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Medical Marketing International,
Inc (MMI)
V.
International Medico
Scientifica,S.R.L(IMS)
Facts by 陈艳霞
Legal issue by 劳艳怡
Reasoning by 唐燕婵
郑燕玲
Decision by 叶艳婷
FACTS
seller
buyer
MMI
plaintiff
agreement
IMS
defendant
Entered into exclusive licensing agreement for
the u.s. distribution of mammography units
manufactured by
The equipment did
not comply with
U.S. safety
regulation!
Food & Drug Administration
IMS was responsible to
assure that its
equipment
met U.S. standards
MMI
no
IMS
MMI declared the contract avoided
because of the nonconforming goods
………………
Arbitration decided that IMS should
give $357,000 to MMI
MMI
demanded the
court to enforce the award
Legal Issue:
General issue:
Whether the arbitration
panel exceeded its
authority?
Whether the arbitration panel exceeded
its authority? (General issue)
IMS held two reasons
Reason1.Violation of public policy of the international global
market
general rule
Whether the case should apply the general
rule
Whether IMS was obligated to supply MMI with
goods that conform to the public laws and
regulations enforced at MMI ’s place of
business?
Specific
issue(1)
reason2.manifest disregard of
international sales law
CISG
Whether the arbitration panel misapplied the CISG Article25
a breach is fundamental when it results in such detriment to the
party that he or she is substantially deprived of what he or she
is entitled to expect under the contract, unless the party in
breach did not foresee such a result.
Whether IMS had made fundamental
breach of the contract
Specific
issue(2)
Specific issue
1.Whether IMS was obligated to
supply MMI with goods that
conform to the public laws and
regulations enforced at MMI ’s
place of business?
2.Whether IMS had made
fundamental breach of the contract?
Reasoning:
(1)Whether IMS was obligated to supply
MMI with goods that conform to the public
laws and regulations enforced at MMI ’s
place of business?
A. IMS’s argument----the CISG did not
require that it should furnish MMI with
equipment that complied with the U.S. GMP
regulations according to the CISG Article
35, a seller is generally not obligated to
supply goods that conform to public laws
and regulations enforced at the buyer’
place of business. (the general rule)
B. Judge’s attitude----IMS should be obligated to
supply goods that conform to public laws and
regulations enforced at the MMI’ s place of business.
a. the applicable rule
The general rule was not applicable in three
exceptions including that if the seller knew or
should have known about the regulations .
b. In this case,
IMS was, or should have been, aware of the GMP
regulations prior to entering into the 1993 agreement.
So this case should not apply to the general rule as
it fit the third exception.
(2) Whether IMS ’s breach of contract was
fundamental in nature?
A. IMS’s argument----the breach was not
“fundamental” according to the general rule.
B. Judge’s attitude----the IMS’s breach was
“fundamental” as it should not apply to the
general rule.
a. the applicable rule
According to the CISG Article 25:
a breach is fundamental when it results in such
detriment to the party that he or she is
substantially deprived of what he or she is entitled
to expect under the contract, unless the party in
breach did not foresee such a result.
b. In the case,
the equipment was seized by the U.S. Food and Drug
Administration, that cause damage to MMI, depriving
of its expectation. So the breach was “fundamental”.
Whether the arbitration panel had exceeded its
authority?
A. IMS ’s argument---the arbitrator’s decision
violates public policy of the international global
market and that the arbitrators exhibited
“manifest disregard of international sales law.”
B. Judge’s attitude--- According to all the
reasons above, the arbitrators’ decision was
neither contrary to public policy nor in manifest
disregard of international sales law.
Decision:
1.The seller knew or should have known the
GMP regulations and should furnish
equipments that complied with the
regulations enforced at the buyer’s place of
business .
2.The seller was in fundamental breach of
contract.
3.The arbitration panel did not exceed its
authority, so IMS should pay the award of
$357,000 for breaching the contract.
Comment:
1.As a general rule, the fitness of
goods sold under an international
contract will be determined by
reference to standards for such goods
in the seller’s country, unless
the seller knew or should have known
that the goods would not conform to
the standards in the buyer’s country.
2.Keep with the basic principles of the
CISG that the convention should be
interpreted according to its “international
character” and to “promote uniformity in its
application”.
3.Disputes of contracts could be submitted
to arbitration. The arbitrator’s written
findings are enforceable for the parties to
carry out, unless the arbitration’s decision
is overruled.