Arbitration

CONTRACT: GUARANTEE and ARBITRATION

DISCUSSING GUARANTEE AND ARBITRATION

LIST OF WORDS

1. to meet halfway

2. the guarantee clause

3. the Arbitration Court/tribunal

4. by arbitration/for arbitration

5. an arbitrator

to appoint/nominate an arbitrator

to choose/elect an arbitrator

a single arbitrator

6. an Umpire

7. the List of Arbitrators

8. to make an award

9. to submit/settle/admit/decline/withdraw/meet/ a claim

10. to make a claim on(against) smb for smth

11. to mishandle the goods

12. amicably/in an amicable way

13. the parties concerned

14. to maintain relations/prices/delivery time

15. maintenance and operation instructions

16. to disclaim

17. implied warranties

18. merchantability

19. pecuniary loss

20. adjudication

adjudicatory

21. litigation

litigant(s)

22. to revert to the matter

23. to infringe the terms and conditions

a gross infringement

24. to violate the law/the treaty/the agreement

25. ahead of schedule/time

26. standing committee

Read the text and answer the questions which follow.

Arbitration is a procedure for the resolution of disputes on a private basis through the appointment of an arbitrator, an independent, neutral third person who hears and considers the merits of the dispute and renders a final and binding decision called an award.

Unfortunately as in other walks of life in trade too errors may occur and the goods may be mishandled: accidents may happen, usually because of hurry and lack of sufficient supervision and mistakes in carrying out orders may creep in. These may be caused by mistyping of figures, misreading of numbers and so on or for more serious reasons.

One of the parties to the contract may consider that the other party has infringed the terms of the contract and may write a letter of complaint containing a claim for damages or for a reduction in the price, etc.

The parties do their best to settle their differences and claims amicably, but if they fail to agree, in accordance with the corresponding clause of the contract, the claim is submitted for arbitration, i.e. a standing arbitration tribunal which shall settle disputes resulting from contractual and other civil-law relations in the course of foreign trade and other international economic and scientific-technological contacts.

If the parties do not agree upon a single arbitrator, each of them appoints (or chooses from among the List or Arbitrators which consists of over 44 experts possessing adequate special knowledge in settling disputes) their own, in which case the latter are to elect the chairman from the same List (who corresponds to the former umpire). The three of them form the arbitration tribunal which considers the case and makes an award by a majority of votes. The awards of the Arbitration Court are final and binding upon both parties and without appeal.

Arbitration expenses, which are sometimes very high, are usually bоrne by the loser unless otherwise agreed upon.

1. Why may errors occur in carrying on trade?

2. What happens when a claim arises?

3. How are claims settled by the Arbitration Court?

4. How can you sum up the difference between them?

5. What are advantages and disadvantages in using the service of a single arbitrator?

6. Why do you think the arbitration practice envisage that as a rule arbitration expenses should be borne by the loser?

Ex. 1. Look through the above text again and find the English equivalents for the following:

1. обычно из-за спешки или недостатка надлежащего контроля, 2. если они не придут к соглашению, 3. споры, возникающие из договорных и других гражданско-правовых отношений, 4. если стороны не пришли к соглашению о единоличном арбитре, каждая (из них) выбирает своего собственного, 5. как в других областях деятельности, 6. могут произойти (быть вызваны) неправильным напечатанием цифр, неправильным прочтением номеров или по более серьезным причинам, 7. это постоянно действующий третейский суд, 8. при осуществлении (в ходе) внешнеторговых и иных международных экономических и научно-технических связей, 9. последние должны избрать председателя из того же списка, 10. расходы по арбитражу обычно несет проигравшая сторона, 11. все трое входят (образуют) в состав арбитража, 12. решения Арбитражного суда обжалованию не подлежат.

Ex. 2. Read the dialogue below and find out the following:

1. Why is Mr Crown interested in treating the proper law of the contract?

2. From what point of view is Mr Crown interested in the arbitration clause and why?

3. What is the most important point in the Guarantee clause for Mr Crown and why?

4. Why does Mr Bogdanov meet Mr Crown halfway?

C.: –Before we start discussing the guarantee clause, can I ask you a couple of questions?

