Claimants and Respondent entered into a contract for the supply of a given quantity of rice of a given quality during a given period of time. Claimants allege that Respondent failed to supply the rice despite all required formalities having been carried out. Respondent is accused of seeking to delay performance, of alleging difficulties arising from government action and flooding in the country of exportation, and of attempting to renegotiate the agreed prices. The sales contract contains an arbitration clause referring to the ICC Rules of Arbitration. Respondent refuses to take part in arbitration proceedings. The arbitration therefore continues on an ex parte basis pursuant to Article 15(2) of the 1988 ICC Rules of Arbitration. The Arbitral Tribunal decides to apply to the contract trade usages and generally accepted principles of international trade, as reflected in the 1980 Vienna Convention on the International Sale of Goods and the <b>Unidroit Principles</b> (Article 7.4.6 of which is referred to for the calculation of damages). The Arbitral Tribunal decides that Respondent was in breach of its obligations and that there was no case of force majeure preventing it from performing. Claimants are awarded damages. Three quarters of the arbitration costs are to be borne by Respondent and the remaining one quarter by Claimant; each party is to bear its own legal expenses.

The ICC Awards in cases 8501, 8502 and 8503 concern disputes arising in connection with contracts all relating to the supply of the same commodity under similar circumstances. The same Arbitral Tribunal decided all three cases, and all three Awards follow a common pattern with respect to legal issues and arguments. For these reasons, only one of the Awards will be presented here, as representative of all three.

<i>Applicable law:</i>

'The Contract concluded between the Parties, and upon which the present proceeding is based, is silent as to the law to be applied on the merits. There is, accordingly, no express choice of law clause. Similarly, having regard to the correspondence exchanged between the Parties, the Arbitral Tribunal is of the opinion that no implied choice of law can be inferred from the relationship between the Parties.

The Contract, as well as the present arbitration, involve, on the one hand, a Vietnamese seller and, on the other hand, a Dutch buyer acting through its French company. The place of arbitration is Paris, France.

This dispute has connections with several national laws, all of which may have a relevant role. Under Article 13(3) of the ICC Rules, the Arbitral Tribunal shall apply the law designated by the rule of conflict "which it deems appropriate".

The Arbitral Tribunal notes that the Respondent has not stated its position as to which law should apply. Respondent has never submitted, in the context of this arbitration or in the correspondence between the Parties, that Vietnamese law should apply. The Arbitral Tribunal is of the opinion that it is not required ex officio to identify potential issues that might possibly arise under Vietnamese law.

Although the Contract contains no choice of law clause, it refers to international trade usages. Article 6 of the Contract, with respect to the price to be paid by the buyer, provides that INCOTERMS 1990 shall apply. Similarly, Article 13 of the Contract stipulates, as regards force majeure, that the clause of UCP 500 shall apply.

It thus appears that the Parties have, to a large extent, agreed to submit their relationship to recognized trade usages such as the INCOTERMS or the Uniform Customs and Practice for Documentary Credits (UCP), published by the ICC. The Arbitral Tribunal considers that by referring to both the INCOTERMS and the UCP 500 the Parties showed their willingness to have their Contract governed by international trade usages and customs.

The application of the relevant trade usages is consistent with Article 13(5) of the ICC Rules and with the arbitral practice . . .

For the foregoing reasons, the Arbitral Tribunal finds that it shall decide the present case by applying [to] the Contract entered into between the Parties trade usages and generally accepted principles of international trade. In particular, the Arbitral Tribunal shall refer, when required by the circumstances, to the provisions of the 1980 Vienna Convention on Contracts for the International Sale of Goods (Vienna Sales Convention) or to the Principles of International Commercial Contracts enacted by Unidroit, as evidencing admitted practices under international trade law.'

<i>With respect to compensation due to Claimant owing to Respondent's default:</i>

'The Arbitral Tribunal found that the Respondent failed to comply with its obligations under the Contract and that said failure was not legally justified. It now remains to calculate the amount of compensation due to the Claimants caused by the Respondent's default.

As regards the applicable law on the question of compensation, the Arbitral Tribunal, as previously mentioned, considers that the Parties have expressed their mutual intention to have their relationship governed by general principles of international trade.

The INCOTERMS 1990 or the UCP 500, to which reference is made in the Contract, contain no provision regarding the effect of the failure by one party to fulfil its obligations under the Contract.

The Arbitral Tribunal considers that this question should be examined in light of generally admitted principles of international trade as contained for example in international treaties. For this reason, the Arbitral Tribunal is of the opinion that the principles embodied in the Vienna Convention on the International Sale of Goods of 1980 (Vienna Sales Convention) reflect widely accepted trade usages and commercial rules. Although the Vienna Sales Convention is not as such directly applicable to the Contract (Vietnam has not ratified this Convention), the Arbitral Tribunal finds that it may refer to its provisions as the expression of usages in the world of international commerce . . .

Article 76 of the Vienna Sales Convention reads as follows:

"(1) If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under Article 75, recover the difference between the price fixed by the contract and the current price at the time of avoidance as well as any further damages recoverable under Article 74. ( ...)

(2) For the purposes of the preceding paragraph, the current price is the price prevailing at the place where delivery of the goods should have been made or, if there is no current price at that place, the price at such other place as serves as a reasonable substitute, making due allowance for differences in the cost of transporting the goods."

The method of calculation of damages in the Vienna Sales Convention is analogous to that envisaged by different national laws. . . .

Finally, the Arbitral Tribunal shall refer to the work of the International Institute for the Unification of Private Law (Unidroit). Article 7.4.6 of the Unidroit Principles of International Commercial Contracts provides:

"(1) Where the aggrieved party has terminated the contract and has not made a replacement transaction but there is a current price for the performance contracted for, it may recover the difference between the contract price and the price current at the time the contract is terminated as well as damages for any further harm.

(2) Current price is the price generally charged for goods delivered or services rendered in comparable circumstances at the place where the contract should have been performed or, if there is no current price at that place, the current price at such other place that appears reasonable to take as a reference."

Based on these applicable principles of law, the Claimants are entitled to damages calculated as the difference between the contract price and the relevant market price. The contract price is easily determined by the contractual provisions agreed upon by the Parties, which include the initial Contract and its amendment. . . .

With respect to the determination of the relevant market price, two issues must be addressed. One needs first determine the reference time at which the market price is calculated, and the place of reference. . . .

[Reference to Article 76 CISG and various national laws.]

It results from the foregoing analysis that, unless a current price is not available, damages should be calculated with reference to the market price at the place where delivery of the goods should have been made. In the present case, the goods being sold FOB Ho Chi Minh City port, the place of delivery of the goods for the purposes of this provision is Ho Chi Minh City . . .

As regards the relevant time to refer to the local market price, the Arbitral Tribunal shall apply the general rule according to which the relevant time for specifying the current price is that of the default. . . .'

<i>With respect to interest:</i>

'The Claimants' prayer for relief asks for the application of compound interest. The Arbitral Tribunal notes that the granting of compound interest is not a universally recognized practice in international trade. Some national laws prohibit the capitalization of interest. Moreover, the Claimants have not shown any particular reason why in this case compound interest should be granted. As a consequence, the amount hereby awarded shall bear simple interest. . . .

. . . the amount awarded shall bear interest commencing . . . the date the Request for Arbitration was received by the ICC until payment.

As to the rate of interest, the Arbitral Tribunal considers that the rate of 12% per annum requested by the Claimants is not excessive and that it would have been up to the Respondent to contest this rate, which it has not done. . . .'