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CISG CASE PRESENTATION

Italy 12 July 2000 District Court Vigevano (Rheinland Versicherungen v. Atlarex) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000712i3.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20000712 (12 July 2000)

JURISDICTION: Italy

TRIBUNAL: Tribunale [District Court] di Vigevano

JUDGE: Alessandro Rizzieri

CASE NUMBER/DOCKET NUMBER: 12 July 2000, n. 405

CASE NAME: Rheinland Versicherungen v. S.r.l. Atlarex and Allianz Subalpina S.p.A..

CASE HISTORY: n. 856 R.g. (1997), appealed 16 December 1997

SELLER'S COUNTRY: Italy (defendant)

BUYER'S COUNTRY: Germany (plaintiff, buyer's assignee)

GOODS INVOLVED: Sheets of vulcanized rubber used in manufacture of shoe soles


Case abstract

Prepared by Charles Sant 'Elia

Rheinland Versicherungen [buyer's assignee], a Germany insurance company, brought suit against the Italian company, Atlarex S.r.l. [seller]. Buyer's assignee was the insurer of Eder GmbH & C. of Germany [buyer], which entered into a supply contract with seller for SOLREX vulcanized rubber. Buyer received shipments on 1 January 1994, 7 January 1994, 21 January 1994 and 2 February 1994. Buyer made the material into shoe soles, which were subsequently purchased and used in the manufacture of footwear by the Hogl + Lorenz shoe manufacturer, whose factory and headquarters are in Austria. Hogl + Lorenz sold 1,000 pairs of the footwear, made with the soles buyer manufactured, to Sovintersport L.T.D., a Russian company, which returned them to Hogl + Lorenz, stating that once the soles were placed on the market and subject to use, they wore out in a short time, and were consequently not fit for the use for which they were produced. In turn, Hogl + Lorenz returned the lot of shoes to buyer. Buyer reimbursed Hogl + Lorenz through Rheinland Versicherungen [buyer's assignee], "which had insured [buyer] against civil liability arising from the exercise of its professional activities." The sum paid was 85,483.24 German marks. Buyer's assignee engaged the ASA company, which deals in the redistribution of defective and damaged goods, which was able to sell 895 pairs below cost, thereby recovering 7,705 Marks, clear after expenses.

Buyer's assignee argued that subsequent testing revealed that the wear was attributable to the low quality of the material produced by the seller and that by a letter of 27 July 1994, the seller acknowledged that the goods did not conform to samples shown to the buyer.

Buyer's assignee brought the suit pursuant to Italian Civil Code art. 1201, standing in all the contractual and extra-contractual rights of buyer, its insured. Buyer's assignee argued that seller should be held to pay actual damages of 80,922.01 Marks (or 79,400,000 Lire), as well as inflation costs and legal interest from the date of the payment by buyer's assignee.

On 31 March 1998 seller sought to plead in Allianz Subalpina S.p.A., which joined the defense on 7 July 1998, asserting seller's defenses, and further arguing that the damages sought by buyer's assignee were beyond the scope of the insurance buyer's assignee had offered the buyer. Seller also filed a counterclaim, arguing that a term requiring 8 days notice for non-conformity was applicable, as such a term was written on the relevant invoices.

The Court held that plaintiff buyer failed to meet its burden of proof under the procedural law of Italy as well as under the CISG. Relying on foreign and Italian court decisions, the Court found that buyer disposed of all of the rubber soles, not bothering to save one sample, but instead chose to submit a written report by a German expert who it alleged examined the defective goods. The Court quickly disposed of this matter as Italian civil procedural law dictates that the judge, as a neutral third party, must order an expert evaluation of such proffered evidence, and must not accept the results of an evaluation conducted by a party to the action. Plaintiff also failed to produce the actual letter by which it claimed to have given timely notice to seller of the non-conformity of the goods. The Court held that the letter offered by plaintiff corresponded to shipments and deliveries not pleaded in the dispute; rather, the letter pertained to other shipments which were never raised by the parties. Testimony was offered as to the contents of the notice given. The only language adduced at trial amounted to "[the goods] caused some problems". This was held insufficiently vague to meet the specificity requirements of Art. 39 (1), which states the "buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity [...]". Furthermore, the Court found that had it been clearly proven that notice had actually been given, it would not have been within a reasonable time under the circumstances, given the kind and nature of the goods. In sum, the Court held that not only had plaintiff failed to produce any evidence which would allow full adjudication of its claims on behalf of the buyer, but even if the purported evidence were found to be properly admissible evidence, it still failed to meet the requirements of the CISG.

The Court ordered buyer's assignee to pay court costs and attorney's fees, and dismissed seller's counterclaim, having found that the illegible writing on the invoices, which it alleged imposed an 8 day notice of non-conformity term, had no effect as it appeared on documents prepared by seller alone, which were generated after the conclusion of the sales contract.

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Case abstract

ITALY: Tribunale de Vigevano

Case law on UNCITRAL texts (CLOUT) abstract no. 378

Reproduced with permission of UNCITRAL

An Italian seller delivered vulcanized rubber to a German buyer for the production of shoe soles. The soles produced by the buyer were sold on to an Austrian manufacturer who produced a certain number of shoes and commercialized them in Russia. Upon receiving complaints from its Russian customer, the Austrian manufacturer turned to the buyer who commenced legal action against the seller alleging lack of conformity of the raw material.

In its judgement, the Court relied for each issue on a number of decisions on the CISG already rendered by foreign courts and arbitral tribunals. Though precedents in international case law cannot be considered legally binding, in the Court’s opinion they have to be taken into account by judges and arbitrators in order to promote uniformity in the interpretation and application of CISG (Art. 7(1) CISG).

According to the Court, while the parties are free to exclude application of CISG either expressly or impliedly (Art. 6 CISG), the mere reference to domestic law in the parties’ pleadings is not in itself sufficient to exclude CISG. To this effect parties must first of all be aware that CISG would be applicable and moreover intend to exclude it.