B.: –Go ahead!

C.: –I understand there’s a difference in treating the proper law of the contract in different countries? Which is yours?

B.: –You’re quite right. In English law, for example, a foreign trade transaction is governed by the conflict of laws: the law of the country where the contract has been concluded, the law of the country where the contract is to be performed and the law of any third country agreed on. In Russian law “rights and obligations of the parties in a foreign trade transaction are guided by the law of the place where it is made unless otherwise agreed upon”. And the place of signing the contract is determined in accordance with Russian law.

C.: –I see, thank you. And the second query is about arbitration. In case a claim arises where do we refer it?

В.: –First of all we try and do our best to settle all claims and differences amicably without referring them anywhere. And you shouldn’t feel concerned about it at all. But if we fail, which is the rarest case, claims are to be submitted to the Arbitration Court at the Russian Chamber of Commerce and Industry, who have plenty of competent and very objective (reliable) members to choose arbitrators from. If you want, I can give you a list of firms from your own country as well as from Australia or New Zealand or any other country ofyour choice who have had experience with our arbitration and who never regretted doing so.

C.: –I’m content, thank you.

В.: –Here’s the exact wording of the arbitration clause in case you still have doubts. Please observe that we now call it the Arbitration Court instead of the Foreign Trade Arbitration Commission.

C.: –Oh well, the Guarantee Clause now. Point number 1 — the length of the guarantee period. You guarantee trouble-free operation of machinery for only 24 months from the date of delivery. We consider it too short. I hope you’ll make the guarantee period much longer, say, twice as long from the date of delivery, or at least for 3 years.

В.: –I can’t give you a four years’ guarantee, that’s a fact.

C.: –What about three years then?

В.: –It makes 36 months! It isn’t our practice. But since it’s your first deal with us, let it be so, but you will remember the guarantee doesn’t apply to rapid wearing parts and second, you should strictly observe our operation and maintenance instructions, to say nothing that you are not supposed to make any alterations in the design of the tractors during, the guarantee period without our consent.

C.: –We’ll bear that in mind.

В.: –As to spares I should say that we’ll pay for their transportation for only 2 years and you’ll have to order them for your own account. I wish we had some kind of centre in your country dealing with after-sales services. Then spares wouldn’t be any problem. So are there any more things to discuss today?

C.: –That seems to be the lot for now. We’ll take up the remaining clauses tomorrow.

Ex. 3. Which word in each group is the odd one out? You may need to consult a dictionary to distinguish the differences in the meaning.

1. purchaser — vendor — buyer — consumer

2. comparable — distinct — corresponding — equivalent

3. plaintiff — appellant — defendant — petitioner

4. postpone — decide — delay — defer

5. void — non-arbitrary — invalid — non-binding

6. material — pecuniary — monetary — financial

7. originate from — lead to — arise out of — result from

8. warranty — guarantee — ensurance — remedy

9. damages — compensation — injury — reparation

10. the Court found — the Court argued — the Court held — the Court decided

Ex. 4. Complete this paragraph about consumer rights by choosing the correct word in each case.

When you buy goods from any seller, you have the right to expect certain standards. The UK Sale of Goods Act 1979 states that the goods must be ¹⁾ for/of/in satisfactory quality ²⁾ in comparison to/by virtue of/in respect of the appearance and finish of the goods, their safety and durability, and their freedom from defects- except where they have been pointed out to you before purchase. They must also be ³⁾ special/fit/made for their purpose, including any particular purpose mentioned by you to the ⁴⁾ vendor/purchaser/consumer, if the ⁵⁾ merchandise/supply/sale does not meet these standards, you are ⁶⁾ obliged/entitled/required to reject it and get your money back. You have a/an ⁷⁾ reasonable/acceptable/exclusive time to return faulty goods, after which you are ⁸⁾ requested/deemed/implied to have accepted the goods and their faults, although you may still be able to ⁹⁾ claim/incur/charge damages.

Ex. 5. Match the words in italics in the text (1-9) with the word or phrase below (a-i) that has a similar meaning.

