Un différend est survenu au sujet de la tentative par la défenderesse, une société des Etats-Unis, d'annuler des commandes d'articles d'habillement. La demanderesse, une société taïwanaise, a refusé d'accepter cette annulation mais a convenu de réduire le prix. Lors de la livraison des vêtements, la défenderesse a refusé d'accepter ceux-ci au motif qu'ils n'étaient pas conformes aux spécifications de taille. Dans sa demande d'arbitrage, la demanderesse se prévaut d'une violation contractuelle de la part de la défenderesse qui a refusé d'accepter la livraison des vêtements et d'une fraude au motif que la défenderesse a faussement déclaré à la demanderesse qu'elle achèterait les vêtements pour un prix réduit et que les inspecteurs de la défenderesse ont délibérément enregistré des fausses mesures sur les rapports d'inspection. La demanderesse a sollicité des dommages-intérêts punitifs pour la fraude alléguée. A la demande des parties, l'arbitre a rendu deux sentences intérimaires relatives aux questions préliminaires avant d'examiner l'affaire au fond.

• Loi applicable

• Prescription

• Indépendance des demandes délictuelle et contractuelle

• Fraude

• Dommages-intérêts

<i>Première sentence intérimaire</i>

'Statute of limitations

The parties expressed different views as to which statutes of limitations were applicable to the claims for breach of contract and fraudulent representation with respect to Purchase Order No. 144303.

The Defendant argued that the breach of contract and the fraud occurred in the State of Oregon and that in consequence the two years Oregon statute of limitations for fraud was applicable and barred the Claimant's claim for fraud since the arbitration was commenced on October 14, 1988, more than two years after the alleged fraud occurred on April 21, 1986 which is the date when the contract was formed. The Defendant also claimed that article 127 of the Civil Code of the Republic of China which provides that claims of merchants and manufacturers for purchase price are extinguished if not exercised within two years was applicable. The Claimant rejected these arguments.

The arbitrator having considered these views very carefully decides that the applicable law is the law of New York since the arbitration clause specifies that the law of New York is applicable to the construction, interpretation and performance of the contract. It is a well known and universal principle of conflict of laws that a provision of a statute of limitations which extinguishes the obligation is a matter of substance governed by the proper law of the contract to which it relates and a provision which bars the remedy is governed by the lex fori.

Since the proper law of the contract is that of New York as expressly chosen by the parties and the procedural law is the same, it is not necessary to consider which provisions of New York law are procedural and which are substantive. Both are applicable. By bringing an action in the United States District Court for the District of Oregon on May 1st, 1987, the Claimant interrupted the running of the New York statute of limitations which began at the earliest on April 21st, 1986 with respect to fraud (when the parties reached an agreement on the reduction of price) and at the earliest on July 19th, 1986 for breach of contract (when delivery under Purchase Order No. 144303 was due). The N.Y. Civil Practice Law and Rules provide that an action upon a contractual obligation or liability (except as provided in article 2-275(1) of the Uniform Commercial Code: breach of contract for sale 4 years) (s. 213.2) or based on fraud (s. 213.8) must be commenced within six years.

Therefore whether one applies sections 213.2, 213.8 or article 2-275(1) of the Uniform Commercial Code, the Claimant's claims for breach of contract and for fraud are not barred or extinguished by the applicable statutes of limitations.'

<i>Seconde sentence intérimaire</i>

'1. Fraud claim

The Defendant has asked the arbitrator to dismiss the Claimant's claim for fraud on the ground that under the substantive law of New York which is applicable to the merits of this case, an alleged breach of contract does not give rise to a tort absent a violation of a legal duty independent of the contract obligation. The Defendant also maintains that although New York law recognizes a cause of action for fraud or deceit in inducing a contract, it may not be sustained where the Claimant's allegation is that the defendant did not intend to perform the contract when he entered into it.

The arbitrator, after having examined the authorities cited by the Defendant and the arguments made by the Claimant in its reply, has come to the conclusion that the Claimant's claim based on fraud should not be dismissed.

The Claimant has stated a claim for fraud under New York law against the Defendant because the factual allegations made in the Request for Arbitration allege that the Defendant engaged in a planned scheme to defraud the Claimant. The allegations that the Defendant had a duty to carry out its obligations under the contract and breached that duty by fraudulently rejecting the goods and thereby depriving the Claimant of property are allegations of wrongdoing sufficient to support a tort claim separate from that of breach of contract. The allegations assert a violation of a duty that is not identical and indivisible from the contract obligations already asserted in the breach of contract claim: Rich v. New York Cent. and Hudson Riv R.R. Co. (1882), 87 N.Y. 382. Furthermore, the allegations made by the Claimant that the Defendant assured the Claimant that it would purchase the [garments] at the reduced price and that this representation was made with the intent not to go through with the purchase together with the allegation of forged inspection reports and rejection of the [garments] also state an actionable cause of action for fraud in inducing the contract. Thus in Potter's Photographic Applications Co. v. The Ealing Corporation, (1968), 292 F. Supp. 92, the United States District Court for the Eastern District of New York held that the defendant's misrepresentation that it had the intention to carry out the bargain it made with the plaintiff was a material fact capable of ascertainment and as such actionable: at p. 106. See also Restatement of Torts, ss. 530.

