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Belarus 5 October 1995 Belarusian Chamber of Commerce and Industry International Court of Arbitration Case No. 24/13-95 (ATT v. Armco) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/951005b5.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISION: 19951005 (5 October 1995) [date of award is unavailable: assigned date is date of hearing]

JURISDICTION: Arbitration ; Belarus

TRIBUNAL: Belarusian Chamber of Commerce and Industry International Court of Arbitration

JUDGE(S): N.G. Yurkevich, Chairman



CASE HISTORY: Unavailable

SELLER'S COUNTRY: Belarus (plaintiff)

BUYER'S COUNTRY: Bulgaria (defendant)

GOODS INVOLVED: Refrigerators and deep-freezers

Classification of issues present

APPLICATION OF CISG: Yes. Contract contained no provision on choice of law: CISG applied in accordance with Article 1(1)(a)


Key CISG provisions at issue: Articles 71 ; 80

Classification of issues using UNCITRAL classification code numbers:

71A1 [Anticipatory breach (suspension of performance): grounds for suspension by other party (apparent that party will not perform substantial part of obligations)];

80A2 [Failure of performance caused by other party: party causing non-performance (loss of rights, as a general principle]

Descriptors: Anticipatory breach ; Suspension of performance ; Failure of performance, other party

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Editorial remarks

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Citations to case abstracts, texts, and commentaries


(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1130&step=Abstract>


Original language (Russian): Practice of the Belarusian Chamber of Commerce and Trade International Court of Arbitration, 3 Industrial and Trade Law Magazine, 97 (2002)

Translation (English): Text presented below


English: Seliazniova, Prospective Non-Performance or Anticipatory Breach of Contract (Comparison of the Belarusian Approach to CISG Application and Foreign Experience), 24 Journal of Law and Commerce (Fall 2004) 111-140

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Case text (English translation)

Queen Mary Case Translation Programme

Belarusian Chamber of Commerce and Industry
International Court of Arbitration (ATT v. Armco)

Translation by Tatsiana Seliazniova [1]


In two hearings on 28 September 1995 and 5 October 1995 in Minsk after examination of Case 24/13-95 based on the lawsuit filed by the Plaintiff Belarusian joint-stock company "ATT" [hereafter, Seller] against the Bulgarian firm "Armco" [hereafter, Buyer] with the purpose to recover a debt for a total amount of US $306,759.52, the Belarusian Chamber of Commerce and Industry International Court of Arbitration has found the following:

The [Seller] asserts that the parties made the contract on 18 May 1992 and, according to the provisions of the contract, the [Seller] delivered to the [Buyer] 11,841 units of contractual goods (refrigerators and deep-freezers in different models). The [Buyer] paid for part of the delivered goods and ran into debt. The [Seller] claims to collect from the [Buyer] the amount of the basic debt - $258,618.60 plus interest of $48,176.92 on the amount of the debt in arrears. The total amount of the claim is $306,759.52. The [Seller] asks also to recover his arbitration expenses, $7,168.

The [Buyer] in his response motion, and in addition to it, alleges that this dispute is out of the jurisdiction of the Belarusian Chamber on Commerce and Trade. However, if the arbitration court does not agree with the [Buyer]'s opinion on jurisdiction, the [Buyer] contests the claim on both issues of amount and grounds. In the [Buyer]'s opinion, the claim is not supposed to be subject to recovery because the [Seller] acted in bad faith. First, he groundlessly and unilaterally terminated the delivery of the necessary quantity of refrigerators and deep-freezers provided for in the contact. Second, [Seller] delivered the goods with a number of mechanical and latent defects. Meanwhile, the groundless termination of the delivery of the goods and their defects caused damages to the [Buyer] in an amount that significantly exceeds the amount of the [Seller]'s claim. For the determination of the amount of real damages, the [Buyer] asked to hire an economic expert. [Buyer] also claimed that he reserved for himself the right to submit a counterclaim.

On 28 September, at a court hearing the representative of the [Seller]'s interests was a deputy director of the [Seller]'s firm, Mr. S.S. Anatolyev (a letter from the attorney was issued on 21 July 1995 and attached to the case file). Mr. Anatolyev supported all of the declared claims completely and produced supplementary proofs.

The [Buyer]'s interests were presented by the director and owner of the [Buyer]'s firm, Mr. K. Stoichkov and the specialized legal advice office of the Minsk City Bar attorney, Ms. O.S. Zabolotnaya (a letter from the attorney is attached to the case file). Ms. Zabalotnaya also retained their primary objections against the claim in support of which they referred to new facts and evidence.

Since the claims and objections of the parties were to be made concrete as applied to their separate constituents and because they needed time for the analysis of new materials presented at the hearing itself, the court (with the parties' consent) postponed the case examination and appointed a new hearing on 5 October 1995.

