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CISG CASE PRESENTATION

Italy 19 June 2000 Supreme Court (Metal processing plant case) [translation available])
[Cite as: http://cisgw3.law.pace.edu/cases/000619i3.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISION: 20000619 (19 June 2000)

JURISDICTION: Italy

TRIBUNAL: Suprema Corte di Cassazione [Supreme Court], Sez. Un.

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 448

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Malaysia (defendant)

GOODS INVOLVED: Sale and installation of plant for processing of metal


Case abstract

ITALY Corte di Cassazione 19 June 2000

Case law on UNCITRAL texts (CLOUT) abstract no. 647

Produced with permission of UNCITRAL

Abstract prepared by Lucia Ostoni

[Plaintiff], an Italian company (the seller), entered into a contract with [Defendant], a Malaysian company (the buyer) for the purchase, assembly, and delivery of various parts of a plant for manufacturing iron for industrial purposes. According to the contract, the price was set F.O.B. North Italian port, but the assembly and installation of the plant had to take place in Malaysia under the supervision of the seller's employees.

The Italian seller brought suit against the Malaysian buyer before the Court of First Instance of Turin claiming first the payment for supplying the agreed plant, and then the declaration of conformity of the delivered plant as ordered by the buyer. The buyer filed a preliminary motion challenging the jurisdiction of the Italian court arguing that, under the contract, the seller's duties included the assembly, the installation and the delivery of the plant. Such obligations had to take place in Malaysia. According to the buyer, since the place of performance was Malaysia, Italian courts did not have jurisdiction over the dispute. The seller counterclaimed that the agreed price had to be paid in Italy (where the seller had its premises): therefore, the place of performance was Italy.

Pursuant to Italian rules of civil procedure, the decision concerning the preliminary motion challenging jurisdiction was rendered by the Italian Supreme Court. The court found the buyer's preliminary motion admissible and finally declared the lack of jurisdiction of the Court of First Instance. The court rendered a step-by-step rationale finding that:

a) according to the Italian international private law, art. 5(1) of the 1968 Brussels Convention on the Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters was applicable. Under this provision, the court of the place where the obligation has been or must be performed has jurisdiction;

b) the place of performance must therefore be determined pursuant to the substantive law applicable to the dispute according to the domestic private international law;

c) with regard to international sales of moveable goods, the Italian private law is based on The Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods. According to art. 3 of the Hague Convention, unless parties agree otherwise in the contract, the law of the place where the seller has its current dwelling place is the governing law. In this case, the seller had its dwelling place in Italy and, therefore, Italian substantive law was applicable to the case;

Since Italy is party to the CISG, the Convention is the substantive law governing the case. Pursuant to art. 6 CISG, the parties may depart from the Convention's provisions. Therefore, so far as the determination of the place of performance is concerned, it is important to refer, first, to the contractual provisions in order to define the parties' intent.

In the light of the contractual provisions (i.e., the assembling and installing duties, the warranty clause including the seller's duty to participate to the assembling and starting of the plant, etc.), the court found that, even if, with regard to the payment of the price, the place of performance was Italy pursuant to art. 57 CISG, the main obligation within the scope of the contract at issue consisted of assembly, installation and delivery of the industrial plant. Since all these operations had to be performed in Malaysia, Malaysia was the place of performance and Italian courts did not have jurisdiction over the dispute.

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Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(b)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 31 ; 57 ; 90

Classification of issues using UNCITRAL classification code numbers:

6A [Convention yields to contract: modification of Convention by contract];

31A [Place for delivery: contracts involving carriage of goods];

57A [Place for payment: in absence of agreement, payment at seller's place of business];

90A [Relationship to other conventions: 1955 Hague Convention]

Descriptors: Autonomy of parties ; Delivery ; Carriage of goods ; Jurisdiction ; Payment, place of ; Other conventions

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=753&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (Italian): Giurisprudenza italiana (2001) 236; Foro Italiano (2001) I c. 527; see also Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=753&step=FullText>

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

English: [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 31 para. 84

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Case text (English translation)

Queen Mary Case Translation Programme

Corte di Cassazione, Sezioni Unite
19 June 2000 n. 448

Translation [*] by Francesco G. Mazzotta [**]

Translation edited by Giovanna Micheli [***]

[...]