As to the buyer’s claim to damages for lack of conformity, the Court observed – referring to several international decisions on the same issue – that the “reasonable time” for notice under Art. 39(1) CISG depends on the circumstances of each case and on the nature of the goods. It starts running as from the time when the buyer is required to examine the goods under Art. 38(1), which as a rule is upon delivery or shortly thereafter and only exceptionally may be later, for instance when the defect is discoverable only by processing the goods.

In the case at hand, the Court held that a notice given four months after delivery was not timely. Indeed, even supposing that the defects could not have been discovered at delivery, the buyer should have discovered them at the latest when processing the goods and given notice immediately thereafter, while it waited until it received complaints by its own customer. A different conclusion could be drawn only if it were proved that the alleged defects were not discoverable during processing. The burden of bringing evidence thereof falls however on the buyer, who in the case at hand failed to bring such evidence.

Nor had the buyer sufficiently specified the nature of the lack of conformity according to Art. 39(1) CISG. A mere statement that the goods “caused problems” or “present defects” does not enable the seller to determine its conduct regarding the alleged lack of conformity.

Finally, the Court examined the question of the burden of proving the lack of conformity of the goods. The Court rejected the opinion that the burden of proof is a question excluded from CISG and governed by the applicable domestic law (Art. 4, first sentence, CISG). On the contrary, it held that the burden of proof is a matter governed but not expressly settled by CISG, and which therefore has to be settled in conformity with the general principles underlying CISG (Art. 7(2) CISG). In the Court's view, it is a general principle underlying the CISG that the claimant should bring evidence in favor of its cause of action. Such principle may be derived inter alia from Art. 79(1) CISG which expressly states that the non performing party must prove the circumstances exempting it from liability for its failure to perform, thereby implicitly confirming that it is up to the other party to prove the fact of the failure to perform as such. Therefore, it is up to the buyer to prove the existence of a lack of conformity and the damage ensuing from it.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 7(1) and (2) ; 35 ; 38 ; 39(1) ; 74 ; 79(1) - by analogy [Also cited: Articles 4 ; 12 ; 40 ; 44 ]

Classification of issues using UNCITRAL classification code numbers:

6A [Exclusion or modification of Convention by contract];

7B ; 7C21 [Materials for interpretation of Convention: international case law; Problems governed by Convention but not expressly settled: analogous application to areas not expressly regulated];

35A ; 35B [Conformity of goods to contract: quality, quantity and description required by law; Requirements implied by law];

38A [Time for examining goods: buyer's obligation to conduct timely examination of goods];

39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time specifying nature of non-conformity];

74A [General rules for measuring damages: party alleging damages must prove the damages it suffered in addition to the causal nexus between the breach and the damages, which must be recoverable damages within the meaning of Art. 74]

Descriptors: Autonomy of parties ; Choice of law ; Uniformity ; Good faith ; General principles ; Gap-filling ; Conformity of goods ; Examination of goods ; Lack of conformity notice, timeliness ; Lack of conformity notice, specificity ; Damages ; Burden of proof

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Editorial remarks

EDITOR: Charles Sant 'Elia

In a remarkable opinion of the Tribunale di Vigevano,[1] Judge Alessandro Rizzieri, not only sought to apply the provisions of the CISG faithfully to the letter and spirit of the uniform law, but in so doing he also exhibited a willingness to employ the very means which so many jurists and scholars have exhorted courts and arbitral panels to use. Judge Rizzieri cited American, Austrian, Dutch, French, German, Italian, and Swiss court cases contained in national reporters, ICC arbitral awards, as well as two CISG websites and UNILEX.[2] Conspicuously absent are references to civilian commentaries and treatises. For the most part, the judge firmly followed the majority and prevalent views announced by the above-mentioned tribunals.

Judge Rizzieri, presiding alone, held that the claim by plaintiff, buyer's assignee (an insurance company subrogated to buyer's rights), was unfounded. According to the procedural law of both Italy and Germany, buyer's assignee had the proper standing through subrogation to file suit against seller.[3] However, Judge Rizzieri rejected defendant seller's arguments that allowing such suit would effect the obligations between seller and its buyer.

Judge Rizzieri recognized the international character of the sales contract, and held that the CISG was applicable. He held that as a contract for the international sale of goods, the substantive governing law does not have to be specifically identified through recourse to the norms of private international law, nor according to the Hague Convention of 15 June 1955, but rather such law is found through application of the CISG. Citing Tribunale di Pavia 29 December 1999, Judge Rizzieri distinguished the CISG from the aforementioned Hague Convention, by stating that the CISG is more limited in scope by its precise language, which makes it apply to sales contracts on the basis of the relevant places of business of the parties to the contract, while the Hague Convention involves any type of "international" sales contract. The Judge went further, finding that recourse to the norms of relevant uniform law must always take precedence over the norms of private international law, irrespective of their source, as the former are "special" by definition and "directly" resolve the issue.

As the buyer was located in Germany and the seller in Italy as of the date of contract formation, both nations being States signatories to the CISG at that time, such application was held proper pursuant to Art. 1(2) and Art. 1(1)(a). Significantly, the parties to the contract did not exercise their right to exclude application of the CISG. Citing a line of court decisions, Judge Rizzieri recalled that exclusion may occur expressly or even "tacitly" [OLG München 9 July 1997; LG München 29 May 1995; OLG Celle 24 May 1995; contra, LG Landshut 5 April 1995; Orbisphere Corp. v. United States, 726 F. Supp. 1344 (1990)], and stated with respect to foreign jurisprudence that, even if it is not binding, he would hold that foreign jurisprudence should be taken into consideration with "regard" to promoting uniform application of the CISG and the observance of good faith, as mandated by Art. 7(1) [Tribunale di Pavia 29 December 1999]. Importantly, the Court held that merely because the parties based their initial claims and objections on the Italian Civil Code and failed to mention the CISG, this was insufficient to show that the parties wished to exclude its application. [German Supreme Court 23 July 1997; French Cour de cassation 17 December 1996; LG Düsseldorf 11 October 1995; Arbitral Panel of the International Chamber of Commerce award no. 7565 of 1994; but contra, BG Weinfelden 23 November 1998; Cour d'appel de Colmar 26 September 1995].

