In 2000, a Polish company (Claimant) undertook to sell coke to a Swiss company (Respondent). The sale was governed by the terms of the parties' agreement and the 1980 United Nations Convention on Contracts for the International Sale of Goods. The buyer paid only part of the price of one of the orders, alleging that the goods delivered did not comply with the parties' contract. The seller agreed to a price reduction, but less than the 50% withheld by the buyer. Failing further payment, the seller commenced arbitration proceedings to recover the balance.

'The dispute concerns the extent of the percentage reduction to be applied to the contract price. Claimant conceded 15% for commercial reasons. Respondent imposed a 50% reduction on the basis of the price reduction claim made against it by the ultimate recipient of the goods.

The contract required that the conforming quality of the delivered coke be attested by contemporaneous technical reports from the producer and [a Polish certification company]. This contractual stipulation is consistent with the checking and inspection requirements foreseen under FCA conditions (INCOTERMS 1990) (see further discussion below), and also rendered explicit the CISG requirement that the seller deliver conforming goods (Article 35, paragraph 1 CISG: "The seller must deliver goods which are of the quantity, quality and description required by the contract . . ."; Article 36, paragraph 1: "The seller is liable in accordance with the contract and this Convention for any lack of conformity which exists at the time when the risk passes to the buyer, even though the lack of conformity becomes apparent only after that time.").

However, the CISG also provides in Article 50 that "if the goods do not conform with the contract and whether or not the price has already been paid, the buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time." While this provision establishes a right of reduction, the burden of proof is not expressly allocated between seller or buyer as to which party has to establish the value of the delivered goods versus the value of conforming goods at the time of delivery. Procedural issues such as the burden of proof were left outside the scope of the CISG, and it is therefore up to the adjudicatory forum to determine such issues (see discussion of burden of proof in Convention de Vienne sur les contrats de vente international de marchandises: Commentaire, Dessemontet, ed., Cedidac, Lausanne (1993), pp. 77-78).

The documentary evidence indicates that the shipment was indeed contaminated by clay. However, no determination can be made as to whether this contamination occurred before delivery, during carriage, or after unloading at destination. Notably, the contract specified "FCA, Manufacturer, Poland" (INCOTERMS 1990). FCA means "Free Carrier", i.e. that the seller fulfils the obligation to deliver when the goods are handed over, cleared for export, into the charge of the carrier named by the buyer at the named place or point. The evidence presented to the Sole Arbitrator shows that the shipment was of conforming quality at the time of loading in Poland. In particular, the documentation shows that testing yielded over-size grains within the 10% tolerance specified by the contract.

Respondent alleges that the certificates are unreliable and did not conform to the actual quality of the goods as reported by the consignee. However, Respondent did not produce evidence supporting the consignee's allegation of a 39% non-conforming grain-size. It is a relatively simple matter to screen for grain size. In the absence of evidence rebutting the quality certified by the producer and confirmed by [the Polish certification company] at the time risk passed to the buyer, the 15% price reduction conceded by Claimant satisfactorily covers any margin of doubt. In addition, Respondent's complaint of volatiles at the level of 1.7 % is of no relevance, since this unproven value is anyway well within the 3% maximum specified in the delivery order. Finally, while the complaint of an ash content of 14,5% does marginally exceed the 14 % maximum, Respondent did not provide the evidence for this value, which means that its degree of accuracy (+-) also cannot be weighed.

Viewed against the requirements of the CISG, the situation appears straightforward. Claimant supplied documentary proof for the conforming quality of the delivered goods. Respondent's unsupported allegations are insufficient to rebut the satisfactory fulfillment of seller's obligations, which confirms that seller is entitled to payment according to the contract. Respondent then exercised its unilateral right to reduce the price. Claimant conceded a lesser price reduction but claims for a balance due. In these circumstances, the maxim actori incumbit probatio clearly applies such that the burden must weigh on the buyer to prove both the alleged lesser value for the delivered goods and the value that conforming goods would have had at that time (cf. Article 50 CISG). This burden has not been met.

Consequently, the claim for payment of . . . is upheld, and Respondent's objections are rejected.'