substitution of defective equipment was held to have lost this right since it could not return the defective equipment to the seller. The equipment was written off from the buyer's balance and the buyer did not have the equipment any more. [page 58]

In a case 340/1999,[262] the seller sought recovery of the price for the goods. This claim was denied on the ground that the seller had not complied with Article 88(2). The Tribunal held that the seller neither had provided evidence that it had taken measures to sell the goods, nor its inability to make such a sale. As a result of the seller's failure to sell the goods, a significant part of the goods deteriorated and the rest was given to charity organisations. Thus, the Tribunal held that the seller was not entitled to recover the price for these goods.

6. CISG AND THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS

Although the issue of interrelationship between the CISG and the UNIDROIT Principles of International Commercial Contracts has been widely discussed in legal literature,[263] there is still no agreement as to what this relationship is and the extent to which the UNIDROIT Principles should affect the Convention's regime. The ICAC cases offer a number of interesting examples of where the UNIDROIT Principles were used to supplement the CISG or referred to along with references to the provisions of the Convention.

According to the facts of a case No 229/1996 governed by the CISG,[264] the contract provided for a fixed payment agreed upon by the parties to be made in case of a breach. When the respondent breached the contract, the claimant demanded payment of sum calculated in accordance with the said clause in the contract. The respondent asked the Tribunal to reduce the amount of the payment. The Tribunal stated that according to Article 9(2) CISG, '[t]he parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned'. On the basis of this provision, the Tribunal applied the UNIDROIT [page 59] Principles of International Commercial Contracts as an international usage.[265] The Tribunal also noted that according to the preamble of the UNIDROIT Principles, they may be used to interpret or supplement international uniform law instruments. Although reference was made to the subsidiarily applicable national law, the decision was made on the basis of Article 7.4.13 of the UNIDROIT Principles, and the amount claimed was reduced to fifty percent from the amount originally claimed.

Similarly, in the above described case where the principle of estoppel was applied, the UNIDROIT Principles were referred to as the principles which 'gradually acquire the status of international trade usages'.[266]

The possibility of application of the UNIDROIT Principles as an international trade usage is provided for in the Comments to the UNIDROIT Principles.[267] Therefore, it seems that in some cases, it is possible to apply the UNIDROIT Principles as an international trade usage. However, where they are applied to a case governed by the CISG and by virtue of Article 9 CISG, it is submitted that their application should be admissible only where the requirements of Article 9 are met. Although the Principles have gained a certain degree of recognition,[268] it does not seem possible to state that the Principles can automatically meet every requirement of Article 9(2) in every case.[269]

If, however, the UNIDROIT Principles are applied on the basis of their function to interpret and supplement international uniform law instruments, then examination of the issue of whether or not the requirements of Article 9 CISG [are met] is irrelevant. In such a case, the basis for application of the UNIDROIT Principles to the case governed by the CISG is different. They are applied by virtue of the function stated in the preamble thereto, and not as a trade usage. [page 60]

In case No 229/1996, although reference was made to the preamble of the UNIDROIT Principles, they were applied as a trade usage by virtue of Article 9(2) CISG. Therefore, it is argued that the Tribunal should have discussed the issue of whether application of the Principles as a trade usage was in accordance with the requirements of Article 9(2) CISG.

In some other cases,[270] the conclusions with respect to application of the provisions of the CISG were supported by lex mercatoria. The UNIDROIT Principles were referred to as an example of lex mercatoria.[271]

In case No 152/1998,[272] where Article 8 CISG was applied the Tribunal also referred to Article 4.2 of the UNIDROIT Principles.[273] The Tribunal stated that the criteria for interpretation of statement and conduct of the parties were the same in both documents.[274]

Expediency of and legal basis for application of the UNIDROIT Principles in this case are not clear. Application of Article 4.2 of the UNIDROIT Principles did not supplement Article 8 CISG. The result would have been the same even if Article 4.2 had not been used. Therefore, such a reference seems to have been superfluous. However, even if it were expedient to use the UNIDROIT Principles in this case, the decision did not specify the grounds for using the UNIDROIT Principles.[275]

7. CONCLUSION

A survey of cases on CISG decided in Russia, was presented in this work. In conclusion, it can be said that many of the provisions of the Convention have been applied. The ICAC and some Russian courts have discussed a number of issues under the [page 61] Convention. The author hopes that this survey can serve as a source of information on the ways in which various provisions of the Convention have been interpreted and applied in Russia. Further, some cases gave examples of how the Convention should not be applied. Finally, comments on some of the decisions may have raised issues that might need to be addressed further.[page 62]


FOOTNOTES

* PhD candidate at the Norwich Law School, University of East Anglia (UK); LLM (University of East Anglia); Bachelor (University of World Economy and Diplomacy, Uzbekistan). The author is grateful to Mr. Alastair Mullis and Professor Albert Kritzer for their review of an earlier draft.

1. See Rozenberg, M.G., International Sale of Goods: Commentary on Legislation and Practicee of Dispute Resolution, Moscow, 2001, 'Introduction' (title was translated by the author)/M.G. Rozenberg Mezhdunarodnaya kuplya prodazha tovarov: Kommentariy k zakonodatel'stvu i praktika uregulirovaniya sporov, Moskva 2001g.

2. See Article 15(4) of the Constitution of the Russian Federation (English translation of the Constitution of the Russian Federation is available at: <http://www.constitution.ru/en/10003000-01.htm>); see also Article 7 of the Civil Code of the Russian Federation.

3. Rozenberg in Rozenberg, M.G., (Editor) The UN Vienna Convention on Contracts for the International Sale of Goods. To the Tenth Year Anniversary of its Application in Russia, 2001, Moscow, at p. 27 (title translated by the author)/Sost. Rozenberg, M.G., Venskaya Konventsiya OON 1980 g. o dogovorahh mezhdunarodnoi kupli prodazhi tovarov. K 10-letiyu yeyo primeneniya Rossiyei, Moskva, 2001.

4. In this regard, it must be noted that much work has been done to create access to Russian cases on CISG. Thanks to the Queen Mary - Pace University (School of Law, Institute of International Commercial Law) Case Translation Programme. English translations of many of the Russian cases are now available at the Pace University website (<http://www.cisg.law.pace.edu/>).

5. Lebedev/Rozenberg, please see fn 3, at p. 7. The ICAC is often translated as International Court of Commercial Arbitration (ICCA). However, the translation given in the main text (ICAC) will be used in this work as it seems to be more precise translation of the name of this arbitration institution.

6. General information on the ICAC (available in Russian) at: <http://www.tpprf.ru/ni/main/court/mkac/obsh/>.

7. See Zykin, I.S., 'Commercial Arbitration in the CIS', International Arbitration Law Review, 1997.

8. Adopted on 7 July 1993.

9. The Statute is an Annex to the Law 'On International Commercial Arbitration'. Annex II to the Law is the Statute 'On the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation'.

10. English translation of the Rules was published in Veede, V.V., 'The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation', Arbitration International, Vol. 11, No 2, 1995, at pp. 197-217.