At the hearing on 5 October 1995, the interests of the parties were presented by the same counsel - S.S. Anatolyev (on the [Seller]'s side), K. Stoichkov and O.S. Zabolotnaya (on the [Buyer]'s side). The parties' claims and objections were without changes on the whole. However, in their affidavits and oral arguments the parties explained in detail and defined more exactly some of their arguments which were presented earlier. The [Buyer]'s representative waived a right to file a counterclaim. He did not insist on having an economic expert in the case.

As a result of the parties' explanations and on the basis of the presented evidence assessment, the Court states the following:

1. In connection with the [Buyer]'s statements that the instant case is beyond the jurisdiction of the Belarusian Chamber of Commerce and Industry International Court of Arbitration, this issue was considered by the Presidium of this Court on 22 September 1995. As a result of the study of the case materials and on the basis of the Regulations of the Belarusian Chamber of Commerce and Industry International Court of Arbitration (Article 26), the Presidium recognized that the consideration of case 24/13-95 at the suit of [Seller] JSC "ATT" vs. [Buyer] "Armco" is subject to the authority of the Belarusian Chamber of Commerce and Industry International Court of Arbitration (in other words, it is within its competence).

Sharing the Presidium's opinion in full, the Court states that the contract of delivery of the refrigerators and deep-freezers was signed by the parties on 18 May 1992 (i.e., after the collapse of the former USSR) when the common and widespread earlier indication in the arbitration clause of the Court of Arbitration at the USSR Chamber of Commerce and Trade became impossible. Therefore, it was reasonable to change the arbitration clause and mention in it the International Court of Arbitration of the Belarusian Chamber of Commerce and Trade (the establishment of which was only a matter of time in the independent Belarusian state).[2]

Such content in the arbitration clause as a part of the whole contract is in complete compliance with the principle of freedom of contract and with the current Belarusian law. Moreover, as it follows from the FAX testimony of Mr. V. Chernov, who signed the contract on behalf of the [Seller], Mr. K. Stoichkov's allegations against the false representation were groundless. No one attempted to mislead him; he did not express any objections against the proposed edits to the arbitration clause which his signature on the contract proves. There is no essential issue of fact concerning whether the [Seller] included the arguable clause later in the text of the additional agreement project. It had already happened after the International Court of Arbitration of the Belarusian Chamber of Commerce and Trade was established. Even more important, explaining his motivation not to sign the mentioned project, Mr. Stoichkov did not say anything concerning the arbitration clause (see his letter on 2 February 1995 about the project of agreement from 1 December 1994).

2. The contracting parties did not reach an agreement on choice of law. Therefore, the Court considering the rules of the Article 561-1 of the Civil Code of the Republic of Belarus [3] (hereafter - BCC) maintains that the rights and obligations of the parties in the international transaction are determined by the law of the place where the contract was made (lex loci contractus), unless otherwise agreed upon in the contract. Since the parties made the contract 745/100-2851 in Minsk (Belarus), this dispute has to be settled according to Belarusian Law.

On the basis of Article 564 of BCC directions, the applicable law on this issue will be the UN Convention on International Sales of Goods (Vienna, 1980), ratified by the Republic of Belarus on 9 October 1989 (hereafter, Vienna Convention).

3. The rights and obligations of the parties are determined by the above-mentioned contract 745/100-2851 of 18 May 1992. The Protocol of 9 November 1992 fixed the agreement between the parties to prolong the mentioned contract through the year 1993 until the moment of the joint enterprise creation planned by the parties. As far as Sophia City Court registered this enterprise (for the [Buyer]'s firm) on 7 May 1993, this date has to be the day when contract 745/100-2851 expires. However, relations connected with the performance under this contract lasted longer. In particular, the contractual term for the payment against the last delivery of the goods elapsed in December 1993.

In compliance with the contract, the [Seller] was obliged to deliver to the [Buyer] 31,000 units of different models of the goods, and the [Buyer] was obliged to pay for these goods in the form of a documented collection. The documents were to be paid for on sight, and no later than 60 days from the date of delivery. Both parties performed their obligations partially.

In the above-mentioned conditions, the [Seller] claims payment for the delivered goods, and the [Buyer], recognizing that he must pay for the delivered goods, asks to reject the claim because of the [Seller]'s violation of the essential conditions of the contract (essentialia negotti) and alleges that damages to the [Buyer]'s interests exceeded the amount of the claim many times.