The software is provided ¹⁾ “ as is ” without warranty of any kind. [The Company] further ²⁾ disclaims all implied warranties including without limitation any implied warranties of ³⁾ merchantability or of ⁴⁾ fitness for a particular purpose. The entire risk ⁵⁾ arising out of the use or performance of the software and documentation remains with you.

⁶⁾ In no event shall [the Company], its authors or anyone else involved in the creation, production, or delivery of the software be liable for any changes whatsoever (including, without limitation, damages for loss of business profits, business interruption, loss of business information or other ⁷⁾ pecuniary loss) arising out of the use of or inability to use the software or documentation, even if [the Company] has been ⁸⁾ advised of the possibility of such damages. Because some states/countries do not allow the exclusion or ⁹⁾ limitation of liability for consequential or incidental damages, the above limitation may not apply to you.

Words: a ) financial, b) told about, c) suitability, d) resulting from, e) denies, f) acceptable quality, g) restriction, h) for no reason, i) in the present condition

Ex. 6. Arbitration is a procedure for the resolution of disputes on a private basis through the appointment of an arbitrator, an independent, neutral third person who hears and considers the merits of the dispute and renders a final and binding decision called an award.

Complete the following text about arbitration with words from the box.

adjudication; arbitration; arbitrator; decision-maker; dispute; documentation; duration; expensive; expert forum; hearing; litigation; needs; submissions

The process is similar to the ¹⁾ ______ process as it involves ²⁾ ______. However, the parties choose their ³⁾ ______ and the manner in which the ⁴⁾ ______ will proceed. For example, if the ⁵⁾ ______ is fairly straightforward and does not involve any factual questions, the parties may agree to waive a formal ⁶⁾ ______ and provide the arbitrator with written ⁷⁾ ______ and ⁸⁾ ______ only, called a documents only arbitration. However, in other cases the parties may wish a full hearing. Therefore, the parties create, their own adjudicatory ⁹⁾ ______ which is tailor-made to the particular of the parties and the nature of the dispute.

The advantages of arbitration over court adjudication can include the following:

· Expertise of the ¹⁰⁾ ______: The parties can choose an arbitrator who has knowledge of the law, business or trade in which the dispute has arisen.

· Low cost: Arbitration is not if the process is kept simple.

· Speed: Arbitration can be arranged within days, weeks or months.

· ¹⁰⁾ ______: Arbitration does not take as long as litigation.

Ex. 7. Insert the correct prepositions in the guarantee clause below.

The Sellers guarantee the trouble-free operation ¹⁾ ___ the goods sold ²⁾ ___ a period ³⁾ ___ 18 months ⁴⁾ ___ the date ⁵⁾ ___ putting them ⁶⁾ ___ operation, or the run ⁷⁾ ___ 30.600 kms (depending ⁸⁾ ___ which ⁹⁾ ___ these circumstances comes first), but ¹⁰⁾ ___ all cases ¹¹⁾ ___ not more than 24 months ¹²⁾ ___ the date ¹³⁾ ___ delivery.

If the goods prove to be defective or non-conforming ¹⁴⁾ ___ the terms and conditions ¹⁵⁾ ___ the period ¹⁶⁾ ___ guarantee, the Sellers shall eliminate the defects detected. The substituted defective goods or their parts shall be returned ¹⁷⁾ ___ the Sellers not later than 3 months ¹⁸⁾ ___ receipt ¹⁹⁾ ___ the Buyers ²⁰⁾ ___ the Sellers’ request ²¹⁾ ___ the return the goods.

The guarantee shall not apply ²²⁾ ___ rapid-wearing spare parts or parts which have suffered ²³⁾ ___ natural wear. Neither does it ²⁴⁾ ___ the damage resulting ²⁵⁾ ___ their improper storage, assembly, repairs, maintenance or operation, or ²⁶⁾ ___ non-observance ²⁷⁾ ___ the Buyers ²⁸⁾ ___ the Sellers’ instructions, as well as ²⁹⁾ ___ the alterations made ³⁰⁾ ___ the Buyers their design ³¹⁾ ___ the Sellers’ consent.

Ex. 8. Translate into English using your active vocabulary (in writing). Pay special attention to the translation of the words in italics in part B.

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