11. Paragraph 2 of the Statute 'On the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation'.

12. ICAC case No 280/1999, decision dated 13 June 2000 reported in Rozenberg (Ed.), please see fn 3, at pp. 100-104 (English translation is available at: <http://cisgw3.law.pace.edu/cases/000613r1.html>).

13. See, for example, ICAC cases referred to in Rozenberg, M.G., International Contract and Foreign Law in Practice of the ICAC (International Court of Commercial Arbitration), Moscow, 1998, at p. 33, fn 3 (translation of the author)/ Rozenberg, M.G., Mezhdunarodniy dogovor i inostrannoye pravo v praktike MKAS, Moskva, 1998g.

14. Russia became a Contracting State on 1 September 1991; Bulgaria on 1 August 1991.

15. Rozenberg, International Sale of Goods, please see fn 1, at p. 5, fn 2.

16. Ibid.

17. Rozenberg, International Contract and Foreign Law, please see fn 13, at p.53.

18. The fact that the claimant's country is a Contracting State is implied.

19. See Article 4 of the CISG.

20. Article 157 of the Civil Code of the Russian Federation provides for this type of an agreement which is referred to as a 'conditional transaction'. 'Conditional transaction' is defined as a 'transaction the legal consequences of which (rise and termination of rights and obligations) are set, by the parties, to be dependent upon the circumstance which may occur (positive condition) or may not occur (negative condition) in the future' (translation of the author).

21. Kabatov/Rozenberg, please see fn 3, at p. 31.

22. According to this provision, the law of the seller's country was applicable.

23. The United Kingdom, on the other hand, is not a party to the CISG.

24. See Case No 406/1988 decision dated 6 June 2000 (Rozenberg, please see fn 3, at pp. 95-96).

25. Portugal is not a party to the CISG.

26. Case No. 161/1994 decision dated 25 April 1995 (Rozenberg, International Contract and Foreign Law, please see fn 13, at p. 34).

27. Please see, for example, ICAC Cases No 309/1996 decision dated 16 January 1998 (Rozenberg, please see fn 3, at p. 33); No 55/1998 decision dated 10 June 1999 (Rozenberg, please see 3, at p. 84); also High Court of Arbitration of the Russian Federation, No 29 16.02.1998 (abstract of the case is available at: <http://www.unilex.info/case.cfin?pid=l&do=case&id=365&step=Abstract?>; editorial remarks by Alexandre Mouranov and a Russian text of the decision are available at: <http://www.cisg.law.pace.edu/cisg/wais/db/cases2/980216r1.html>).

28. See Herber, R., in Schlechtriem, P., (Ed) Commentary on the UN Convention on the International Sale of Goods (CISG), 2nd ed 1998, at pp. 25-26; Jayme in Bianca, C.M. and Bonell, M.J. (Ed), Commentary on the International Sales Law; The 1980 Vienna Sales Convention, 1987, at pp.32-33; Bernstein, H. and Lookofsky, J., Understanding the CISG in Europe: A Compact Guide to the 1980 United Nations Convention on Contracts for the International Sale of Goods, 1997, at pp.10-13; Ferrari, F., 'Uniform Law of International Sales: Issues of Applicability and Private International Law', 15 Journal of Law and Commerce, 1995, at pp. 173-174.

29. See, for example, ICAC Cases No 054/1999, decision dated 24 January 2000 (please see Rozenberg: Case text (synopsis) and commentary: Arbitral Award No. 54/1999, dated 24 January 2000, International Court of Commercial Arbitration, Chamber of Commerce & Industry of the Russian Federation, (English translation is available at: <http://cisgw3.law.pace.edu/cases/000124r1.html#cx>; reported in Russian at: Ezh-Yurist, No. 14, April 2000; see also Treteiskiy Sud [Arbitration Court] No. 2 2000 <http://www.arbitrage.spb.ru/2_00/art05.htm>); No 407/1996 decision dated 11 September 1998 (English, translation of the case is available at: <http://www.cisg.law.pace.edu/cisg/wais/db/cases2/980911r1.html>); No 238/1998 decision dated 7 June 1999 (Rozenberg, please see fn 3, pp. 74-81); No 220/1996 decision dated 11 April 1997 (Kabatov/Rozenberg, please see fn 3, p. 31); No 238/1998 please see note 29, p. 90); No 489/1993 decision dated 7 September 1994 (Rozenberg, Contract of International Sales, please see fn 1, at p. 53 (translation of the author)/ Rozenberg, 'Kontrakt mezhdunarodnoy kupli-prodazhi', Moskva, 1998g.).

30. See ICAC case No 540/1996, decision dated 1 December 1997 (Kabatov/Rozenberg, please see fn 3, at p.32).

31. A possibility of a limited construction of [such a term] is not excluded: it is admissible to assert, in relation to self-executing international treaties, [...] that constitute a part of the legal system of Russia, but not part of its legislation' (Rozenberg cited in Ibid; Kabatov supports the view (Ibid)). For an analogous view, according to which 'legal system' and 'law' are different notions, and for the discussion of the category of 'legal system' in Russian legal literature, please see Zvekov, V.P., International Private Law, Moscow 1999, at pp. 49-50 (title translated by the author)/V.P. Zvekov 'Mezhdunarodnoye chastnoye pravo', Moskva, 1999.

See, however, Case No 493/1993 decision dated 17 November 1994 where reference to Russian 'legislation' was made, but the CISG was found to be applicable (Rozenberg, Contract of International Sales, please see fn 29, at p.52)

32. See Article 3(2) of the Civil. Code of the Russian Federation.

33. Decision dated 3 November 1994 (Rozenberg, Contract of International Sales, please see fn 29, at p.52).

34. See, for example, David. R., 'The International Unification of Private Law' in International Encyclopaedia of Comparative Law, 1971, stating at p. 69 that 'legislation comes necessarily from the state'. One should be careful, however, in using such terms as 'international legislation'. The sources of legal regulation of international commerce are of different legal nature. The place and 'status' of different sources within the system of international commercial law is not always clear (mention of the lex mercatoria doctrine will suffice). Therefore, in absence of a clear definition, use of such terms as 'international legislation' in the context of sources of international commercial law is likely to lead to confusion and uncertainty.

35. See Article 2(l)(a) of the Vienna Convention on the Law of Treaties 1969.

36. ICAC case No 356/1999 decision dated 30 May 2000 (available at: <http://cisgw3.law.pace.edu/cases/000530r1.html>).

37. No thorough examination of the choice of law clause is presented in the synopsis of the case.

38. See Case No 1/1998 decision dated 18 December 1998 (the summary of the case in English is available at: <http://cisgw3.law.pace.edu/cases/981218r1.html>).

39. Ibid.

40. See Editorial remarks by Alexandre Mouranov (Ibid).

41. See ICAC Case No 236/1996, decision dated 6 April 1998 (see M. G. Rozenberg, 'Praktika Mezhdunarodnogo Kommercheskogo Arbitrazhnogo Suda: Nauchno-Prakricheskiy Kommentariy', 1998: 'Practice of the International Commercial Arbitration Court: Scientific-Practical Commentary', 1998, pp. 92-93).