4. The representative of the [Buyer] alleged that if his firm had received 19,859 units of the goods that were not delivered by the [Seller], he would have profited by $853,937. The [Buyer] believes that incomplete delivery was the most important reason which caused his firm's non-performance. Simultaneously, the inability to receive the profit led to the loss of interest on the profit (27% annually) which was to be used for the development of shops, offices and warehouses infrastructure. It led to an additional loss on the blocked account in the amount of $53,604. In the final analysis, the [Buyer] deems that the lost profit for his firm is about $907,541, and he sets this amount against the claim amount.

This Court cannot agree with the [Buyer]'s arguments. Since 1993, the [Buyer] has been obliged to pay the price for every part of the goods promised no later than 60 days from the date of delivery. This price does not depend, and cannot depend, on the profit of the [Buyer]. It seems impossible to pay the contract price from the profit received from the sale of delivered goods, because the estimated profit that was expected for one sold unit is 25% to 33% of the contractual price of the unit. In his business correspondence, the [Buyer] has never referred to the loss of profit as a reason for non-payment. Moreover, in his letter dated 2 February 1995, the [Buyer] explained the delay of the payment as due to the overstocking of the refrigerators (not as incomplete delivery). He writes to the [Seller]'s general director: "Imagine, how it might be possible to pay you in time, if for the period from January to July 1993, I had on average 3,500 units of goods monthly in my warehouses, and sales of products were approximately 350 units per month."

The Court does not accept the [Buyer]'s reference to the oral agreement about cooperation on the consignment basis. By virtue of contract clause 11, such an agreement cannot be made orally.

5. The Court deems that the termination of the delivery from the [Seller]'s side was a response measure (counter-measure), and the [Seller] was forced to undertake the above-mentioned actions because of systematic non-payment for the delivered goods. In his letter of 29 July 1993 addressed to Mr. Stoichkov, [Seller]'s general director stated that the [Buyer]'s arrears on payment against the collections were $884,975.42 (in comparison with the contractual price per one unit of goods from $125 to $165). In the same letter, [Seller]'s director notified Mr. K. Stoichkov that there would be a suspension of delivery until the complete offset of debt under Contract 745/100-2851.

Up until 12 October 1993 (when the parties made their first agreement on the terms for the offset of debt), the amount of the debt had changed insignificantly and amounted to $844,335.29. In accordance with this agreement, the [Buyer] chose to pay off $784,599.94 in equal monthly payments until February 1994. Because the mentioned agreement was performed only partially, the parties have since made new agreements, which, in their turn, were not performed either partially or in full. A letter dated 2 February 1995 is the last evidence on this issue submitted to the case materials. In this letter, Mr. Stoichkov once again informed the [Seller]'s director that "he always recognized his debt for payment for all the delivered production" and promised to pay $273,184.72 in monthly payments within the February-March period. These payments, however, were not made. Until the contract was terminated the [Buyer] built up a huge debt, and in the two following years (until May 1995 when the lawsuit was filed), he had not offset the debt completely.

Consequently, the [Seller] has a right to suspend delivery until the debt is paid off completely. However, the [Seller] refers to the wrong law (article 261 BCC in edition of 1994), as the debt and suspension of the performance took place in 1993. Therefore, the applicable law will be Article 564 of BCC which stipulates, "if the international agreement of the Republic of Belarus determines other rules than those which are contained in the civil legislation of the republic, the rules of the international agreement have to be applied." In this case, these are the rules of the Vienna Convention that has been in force in Belarus since 1 November 1990.

In compliance with Article 80 of Vienna Convention "a party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission". In other words, the [Buyer] cannot refer to the incomplete delivery of the goods by the [Seller], if this non-delivery was caused by the [Buyer]'s refusal to pay for a significant part of the goods which have already been delivered.

Article 80 of the CISG closely interconnects with article 71 of the same Convention that gives the right to a contracting party in an international sale contract to "suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of: (a) a serious deficiency in his ability of perform or in his creditworthiness; or (b) his conduct in preparing to perform or in performing the contract."

In this case, there is the presence of both conditions mentioned in Article 71: the amount of the basic debt of the [Buyer] and his behavior concerning paying off the debt. The requirements of Article 71 were executed by the [Seller]. He informed the [Buyer] by letter on 29 July 1993 about the suspension of the performance "until the complete paying off the debt." On the other hand, this Article requires the continuation of contract performance even after the notification if the other party provides adequate assurance of his performance. However, no evidence was provided by the [Buyer], the arrears are still not liquidated at the present time.

6. The [Buyer] in his arguments mentioned the damages ($205,175) caused by the low quality of the delivered goods. However, this amount cannot contradict the [Seller]'s claims. In compliance with contract provisions, a claim of lack of conformity of the goods has to be filed by registered letter within twelve months from the date of delivery. This letter must be accompanied with the necessary documents including the certification issued by a neutral competent organization. No claims on the quality were filed by the [Buyer] either within twelve-month term, or later.

