Issue: There are two Parties in this case: Phar Lap Allevamento and Black Beauty Equestrian, which are the Claimant and the Respondent. Before the introduction of increased tariffs by the government the Claimant found out that Respondent was reselling the product, which was prohibited under their official contract on selling and buying the good, which is frozen horse semen (Roque et al., 2019). After this, before the last deal between the Parties, the government of Equatoriana imposed additional costs (30% tariff) on the frozen horse semen. However, the Respondent refused to send the Claimant any additional amount for the tariffs imposed by their government, which is located in Equatoriana.
Rule: The Claimant had a right as a seller to receive the full payment from the buyer (Respondent), according to Art. 62 of the CISG, which is an abbreviation for the United Nations Convention on Commercial Contracts. It also should be highlighted that: “The United Nations Convention on Contracts for the International Sale of Goods (CISG) is generally perceived as a successful example of unified law with 62 contracting states” (Lutz, 2004, p. 711).
Application: Respondent’s Chief Executive Officer, Ms. Kayla Espinoza, claimed that their company is no longer interested in further cooperation with Phar Lap (Claimant):
When confronted with our discovery in a meeting on 12 February 2018, Ms. Kayla Espinoza, RESPONDENT’s CEO, got very angry and aggressive. She shouted that she was fed up with the additional permanent requests from Phar Lap, which, in her view, had no basis in the contract and was no longer interested in further cooperation with Phar Lap. (Roque et al., 2019, p. 18).
The Respondent rejected the right of the seller to get an additional amount of money for the tariffs imposed by their government (Equatoriana) and to continue further negotiations with the Claimant side (Roque et al., 2019). Thus, the rule, which provides the right for the Claimant to get the full payment, was not followed by the Respondent’s side, which refused to pay the full price, including 30% tariffs.
Conclusion: Thus, the Respondent has broken the contract rules, which were followed by its refusal to pay the money to Claimant. However, the rule (Art. 62 of the CISG) was not followed, which can be considered an unlawful act. Thus, Respondent’s Chief Executive Officer, Ms. Kayla Espinoza’s letter, claiming that their company stopped any further businesses with the Claimant, cannot be considered as an excuse for breaking the CISG. Therefore, the rule (Art. 62 of the CISG) should be applied, and the full payment, which is $1,250,000) should be entitled to Claimant in order to act in the frame of law. This is true, even despite the Respondent’s desire to stop cooperation and further negotiations.
References
Bonell, M. J. (1996). The UNIDROIT principles of international commercial contracts and CISG – Alternatives or complementary instruments? Uniform Law Review-Revue de droit uniforme, 1(1), 26-39.
Roque, C. A. M., de Medeiros Carreiro, C., & Cerqueira, C. M. T. (2019). Work project: 26th annual Willem C. Vis international commercial arbitration moot. Nova University of Lisbon – School of Law.
Lutz, H. (2004). The CISG and common law courts: Is there really a problem. Victoria U. Wellington L. Rev., 35, 711-734.