Règlement d'arbitrage de la CCI de 1988

Art. 49, 60, 63, 64, 71, 72, 74-77 CVIM

Les parties conclurent un contrat à long terme (désigné « Agreement ») aux termes duquel le défendeur (vendeur) devait livrer au demandeur une certaine quantité annuelle de concentré métallique. Le défendeur livra correctement la quantité stipulée durant les deux premières années du contrat, mais s'en abstint la troisième année, amenant le demandeur à résilier finalement le contrat. Dans sa demande d'arbitrage, le demandeur réclama des dommages-intérêts pour couvrir l'achat de concentré de remplacement sur le marché au comptant, à des prix plus élevés que ceux qui avaient été convenus avec le défendeur. Le défendeur argua que la situation du marché ayant changé durant la troisième année du contrat, il se trouvait libéré de ses obligations contractuelles et il se prévalut d'un cas de force majeure résultant de la cessation forcée de l'une de ses mines et des troubles sociaux ayant réduit sa capacité de production. Il prétendit en outre qu'il pouvait valablement suspendre la livraison du concentré puisque le demandeur avait refusé d'examiner les possibilités d'adaptation du contrat et de régler le prix d'une des livraisons. Il réclama le paiement de ce dernier.

Le droit applicable

'Article 21 of the Agreement includes an arbitration clause providing for ICC arbitration in Stockholm according to the following.

21. Applicable law and arbitration

This Agreement shall be governed by and construed in accordance with the laws of Sweden.

All disputes arising in connection with the Agreement shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce ICC by one or more arbitrators appointed in accordance with the Rules.

The arbitration will be conducted in Stockholm, Sweden, in the English language.'

Sur le fond

'. . . Claimant considered itself justified in invoking anticipatory breach on the part of the Respondent and that the withholding of the payment of the Last Shipment was decided on this basis.

The question is, then, whether the Claimant was justified in withholding this payment and, if not, whether the Respondent because hereof was justified in suspending further deliveries of [metal] concentrate.

Avoidance by Reason of Anticipatory Breach

With respect to the international sales of movable assets the Swedish Act (1987: 822) on International Sales - which directly incorporates the 1980 Vienna Convention (except Part II which is not at issue in this arbitration) - is applicable ("CISG").

With respect to anticipatory breach, CISG invests the potentially prejudiced Party with a right of suspending (Article 71) or terminating - avoiding in the parlance of CISG (Article 72) - the contract. However, in order for the Party to suspend or terminate his performance, he must give immediate or reasonable, respectively, notice of the suspension or termination. The only situation where this may be dispensed is (according to Article 72) in the event where "the other Party has declared that he will not perform his obligations". These requisites which are a reflection of the rule of "positive Vertragsverletzung" of German customary law is obviously motivated by a concern that the other Party is made clear of the position of its counter party, placing him in a position to provide assurance that he will in fact perform and thereby defeating the assumption of anticipatory breach and the concomitant threat to the orderly fulfilment of the contract.

The fact that the Claimant has started to make cover purchases already in February of 1994 (according to its own statement which has not been disputed by the Respondent) one will have to assume that there is an ipso facto avoidance of the Agreement at this point in time on the part of the Claimant rather than a suspension of performance according to Article 71 of the Convention. However, CISG does not recognize the concept of ipso facto avoidance, see, e.g. Documentary History of the Uniform Law for International Sales, Kluwer (1989):

The contract is avoided as a result of the Buyer's breach only if "the Seller …. declare(s) the contract avoided". /-/ Automatic or ipso facto avoidance was deleted from the remedial system in this Convention because it led to uncertainty as to whether the contract was still in force or whether it had been ipso facto avoided. Under Article 60 of [CISG] the contract is still in force unless the Buyer has affirmatively declared it avoided.

So, it had been incumbent upon the Claimant (according to Article 72 (2)) of CISG to give notice to the Respondent regarding its intent to declare the Agreement avoided and to issue a subsequent declaration of avoidance.

Admittedly, the Claimant did avoid the Agreement but then only in a letter of 23 January 1995. This was clearly not within a reasonable time after the circumstance giving right to avoidance had occurred and therefore inconsequential (Article 49 (2) CISG).

A right to avoid an agreement on the basis of anticipatory breach requires - in the language of Article 72 (1) CISG - that it is "clear" that the other party will commit a fundamental breach of contract.

From the witness statements dealing with the events of the 16 December 1993 Meeting only the one issued by Mr. [X] addresses these some specificity. In Mr. [X]'s written witness statement . . . - which is in essential respects confirmed in his examination at the final hearing - it appears that Mr. [Y] - representing the Respondent at the meeting - only expressed his wish to discontinue deliveries to the Claimant and that - in the face of Mr. [Z]'s objection - the "Parties agreed to continue negotiations early 1994 as at this particular moment concentrate market price for 1994 was not yet fixed". In the opinion of the Sole Arbitrator this outcome of the meeting hardly constituted any alarming development in the Parties' relationship tantamount to any "clear" indication of anticipatory breach. And in fact, further negotiations did take place not only on 10 March and 14 April 1994, but also on subsequent occasions throughout 1994. At no time is there any mention from either of the Parties of an avoidance of the Agreement throughout 1994 but, on the contrary, a request for performance of the Agreement was directed to the Respondent in the Claimant's letter of 10 May 1994.

Non-Compliance with CISG Provisions by the Claimant

As far as can be deduced from the pleadings of this case the Claimant has not, therefore, undertaken any step required of him under the provisions of CISG addressed above and has not, furthermore, had any basis for doing so in the absence of "clear" reasons to assume anticipatory breach. Therefore, the Sole Arbitrator concludes that the Claimant breached the Agreement by withholding payment for the Last Shipment.