42. In one case, the ICAC did not apply the Convention in cases where aircraft was the subject of sale (see ICAC Case No 255/1996 decision dated 2 September 1997 (Rozenberg, International Contract and Foreign Law, please see fn 13, at p.37)).

43. Decision dated 15 April 1996 (Rozenberg, International Contract and Foreign Law, please see fn 13, at p.38).

44. See ICAC Case No 356/1999, decision dated 30 May 2000 (available at: <http://cisgw3.law.pace.edu/cases/000530r1.html>).

45. See also Case No 8/1997 decision dated 5 March 1998 where the CISG was not applied, as the contract in question was considered to be not an international sales contract, but a 'mixed contract' (Rozenberg, International Contract and Foreign Law, please see fn 13, at p.38).

46. See ICAC Case No 99/1994 decision dated 22 November 1995 (Rozenberg, International Contract and Foreign Law please see fn 13, at pp. 37-38).

47. Khoo/Bianca and Bonell, please see fn 28, at p. 46.

48. See, for example, Bernstein, Lookofsky, please see fn 28, at pp. 35-36, 71-72.

49. Honnold, J., Uniform Law, for International Sales, 3rd ed, 1999, at p. 355.

50. Hager/Schlechtriem, please see fn 28, at p. 461; Khoo/Bianca and Bonell, please see fn 28, at p. 46.

51. Decision dated 10 June 1999 (Rozenberg, please see fn 3, at pp. 82-87).

52. The USSR, to the CISG membership of which Russia is a successor, made a reservation under Article 96.

53. Rozenberg, please see fn 3, at p. 85.

54. For the outline of the divergent views on this subject see Schlechtriem/Schlechtriem, please see fn 28, at p. 95.

55. This case concerned validity of the facsimile messages, whereas Article 13 only deals with 'telegram and telex'. Nonetheless, some authors are of opinion that such means of communication as facsimile 'should be assimilated to the definition of "writing" in Article 13' (Honnold, please see fn 49, at p. 141).

56. In addition to that, it seems that the Tribunal's reference to the fact that the CISG contains no general principles to resolve the issues of validity seems irrelevant as the Convention expressly excludes validity from its scope. For other ICAC cases dealing with issues of validity see, for example, cases: No 407/1996 decision dated 11 September 1998, in Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 157-159; No 201/1997 2 March 1998, in Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 66-70; No 65/1997, decision dated 10 January 1998 in Rozenberg, International Contract and Foreign Law, please see fn 13, at pp. 92-94.

57. See Article 4(b); also Secretariat Commentary on Article 4 of the 1978 Draft.

58. Decision dated 2 October 1996, (see M.G. Rozenberg, 'Arbitrazhnaja praktika za 1996-1997 gg.'/ 'Arbitration Practice for the Years 1996-97', at pp. 103-109). A translation of this decision appears at (2003) 7 Vindobona Journal of International Commercial Law and Arbitration 171.

59. Besides good faith, the ICAC also regarded 'reasonableness' (refer Case No 054/1999, please see fn 29) and 'freedom of contract' as being the general principles underlying the Convention (refer Case No 94/1996 decision dated 27 January 1997 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p.160)).

60. See Cases No 054/1999, please see fn 29 ('being guided by the general principle of the Vienna Convention 1980 on the need for observance of good faith in international trade [...]'); No 288/1997 decision dated 18 December 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at p.242) ('A general principle on the need to observe good faith international trade (Article 7), on which the Vienna Convention 1980 is based, was taken into account'). See also Rozenberg referring to good faith as being a 'fundamental general principle of the Convention' (Rozenberg, International Sale of Goods, please see fn 1, at p.52) (translation of the author).

61. See Case No 96/1998 decision dated 24 November 1998 (in Rozenberg, Arbitration Practice1998, please see fn 41, at p.232, 235).

62. See Article 7(l).

63. Such possibilities of treatment of good faith have been suggested in Farnsworth, E.A., 'Duties of Good Faith and Fair Dealing under the UNIDROIT Principles, Relevant International Conventions, and National Laws', Tulane Journal Of International and Comparative Law, 1995, at p.56.

64. For example, Cases No 96/1998, please see fn 61, at p. 235; No 288/1997, please see fn 60, at p.242.

65. Bardina/Rozenberg (Ed.), please see fn 3, at p.39.

66. ICAC Case No 288/1997, please see fn 60, at p.242.

67. Decision dated 7 June 1999, in Rozenberg (Ed.), please see fn 3, at p. 80 (English translation is available at: <http://cisgw3.law.pace.edu/cases/990607r1.html>).

68. Decision dated 27 July 1999 (Rozenberg, please see fn 3, at p. 92; English translation is available at http://cisgw3.law.pace.edu/cases/990727r1.html>).

69. In this regard, it seems relevant to cite the statement of an Italian court. This statement, although relates only to, the area of remedies, should apply to the Convention's legal regime as a whole. 'The Convention's provisions (in the area of remedies) cannot be integrated with other internal provisions, which would contradict the Convention's intended specificity' (Corte di Appello di Milano, 11 December, 1998, Bielloni Castello S.p.A. v. EGO S.A: (available at: <http://cisgw3.law.pace.edu/cases/981211i3.html>).

70. Please see fn 68, at pp. 88-93.

71. Ibid, at p.90 (translation of the author). Article 3.15 of the UNIDROIT Principles was referred to as well (see 'CISG and the UNIDROIT Principles of International Commercial Contracts').

72. Honnold, please see fn 49, at pp. 106-107, bringing forward suggestions as to methodology of extracting general principles (using estoppel as an example).

73. This ICAC case is not the only case which applied estoppel to the case governed by the CISG. For example, please see Vienna Arbitration proceeding SCH-4318 (Austria) dated 15 June 1994, where estoppel was declared to be a general principle underlying the Convention (available at: <http://cisgw3.law.pace.edu/cases/940615a4.html>).

74. See Article 8 CISG.

75. See paragraph 2 of the Secretariat Commentary on Article 7 of the 1978 Draft Convention ('article 7 [draft counterpart of CISG article 8] is equally applicable to the interpretation of the contract [...]'); Jacob S. Ziegel's comment on Article 8 in 'Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods' (available at: <http://www.cisg.law.pace.edu/cisg/wais/db/articles/english2.html>); Honnold, please see fn 49, at p. 116; Maja Stanivukovic's Editorial remarks on the manner in which the PECL may be used to interpret or supplement CISG (available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp8.html>).

76. Decision dated 6 April 1994 (Rozenberg, Contract of International Sales, please see fn 29, at pp. 6061).

77. Ibid, at p.61 (translation of the author).

78. Case No 238/1998, please see fn 29.

79. Other claims included a claim for compensation for losses incurred as a result of the avoidance of the contract (ibid, at p.75).

