Force Majeure Contract Dispute

You are a law student, do the case note writing exercise: *. Length: From * pages to * pages. *. Structure According to the rules of sample structure - Issues - Rules. Case of immunity – * Vien Convention WHAT EVENTS ARE CONSIDERED FORCE MAJEURE? If a party encounters force majeure and violates the signed contract, it will be exempted from liability. In practice, however, it is sometimes not easy to determine whether an event is force majeure or not. Dispute between an Austrian company (seller) and a Bulgarian company (buyer). The seller sues the buyer to arbitration for damages caused by the buyer not opening the letter of credit (L/C). The buyer assumes that he did not open the letter of credit due to force majeure. The two sides argue over the force majeure event cited by the buyer. The dispute was adjudicating at the Paris International Arbitration Centre, ruling No. */*. Dispute developments In *, sellers and buyers signed a contract to export goods in a form. The parties agree to pay by letter of credit open one day in advance and the goods must be delivered under DAF (Delivered at Frontier) conditions (INCOTERM *) at the Austrian-Bulgarian border four weeks after the opening of the letter of credit. The buyer does not fulfill his obligation to open the letter of credit within the term specified in the contract and also during the extended period by the seller. The seller sues the buyer for arbitration, seeking compensation for damages incurred by the buyer's non-performance of the contract. The buyer countered that the un opened letter of credit was due to the Bulgarian government ordering a suspension of payment of foreign debts. This is a force majeure event and therefore, the buyer is completely exempt from liability, not damages. The judge's ruling: The arbitrator held that the contract was governed by the * UNITED NATIONS Vienna Convention on International Contracts for the Sale of Goods (CISG) because both Austria and Bulgaria are members of the Convention. The arbitrator invokes article * CISG, under which the buyer is obliged to pay for the goods, including the application of measures in compliance with the procedures required by the contract or law in order to be able to make payment of the goods. The arbitrator said the Bulgarian government's request to suspend payment of foreign debts was not a "force majeure" case that made it impossible for buyers to open letters of credit. According to article *, paragraph * of the CISG, force majeure is an obstacle beyond the control of the parties, the parties do not anticipate at the time of signing the contract and the parties do not avoid nor overcome the consequences of this event. In the dispute, the Bulgarian government's order to suspend payment of foreign debts is an objective event, beyond the control of the buyer. However, that suspension was announced at the time of signing the contract, so the buyer certainly had to anticipate that the suspension would make it difficult to open the letter of credit. As such, this event is not "unpredictable." Moreover, in fact, the buyer cannot prove that the inability to open the letter of credit is a consequence of that suspension order. With those arguments, the arbitrator ruled that the event cited by the buyer is not a force majeure event, so the buyer is not exempt from liability but must compensate the seller for not fulfilling his obligations.