Facts [and history of proceedings]

Plaintiff of Italy [Seller], brought suit against Defendant [Buyer], which has its headquarters in Malaysia, before the Tribunale of Turin [Circuit Court of First Instance], with a complaint served on 3 March 1997, seeking:

a) Pursuant to Art. 1224 of the [Italian] Civil Code (Cc), [Buyer]'s payment for Italian Lire [It£] 427,110,000 plus interest and damages, as balance of the price for supplying an [industrial] plant for manufacturing of iron for industrial purposes; and

b) A declaration that the [industrial] plant complied with the 12 January 1996 order; consequently, [a declaration] that [Buyer]'s out of court's request for damages was groundless.

[Buyer] filed a motion [Regolamento preventivo di giurisdizione] challenging the jurisdiction of the Italian court and arguing that the Malaysian judicial authorities must handle the matter. [Seller] replied with a counterclaim moving to dismiss the matter. [Buyer] filed a defense pleading.

Law

1. Since [Seller] already brought an action against the guarantor Overseas Union Bank in Malaysia, [Buyer] claims that [Seller]'s goal is not to obtain the balance of the price but to prevent the action that [Buyer] was about to bring against [Seller] in Malaysia. Therefore, [Buyer] argues that:

2. Despite the repealing of Art. 37(2) of the [Italian] Code of Civil Procedure (C.p.c.) by Art. 73 of the L. 31 May 1995 n. 218, which reformed the [Italian] international private law, as this Court has already ruled (decisions of 25 May 1999, n. 293 and 1 February 1999, n.6), a motion to determine jurisdiction is permissible because such a motion may be brought to resolve the issue of the existence of the jurisdictional power of the court over a foreign party. [This issue] is governed by Art. 11 of the L. 1995 n. 218, as Art. 41 of the C.p.c is now construed. The decision on whether this motion is admissible is not affected by the existence of a proceeding before a Malaysia court, as both parties in their pleadings referred to. The proceeding in Malaysia has been brought by [Seller] against Overseas Union Bank seeking to obtain payment under the terms of a bank warranty executed in connection with the transaction with [Buyer] that later intervened in the same proceeding. Lacking the elements required by Art. 7 of the L. 1995 n. 218 (identity of parties, subject matter and cause of action between the two actions), the proceeding in Malaysia does not determine any litispendentis [the simultaneous pending of a double process over the same subject matter before different courts], therefore it is not suitable for suspending this proceeding and precluding it from the analysis of jurisdiction raised with the motion. With regard to the cause of action, the case at hand differs from other cases (decisions of 28 April 1999, n. 274 and 13 February, 1988, n. 1514) where this court found a motion for lack of jurisdiction not permissible. These cases referred to international conventions which provide for ex officio [judge made] suspension due to the international litispendentis, whereas the Art. 7 [L. 1995 n. 218] provides that the litispendentis must be plead by the parties.

3. [Buyer]'s contention is correct; it is therefore necessary to declare the lack of subject matter jurisdiction of Italian court over this dispute.

     3.1. This proceeding was brought after L. 1995 n. 218 had entered into force; thus Art. 3 of this law must be applied. Art. 3(1) cannot be applied because none of the criteria requiring a connection between the Italian jurisdiction and the Malaysian corporation is met. According to Art. 3(2), when dealing with subjects included in the Brussels Convention of 27 September 1968 (implemented with L. 21 June 1971 n. 804) the Italian jurisdiction may also exist as the requirements of Sections 2, 3 and 4 of Title II of the Brussels Convention are satisfied; these criteria are applicable regardless of whether or not the country involved in the dispute is a member of the Convention.