The Court reminded that Art. 35(1) requires that the "seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract." Goods are considered non-conforming according to Art. 35(2) if they are not suitable for the purposes for which goods of the same description would ordinarily be used, if they are not suitable for any particular purpose the buyer expressly or impliedly made known to the buyer, if they do not possess the qualities of goods which the seller has held out to the buyer as a sample or model, if the goods are not contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods. As mentioned, if the goods are non-conforming, the buyer must notify the seller of the defects, specifying as far as possible, their nature, within a reasonable time, pursuant to Art. 39(1). The moment in which the buyer discovered the non-conformities or should have discovered them, as imposed by Art. 39(1), is to be established in line with Art. 38(1), which further requires the buyer to examine the goods "within as short a period as is practicable in the circumstances." [Pretura Torino, 30 January 1997] The timeliness of the buyer's notice is to be determined on a case-by-case basis, bearing in mind the particular circumstances of the case being adjudicated. [Tribunale di Cuneo 31 January 1996; OLG München 8 February 1995; OLG Düsseldorf 10 February 1994]. The Court noted that among the factors to be considered is the nature of the goods (chiefly, whether perishable or non-perishable). [AG Augsburg 29 January 1996; Rechtbank Roermond 19 December 1991]. Perishable goods generally give rise to an obligation to notify the seller within a shorter period of time. [Rechtbank Zwolle 5 March 1997; AG Kehl 6 October 1995].

The Court went on to state that the will of the parties is also relevant in determining whether notice is timely. The Court reasoned that as Art. 39(1) may be derogated from, just as all other articles of the CISG with the exception of Articles 12 and 89 to 101, therefore the parties are able to establish a time within which the buyer must give notice of non-conformity, or else lose absolutely its right to prevail in claims based on that non-conformity. [LG Gießen 5 July 1994]. It was held that the parties in this case did not derogate from Art. 39(1) because the alleged eight day notice of non-conformity term was not received into evidence, as the term was illegible and appeared on documents unilaterally generated by the seller subsequent to the formation of the sales contract. Therefore, a "reasonable time" was to be construed, keeping in mind that the goods were not perishable, and under such circumstances that the notice allegedly given four months later did not constitute notice "within a reasonable time." Judge Rizzieri reasoned that the mere fact that goods are not perishable does not lead to a blanket extension of the meaning of "reasonable time." Rather, he noted that at least one court held in a similar case that notice received four months later was not reasonable. [Dutch Supreme Court 20 February 1998]. Other courts have also held that three months was too late [Rechtbank Roermond 6 May 1993], while still others have held two months was too late. [OLG Düsseldorf 10 February 1994]. The Judge noted that in one case this latter court held 25 days to be unreasonable. [OLG Düsseldorf 12 March 1993]. Based on the facts before it, the Court found it highly probable that the buyer failed to make a timely inspection of the goods, as required by Art. 38, and for that reason failed to notify the seller.

The Court accepted the possibility that in a case as such this one, the buyer might arguably not be able to discover defects until further reworking or incorporation of the goods into other goods had been completed. Yet even after such processing occurred, the buyer did not provide seller a timely or sufficiently specific notice of any non-conformities. The manufacturer buyer did not notify the seller, but instead sold as many of the processed products as it could. The Court found it rather suspect that the buyer only notified the seller after the final purchaser complained to its immediate seller, who in turn sent the shoe soles back to the initial manufacturer buyer. Significantly, the buyer, which asserted a claim of non-conformity was wholly unable to produce any samples of the non-conforming goods, as buyer's assignee sought recourse to a company which resold the shoes in other markets.

Judge Rizzieri reminded that the rationale behind not only giving timely notice of non-conformity but sufficiently specific notice, is to enable the seller to decide how to proceed. [HG Zürich 30 November 1998]. Judge Rizzieri also cited with approval a German court which held that the blanket statement "the goods are defective in all respects" failed to meet the requirements of Art. 39(1). [OLG Frankfurt 18 January 1994]. Furthermore, Judge Rizzieri found that Articles 40 [4] and 44 [5] were inapplicable, as no facts were presented to indicate that the defendant seller knew or could have known of the non-conformities; nor were any facts adduced which would support a finding that a late notice had a reasonable justification.

Evidentiary issues played a key role in the outcome of the case. The Court addressed the problem of determining the burden of proof by finding that buyer bore such a burden with respect to its notice claims. The Court took note of the minority jurisprudence which holds that the allocation of the burden of proof is not governed by the CISG, as it is not listed in Art. 4, and must consequently be determined by national law.[6] [Arbitral Panel of the ICC, award no. 6653 of 1993; Repubblica e Cantone del Ticino, Corte d'Appello, seconda camera civile, 15 January 1998]. However, it decided to follow the majority view, accepting what it termed as "the better doctrine", which relies on the fact that Art. 79(1), by way of example, in referring to a party's failure to perform, makes express mention of the burden of proof.[7] Thus the allocation of the burden of proof is to be determined pursuant to Art. 7(2), in accordance with the general principles of the CISG itself. [LG Frankfurt 6 July 1994]. Judge Rizzieri identified the general principle regarding the allocation of the burden of proof to be such that ei incumbit probatio qui dicit, non qui negat, that is, the party which invokes its right to assert a claim is required to demonstrate the facts which support the claim. The Judge further stated that the corollary of this principle is that objections or defenses are to be proven by the party which raises them. [HG Zürich 30 November 1998]. Similarly, if a party asserts that the CISG is inapplicable because the sales contract is not "international" or because the parties have contractually derogated from its applicability pursuant to Art. 6, that proponent party must prove the inapplicability of the CISG. The Court firmly announced that "there can thus be no doubt" that the party to the contract which asserts non-performance of the other party and thereby seeks damages must prove both the non-performance as well as the damages it suffered, in addition to the causal nexus between the breach and the damages, which must be recoverable damages within the meaning of Art. 74. [HG Zürich 26 April 1995].

