SCC Case 7/2001 - Chapter 21 - 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:

Michael Pryles, President of the Australian Centre for International Commercial Arbitration.

Jon Stokholm, Judge of the Supreme Court of Denmark.

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Description:

Originally from SCC Arbitral Awards 1999-2003

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Subject-matters:

(1) Letter of credit and unjust enrichment - whether the purchaser had fulfilled its obligations concerning payment under the contract by obtaining the letter of credit.
(2) Invalidity of contract – whether the contract was duly signed and dealt with past events.
(3) Calculation of interest.

Findings:
(1) The opening of a letter of credit does not constitute a final payment. Furthermore, since the purchaser had accepted the equipment sold and the purchaser had received full payment for the goods by the end user, the purchaser would be unjustly enriched if it did not have to pay the seller.
(2) It is a widely recognized principle under international contract law that a party to a contract cannot successfully claim invalidity of the contract after having himself acted in compliance with the contract, without giving notice to the opposing party that the contract might be invalid.

There is no rule allowing the avoidance of a written contract for the sole reason that it was signed after its performance.

(3) Since the purchaser was not liable for the seller’s failure to obtain payment under the letter of credit, the seller was not entitled to interest as from the expiry date of the letter of credit.

Table of Contents:

XXI. SCC case 7/2001

Subject-matters:

(1) Letter of credit and unjust enrichment - whether the purchaser had fulfilled its obligations concerning payment under the contract by obtaining the letter of credit.

(2) Invalidity of contract - whether the contract was duly signed and dealt with past events.

(3) Calculation of interest.

Observations by Michael Pryles

Observation by Jon Stokholm