80. Ibid, at p.77 (translation of the author).

81. Case No 238/1998, please see fn 29, at p.78 (translation of the author).

82. The standard in Article 8(2) providing for a criterion of a 'reasonable person of the same kind' is often referred to as an objective interpretation.

83. See Article 8(2); Bernstein, Lookofsky, please see fn 28, at p.28.

84. Junge/Schlechtriem, please see fn 28, discussing at p.70 the order in which paragraphs (1) and (2) are to be applied.

85. Case No 152/1998 decision dated 16 April 1999 (Rozenberg, International Sale of Goods, please see fn 15, p. 93).

86. Decision dated 21 February 1997 (abstract of the case is available at: <http://cisgw3.law.pace.edu/cases/970221r1.html>).

87. Decision dated 6 April 1994 (Rozenberg, Contract of International Sales, please see fn 29, at pp.60-61).

88. Article 8 has been dealt with in a number of other ICAC decisions. See cases: No 62/1998, decision dated 30 December 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 250-256; English translation is available at: <http://cisgw3.law.pace.edu/cases/981230r1.html>); No 054/1999, please see note 29; No 201/1997 decision dated 2 March 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 66-70); No 304/1993 (Rozenberg, Contract of International Sales, please see fn 29, at pp. 66-74; English translation is available at: <http://cisgw3.law.pace.edu/cases/950303r2.html>).

89. See Information Letter of the Presidium of the Higher Arbitration Court of the Russian Federation dated 25 December 1996, No 10 (Review of the practice of examination of disputes on matters involving foreign persons, examined by arbitration courts after 1 June 1995) (available at: <http://cisgw3.law.pace.edu/cases/961225r1.html>).

90. 'The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves' (Article 9(1)).

91. Criteria for determining of applicability of a trade usage are set out in Article 9(2).

92. Rozenberg, International Sale of Goods, please see fn 1, at p.28.

93. See Case No 478/1996 decision dated 25 June 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 131-134).

94. For other cases on Article 9, see, for example, Case No 28/1998 decision dated 17 January 2000 (available at: <http://cisgw3.law.pace.edu/cases/000117r1.html>).

95. See Resolution of the Presidium of the High Arbitration Court of the Russian Federation No 4670/96, dated 25 March 1997 (text in Russian as well as Editorial Remarks by A. Mouranov are available at: <http://cisgw3.law.pace.edu/cases/970325r1.html>); Information Letter of Presidium of the High Arbitration Court of the Russian Federation No 29, dated 16 February 1998 (text in Russian as well as Editorial Remarks by A. Mouranov are available at: <http://cisgw3.law.pace.edu/cases/980216r1.html>).

96. Please see fn 88.

97. Ibid.

98. Case No 33/1997 decision dated 16 February 1998, in Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 52-54.

99. From the, synopsis of the case, it is not clear what the respondent's arguments were when he/she relied upon Article 19 (ibid, at p.53).

100. Rozenberg, International Sale of Goods, please see fn 1, at p.84.

101. See the case described in Ibid, at pp.84-85 (with further reference). It is not clear, however, whether the CISG was the governing law in this case.

102. Case No 238/1998 (please see fn 29, and description of the facts of the case described in 'Article 8').

103. Ibid, at p.78 (translation of the author).

104. Case No 2/1995, decision dated 5 November 1997 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p. 252; English translation is available at: <http://cisgw3.law.pace.edu/cases/970511rl.htm1>).

105. Case No 054/1999 (please see fn 29).

106. Decision dated 4 April 1998 (abstract available at: <http://cisgw3.law.pace.edu/cases/980404r1.html>).

107. See ICAC cases No 96/1998, decision dated 24 November 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp.233-237); No 222/1993, (Rozenberg, International Sale of Goods, please see fn 15, at pp.116-119); No 53/1997 decision dated 5 October 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 173-175 (in this case, however, it is not clear whether the decision was based on the contract or the CISG)).

108. See Article 26 CISG.

109. Decision dated 22 October 1998 (in Rozenberg, Arbitration Practice 1998, please see fn 41, at pp.193-199).

110. Ibid, at p.197.

111. Please see fn 104, at p. 252.

112. Similar decisions were made in a number of other case on CISG (see Federal Court of Australia, South Australian District, Adelaide, Roder Zelt- and Hallenkonstruktionen GmbH v. Rosedown Park Pty Ltd and Reginald R Eustace, 28 April 1995, available at: <http://cisgw3.law.pace.edu/cases/950428a2.html>; Zurich Chamber of Commerce, Arbitration Award ZHK 273/95, 31 May 1996, available at: <http://cisgw3.law.pace.edu/cases/960531s1.html>). Cf. Date-Bah/Bianca and Bonell, please see fn 28, stating at p. 225 that 'indirect notice should not be effective although the language of Article 26 does not specifically say so'; also Leser/Schlechtriem, pleas see fn 28, at p.188.

113. Decision dated 12 March 1996 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at pp.42-48; English translation is available at: <http://cisgw3.law.pace.edu/cases/960312r1.html>). A translation of this decision also appears at (2003) 7 Vindobona Journal of International Commercial Law and Arbitration 161.

114. Article 76(1) 'of the Fundamentals of Civil Legislation of the Russian Federation provides as follows: 'Quality of the goods sold must conform to the terms of the contract. In absence of such terms in the contract, the seller is obliged to deliver to the buyer the goods of ordinary quality conforming to its particular purpose, specified in the contract or known to the seller [...]' (translation of the author).

115. English translation of the synopsis of the decision and Article 35(2)(b) CISG.

116. According to Article 35(2)(a) CISG, the goods do not conform with the contract unless they 'are fit for 117 the purposes for which goods of the same description would ordinarily be used'.

117. This conclusion flows from the following. First, the Tribunal expressly stated that the respondent had an obligation to deliver the goods of 'ordinary quality'. Secondly, along with reference to Article 118 35(2)(a), the national standard was regarded as the basis for finding the goods non-conforming.

118. Schwenzer/Schlechtriem, please see fn 28, at p. 280; Bianca/Bianca and Bonell, please see fn 28, at p. 274.

119. Honnold, please see fn 49, at pp. 256-257.

120. Case No 238/1994, decision dated 2 October 1996 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at pp. 102-109; English translation is available at: <http://cisgw3.law.pace.edu/cases/960210r1.html>).

121. Reference to Article 36 has been made in other cases as well (see, for example, ICAC Case No 166/1995, please see fn 113). A translation of this decision appears at (2003) 7 Vindobona Journal of International Commercial Law and Arbitraiton 161.

122. See FOB (A5; B5) INCOTERMS 1990.

123. Article 41 CISG.

124. Decision dated 21 January 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 38-42).

125. The delivery was made to a person whose was not authorised to take delivery.

126. Case No 054/1999 (please see fn 29).

127. The specifications to the contract referred to the Technical Conditions which provided that inspection was to be carried out at the port of shipment (Ibid). The ICAC clearly regarded the Technical Conditions as being part of the contract.