Whether one challenges the Court's judgment or the line of court decisions and arbitral awards upon which it is based, the judgment's breadth and analysis remain a fertile invitation to further explore the limits of the meaning of "reasonable" and "within as short a period as is practicable in the circumstances", and the specificity requirement recited in Art. 39(1), as well as reasoning by analogy to arrive at a tenable identification of and application of "general principles". Common law jurists may term much of what is stated in the judgment as dicta. Although the Court has provided clear examples of how it would rule in several instances, it would have been interesting to observe the Court's handling of such a case, had the plaintiff buyer proffered legally sufficient evidence to support its claims. Critics, no doubt, will challenge such a decision on the threshold question as to the allocation of the burden of proof and perhaps the quantum of that proof. In this litigation, plaintiff's case was easily dismissed on the facts (or absence of facts for the judge to deem established and to which to apply the law). Nonetheless, the instant case provides great insight into what would or should constitute the presentation of a case with colorable claim. The decision rendered by the Court is likely to prove highly persuasive in future decisions due to its extensive overview and assessment of the application of the CISG and the jurisprudence of other nations.

This decision is also highly indicative of a modern court's (particularly, a civilian court's) willingness to render a decision based upon decisional law from many other nations' internal sources. Geographic and linguistic borders are ever more easily crossed due to the Internet and the availability of electronic databases. As such, this case is not only important to the history and development of CISG case law in Italy, which was an early signatory to the Convention and the source of many commentaries, but also for its contribution to the ever growing global CISG jurisprudence.


FOOTNOTES

1. Regional Court (Province of Pavia), having original jurisdiction over matters involving a value exceeding Lire 20,000,000 pursuant to Art. 9 I Code of Civil Procedure, and having appellate jurisdiction over decisions of the Pretura (District Court), pursuant to Art. 341 I, II Code of Civil Procedure.

2. For purposes of the discussion, the sources relied upon for various propositions by the court have been bracketed. The court is referred to herein interchangeably as "the Court" and "Judge Rizzieri," as he rendered this decision alone.

3. The court expressly cited § 67 of the Versicherungsvertragsgesetz as well.

4. "The seller is not entitled to rely on the provisions of articles 38 and 39 if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer."

5. "Notwithstanding the provisions of paragraph (1) of article 39 and paragraph (1) of article 43, the buyer may reduce the price in accordance with article 50 or claim damages, except for loss of profit, if he has a reasonable excuse for his failure to give the required notice."

6. Article 4 expressly states that the CISG "governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract". The article further states, that unless expressly provided in the CISG, the "validity of the contract or of any of its provisions or of any usage" and the "effect which the contract may have on the property in the goods sold" are not governed by the CISG. Art. 4(a), Art. 4(b).

7. The reference is to the language whereby a party is not liable for a failure to perform if he "proves that the failure was an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences." Art. 79. Some may argue that this is merely intuitive, as with all asserted claims, while others may assert that the article only addresses impediments.

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Citations to other abstracts, texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=387&step=Abstract>

French: Recueil Dalloz (24 January 2002) No. 4, 395

CITATIONS TO TEXT OF DECISION

Original language (Italian): Click here for Italian text of case; see also Giurisprudenza italiana (2000) 280-290; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=387&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, Tribunale di Vigevano: Specific Aspects of the CISG Uniformly Dealt With, 20 Journal of Law and Commerce (Spring 2001) 225-239; Ferrari, Truly Uniform Application of CISG: Tribunale de Vigevano (Italy), 12 July 2000, Uniform Law Review (2001-1) 203-215; Saidov, Damages under the CISG (December 2001) nn.351, 353, 355, 357; Perales, Battle of the Forms and Burden of Proof, 6:2 Vindobona Journal (2002) 217-228, n.23; Mazzotta, The International Character of the UN Convention on Contracts for the International Sale of Goods: An Italian Case Example (June 2003); Graffi, Case Law on the Concept of "Fundamental Breach" in the Vienna Sales Convention, Revue de droit des affaires internationales / International Business Law Journal, No. 3 (2003) 338-349 at n.65; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.340, 402, 408, 567, 582, 589, 788, 866; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (cases cited in addendum to opinion); [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 162, 172, 179; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 1 para. 49 Art. 4 para. 21 Art. 6 para. 14 Art. 7 para. 14 Art. 38 para. 14 Art. 74 para. 51 Intro. 89-101 para. 3; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 38, 158

French: Ferrari, Revue de droit des affaires internationales (2001) 224-230; Spiegel, Recueil Dalloz (24 January 2002) No. 4, 395-396

German: Ferrari, Internationales Handelsrecht (2001) 56-60

Italian: Ferrari, Giurisprudenza italiana (2000) 281-285; Veneziano, Diritto del Commercio Internazionale (2001) 509 et seq.

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Case text (English translation)

Reproduced with the permission of 20 Journal of Law and Commerce (Spring 2001) 209-224.

Decision of the Tribunal of Vigevano, Italy
July 12, 2000
[*]

Judge: Dr. Alessandro Rizzieri
Sitting as Sole Judge
July 12, 2000 decision, #405

[For purposes of this presentation, Plaintiff Rheinland Versicherungen Company is referred to as [buyer's assignee]; Eder GmbH & C of Germany is referred to as [buyer]; Defendant Atlarex S.r.l. of Italy is referred to as [seller]; citations to [available texts] have been added to CISG case citations; for ease of reference, the paragraphs of the judge's opinion have been numbered [1] through [32].]

