Russia 16 December 2009 Supreme Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation
[Cite as: http://cisgw3.law.pace.edu/cases/091216r1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: VAS- 13520/09
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Czech
BUYER'S COUNTRY: Russia
GOODS INVOLVED: Technical Equipment
RUSSIAN FEDERATION: Judicial Division of the Supreme Arbitration Court of the Russian Federation (VAS)
Case No. VAS-13520/09 of 16 December 2009
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/113],
CLOUT abstract no. 1109
Reproduced with permission of UNCITRAL
A Russian buyer sued a Czech seller, claiming restitution of the price paid for technical equipment of inferior quality, which had been supplied under a contract between the two parties. The total price of the contract included both the cost of the equipment and the cost of packaging, marking, installation and training of staff. The plaintiff paid 90 per cent of the cost of the equipment. Hidden defects became apparent at the commissioning stage. The seller took steps to remedy the defects, but the buyer would not sign the commissioning certificate for the equipment. The buyer then withdrew from the part of the contract relating to the parts of the equipment in which the defects had been detected, and asked for the sum paid in respect of those parts to be returned and for the parts to be removed. When the seller failed to comply, the buyer sued the seller for restitution of the price of all the supplied equipment.
The court rejected the claim for compensation. The higher courts considered the case and upheld the decision of the court of first instance.
The plaintiff, alleging incorrect application of CISG, submitted a complaint to the Supreme Arbitration Court of the Russian Federation, which likewise upheld the decisions of the lower courts, on the following grounds.
The contract concluded between the parties was a mixed one, combining elements of a contract to supply goods, a contract to supply labour and a contract to supply services for payment. The question therefore arises whether CISG is applicable. In the light of article 3 CISG, it appears that, in this case, the seller's principal obligation was to supply equipment, since it was not possible to distinguish the parts associated with the supply of labour and training of the buyer's staff from the main contract (the buyer made a single payment covering everything). CISG is therefore applicable.
In respect of the performance of assembly, commissioning and staff training work, the contract was deemed to be not concluded, since it did not enable the start and finish dates for the work to be specified: these terms are essential for the conclusion of contracts of this type under the Civil Code of the Russian Federation.
Pursuant to article 81 CISG, avoidance of the contract, which the buyer is obliged to notify to the seller (article 26 CISG), entails the restitution of the price of the goods. The case file contains no evidence of any notice by the plaintiff informing the respondent of avoidance of the entire contract. The plaintiff had avoided the contract only in respect of certain parts of the equipment, and accordingly its claim for restitution of the price of all the equipment would be contrary to the provisions of CISG.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
3A [Goods to be manufactured]; 26A1 [Notice to the other party required]; 81C [Restitution by each party of benefits received]
3A [Goods to be manufactured];
26A1 [Notice to the other party required];
81C [Restitution by each party of benefits received]
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Russian): online database of court judgements <http://kad.arbitr.ru>
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents