REVERA law group’s arbitration team defended the client in the International Arbitration Court at the BelCCI (IAC at the BelCCI) in the case regarding recovery of an advance payment from a Russian counterparty under a supply contract.
A major Belarusian company had signed a supply contract for agricultural products with a Russian company under an investment project.
The contract stipulated an advance payment for two years in the amount of 13 million Belarusian roubles (approximately USD 4.5 million), to be paid in Russian roubles (the equivalent of approximately RUB 330 million).
The advance payment, paid in full, should have been gradually credited by the parties as the supply specifications were agreed upon in accordance with the Buyer’s specifications.
However, cooperation proved ineffective and the parties negotiated the termination of cooperation and a refund of the advance payment, and later even concluded a supplementary agreement to reimburse the unaccomplished advance payment by a certain date without terminating the original contract.
But then the supplier refused to return the advance payment, referring to a different interpretation of the agreement, according to which he was obliged to return the advance payment only if the agreed specifications were not complied with.
After several unsuccessful attempts to settle the dispute amicably, the Client decided to file a claim for recovery of the advance payment to the IAC at the BelCCI.
The risk of a dispute over the competence of the IAC at the BelCCI in this case was clear in advance, so the Client used the mechanism of the European Convention on International Commercial Arbitration and applied to the Chairman of the Belarusian Chamber of Commerce and Industry to identify the competent arbitral institution, which was subsequently appointed the IAC at the BelCCI.
In this case a supplementary agreement obliged the Supplier to return the unaccounted advance in case of non-performance or improper performance of the delivery volume by the agreed date. It was not clear from such an agreement between the parties whether the Supplier was obliged to return the entire unaccounted advance in case of non-performance by a certain date, or whether the Supplier would return the advance only in case of breach of delivery under the specifications.
Based on the rules of contract interpretation under Art. 8 of the Convention on Contracts for the International Sale of Goods (Vienna Convention), the REVERA law group arbitration team succeeded in arguing that it was a matter of refunding the entire unaccounted advance, regardless of whether or not agreed specifications and purchase orders had been submitted by the buyer.
The panel of arbitrators examined the merits of the case and agreed with the Claimant on the issue of the Supplier’s breach of the obligation to return the advance payment. REVERA’s client collected the amount of the advance payment as well as the amount of the arbitration fee and the costs incurred for representation.