128. This case also contains an interesting discussion of the issue of methods of examination of the goods.

129. The following authors support the view that reasonableness represents a general principle of the CISG: Schlechtriem, P., Uniform Sales Law -- The UN-Convention on Contracts for the International Sale of Goods, at p. 38; Bonell/Bianca and Bonell, please see fn 28, at pp. 80-81; Magnus, U., 'General Principles of UN-Sales Law', Max-Planck-Institute for Foreign and International Private Law Part I Volume 59 (1995) Issue 3-4; Koneru, P., 'The International Interpretation of the UN Convention on Contracts for the International Sale of Goods: An Approach Based on General Principles', 6 Minnesota Journal of Global Trade (1997).

130. Article 38 was also referred to in ICAC case No 33/1997, please see fn 98. In this case, however, although Article 38(1) was referred to, it was the provision of the contract that was, in fact, relied upon by the Tribunal.

131. Article 39(1) CISG.

132. Case No 054/1999 (please see fn 29).

133. Ibid.

134. Decision dated 4 June 1997 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at pp. 207-208).

135. Other ICAC decisions in which reference to Article 39 was made dealt with the issue whether the notice of a lack of conformity had been given within a reasonable period of time. In two of its decisions, the ICAC found that the notice of a lack of conformity had been given within a reasonable period of time (see cases No 166/1995 (please see fn 113), No 226/1999, decision dated 11 February 2000 (available at: <http://cisgw3.law.pace.edu/cases/000211r1.html>)).

136. Rozenberg, International Sale of Goods, please see fn 1, at p. 261.

137. See ICAC Case No 164/1996, decision dated 17 November 1998 (see Rozenberg, Arbitration Practice 1998, please see fn 41, pp. 225-226); also ICAC Case No 222/1993, decision dated 4 October 1999 (referred to in Rozenberg, please see fn 15, at p. 262).

138. ICAC Case No 164/1996, decision dated 17 November 1998 (referred to in Ibid).

139. Case No 2/1995, please see fn 104.

140. See ICAC Case No 269/1998, dated 27 October 1999 (available at: <http://cisgw3.law.pace.edu/cases/991027r1.html>).

141. Decision dated 5 March 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 76-78).

142. Decision dated 9 June 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 124-126).

143. In the synopsis of the case, there is no discussion of whether the buyer's failure to deliver all the goods amounted to a fundamental breach. However, since Article 51(2) provides that the contract may be avoided in its entirety only if the failure to make delivery completely amounts to a fundamental breach, the decision seems to imply such a conclusion.

144. See also ICAC Case 3/1996, decision dated 13 May 1997 where the contract was avoided by the buyer (Rozenberg, International Contract and Foreign Law, please fn 13, at pp. 89-91; English translation is available at: <http://cisgw3.law.pace.edu/cases/970513r1.html>).

145. Decision dated 22 October 1998 (Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 193-199).

146. Article 49(2)(a) CISG.

147. The contract was concluded under the CPT terms according to which delivery means delivery 'into the custody of the carrier, or if there are subsequent carriers, to the first carrier, for transportation to the named place of destination on the date or within the period stipulated' (INCOTERMS 1990; the synopsis of the case does not indicate which INCOTERMS applied to the case. Since the contract was dated 1996, INCOTERMS 1990 were relied upon).

148. The declaration was apparently ambiguous because the Tribunal when referring to the declaration stated as follows: 'even if it could denote avoidance of the contract' (Rozenberg, Arbitration Practice 1998, please see fn 41, at p.198).

149. Please see fn 58. A translation of this decision appears at (2003) 7 Vindobona Journal of 'International Commercial Law and Arbitration 161.

150. See Bergsten, E. E., and Miller, A.J., 'The Remedy of Reduction of Price', 27 The American Journal of Comparative Law, 1979, at p. 263.

151. ICAC Case No 318/1997, decision dated 8 July 1999 (referred to in Rozenberg, International Sale of Goods, please see fn 1, at p. 161).

152. Refer Huber/Schlechtriem, please see fn 28, at p. 443; also, only as regards the independence of the remedy of reduction of the price on the factor of loss: Arnau Muria Tunón 'The Actio Quanti Minoris and Sales of Goods Between Mexico and the U.S.: An Analysis of the Remedy of Reduction of the Price in the UN Sales Convention, CISG Article 50 and its Civil Law Antecedents', available at: <http://www.cisg.law.pace.edu/cisg/biblio/muria.html>; Piliounis, P.A., 'The Remedies of Specific Performance, Price Reduction and Additional Time (Nachfrist) under the CISG: Are these worthwhile changes or additions to English Sales Law?', 12 Pace International Law Review, 2000 (also available at: <http://www.cisg.law.pace.edu/cisg/biblio/piliounis.html#6>).

The buyer's right to reduce the price was also recognised in ICAC case No 054/1999, please see fn 29.

153. See Article 52(2) CISG.

154. It is noteworthy that although the Tribunal's decision was correct, no express reference to Article 52(2) was made.

155. See Ziegel's comment on Article 53 (please see fn 75).

156. ICAC cases No 2/1995, please see fn 104, at p. 252; English translation is available at: <http://cisgw3.law.pace,edu/cases/970511r1.html>); No 407/1995, decision dated 8 October 1996 (ibid, p.112); No 40/1995, decision dated 22 January 1996 (ibid, at p. 14); No 470/1996, dated 29 September 1997 (refer Rozenberg, Arbitration Practice 1996-97, please see note 58, at p. 233); No 28/1998, decision dated 17 January 2000 (available at: <http://cisgw3.law.pace.edu/cases/000117r1.html>).

157. See ICAC cases No 031/1999 decision dated 1 February 1999 (referred to in Rozenberg, International Sale of Goods please see fn 1, at p. 193); 398/1998 decision dated 29 November 1999 (ibid); 136/1998 decision dated 27 January 1999 (ibid); No 218/1995, please see fn 13, at p. 40; No 328/1994, decision dated 2 October 1996 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p. 104); No 309/1995, decision dated I November 1996 (ibid, at p. 117); No 228/1995, decision dated 31 January 1996 (ibid, at p. 27); No 74/1995, decision dated 16 September 1996 (ibid, at p. 84); No 94/1996, decision dated 27 January 1997 (ibid, at p. 160); No 113/1997, decision dated 2 October 1998 (ibid, at p. 172); No 102/1997, decision dated 22 January 1998 (ibid, at p. 34); No 220/1996, decision dated I I April 1997 (ibid, at p.195); no 439/1995, decision dated 29 May 1997 (ibid, at p. 206); No 478/1996, decision dated 25 June 1998 (refer Rozenberg, Arbitration Practice 1998, please see fn 41, at p. 134); No 47/1997, decision dated 14 April 1998 (ibid, at p. 100); No 356/1999 decision dated 30 May 2000 (available at: <http://cisgw3.law.pace.edu/cases/000530r1.html>).

