A Study on CIETEC Arbitration Case for the Relationship between Damages and Reduction under CISG

CISG상 손해배상과 대금감액의 관계에 관한 중국 CIETAC의 중재사례 연구

The purpose of this study is to analyze one of CIETEC(China International Economic and Trade Arbitration Commission) Award on the dispute arising from Cotton Sale Contact which deals with damages and reduction of the price. Especially this case focused on the effect of reduction of the price to damages. The purpose of damages is to place the aggrieved party in as good a position as if the other party had properly performed the contract. So court costs and attorney's fee should be regarded as the loss, because these are caused by consequence of the breach which is recoverable. With the same reason, overpaid taxes should also regard as the loss. It is not impossible, however, to claim both damages and reduction of the price for same loss at the same time. It means buyer could not claim damages for the same loss, once he already claimed reduction of the price. So Korean companies should consider which remedy is proper to himself under the circumstances. He should choose reduction of the price when market price is down. In case of rising market price, he should consider follows: first, it is better to choose damages based on current price(Art.76), if upswing of non-conformity price is higher then upswing of market price. Second, it is better to choose general rule for measuring damages(Art.74), if upswing of market price is higher then upswing of non-conformity price.