In 1983, a Peruvian company (Claimant) agreed to sell metal to a Swiss company, whose rights were subsequently acquired by Respondent, a Swedish company. Part of the goods suffered damage during transport. The parties' contract was governed by Swiss law and provided for purchases within a given range of quantities, at the buyer's option, FOB at a port in Peru.

'Article 11 of the agreement specifies: "All [the] terms [of the contract] are based on a maximum fio o/f rate of $60 per wmt from [Peruvian port] to [Swedish port]. Any increase over such rate to be shared 50/50 between buyer and seller."

[Seller] claims that, by virtue of this clause, [Buyer] must restitute to it the difference between "the rate of $60" and the actual shipping cost.

For its part, [Buyer] argues that the purpose of Article 11 was to ensure that the final price of the [goods] would remain competitive despite an increase in the shipping cost. This is why Article 11 provides that any increase in the freight cost would be split 50/50 between buyer and seller.

The terms of this clause are clear: the use of the words "maximum" and "increase" shows that when they concluded the agreement, the parties had only envisaged a situation whereby the cost of transport would exceed the limit of $60/wmt.

In an FOB sale, as the transport costs are borne by the buyer, any increase in freight is, in theory, incumbent upon the buyer.

The purpose of such a clause is therefore clearly to ensure that the buyer may keep the prices competitive in the event that the transport costs should turn out to be more than expected.

[Seller] could not therefore reasonably request that [Buyer] pay to it the sum of 53,419 US dollars.

. . . . . . . . .

The agreement does not contain any express provision fixing the place for the determination of the weight of concentrates sold.

Article 14 of the agreement, which includes a provision for determination of the weight, merely provides that the weighing operations shall be carried out "at the port of loading or at the port of discharge".

In their pleadings and during the hearing, both parties do however appear to acknowledge that the determination of the reference weight for the calculation of the price of the goods should be carried out at the time of loading under the terms of the contract. . . .

However, [Buyer] argues that [Seller] had agreed to calculate the price of the goods on the basis of the average weight between the weight of loading and unloading. . . .

However, [Buyer] does not provide any document to prove that [Seller] intended to make such a proposal (or even to accept such a modification to the agreement).

Furthermore, [Buyer] claims that once the order placed on 3rd March 1983 provided for a Cost Insurance Freight ("CIF") [Swedish port] delivery, the place of delivery of the concentrates was modified and that the reference weight should therefore be calculated at the port of discharge.

[Buyer] argues that a novation occurred in the sale conditions.

Novation, i.e. the annulment of a former obligation by the creating of a new one, is governed under Swiss law by Article 116 of the Code of Obligations.

It is an agreement: "only a meeting of minds of the creditor and debtor can operate to procure such a change" (see Pierre Engel, Traité des obligations en droit Suisse 1973 p. 517).

In this case, [Buyer] merely proposed a unilateral change to the initial agreement in the order of 3 March 1983.

However, [Seller] did not accept this offer. Above all, the very behaviour of [Buyer] during performance of the delivery reveals its intention to comply with the terms of the initial agreement.

. . . . . . . . .

It is true that [Seller] only objected to this change in April 1984 . . .

However, the fact that one party is silent under Swiss law "is not significant in principle. It is not in itself an expression of will, whether affirmative, negative, or tacit. The rule is therefore "he who is silent does not consent". (Traité des obligations en droit suisse, P. Engel, 1973, p. 146).

It is true, however, that in its pleadings during the arbitration proceedings, [Seller] appears to accept a change in the FOB [Peruvian port] conditions to the CIF [Swedish port] conditions . . . During the hearing, [Seller] also noted that there had been a change to the conditions. The Arbitral Tribunal notes, however, that these assertions derive from an erroneous interpretation of certain documents exhibited . . .

On the basis of these factors, the Arbitral Tribunal concludes that [Seller] did not accept the change to the conditions of delivery.

. . . . . . . . .

[Buyer] cannot argue before the Arbitral Tribunal that the order of 21st [sic] March 1983 established a change in the conditions of delivery on the ground that this order specified that the goods would be delivered CIF [Swedish port] when in fact the sale was performed on the terms and conditions of an FOB delivery according to the terms of the agreement.

In an FOB sale, the buyer undertakes to pay for the transport and insurance of the goods, whereas in a CIF sale, the vendor bears these costs (see F. Eisemann and Y. Derains, La pratique des Incoterms, Jupiter edition).

In this case, it is indisputable-and [Buyer] does not dispute it-that the transport costs were borne by [Buyer].

As regards insurance, [Buyer] refers to this matter several times in its letters. . . .

[Buyer] therefore complied with the terms of the initial agreement of its own free will and cannot validly claim before the Arbitral Tribunal that the sale conditions were altered by the order of 3rd March 1983.

This analysis is confirmed by the application of the general principle of contractual good faith expressed, inter alia, in the principle of estoppel which is recognized in Swiss law and in international arbitration. . . .

Swiss law has developed a rule comparable to the Anglo-American doctrine of estoppel on the basis of the proverb non concedit venire contra factum proprium.

The Federal Court thus held that "the position taken" by a party "which blatantly contradicts its former conduct" on which another party may have relied to "conclude in good faith" that it had a particular entitlement, "constitutes a venire contra factum proprium which must be deemed to be an abuse of right (abus de droit) within the meaning of Article 2 para. 2 of the Civil Code".

The contrary argument, subsequently raised before the courts, "does not therefore deserve the protection of the judge". (Forces hydrauliques de Saint Gall et Appenzell SA c. Commune de Linthal 17/05/1963, RO 89 287, JT 1964, 334).

[Buyer] cannot rely on the modification to the sale conditions of the concentrates and should therefore have calculated the price of the goods on the basis of the weight on loading.

Furthermore, and in the alternative, [Buyer] does not supply any proof that according to the parties' intention or customary practice in the profession, the alleged change from FOB conditions of delivery to CIF conditions would also change the method of calculating the price of the goods.'