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Nicola Girotti

on 14 April 2015

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Case identification
Classification of issues
Contract clauses
Contract breaches
Ruling by the ICC
Contract breaches
Classification of issues: key articles.
Ruling by the ICC
(Processed food product case)
Claimant was entitled to announce a suspension of the deliveries due to the occurrence of a case of force majeure.
Defendant was not entitled to withhold the payment of the price of the goods rebutting the case of force majeure nor on the grounds of alleged quality problems.
Claimant is entitled to receive payment of the purchase price for 90 tons ... of the product, less half of the re-packing costs claimed by defendant.
Defendant is not entitled to claim that the alleged losses incurred as a result of these alleged quality problems should be set off against claimant's claim for payment of the purchase price for 90 tons.
79A [Impediment excusing party from damages]
78B [Rate of interest];
71A1 [Suspension of performance: grounds for suspension];
67A [Risk when contract involves carriage of goods: risk passes on handing goods over to first carrier];
53A [Obligation of buyer to pay price of goods.];
Classification of issues using UNCITRAL classification code numbers:
OBLIGATIONS OF THE BUYER, Article 53:  The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention
Article 67(1): If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. If the seller is bound to hand the goods over to a carrier at a particular place, the risk does not passto the buyer until the goods are handed over to the carrier at that place. The fact  that the seller  is  authorized  to retain  documents  controlling  the disposition of the goods  does  not affect the passage of the risk
Article 71 (1): 
A party may 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 to perform or in is credit-worthiness
Section III. Article 78:
If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under article 74.
Section IV. Exemptions, Article 79 (a):
(1)  A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it, or its consequences.
ICC Arbitration Case No. 8790 of 2000
Five main breaches to the contract
Payment withhold
Reference to arbitration
No certificate for alleged quality problems
No contradictory inspection at reception
United Nations Conventions for the International Sale of Goods
Case overview
ICC Arbitration Case 8790 of 2000
Claimant: seller (Central Europe)
Defendant: buyer (Western Europe)
Subject matter
- inconsistent versions of contract
- exclusion of common courts
- 1980 UN Sales Convention (CISG)
- Incoterms
- force majeure
- breach of contract
Place of arbitration: Paris, France
Contract for sale of processed food product
Two versions of the contract
Russian version Bilingual version
Contained arbitration clause No arbitration clause
Just a summarized version
No evidence of forgery,
ICC considers it valid
No date on it
Obligations arising from such contract
Seller/Claimant Buyer/Defendant
1) Deliver 1.000 tons at
fixed price
2) Present to defendant after
loading the goods a certificate of
radioactivity, a health certificate,
a certificate of quality, a certificate
of origin of the product.
1) Pay the price
3) At the time of the reception of the deliveries at its own place of business, do a contradictory inspection of the goods.
2) Pre-shipment inspection
(clause B9 of FCA Incoterms)
Origin of the dispute
Suspension of deliveries by seller due to drought caused buyer to suspend payment alleging contract breach by seller. Moreover, buyer claims delivered products do not respect agreed quality requirements.
Need to adopt uniform standards (lei uniforme)
UNCITRAL drafted and adopted CISG in 1980
Fundamental principles:
Autonomy of the parties (Art. 6; Art. 12)
Freedom of contract (Art. 8; Art. 9)
Preamble, two main aspects:
Part I: Application and general provisions
Part II: Formation of the contract
Part III: Sale of goods
Part IV: Final provisions
Explanatory note by UNCITRAL
Development of international trade
Connection of friendly relations among States
The end!
Thank you for your attention!
Nicola Girotti
Andrea Ranieri
Alessandro Testa
Considering the technicalities involved in the case, arbitration proceedings and application of CISG made resolution much faster and cheaper.
Contract between companies from different states, language problems
Drought as force majeure, damaged goods
Uncertainty of parties as to the use of common courts or arbitration for dispute resolution
Full transcript