The [Buyer] alleges that the parties modified the meaning of contract clause 8, and that modification allows managing without the act of the neutral competent organization. However, according to clause 11.3 of the contract, "all amendments and modifications to the contract will be valid only if they are made in written form and signed by both parties." Hence, as such a document was not produced by the parties; the Court cannot accept the reference to the contract modification.

Under the present conditions, the Court in its judgment on the issue of the [Seller]'s responsibility for the production quality can rely only on the contract and the documents signed by both parties. The [Seller] testifies to the absence of the proper registration of the expenses incurred by the [Buyer] in connection with defects of the delivered goods. For instance, it is evident from the checking list on service expenses in 1993-1994 (drawn up in Sophia, dated on 25-28 April 1994, and signed by Mr. Stoichkov and Mr. Namonov, representative of [Seller]) that in Sophia 122 customer service calls were registered, but in the column "Execution of order and the work done" only nine cases are marked. As a result of checking and analyzing of facts, the parties concluded: "The data on registration and account of the customer service operations does not allow us to determine definitely the real volume of work that was done and to calculate the real expenses."

At the same time, the [Seller] does not reject that among the delivered goods there could be defective units. Appendix 1 to the contract stipulates a warranty discount at the amount of 2% of the price of the delivered defective goods. The amount of the mentioned discount for the goods delivered in 1993 is $20,151.62. The latter is recognized by the [Seller].

7. The Court finds that the claim of the [Buyer] to deduct from the [Seller]'s claim the amount of $10,142.50 has legal grounds because of the discount on 114 defective units of the goods. Reduction of the debt to the extent of the mentioned amount is proved by the agreement of 23 February 1994. The [Seller]'s allegation that the [Buyer] has been already released of this amount on 31 May 1994 was found groundless by the Court because of absence of due evidence.

8. Among the objections against the claim, the [Buyer] indicated also errors in the documents for customs: wrong address, price and delivery conditions. All these actions caused damage to the [Buyer] in the amount of $13,871. The last allegation of the [Buyer] is considered by the court to be proven by the invoices as well as recognized by the representative of the [Seller] in the court hearing.

Thus, the [Buyer] justified an offset of the following sums due to him by the [Seller]: $10,142.50 (the amount of the discount on the defective goods) and $13,871 (expenses caused by the wrong custom documents registration), totaling $24,013.50.

In this connection, the callable amount that must be paid by the [Buyer] for the delivered goods is $234, 605.10 ($258,618.60 minus $24,013.50). In view of the basic debt amount reduction, it is necessary to reduce the interest on the delay of payment to the extent of $43,688.10. Respectively, the expenses incurrent by the [Seller] on the arbitration expenses have to be reduced.

On the basis mentioned above and governed by articles 256-258, 564 BCC, Articles 71 and 80 of the CISG and Articles 3, 5, 26, 49-50, 70 of the Belarusian Chamber of Commerce and Trade International Court of Arbitration Regulations the Court


The claim has to be recovered partially. The amount of $278,293.20 of the basic debt and interest as well as the amount of $6,883 in return for the arbitration duty has to be recovered from the [Buyer] in the favor of the [Seller]. The rest of the claim has to be denied.

The signatures of the arbiters.

We confirm that the present Resolution is issued by the Court, organized in compliance with the requirements of the Belarusian Chamber of Commerce and Trade International Court of Arbitration Regulations. The signatures of the arbiters are authentic. The Court Resolution is final and comes into force from the moment of its pronouncement.

Chairman of the Court of Arbitration, Professor N.G. Yurkevich

Secretary of the Court of Arbitration, S.I. Rak


1. Translated from Russian: extracts from: Practice of the Belarusian Chamber of Commerce and Trade International Court of Arbitration, 3 Industrial and Trade Law Magazine, 97 (2002).

All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff Belarusian joint-stock company "ATT" is referred to as [Seller] and Defendant Bulgarian firm "Armco" is referred to as [Buyer]. Dollar amounts indicated are in all instances U.S. dollars.

Tatsiana Seliazniova is a Master in Law, LL.M. University of Pittsburgh School of Law and a Ph.D. in Law Candidate, Belarusian State University, Minsk.

2. The Belarusian Chamber of Commerce and Industry International Court of Arbitration was established on 12 April 1994 in Minsk (the capital of the Republic of Belarus) and acts under the provisions of Law on International Court of Arbitration (9 July 1999) and its own Regulations (N.B. - all the references for this case are made by the translator).

3. At the time when the instant resolution was judged in Belarus there was BCC of 1964 (with amendments of 1994 year) in legal force. Since 1999, a new BCC (adopted in 1998) has entered in force, but it still uses the same rule to determine the choice of law in contractual relations.

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