Since this dispute concerns a contractual matter, Art. 5(1) of the Brussels Convention applies. It provides that the "court of the place where the obligation has been or must be performed" has jurisdiction (locus destinatae solutionis). The place [of performance] must be determined pursuant to the substantive law applicable to the dispute according to the domestic private international law (Cass. 30 June 1999, n. 366; Cass. 19 December 1994, n. 10910). With regard to the International Sales of Moveable Goods (as the case at issue), the Italian private international law is based on the Hague Convention of 15 June 1955 (implemented by L. 4 February 1958 n. 50), which has a universal character (Art. 7) and prevails over the Rome Convention of June 1980 (implemented by L. 18 December 1984 n. 975), and to which Art. 57 of L. 1995 n. 218 sends back (this prevalence can also be inferred from Art. 21 of the Rome Convention). Contrary to [Seller]'s contentions, The Hague Convention of 1955 cannot be considered repealed by the United Nations Convention on Contracts for the International Sale of Goods adopted in Vienna 11 April 1980 (ratified with L. 11 December 1985, n. 765) because the latter sets substantive uniform rules and not rules on private international law. So that, the Vienna Convention provides substantive rules for the sale that pre-empt national rules, but the aim of [these rules] is not to determine the law applicable to the contract of sale, which has to be determined on the basis of the Hague Convention. According to Art. 3 of The Hague Convention, unless parties agreed otherwise in the contract, the law governing the sale is Italian law, since [Seller] has its current dwelling place in Italy. The locus destinatae solutionis (which is relevant pursuant to Art. 5 of Brussels Convention) must be determined according to Italian law. Though, since Italy has ratified the Vienna Convention of 11 April 1980 for the International Sale of Goods, the Italian law is substituted by the law stated in this Convention (Art. 1(1)(b)). However, such rules have general character so far as the parties, who have the contractual self-government[YUN2], may derogate from or vary the effect of any of these provisions (Art. 6).

     3.2. Hence, to determine the place of performance of the duties at issue (locus destinatae solutionis), it is necessary to refer first to the contractual provisions and subordinately to the rules of the Vienna Convention.

As already mentioned, [Seller] brought two claims before the Tribunale of Turin: first, [Seller] sought to have [Buyer] pay the balance of the price for the [industrial] plant; second, [Seller] asked for a declaration of conformity of the delivered [industrial] plant as ordered by [Buyer], and with the consequent declaration that [Buyer]'s out of court claim for damages was groundless.

With respect to the first claim, it is agreed between the parties that the place of performance is Italy because, pursuant to both the contract terms and Art. 57 of the Vienna Convention, the price had to be paid at [Seller]'s place of business (Italian company).

However, a controversy arises with regard to the place of performance in connection with the second claim, which concerns the supply of the [industrial] plant. [Seller] argued that the place of performance is in Italy, since there (precisely, at the port of Genoa) was performed the delivery to the carrier of the [industrial] plant's parts for shipping them to Malaysia; this handing of the "goods over to the first carrier for the transmission to the buyer" has to be considered as the delivery consistent with Art. 31 of the Vienna Convention. However, [Buyer] alleged that the place of performance of [Seller]'s duties is Malaysia, since the assembly of the [industrial] plant's parts occurred there; and in this regard, [Seller] contractually agreed to have its specialized technicians available in Malaysia for the assembling of the plant, which must be deemed as "a fundamental requirement for the performance of the duty to deliver." This Court (which has authority over the facts for the questions of jurisdiction) agrees with [Buyer]'s view with regard to the parties' contractual obligations. The Italian [Seller] sold to the Malaysian [Buyer] various parts of a plant, for manufacturing iron for industrial purposes, which had been assembled in Malaysia. The price was set "F.O.B. North Italian Port", but, with regard to the assembling of the plant in Malaysia, in the written contract (offered into evidence by [Seller]), right after the price clause, is provided that there should be present in Malaysia a "[Seller]'s employee with trips and other living expenses put in charge to [Seller]." The employee "was to complete the assembling and the starting operations within fourteen days from the beginning," as agreed by the parties upon request of [Buyer] (this Court relies on the translation of the contract offered by [Buyer] that was not objected by [Seller]). Moreover, even in the clause concerning "Warranty" the parties referred to the [Seller]'s obligation to participate to the assembling and starting of the plant. From the nature of the items of the sale (assembling parts that have to be technically put together to be used) as well as from the expressed terms of the agreement, it can be concluded that [Seller] has the duty to contribute, by means of one of its employees, to the assembling of the [industrial] plant in Malaysia.

