Business Law Question: Miga, a French company, sold hundreds of millions of doll
ID: 365511 • Letter: B
Question
Business Law Question:
Miga, a French company, sold hundreds of millions of dollars worth of goods, much of it on credit, to various agencies of the Russian government. The first deals were made with the Union of Soviet Socialist Republics (USSR), then, after the collapse of that government in 1991, with the Federative Socialist Soviet Republic of Russia (RSFSR), the successor government. The agreements called for binding arbitration of any disputes at the Chamber of Commerce of Stockholm, Sweden, under Swiss law, and subject to enforcement in court in New York. Following failure to make payments, the arbitrator awarded Miga $275 million, which Russia refused to pay. Miga brought suit in federal court in New York to enforce the arbitration award.
You be the judge. Who wins? Why? Make sure you address all the issues.
Explanation / Answer
Russia should win. Because, in this case there is a change in the government and there is no formal agreement with the new government about the terms and conditions. Miga has been supplying goods based on the previous government's agreement. There was no formal agreement between the new government and Miga. When Miga did not get credit clearance from the previous government, it should shop supplying to the new government until the past dues are cleared. Instead, Miga choose to supply new government on credit basis again.
Under international law, governments are generally bound by contracts, including those requiring binding arbitration of disputes that were lawfully signed by agencies of the governments that controlled the country prior to the current government. Here there is no formal arbitration between Miga and new government.
Miga is seeking to enforce an arbitration award rendered in a foreign state, the confirmation of the award is governed by the framework set forth in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. S
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