158. See ICAC cases No 65/1997, decision dated 10 January 1998 (refer Rozenberg, International Contract and Foreign Law, please see fn 13, at p. 93); No 304/1993, please see fn 88, at p. 70 (Article 61 was also referred to); No 196/1997, decision dated 22 October 1998 (refer Rozenberg, Arbitration Practice 1998, please see fn 41, at p. 199; English translation is available at: <http://cisgw3.law.pace.edu/cases/981022r1.html>); No 430/1995, decision dated 25 February 1997 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p. 185); No 255/1994, decision dated 11 June 1997 (ibid, at p. 215).

159. Such a connection only relates to buyer's obligations to pay the price and take delivery of the goods. Article 62, besides referring to these obligations, also refers to buyer's 'other obligations' (please see Article 62 CISG).

160. Article 54 has also been referred to in numerous cases. Please see, for example, ICAC cases: ICAC cases No 031/1999, please see fn 157; No 398/1998, please see fn 157; No 218/1995, please see note 13, at p. 40; No 478/1996, please see fn 157; case No 40/1995, please see fn 156; See ICAC case No 340/1999 decision dated 10 February 2000 (available at: <http://cisgw3.law.pace.edu/cases/000210r1.html>); No 123/1992, decision dated 17 October 1995 (abstract of the case is available at: <http://cisgw3.law.pace.edu/cases/951017r1.html>). Article 60 has been referred to only on few occasions (see ICAC cases No 340/1999; No 255/1994, please see fn 158).

161. ICAC case No 33/1997, decision dated 16 February 1998 (please see fn 98; also referred to in Rozenberg, International Sale of Goods, please see fn 1, at p. 201).

162. Article 55 can apply only when a validly concluded contract 'does not expressly or implicitly fix or make provision for determining the price'.

163. ICAC Case No 99/1994, decision dated 22 November 1995 (see Rozenberg, International Sale of Goods, please see fn 1, at pp. 201-202).

164. The seller on whom the burden of determining the price under Article 55 was placed did not have data with respect to the price generally charged for such goods under comparable circumstances. The price was eventually calculated on the basis of the prices fixed in the act of receipt of the goods signed by the parties.

165. There seems to have been no question of the validity of such an agreement under the applicable domestic law.

166. See 'Formation of Contracts (Articles 14-24)'.

167. See ICAC cases No 88/1995, decision dated 19 March 1996 (refer Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p. 51,); No 243/1993, decision dated 12 April 1994 (refer Rozenberg, Contract of International Sales, please see fn 29, at pp. 84-85); No 470/1996, decision dated 29 September 1997, please see fn 58, at p. 233; No 407/1995, please see fn 156, at p. 112; see also cases referred to in fn 158.

168. Decision dated 5 October 1998 (in Rozenberg, Arbitration Practice 1998, please see fn 41, at p. 175; English translation is available at: <http://cisgw3.law.pace.edu/cases/981005r1.html>.

169. Please see fn 61, at p. 236.

170. Decision dated 11 March 1998 (refer Rozenberg, Arbitration Practice 1998, please see fn 41, at pp. 80-81).

171. Please see fn 88, at p. 255.

172. Article 66 was also referred to in ICAC case No 342/1998, decision dated 17 May 1999 (available at: <http://cisgw3.law.pace.edu/cases/990517r1.html>).

173. ICAC Case No 102/1997, decision dated 22 January 1998 (refer Rozenberg, Arbitration' Practice 1998, please see fn 41, at pp. 32-33).

174. ICAC Case No 302/1996, please see fn 68, at p. 92.

175. Please see fn 67, at p. 79.

176. ICAC Case No 161/1994 decision dated 25 April 1995 (referred to in Rozenberg, International Sale of Goods, please see fn 1, at p. 175).

177. See Article 72(2) CISG.

178. ICAC Case No 222/1993, please see fn 107, at p. 119.

179. Article 73 was also referred to in ICAC Case No 161/1994, please see fn 176.

180. See, for example, ICAC Case No 493/1993, decision dated 17 November 1994; Rozenberg, International Sale of Goods, please see fn 1, at p. 248.

181. Please see Article 15 (2) of the Civil Code of the Russian Federation (translation of the author).

182. Article 74 CISG.

183. See, for example ICC Case No 7660 of 1994, where damages within the meaning of Article 74 were interpreted as covering only those losses which were actually suffered (abstract of the case and editorial remarks by Albert H. Kritzer are available at: <http://cisgw3.law.pace.edu/cases/947660i1.html>); see also Zurich Arbitration proceeding dated 31 May 1996 (Switzerland) where damages for future losses under the framework contract were awarded (available at: <http://cisgw3.law.pace.edu/cases/960531s1.html>).

184. ICAC Case No 131/1996, decision dated 14 September 1998 (refer Rozenberg, Arbitration Practice 1998, please see note 41, at 165); 345/1996, decision dated 14 September 1998 (in Bardina/Rozenberg, please see fn 3, at p. 39).

185. Refer Rozenberg, International Sale of Goods, please see note 1, at p. 250.

186. See ICAC Case No 205/1994, decision dated 20 March 1995 (refer Rozenberg, Contract of International Sales, please see fn 29, at p. 86).

187. See ICAC Case No 437/1992, decision dated 6 May 1994 (ibid).

188. ICAC Case No 142/94, 25 September 1995 (abstract of the case is available at: <http://cisgw3.law.pace.edu/cases/950425r2.html>).

189. See ICAC Case No 38/1996, decision dated 28 March 1997 (refer Rozenberg, Arbitration Practice 1996-97, at p. 191). For many other examples of 'real loss', see, for instance, Rozenberg, Contract of International Sales, please see fn 29, at tp. 87; Rozenberg, International Sale of Goods, please see fn 1, at p. 250.

190. See Komarov, A.S., 'Liability in Commercial Turnover', 1991, referring at p.202 to a case decided by the Foreign Trade Commission.

191. See ICAC Case No 310/1996, decision dated 26 September 1997 (refer Rozenberg, International Sale of Goods, please see fn 1, at p. 249).

192. See, for example, Comment 2 on Article 7.4.2 of the UNIDROIT Principles of International Commercial Contracts where loss of profit is defined as 'the benefit which would normally have accrued to the aggrieved party if the contract had been properly performed'.

193. See Article 7.4.3(2) of the UNIDROIT Principles of International Commercial Contracts. See also Eiselen, S., 'Remarks on the Manner in which the UNIDROIT Principles of International Commercial Contracts May Be Used to Interpret or Supplement Article 74 of the CISG', suggesting that the provisions of the UNIDROIT Principles on loss of a chance may be used for establishing liability for loss of a chance under the CISG (available at: http://www.cisg.law.pace.edu/cisg/principles/uni74.html#editorial>).

Furthermore, it seems that loss of a chance in the meaning used in the UNIDROIT Principles seems to refer to loss of a chance to benefit from opportunities that would have been available had the contract been performed, rather than from opportunities that would have been available had there been no contract (see, for instance, the example given in Comment I to Article 7.4.3 of the UNIDROIT Principles).

194. The concept of 'foregone opportunities' as a compensable type of loss in protecting the injured party's 'reliance interest' was introduced in Fuller, L.L. and Perdue, Jr., W.R., 'The Reliance Interest in Contract Damages', 46 (1936) Yale Law Journal 52, at p. 74.

