1988 ICC Rules of Arbitration

CISG Arts. 1, 6

Claimant undertook to construct and supply Defendant with two engines. Payments were to be made in instalments. After paying the first instalment for the first engine more or less on schedule, Defendant fell seriously behind on the second instalment. Although entitled to postpone delivery, Claimant nevertheless completed the engine on the contractual date. An agreement was struck whereby Defendant would pay outstanding sums in instalments, in return for which Claimant would deliver the engine less crankshaft, which would be supplied once all payments had been made. Claimant dispatched the engine without crankshaft, but Defendant failed to pay as agreed, causing Claimant to file its Request for Arbitration. The Arbitral Tribunal addressed the question of the applicability of the Vienna Convention.

'Applicable law

1. Art. 8.03 of the Contract provides that "this contract shall be subject to the Swiss law".

2. The question arises whether the Vienna Sales Convention (United Nations Convention on Contracts for the International Sale of Goods of April 11, 1980) will apply and be part of the law designated by the parties or if the parties, by electing Swiss law, intended the Arbitral Tribunal to apply the Swiss Code of Obligation.

Art. 1(1)(b) of the Vienna Sales Convention does not apply in cases of a contractual election of the law of a contracting state (K. Neumeier, C. Ming, Convention de Vienne sur les contrats de vente internationale de marchandises, CEDIDAC 1993, ad. Art. 6, no. 5 page 87). This issue must be resolved by interpreting the intentions of the parties (Art. 8 of the Vienna Sales Convention).

3. By choosing Swiss law as a "neutral" law to apply to the Contract and with an Arbitration Clause choosing Zurich as the place of the Arbitration, it may be concluded that the Parties intended the Arbitrators to apply the Swiss Code of Obligation and not the Vienna Convention (using the same argumentation: K. Neumeier, C. Ming, op. cit., ad. Art. 6, no. 6, page 93: "Cependant, lorsque le vendeur et l'acheteur ont voulu que leur litige soit tranché par un juge d'un Etat neutre et qu'ils sont convenus en conséquence de l'élection d'un for suisse par exemple, on peut en conclure qu'ils ont voulu que le juge applique son propre droit national, c'est-à-dire le Code des obligations." (Translation=However, when the seller and the buyer wanted the litigation to be settled by the judge of a neutral country and therefore agreed upon the choice of, say, a Swiss forum, it can be concluded that they wanted the judge to apply his own national law, i.e. the Code of Obligations.)

This issue, however, need not be resolved here, since the end result of the present Award is no different under the Swiss Code of Obligation or under the Vienna Sales Convention.'