## Facts

- A Hong Kong seller (claimant) and a German buyer (respondent) entered into a framework agreement for the sale of goods, allowing the buyer to place individual shipment orders as needed.
- The framework agreement required the buyer to pay in advance for certain rush orders.
- During the relationship, the buyer placed a rush order for 10,000 units, and the parties treated the order as subject to the advance-payment requirement.
- The seller later informed the buyer that the seller’s own supplier was having difficulty filling the rush order.
- The seller then stated it would deliver the 10,000-unit order only if the buyer first paid unpaid invoices arising from prior contracts between the parties.
- The buyer objected to this added condition.
- The seller commenced arbitration before the Chamber of Commerce Arbitration Court seated in Hamburg, Germany.
- In the arbitration, the buyer invoked the United Nations Convention on Contracts for the International Sale of Goods (CISG), declared avoidance of both the framework agreement and the 10,000-unit contract, and sought damages.

## Issues

1. In a CISG-governed sales relationship structured through a framework agreement plus individual orders, may the seller condition delivery of a current rush order on the buyer’s payment of outstanding debts from prior contracts between the parties?
2. If the seller refuses delivery unless prior invoices are paid, does that conduct permit the buyer to declare avoidance of (a) the specific 10,000-unit contract and/or (b) the broader framework agreement under the CISG?
3. What (if any) damages are recoverable by either party based on the asserted breach, avoidance declarations, and performance disputes?

## Decision

- The dispute was decided in arbitration in 1996 by the Chamber of Commerce Arbitration Court in Hamburg, Germany, and is indexed in the UNILEX database as D. 1996-3.4.
- Publicly accessible summaries identify the parties’ positions (seller’s claim; buyer’s CISG-based avoidance and damages request) and the dispute’s factual core (delivery conditioned on payment of prior invoices), but do not provide the award’s operative result or its reasoning.
- Because the award text and detailed disposition are not available from the accessible materials, the prevailing party, the tribunal’s CISG analysis, and any monetary relief cannot be stated with certainty from those materials.

## Legal Principles

- The CISG may apply to international sales disputes between parties in different States and may be invoked in arbitration as the governing sales law when applicable.
- A seller’s obligation to deliver and a buyer’s obligation to pay arise from the contract and, where applicable, the CISG; disputes may arise when a party links performance on a current order to payment disputes from earlier transactions.
- Under the CISG, questions of suspension of performance, refusal to deliver, and contract avoidance commonly turn on whether the other party’s non-performance is serious enough to justify suspension or avoidance, and whether any additional conditions were authorized by the parties’ agreement or by CISG standards.
- Where avoidance is asserted, damages claims typically depend on whether a breach is established, whether the breach justifies avoidance, and whether loss and mitigation requirements are met; the specific application in this matter cannot be confirmed without the award.

## Conclusion

Unilex D. 1996-3.4 (1996) concerns a Hong Kong seller and a German buyer operating under a framework sales arrangement with prepaid rush orders, a disputed 10,000-unit rush order, and the seller’s insistence on payment of earlier unpaid invoices as a condition of delivery; the buyer invoked the CISG to avoid both the framework agreement and the individual order and sought damages, but the publicly available information does not disclose the arbitral tribunal’s final holdings or reasoning.


Unilex, D. 1996-3.4, Unilex D. 1996-3.4 (1996)