195. Some authors doubt the admissibility of the reliance interest's being the basis for recovery of damages under the CISG (see Lookofsky, J., 'Consequential Damages in Comparative Context: From Breach of Promise to Monetary Remedy in the American, Scandinavian and International Law of Contracts and Sales', 1989, stating at p. 269 that 'the idea that compensation should sometimes extend only to reliance is hard to reconcile with the Convention rules').

196. The term 'external value' of currency is sometimes used to describe the value of a currency in relation to the value of another currency. This relationship influences and is reflected in the 'rate of exchange', i.e. 'the price of a foreign currency in terms of a country's own currency' (see Mann, F.A., The Legal Aspect of Money, the 5th ed, 1992, at p. 61; Rosenn 'Law and Inflation', 1982, at p.3)

197. ICAC Case No 61/1993, decision dated 21 April 1994.

198. ICAC Case No 442/1996, decision dated 26 February 1998.

199. ICAC: Case No 242/1996, decision dated 26 February 1998 (refer Rozenberg, International Sale of Goods, please see fn 1, at pp. 222, 251); Case No 445/1992, decision dated 8 June 1994.

200. The foreseeability rule is of particular importance because the debtor cannot be liable for this loss unless he knew or was in the position to known that the creditor was going to exchange the payment currency into its domestic currency.

201. For other international cases where such loss was held recoverable under the CISG see, for example, Handelsgericht Zurich, R.H.V.E., HG 950347, 5 February 1997 (Switzerland) where the German buyer who brought an action to recover the advance payment and damages, was awarded damages for losses suffered due to the change in the exchange rate between the US dollar (the currency of payment) and the DM, calculated as the difference between the exchange rate on the date of the advance payment and the date on which restitution of payment will be made (available at: <http://cisgw3.law.pace.edu/cases/970205s1.html>).

202. See ICAC Case No 304/1993, please see fn 88, at pp. 67, 73.

203. See ICAC Case No 054/1999, please see fn 29.

204. See Schlechtriem, P., 'Case Comment: Attorney's Fees as Part of Recoverable Damages', 14 Pace International Law Review, 2002; Flechtner, H.M., 'Recovering Attorney's Fees as Damages under the U.N. Sales Convention: A Case Study on the New International Commercial Practice and the Role of Foreign Case Law in CISG Jurisprudence, with a Postscript on Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co.' 22 Northwestern Journal of International Law, 2002; Rogers, V., 'Attorney's Fees: Is the "American Rule" Applicable to International Sales Law Cases?' NY State Bar Association New York International Chapter News, Vol. 7 No.1, Spring 2002; Lookofsky, J., 'Zapata Hermanos v. Hearthside Baking', (2002) 6 Vindobona Journal of International Commercial Law and Arbitration, 27; Felemegas, J., 'The Award of Counsel's Fees under Article 74 CISG, in Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co. (2001)', (2002) 6 Vindobona Journal of International Commercial Law and Arbitration 30.

205. See, for example, the following ICAC cases: No 2/1995, please see fn 104, at p. 254; No 302/1996, please see fn 68, at p. 93; No 406/1998, please see fn 24, at p. 99; No 238/1998, please see fn 29, at p. 81; No 160/1997, please see fn 141,at p. 78.

206. See case referred to in Kornarov, please see fn 190, at p. 201.

207. See ICAC Case No 054/1999, please see fn 29.

208. See ICAC Case No 160/1997, please see fn 141, at p. 78.

209. Please see fn 113, at p. 46. A translation of this decision appears at (2003) 7 Vindobona Journal of International Commercial Law and Arbitration 161.

210. Please see fn 24.

211. See other ICAC cases where foreseeability of damages was discussed: No 054/1999, please see fn 29; No 302/1996, please see fn 88, at p. 93.

212. See ICAC Case No 406/1998, please see fn 24, at p. 98.

213. See ICAC Case No 054/1999, please see fn 29.

214. Decision dated 18 October 1999 (refer Rozenberg, International Sale of Goods, please see fn 1, at p. 107).

215. Ibid, at p. 253.

216. See, for example, ICAC Case No 385/1998, please see fn 214.

217. See ICAC Case No 302/1996, please see fn 88.

218. See also ICAC Case No 71/1999 decision dated 2 February 2000 where Article 77 was applied (available at: <http://cisgw3.law.pace.edti/eases/000202r1.html>).

219. See ICAC Case No 227/1996, decision dated 22 March 1999 (referred to in Rozenberg, International Sale of Goods, please see fn 1, at p. 267).

220. See ICAC Case No 302/1996, please see fn 88, at p. 93.

221. See Par. 34(4) of the Regulations of the International Commercial Court of Arbitration at the Russian Federation of Chamber of Commerce and Industry.

222. See ICAC cases No 196/1997, please see fn 158; No 054/1999, please see fn 29.

223. See ICAC Case No 516/1996, decision dated 2 August 1999 (referred to in Rozenberg, International Sale of Goods, please see fn 1, at p. 270).

224. See ICAC Case No 116/1996, decision dated 20 January 1997 (referred to in Ibid). For other cases where Article 75 was referred to see Rozenberg, International Sale of Goods, please see fn 1, at pp. 270-271.

225. See ICAC Case No 133/1994 (referred to in Ibid, at p. 271).

226. Please see fn 141, at p. 78.

227. It has been said that interest can serve as compensation for the loss of use of money (see Zoccolillo, Jr., A.F., 'Determination of the Interest Rate under the 1980 United Nations Convention on Contracts for the International Sale of Goods: General Principles vs. National Law', (1997) 1 Vindobona Journal of International Commercial Law and Arbitration 3), as a preventive mechanism against undue enrichment of a debtor, or against a debtor's use of money to which the creditor is entitled (see Christian Thiele 'Interest on Damages and Rate of Interest under Article 78 of the United Nations Convention for the International Sale of Goods', (1998) 2 Vindobona Journal of International Commercial Law and Arbitration 3), as a form of compensation for inflationary losses (see Rosenn, please see fn 196, at p.231).

228. See, for example, ICAC Case No 243/1996, please see fn 13, at p.57.

229. See Article 395 of the Russian Civil Code.

230. See, for example, ICAC Case No 38/1996, please see fn 189, at p. 191).

231. See the following ICAC cases: No 243/1996, please see fn 13, at pp. 57-58; No 430/1995, please see fn 13, at p. 185; No 439/1995, decision dated 29 May 1997 (refer Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p. 206); No 102/1997, please see fn 13, at p. 34; No 487/1996, please see fn 170, at p. 81; No 340/1999, please see fn 160; No 228/1995, please see to 157, at p. 28; No 196/1997, please see fn 158, at p. 199.

232. See ICAC Case No 83/1997, decision dated 10 June 1998, (refer Rozenberg, Arbitration Practice 1998, please see fn 41, at p. 130).