Briefstein v. Rotondo Construction Co. (1954), 8 A.D. 2d 349 which is cited by the Defendant in support of its contention that a cause of action for fraud is not stated where the plaintiff alleges that the defendant did not intend to perform a contract when he made it does not represent the law of New York as stated by the Court of Appeal of New York in Sabo v. Delman (1957), 3 N.Y. 2d 155, 143 N.E. 2d 906. In Perma Research and Development Company v. Singer Company (1969), 410 F. 2d 572, at pp. 575-576, the United States Court of Appeal for the Second Circuit, specifically criticized Briefstein and its reasoning in distinguishing Sabo. See also Deerfield Communications Corp. v. Chesebrough-Ponds Inc. (1986), 68 N.Y. 2d 954 (New York Court of Appeal).

2. Punitive damages

a) Fraud claim

The arbitrator is of the opinion that under New York law the weight of authority is in favor of the possibility of awarding punitive damages for fraud in the inducement to enter into a contract where the defendant's conduct is gross, wanton and willful or where the wrong complained of is morally culpable or is actuated by evil and reprehensive motives even if it is not aimed at the public generally: Walker v. Sheldon (1961), 10 N.Y. 2d 401. Therefore, the Claimant is entitled to pursue its claim for punitive damages for fraud.

b) Breach of contract claim

Although the Claimant has not specifically claimed punitive damages for breach of contract, it has stated that it will seek leave to amend the Terms of Reference to include a request for such punitive damages. Also, since in Paragraph I at p. 18 of the Claimant's Request for Arbitration, as to both claims for relief (breach of contract and fraud) the Claimant requests such other relief as the court may deem proper, the question of punitive damages could arise in connection with the breach of contract. For these reasons the arbitrator will deal with this question.

The Arbitrator agrees with the Defendant that under the law of New York which is applicable, punitive damages are not recoverable in an action for breach of contract for in such a case only a private wrong, and not a public right is involved. Halpin v. Prudential Ins. Co. of America, 48 N.Y. 2d 906 (1979), Holoness Realty Corp. v. New York Property Insurance Underwriting Assn., 75 A.D. 2d 269 (1st Dep't 1980), Supreme Automotive Manufacturing Corp. v. Continental Casualty Co., 126 A.D. 2d 153 (1st Dep't 1987) and Charles Adams Importers, Ltd. v. Dana, 121 A.D. 2d 279 (1st Dep't 1986) are conclusive on this question.

The Claimant did not allege that the Defendant engaged in a fraudulent and deceitful conduct directed at the general public, consequently, the Claimant is not entitled to seek punitive damages for breach of contract.'

<i>Sentence finale</i>

'Fraud claim

The Claimant has argued that the Defendant committed fraud by negotiating and entering into an agreement with the Claimant to purchase the [garments] at a reduced price while, all the time, the Defendant had no intention to proceed with the purchase but instead intended to reject the goods at the time of delivery.

The arbitral tribunal is of the opinion that the fact that the Defendant had overbought [garments] and attempted to cancel order no. 144303, that it may not have had orders for such [garments], that the Claimant had never experienced the rejection of any of its goods by the Defendant due to size defects, that the Defendant's inspectors used [unacknowledged] specifications to measure the [garments], that erroneous measurements may have been recorded on the inspection reports and that the Defendant lost the eight size samples which had been sent to it by the Claimant for specification verification constitute circumstantial evidence not sufficient to raise a legitimate inference of fraud having actually taken place especially in the light of the sworn testimony of three of the Defendant's sourcing employees . . . and of . . . to the effect that the [garments] were rejected because they were badly undersized. (Gerstle v. Gamble-Skogmo, Inc. (E.D.N.Y. 1969), 298 F. Supp. 66.) Furthermore, there is a lack of absolutely convincing evidence that . . . the Defendant's inspectors . . . deliberately recorded false numbers on the inspection reports pursuant to an alleged pre-existing scheme to reject the [garments] . . .

Since the Claimant has not demonstrated fraud by clear and convincing evidence, its claim of fraud is dismissed. (See also Simcuski v. Saeli, 44 N.Y. 2d 442, 452, 377 N.E. 2d 713, 718, 406 N.Y.S. 2d 259, 265 (1978).)'