Such an obligation is a fundamental requirement for the accomplishment of the duty to deliver; therefore, the place of performance of the obligation must be considered that where the assembling of the [industrial] plant had to take place. In this way, since time, this Court has been oriented: see decisions of 19 December 1994, n. 10910; 25 July 1981, n. 4818; 20 October 1975, n. 3397; 10 April 1968, n.1103; 20 June 1964, n.1610. Thus, Art. 31 of the Vienna Convention cannot be applied, as sought by [Seller], because the parties' contractual autonomy prevails over that provision. Therefore, the Court that has jurisdiction over the second claim is that of Malaysia, where the [industrial] plant had to be assembled and installed.

4. Pursuant to the criteria set forth by Art. 5, n.1 of the Brussels Convention of 27 September 1968, it must be concluded that the Italian court has jurisdiction over the first claim brought by [Seller] for monetary damages; that the Malaysian court has jurisdiction over the second claim with respect to declaratory judgment. However, the separation of the two claims would be contrary to the aims of the aforementioned Convention, which, pursuant to consistent case law of the European Court of Justice, attempts to avoid, as much as possible, the jurisdiction of multiple courts over the same contract. To this end, this court has repeatedly ruled that when there is an action based upon multiple obligations set forth by the same contract, Art. 5, n.1, of the Brussels Convention has to be applied by taking into consideration the duty that characterizes the contract (Cass. 9 June 1995, n. 6499; 21 February 1995, n. 1880; 28 March 1990, n. 2500). Applying this criteria, the jurisdiction over both claims brought by [Seller] must be determined on the basis of the performance that characterizes the contract among all of the performances due. In the case at hand, between the two performances at issue (payment of the price and the delivery along with the installation of the [industrial] plant), the second performance is the one that characterizes the contract signed by the parties, because the obligation of payment of the price is common to various contracts. Therefore, the place where this performance has to be done is the relevant place for the determination of jurisdiction over the action. As mentioned, the place is in Malaysia.

5. In conclusion, this Court holds that the Italian court lacks subject matter jurisdiction over the present case. Equitable reasons exist to offset the trial expenses between the parties.

For these reasons:

This Court declares that the Italian court does not have jurisdiction over the present case. The Court also offsets the trial expenses. So decided in Rome on 10 March 2000 [*].


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Italy is referred to as [Seller]; Defendant of Malaysia is referred to as [Buyer].

Translator's note on abbreviations: S.p.A = Società per Azioni [Corporation]; ITL = Italian Lire (Italian former currency); Cc = Codice civile [Italian Civil Code of 1942]; C.p.c. = Codice di procedura civile [Italian Civil Procedure Code of 1940] L. = Italian ordinary law, enacted by the Parliament; Cass. = Corte di Cassazione [Italian Supreme Court].

Translator's note on dates of the case: There are two dates that are important: the date on which the decision is rendered (10 March); and the date on which the decision is deposited, meaning before which it cannot have effect (19 June). When citing the case, one normally uses the latter date.

** Francesco G. Mazzotta, LL.M. University of Pittsburgh (2000), is an Associate in the New York office of Zini & Associates and an Associate of the Institute of International Commercial Law of the Pace University School of Law.

*** Giovanna Micheli is a member of the MAA and has received an LL.M. in Admiralty, Tulane University School of Law (2002). She earned Certificates in International Commercial Arbitration and Domestic Law and Practice of Arbitration. She is admitted in Italy as Attorney-at-Law.

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Pace Law School Institute of International Commercial Law - Last updated June 21, 2007
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