FACTUAL AND PROCEDURAL HISTORY

By a statement of claim served on December 16, 1997, [Plaintiff] Rheinland Versicherungen Company [buyer's assignee], which has its offices in Neuss (Germany), brought suit against [Defendant] Atlarex S.r.l. [seller], which has its offices in Vigevano, alleging:

-   that the [seller], "pursuant to an existing supply contract with [buyer], delivered to [buyer] sheets of SOLREX vulcanized rubber on May 1, 1994, July 1, 1994, January 24, 1994 and February 2, 1994;"
that, upon receipt of the rubber, [buyer] converted it into shoe soles which were subsequently bought and used for manufacturing footwear by the footwear manufacturer Hogl+Lorenz, which has its factory and offices in Austria;
-   that Hogl+Lorenz sold 1,000 pairs of footwear manufactured with soles made by [buyer] to Sovintersport L.T.D., which has its offices in Russia. Sovintersport, however, returned them to Hogl+Lorenz "because the soles wore out in a very short time, and hence were not suitable for the use for which they were produced;"
that Hogl+Lorenz, in turn, "returned the shoes to [buyer];"
-   that [buyer] compensated Hogl+Lorenz for its losses by a payment of 85,483.24 German Marks (DM). Payment was made by the plaintiff insurance company "under a policy covering civil liability arising from professional activities";
that the ASA Company, which was in the business of salvaging damaged or defective goods, was hired by the [buyer's assignee] and was able to sell [page 209] 895 pairs of the returned shoes for 7,705 DM net, a price less than [buyer]'s costs for producing the shoes;
-   that upon investigation "after the complaint and the return of the manufactured products," it appeared that the excessive wear was due to the poor quality of the raw materials supplied by the [seller]. The [seller], furthermore, admitted in a letter dated July 27, 1994 that the product did not conform to samples it had supplied;
that, under the insurance contract and Article 1201 of the Civil Code, [buyer's assignee] "was subrogated to all contractual and extra-contractual rights of the insured [buyer] against [seller], which had committed a serious breach of contract."

Therefore, [buyer's assignee] asked the Court to determine that the [seller] breached the contract, and to order the [seller] to pay the [buyer's assignee] 80,922.01 DM, or 79,400,000 lire, as damages, in addition to currency appreciation and legal interest from the date of the disbursement to the date damages are completely paid.

[Seller] appeared before the Court and asserted:

-   that the [seller] provided [buyer] with several deliveries of SOLREX vulcanized rubber sheets between November 30, 1993 and June 3, 1994, and that [buyer] still owed part of the price (18,753,948 lire) for these deliveries;
that "more than four months after receiving the goods" it claimed were defective, [buyer] first communicated to the [seller] in July 1994 that some soles made of the SOLREX material "had problems;"
-   that [seller] promptly objected to the tardiness of the notification in a letter of September 23, 1994 in which it admitted that, "according to a small sample sent for testing, it might have provided some defective sheets of material," and it also noted "that the supposed fault or defect could not have caused such serious damage as that claimed," and that "responsibility had to be imputed to those who manufactured the vulcanized rubber sheets into soles;"
that the goods could not contain hidden defects because these raw materials used for production were homogeneous, and the alleged defects (such as the porosity of the rubber, its inadequate hardness, and its improper specific gravity, as well as possible holes and punctures in the sheets of rubber) would be so obvious that they could not fail to be noticed by [buyer] at the time the rubber was used;
-   that "the number of allegedly defective sheets of rubber (12 out of a total of 1200 sheets delivered by [seller]) was so low as to make it highly improbable that they could have caused the problems alleged by the [buyer's assignee];" [page 210]
that, furthermore, there was inadequate proof of the alleged defects, nor had testing been done on the 200 pairs of used shoes or on the 800 pairs of new shoes that were returned to Hogel+ Lorenz by its Russian customer;
-   that notice of the defects was not communicated in a timely fashion, resulting in loss of rights arising from such defects, and that an action based on those defects was barred by the statute of limitations in article 1495 of the Civil Code because the action was commenced more than a year after the last delivery contested by [buyer], which occurred on February 2, 1994;
that these objections could also be raised against [buyer's assignee];
-   that [buyer's assignee] lacked standing to sue "because the [buyer's assignee]'s intent to subrogate itself to the rights of [buyer] had not been expressed at the time of payment;"
that, in any event, [seller] would also be entitled to a partial set-off from any liability to [buyer's assignee] based on outstanding matters between the [seller] and [buyer].

For these reasons, the [seller] asked the Court to dismiss the [buyer's assignee]'s request, and to authorize the [seller] to implead the insurance company Allianz Subalpina S.p.a. Company, which stands as surety for the [seller] in case of defeat.

Upon authorization by the Court, the defendant [seller] impleaded Allianz Subalpina by a statement of claim served on March 31, 1998. By an answer filed on July 7, 1998, Allianz Subalpina, which has its offices in Turin, became a party to the litigation. Allianz Subalpina referred to the defenses raised by [seller] against the [buyer's assignee], and it further argued that it had no liability in this matter because the claimed damages were outside the scope of its insurance relationship with the [seller]. Allianz Subalpina therefore asked the Court to dismiss all claims against it.

On February 2, 1999, the [seller]'s legal representative was examined concerning the events giving rise to the dispute, but it was not possible to attempt conciliation because the legal representatives of the [buyer's assignee] and Allianz Subalpina did not attend the hearing. By order dated February 9, 2000, the judge ruled that the dispute could be settled as a matter of law and he invited the parties to state their positions and conclusions precisely. At a hearing on March 8, 2000, the parties stated their respective positions and the matter was scheduled by the Court for deliberation at the expiration of the date granted to the parties under article 190 of the Code of Civil Procedure. [page 211]

GROUNDS FOR THE DECISION

The claim by [buyer's assignee] is not well-grounded and must be rejected for the following reasons:

[1] Because the sale in question was made by [seller], with offices in Italy, to [buyer], a German company (to whose rights the [buyer's assignee] was subrogated), it has an international aspect. Thus the substantive law applicable to the case must first be determined. That law will also be applied to the relationship between the [buyer's assignee] and the [seller], because subrogation does not extinguish the original right to which subrogation is claimed, nor does it create a new, independent obligation; it merely changes the party asserting the right. Therefore the relationship giving rise to the obligation at issue remains unchanged despite the [buyer's assignee]'s subrogation, so that in our system the applicable law also remains the same. The same is true under German law, which in this case governs the subrogation of [buyer's assignee] to the rights of [buyer] against [seller] based on the insurer indemnifying [buyer] for its losses. In fact, according to § 67 of Versicherungsvertragsgesetz, the insurer is subrogated by law to the legal position of the insured whose damages it has paid, so that the [seller]'s argument that the [buyer's assignee] lacked standing to sue is not well grounded.

