SCC Case 16/1998 - Chapter 7 - SCC Arbitral Awards - 1999-2003

About the Editors:
Sigvard Jarvin has been involved in more than 215 international arbitrations under the arbitration rules of the ICC, the Stockholm Arbitration Institute, the Dutch Arbitration Institute, the American Arbitration Association, LCIA, UNCITRAL, the Cairo Regional Centre, and other arbitration organizations. He was general counsel to the ICC International Court of Arbitration, Paris (1982-1987) and member of the Court (1988-1995). He also chaired the ICC working party revising the ICC/CMI Maritime Arbitration Rules (1997-1998).

Mr. Jarvin was the rapporteur at the 1990 and 1998 ICCA Congresses and was chairman of the foreign section of the Swedish Bar from 1999 to 2000, and he is also a member of the board of the Institute of Arbitration Law at Stockholm University and a member of the ICC Commission on Arbitration and the International Arbitration Club, London. He is cited yearly as one of the best arbitration lawyers in France in Chambers Global — The World’s Leading Lawyers , published by Chambers & Partners.

Annette Magnusson, is a Professional Support Lawyer at the firm of Mannheimer Swartling, Stockholm. She was formerly Assistant Secretary General and legal counsel for the Arbitration Institute of the Stockholm Chamber of Commerce.

Observation Commentary by:

John Kadelburger, Partner, Gedda & Ekdahl Advokatbyra, Stockholm.

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Description:

Originally from SCC Arbitral Awards 1999-2003

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Subject-matters:

(1) Trading in Russian securities; failure by trader to comply with client’s instructions; client’s identity and validity of instructions questioned.
(2) Does deposit of securities with a public notary constitute discharge under Article 327 of the Russian Civil Code?
(3) Applicable law: Russian or Swedish?
(4) Does a penalty clause relating to late payment apply in lieu of or in addition to default interest provisions under Swedish law?

Findings:
(1) Where a bank acted as intermediary between the investor and the broker, representatives of the bank had apparent authority to represent the broker.
(2) Respondent is obligated to pay to Claimant a principal amount of USD 317 000, as evidenced by a statement of account; this obligation cannot be affected by Respondent’s deposit of any securities with the Moscow notary, unless and until Claimant has accepted such manner of performance by collecting the securities.
(3) Where the contract provided for the application of both Russian and Swedish law, Russian law was not, considering the context and the wording of the clause, intended as a general provision on applicable
law. Swedish law applies to the calculation of interest.
(4) In view of the modest level of the contractual penalty and of the contents of the Agreement, the Tribunal finds that the penalty must have been intended to be payable in addition to default interest
rather than in lieu thereof.

Table of Contents:

VII. SCC case 16/1998

Subject-matters:

(1) Trading in Russian securities; failure by trader to comply with client’s instructions;
client’s identity and validity of instructions questioned.

(2) Does deposit of securities with a public notary constitute discharge under Article
327 of the Russian Civil Code?

(3) Applicable law: Russian or Swedish?

(4) Does a penalty clause relating to late payment apply in lieu of or in
addition to default interest provisions under Swedish law?

Observations by John Kadelburger