However, the payment's relation to a relatively small fraction of the annual volume of [metal] concentrate due for delivery, the insignificant delay and the prevailing element of uncertainty regarding the shipping schedule and other parameters impacting on the price fixing and, additionally, the fact that the Parties were in a negotiation process with regard to future deliveries when the delay arose - all taken together - lead to the conclusion that the withholding was not a fundamental breach by the Claimant of the Agreement.

Non-Compliance with CISG Provisions by the Respondent

In the event of a breach of contract of the part of the buyer, the seller is left with two options according to Article 64 of CISG. Either may the seller declare the contract avoided right away by inferring that the breach is of a fundamental character or he may fix an additional period (so called "Nachfrist") for performance by the buyer of his obligations according to Article 63 of CISG.

However, the Respondent has adopted neither of these options just as the Claimant has failed to do this (up to the 23 January 1995 rescission letter).

Right of Damages in the Absence of Avoidance

The basic principles to govern compensation for breach of contract are laid down in Articles 74-77 of CISG. Damages for breach of contract may be envisaged in a situation, where the contract has been performed or - in spite of performance - has not for one reason or another been avoided by the aggrieved party. For this situation Article 74 of CISG offers exhaustive, albeit generally phrased principles for measuring the amount of damages.

Article[s] 75 and 76 of CISG address the situation where a contract has been avoided and where damages are based on factual or hypothetical substitute transactions, respectively, while Article 77 imposes a general duty for the prejudiced party to mitigate its damages.

The Claimant requests damages in this arbitration covering the price difference between the contract price and the price of actual, substitute transactions which it has made ("cover purchases").

However, in order for these to be recoverable the contract must have been avoided according to the provisions of CISG. This requisite flows from Article 75 of CISG which reads in extenso:

Article 75 (Damages in case of avoidance and substitute transactions.) If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under article 74.

The Agreement was not, however, avoided until 23 January 1995, and no substitute transactions undertaken prior to a reasonable time after that date can be taken into account for purposes of establishing a duty of indemnification based on substitute transactions.

Request for damages may also in certain circumstances be based on Article 76 of CISG enabling a buy[er] to recover the difference between the price fixed by the Contact and the current price as a[t] time of avoidance for the particular goods. However - apart from the requisite that a declaration of avoidance must have been made - "a party that has entered into a substitute transaction within the meaning of Article 75 [………] must proceed under that provision and cannot claim damage under Article 76" (Flechtner, "Remedies under the Convention", 8 J.L.&Com. 101 (1988)). Therefore, Article 76 cannot be invoked as a basis for damages.

Therefore, the Sole Arbitrator cannot award the Claimant damages on the basis of Articles 75 or 76 of CISG.

However, it remains to be explored whether or not damages cannot be awarded on the basis of the fundamental provisions relating to damages pursuant to Article 74 CISG, i.e. based on the assumption which has to be made in the absence of a declaration of avoidance from either party, i.e. that the Agreement was still in force during the year of 1994.

If based on this assumption the Claimant's purchase of [metal] concentrate in substitute transactions may be looked upon as a measure undertaken to mitigate damages pursuant to Article 77 CISG. This could constitute premises for the following argument.

The procurement of an annual volume of 15,000 dmt [metal] concentrate constitutes a marginal contribution (5-10 per cent) to the aggregate input of materials in the processing operation of the Claimant's . . . smelter plant. It may therefore be assumed that the variable cost for processing this marginal quantity [metal] concentrate only to a negligible extent exceeds the landed cost of the [metal] concentrate itself. From this may follow that the loss of profit - in terms of the marginal or gross contribution foregone - which the Claimant would have suffered if it had chosen not to procure [metal] concentrate in substitute transactions would have been significantly greater than the difference between the price according to the Agreement and the price obtained by the Claimant in the substitute transactions.

This assumption would appear to obtain support by the fact that the Claimant in fact did go ahead and procure [metal] concentrate in substitute transactions - exposing itself to financial risk - which would not - based on reasonable commercial judgement - have been undertaken in the absence of their economic viability.

On the basis of these general considerations the assumption made here obviously carries a high degree of verisimilitude. However, more important for the assessment of the Claimant's request for damages is whether the measures taken by the Claimant in purchasing [metal] concentrate in substitute transactions constituted the most appropriate action under the circumstances taking into consideration the aggrieved Party's duty to mitigate damages resulting from the other Party's breach of contract. For purposes of carrying out this assessment there are no materials available to the Sole Arbitrator which shed any light on the cost consequences of any alternative action undertaken by the Claimant, such as the gross contribution arising from sales of processed goods resulting from the processing of [metal] concentrate in the Claimant's . . . smelter plant. Hence, there is no information made available to the Sole Arbitrator in the course of this arbitration addressing issues like unit cost for processing or price levels during the relevant time period for processed goods making use of [metal] concentrate.

However, it is up to the party who argues that the aggrieved party has not taken appropriate steps to prevent unnecessary damage from occurring which carries the burden of proof for his allegation in this regard.

In this arbitration it has not been argued that there would have been any alternative course of action open for the Claimant which would have produced a less costly outcome than the one actually chosen by the Claimant.

In view hereof the Sole Arbitrator must consider that any relevant difference between the price agreed by the Parties according to the Agreement and the price achieved in substitute transactions must be relevant for purposes of establishing the indemnifiable damages suffered by the Claimant.'