[2] Contrary to initial appearances, the substantive law applicable to this international transaction should not be determined by reference to the rules of private international law on the matter of international sales B [sic] namely the rules provided by the June 15, 1955, Hague Convention (ratified by statute on February 4, 1958, # 50, entered into force on September 1, 1964) -- but rather by reference to the 1980 United Nations Convention on Contracts for the International Sale of Goods (ratified by statute on December 11, 1985, # 765, entered into force on January 1, 1988). This conclusion derives from the specificity of the provisions of the United Nations Convention in comparison to those of the Hague Convention (on this point see the decision of the [District] Court of Pavia [Italy], December 29, 1999 [text + English translation available at <http://cisgw3.law.pace.edu/cases/991229i3.html>]. This specificity is due not only to the narrower scope of the United Nations Convention (it applies only to sale contracts whose international character depends on the location of the buyer and seller in different countries, whereas -- as is commonly recognized -- the Hague Convention applies to all kinds of international sales contract) but also, and above all, to the fact that rules of uniform substantive law must always prevail over the rules of private international law (independent of their sources). Uniform substantive law is more specific per definitionem than the rules of private international law because the former settles "directly" the [page 212] question of applicable substantive law. It thus avoids the two-step process -- consisting first in the identification of the applicable law and then in its enforcement -- required by resort to private international law.

[3] The United Nations Convention applies to contracts for the sale of goods in which the contracting parties had business offices in different States at the time the contract was concluded.

[4] As to the contract involved in this case, it is clear that the international character requirement mentioned above is satisfied, in light of the fact that the seller has its place of business in Italy while the buyer has its business seat in Germany. This international character was well known by parties at the time the contract was concluded, so it therefore cannot be disregarded under article 1, paragraph 2 of the United Nations Convention.

[5] The international character of the contract is not in itself sufficient to make the Vienna Convention applicable. It is also necessary that the countries in which the parties have their places of business be Contracting States to the Convention at the time the contract was concluded (CISG Article 1(1)(a)) or that the rules of international private law of the forum would refer to the law of a Contracting State (CISG Article 1(1)(b)). In the instant case, considering that the Convention became effective both in Italy and in Germany before the conclusion of the present contract (respectively on January 1, 1998 and January 1, 1991), the contract is governed by the CISG under Article 1(1)(a). We add that the parties did not exercise the power -- allowed them by the Convention -- to exclude application of the CISG. Such an exclusion can be expressly provided for, but it also can be tacitly agreed to, as foreign case law often asserts (see, for example, the decision of the OLG [Appellate Court] Munich [Germany], July 9, 1997 [text available at <http://cisgw3.law.pace.edu/cases/970709g2.html>]; the decisions of the LG [District Court] Munich [Germany], May 29, 1995 [text available at <http://cisgw3.law.pace.edu/cases/950529g1.html>]; and the decision of the OLG [Appellate Court] Celle [Germany], May 24, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950524g1.html>]; contra, the decision of the LG [District Court] Landshut [Germany], April 5, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950405g1.html>]; Orbisphere Corp. v. United States, [U.S. Court of International Trade, October 24, 1989] [text available at <http://cisgw3.law.pace.edu/cases/891024u1.html>]). Such foreign case law, contrary to what a minority of authorities have argued, is not binding on this TR. It must nevertheless be considered in order to assure and to promote uniform enforcement of the United Nations Convention, according to its article 7(1) (accord, the decision of the [District] Court of Pavia [Italy], December 29, 1999 [text + English translation available at <http://cisgw3.law.pace.edu/cases/991229i3.html>]). The fact that during the preliminary legal proceedings in this case the parties based their arguments exclusively on Italian domestic law without any references to the Vienna Convention cannot be considered an implicit manifestation of an intent to exclude application of the Convention. Foreign [page 213] case law is in accord. See the decision of the German Federal [Supreme] Court, July 23, 1997 [text + English translation available at <http://cisgw3.law.pace.edu/cases/970723g2.html>], according to which a reference in a party's brief to the non-uniform national law of a Contracting State -- even though it is theoretically some evidence of an intent to choose the national law of that State -- does not imply the automatic exclusion of the United Nations Convention. Accord, the decision of the French Court of Cassation [Supreme Court], December 17, 1996 [text + English translation available at <http://cisgw3.law.pace.edu/cases/961217f1.html>]; the decision of the LG [District Court] Düsseldorf [Germany], October 11, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/951011g1.html>]; and the decision of the Arbitration Court of the International Chamber of Commerce, arbitration No. 7565 [English text available at <http://cisgw3.law.pace.edu/cases/947565i1.html>]; contra the decision of the BG [District Court] Weinfelden [Switzerland] November 23, 1998 [text available at <http://cisgw3.law.pace.edu/cases/981123s1.html>]; the decision of the Cour d'appel [Appellate Court] de Colmar [France], September 26, 1995 [text available at <http://cisgw3.law.pace.edu/cases/950926f1.html>]. We will assume that the parties wanted to exclude the application of the Convention only if it appears in an unequivocal way that they recognized its applicability and they nevertheless insisted on referring only to national, non-uniform law.