233. See ICAC cases No 448/1995 (Rozenberg, please see fn 3, at p. 91); No 328/1994, please see fn 58, at p. 109.

234. See ICAC No 491/1996, decision dated 25 March 1998 (refer Rozenberg, Arbitration Practice 1998, please see fn 41, at p. 91).

235. Refer Rozenberg, Contract of International Sales, please see fn 29, at p. 95.

236. See ICAC Case No 304/1993, please see fn 88.

237. See ICAC cases No 243/1996, please see fn 13, at pp. 57-58; No 196/1997, please see fn 164, at p. 199.

238. See ICAC cases No 38/1996, please see fn 189, at p. 191; No 256/1996, please see fn 134, at p. 208; No 430/1995, please see fn 13, at p. 185.

239. See ICAC Case No 250/1998, decision dated 15 November 1999 (referred to in Rozenberg, International Sale of Goods, please see fn 1, at p. 263).

240. See ICAC Case No 169/1996, decision dated 3 September 1998 (referred to in ibid).

241. Please see fn 158, at p. 215.

242. Please see fn 141, at p. 78.

243. One of the buyer's claims in this case was return of the advance payment. The Tribunal, in this regard, held that impediments beyond control of the party in breach cannot apply to the obligation to return the advance payment under Article 81 (see ibid, at p. 77).

244. Please see fn 61.

245. See ICAC Case No 152/1996, decision dated 12 January 1998 (referred to Rozenberg, International Sale of Goods, please see fn 1, at p. 264).

246. See ICAC Case 65/1995, decision dated 22 January 1996 (referred to in ibid, at p. 265).

247. See ICAC Case 64/1995, decision dated 28 March 1996 (referred to in ibid).

248. See ICAC Case 149/1994, decision dated 2 March 1995 (referred to in ibid).

249. For the cases where these situations took place and for more examples see Rozenberg, International Sale of Goods, please see fn 1, at pp. 264-265.

250. See ICAC case 328/1994, please see fn 157. See also ICAC Case No 406/1998, please see fn 24, at p.93.

251. See ICAC Case No 123/1992, decision dated 17 October 1995 (abstract of the case is available at: <http://cisgw3.law.pace.edu/cases/951017r1.html>); see also Rozenberg, International Sale of Goods, please see fn 1, at p. 265.

252. Please see fn 27, at p.86; this aspect of the case is also discussed in Rozenberg, International Sale of Goods, please see fn 1, at pp. 215-216.

253. Refer Schlechtriem, please see note 129, at p. 105; Enderlein, F., Maskow, D., 'International Sales Law: United Nations Convention on Contracts for the International Sale of Goods -- Convention on the Limitation Period in the International Sale of Goods', p. 335; Bernstein, Lookofsky, please see fn 28, at p. 111.

254. Presumably, payment was to be made against the documents.

255. See also ICAC Case No 102/1997, please see fn 13, at p. 33 where Article 80 was referred to; see also ICAC Case No 407/1996, please see fn 29, at pp. 158-159 where the respondent argued that nonperformance of its obligations had been caused by the claimant.

256.See ICAC cases No 2/1995, please see fn 104, at p. 252; No 238/1998, please see fn 29, at p. 80; No 280/1999, please see fn 12, at p. 103.

257. See ICAC cases No 2/1995, please see fn 104, p. 253; No 263/1997, please see fn 142, p. 126; No 160/1997, please see fn 141, p. 77; No 196/1997, please see fn 158; No 269/1998, please see fn 140; No 251/1993, decision dated 23 November 1994 (abstract of the case is available at: <http://cisgw3.law.pace.edu/cases/941123r1.html>).

258. See ICAC cases No 72/1995, decision dated 25 April 1996, (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at p.72); No 439/1995, please see fn 158, at p. 206; No 1/1993, decision dated 15 April 1994 (abstract of the case is available at: <http://cisgw3.law.pace.edu/cases/940415r1.html>).

259. See ICAC Case No 328/1994, please see fn 157, at pp. 106-107. A translation of this decision appears at (2003) 7 Vindobona Journal of International Commercial Law and Arbitration 171.

260. See ICAC Case No 142/1994, decision dated 25 September 1995 (abstract is available at: <http://cisgw3.law.pace.edii/cases/950425r2.html>) where the court stated that 'the seller was entitled to take such steps as were reasonable in the circumstances to preserve the goods'. Article 87 was also referred to in this case.

261. Please see fn 138.

262. Please see fn 161.

263. See, for example, Ziegel, J.S., 'The UNIDROIT Contract Principles, CISG and National Law', Presentation at a Seminar on the UNIDROIT Principles at Valencia, Venezuela (6-9 November, 1996) (available at: <www.cisg.law.pace.edu/cisg/biblio/ziegel2.html>); Bonell, M.J., 'The UNIDROIT Principles of International Commercial Contract and CISG -- Alternatives or Complementary Instruments T26 Uniform Law Review (1996); Garro, A.M., 'The Gap-Filling Role of the UNIDROIT Principles in International Sales Law: Some Comments on the Interplay between the Principles and the CISG', Tulane Law Review, April 1995.

264. Decision dated 5 June 1997 (Rozenberg, Arbitration Practice 1996-97, please see fn 58, at pp. 209211). A translation of this decision appears at (2003) 7 Vindobona Journal of International Commercial Law and Arbitration 181.

265. The UNIDROIT Principles, in the words of the Tribunal, reflected 'international legal practice'.

266. See ICAC Case No 302/1996, please see fn 68. In spite of the reference to the Principles' gradually becoming an international trade usage, the Principles were applied not by virtue of Article 9 CISG but as part of lex mercatoria.

267. See Comment 4(b) to the Preamble of the UNIDROIT Principles.

268. See, for example, Bonell, M.J., 'An International Restatement of Contract Law: The UNIDROIT Principles of International Commercial Contracts', 2nd ed, 1997, at pp. 235-253.

269. The UNIDROIT Principles must meet the following requirements: (1) the parties are required to have known or having been in the position to know of the Principles; (2) the Principles must be widely known to parties in international trade; (3) the Principles must be regularly observed by, parties to contracts of the type involved in the particular trade concerned. It cannot be said that all these requirements will be met in every case (this statement is especially relevant in the context of the third requirement).

270. See ICAC Case No 302/1996, please see fn 68, at pp. 90, 92.

271. It has already been argued that such references were irrelevant in this case (see subsection on 'Mitigation').

272. Please see fn 85.

273. For the criticism of this decision, please see section entitled. 'Article 8' in Section 3.6 above, at p. 16.

274. For an analogous view, see Joseph M. Perillo 'Editorial remarks on the manner in which the I NIDROIT Principles may be used to interpret or supplement CISG Article 8' (available at: <http://www.cisg.law.pace.edu/cisg/principles/uni8.html>).

275. For the ICAC cases where the UNIDROIT Principles were the governing law or where they were applied in cases not governed by the CISG see: cases No 116/1996, decision dated 20 January 1997 (referred to in Rozenberg, International Sale of Goods, please see fn 1, at pp. 193-194); No 255/1996, please see fn 42.


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