[6] In the present case, it does not appear from the parties' arguments that they realized that the United Nations Convention was the applicable law before the hearing that was held pursuant to article 183 c.p.c.;[1] we cannot, therefore, conclude that they implicitly wanted to exclude the application of the Convention by choosing to refer exclusively to national Italian law. Thus according to the principle iura novit curia, it is up to the judge to determine which Italian rules should be applied (accord, the decision of the Cuneo [District] Court [Italy], January 31, 1996 [text + English translation available at <http://cisgw3.law.pace.edu/cases/960131i3.html>]); for the reasons mentioned above, the applicable rules are those in the Vienna Convention (see the decision of the German Federal [Supreme] Court, July 23, 1997 [text available at <http://cisgw3.law.pace.edu/cases/970723g1.html>]).

[7] Having decided that the United Nations Convention is applicable to the contract between [buyer] (to whose rights the [buyer's assignee] is subrogated, as we said earlier) and [seller], we now must [page 214] determine, on the basis of this Convention, if the [seller] breached the contract and so is liable to pay damages in the amount requested by the plaintiff.

[8] The [buyer's assignee] claims that the goods delivered to it -- sheets of vulcanized rubber -- were defective, which caused the damages that it claims. The [seller] objects that notice of the alleged defects was given too late, and that insufficient proof of the defects was offered. The question of conformity of the goods is regulated by Articles 35 et seq. of the United Nations Convention. According to Article 35 of the Convention, the seller must deliver goods of the quantity, quality and kind contracted for by the buyer, and the goods must be contained or packed in compliance with contractual expectations.

[9] Goods must be considered non-conforming if they are unfit for the purposes for which goods of the same description are usually used; or if they are unfit for a specific use contemplated by the buyer (provided that such use was brought to the seller's attention); or if the goods do not possess the qualities of goods which the seller held out to the buyer in a sample or model; or if the goods are not contained or packaged in the manner usual for such goods or, where there is no such usual manner, in a manner adequate to preserve and protect them.

[10] If goods are non-conforming, the buyer must give notice of the defects to the seller or else he will lose the right to rely on the lack of conformity. This notice must specify the nature of the non-conformity, and it must be given within a "reasonable time" after the buyer discovered or ought to have discovered the lack of conformity (Article 39(1)). (A "reasonable time" is sometimes defined in a "general clause" of the contract, see the decision of the Pretura [District Court] di Torino [Italy], January 30, 1997 [text + English translation available at <http://cisgw3.law.pace.edu/cases/970130i3.html>], in which case, it will not be determined by the judge considering all circumstances of the actual case.). The time when the buyer ought to have discovered the defect should be determined by reference to Article 38, under which "[t]he buyer must examine the goods, or cause them to be examined, within a short a period as is practicable in the circumstances," although "if the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination."

[11] As for the time within which notice of non-conformity must be given, it must be fixed on a case-by-case basis, in light of the circumstances of the individual case (see the decisions of the [District] Court of Cuneo [Italy], January 31, 1996 [text + English translation available at <http://cisgw3.law.pace.edu/cases/960131i3.html>] and the OLG [Appellate Court] Munich [Germany], February 8, 1995 [text available at <http://cisgw3.law.pace.edu/cases/950208g2.html>]; and the decision of the OLG [Appellate Court] Dusseldorf [Germany], February 10, 1994 [text + English translation available at <http://cisgw3.law.pace.edu/cases/940210g1.html>], [page 215] including the nature of the goods involved in the transaction, as has often been affirmed by foreign case law (see the decision of the AG [Lower Court] Augsburg [Germany], January 29, 1996 [text available at <http://cisgw3.law.pace.edu/cases/960129g1.html>]; and the decision of the Rechtbank [District Court] Roermond [Netherlands], December 19, 1991 [text available at <http://cisgw3.law.pace.edu/cases/911219n1.html>] ). For example, if the goods involved in the transaction are perishable, the "reasonable time" within which notice of lack of conformity must be given is generally shorter than the time for giving such notice if the goods are not perishable (see the decision of the Rechtbank [District Court] Zwolle [Netherlands], March 5, 1997 [text available at <http://cisgw3.law.pace.edu/cases/970305n1.html>]; and the decision of the AG [Lower Court] Kehl [Germany], October 6, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/951006g1.html>]). To determine if notice is timely, it is also necessary to consider the intention of the contracting parties. In fact, the provision requiring timely notice of lack of conformity (Article 39(1)), like all provisions of the United Nations Convention except for Article 12 and Articles 89-101, can be derogated from by the agreement of the parties. Thus, if the parties have intended that notice of lack of conformity must be given within a particular time, a buyer who does not give notice within the required time loses the right to rely on the lack of conformity (see the decision of the LG [District Court] Giessen [Germany], July 5, 1994 [text available at <http://cisgw3.law.pace.edu/cases/940705g1.html>]).

[12] In the instant case, the parties did not fix a date within which notice must be given. The suggestion by the [seller] that its bills fixed a term of eight days from receipt of the goods to complain of defects cannot be accepted, since such bills were documents of only one party and they were sent after the conclusion of the contract. (Judging from the photostat of the bills produced by [seller], furthermore, the term requiring that complaints of defects be made within eight days is not even legible, so that [seller]'s argument fails both factually and legally.)

[13] It follows that the timeliness of notice of lack of conformity must be evaluated according to Article 39(1). The goods involved in this transaction are not perishable, and thus the "reasonable time" for giving notice must not be construed too narrowly. That does not mean, however, that notice given four months after the lack of conformity was discovered or ought to have been discovered should be deemed given within a "reasonable time." In support of this view is a foreign decision that, on similar facts, ruled that notice of lack of conformity given some four months after receipt of the goods was not timely (see the decision of the Dutch Supreme Court of Justice, February 20, 1998 [text available at <http://cisgw3.law.pace.edu/cases/980220n1.html>]). According to other foreign case law, furthermore, notice can be deemed tardy even if it is given after only three months (see the decision of the Rechtbank [District Court] Roermond [Netherlands], May 6, 1993 [text available at <http://cisgw3.law.pace.edu/cases/930506n1.html>]); [page 216] or after two months (see the decision of the OLG [Appellate Court] Düsseldorf [Germany], February 10, 1994 [text + English translation available at <http://cisgw3.law.pace.edu/cases/940210g1.html>]); or even after just twenty-five days (see the decision of the OLG [Appellate Court] Düsseldorf [Germany], March 12, 1993 [text available at <http://cisgw3.law.pace.edu/cases/930312g1.html>]). Several other courts, however, have declared that notice given one month after discovery of defects should be deemed to be within a "reasonable period" (see the decision of the OG [Appellate Court] Kanton Luzern [Switzerland], January 8, 1997 [text + English translation available at <http://cisgw3.law.pace.edu/cases/970108s1.html>], and the decision of the Bundesgerichtshof [Federal Supreme Court of Germany], March 8, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950308g3.html>] ). As regards the instant case, the question is whether the notice given by [buyer] should be deemed timely.

[14] As we said above, the buyer has a responsibility to examine the goods or to cause them to be examined within as short a period as is practicable (Article 38), so that he can promptly discover whether the goods have the required characteristics and whether they have defects. This responsibility is linked to the passing of a reasonable time under Article 39 for giving notice of defects on pain of losing the right to rely on the defects. The requirement that notice be given within a reasonable time after the buyer discovers or should have discovered the lack of conformity is designed to give certainty to the legal relationship and thereby to support the development of international trade. The buyer has an interest in discovering defects quickly, and the seller certainly has an interest in knowing that the other party is satisfied with the goods and in the future will not raise any objections, so that the transaction can be deemed fulfilled positively (see the decision of the OLG [Appellate Court] Düsseldorf [Germany], January 8, 1993 [text + English translation available at <http://cisgw3.law.pace.edu/cases/930108g1.html>]). Therefore, according to the drafters of the Convention, goods are normally to be examined at the time of receipt, which will usually permit the buyer to determine quickly whether the goods are defective, and thus notice to the seller of any lack of conformity will follow shortly after the goods are delivered (see the decision of the LG [District Court] Kassel [Germany], February 15, 1996 [text available at <http://cisgw3.law.pace.edu/cases/960215g1.html>]). In the instant case, evidently, the buyer did not carefully check the material received from the seller, and so the buyer did not give the seller notice within a reasonable time from receipt of the sheets of rubber .

[15] In light of particular circumstances, such as the nature of goods, it may be impossible to check for defects until the goods have begun to be processed. In this case, however, the sheets of vulcanized rubber provided by [seller] were processed and transformed into shoe soles by the [buyer]. Thus, even if it was impossible to detect the defects any earlier, the buyer should have [page 217] discovered the lack of conformity in the course of processing the material, and have given the seller notice thereof. [Buyer], however, finished processing the material and sold the resulting product to another company [Hogl+Lorenz], which in its turn used the soles to manufacture footwear and then sold the footwear to a fourth party [Sovintersport], which distributed the shoes in the Russian market. Only after the last buyer, Sovintersport, complained and returned to Hogl+Lorenz some of the footwear manufactured with the [seller]'s product, and Hogl+Lorenz in turn complained to [buyer], did [buyer] give notice to [seller] concerning the defects in the vulcanized rubber. This notice was given in July 1994, more than four months after delivery of the goods by [seller].

[16] Although it is unlikely that, in using the sheets of rubber to manufacture shoe soles, [buyer] would fail to detect the defects (in which case [buyer] should have stopped production in order to mitigate damages, and then promptly communicated the facts to [seller] to allow the seller to solve the problem by replacing the defective rubber), in theory it is possible that the defects were of a hidden nature that could not be discovered even if the goods were carefully inspected before use, or even during the manufacturing process. In that case, in the judgment of this Court, notice of lack of conformity given four months after receipt of goods might not be deemed late.

[17] In the instant case, however, it is impossible for a judge to verify whether the defects complained of -- assuming they in fact existed -- should have been detected during a careful examination of the goods by [buyer], because the [buyer's assignee] disposed of all the shoes returned to [buyer] without keeping even a sample. If the [buyer's assignee] had retained some shoes with defective soles it would have been possible, surely, to obtain official technical advice to verify the existence of defects and their discoverability, which would permit a judge to determine whether timely notice of lack of conformity was given. [Buyer's assignee] has the burden of proving that notice of the defects was given within a "reasonable time" -- that is, it must prove that the defects were of such a nature as to escape detection both in the initial examination of the goods and when the manufactured products in which the goods were used were checked. It must bear the consequences of its failure to offer (or, if you prefer, retain) the proof that the lack of conformity of the goods could not have been recognized either upon examination after delivery of the goods or following the goods' use in manufacturing, so that the notice of defects could be considered timely despite the considerable lapse of time between the notice and the time the buyer received the goods from the seller (concerning the issue of the burden of proving the timeliness of notice, see the decision of the [page 218] LG [District Court] Frankfurt [Germany], July 13, 1994 [text available at <http://cisgw3.law.pace.edu/cases/940713g1.html>]).

[18] It is worth mentioning at this point that notice of lack of conformity, which is not required to be in a particular form and thus can be given verbally or by telephone (see the decision of the LG Frankfurt, July 13, 1994 [id.], must not only be timely but must also specify the nature of the defect. The requirement that the defect be specified with particularity affords the seller an opportunity to verify the basis and the accuracy of the notice, paving the way for the seller to cure the lack of conformity (this is the reason for the requirement of particularity -- see the decision of the OLG [Appellate Court] Düsseldorf [Germany], January 8, 1993 [text + English translation available at <http://cisgw3.law.pace.edu/cases/930108g1.html>]). In the instant case, the notice is not specific enough: merely referring to the fact that the goods "caused problems" does not put the seller in the position to know how to proceed (see the decision of the HG [Commercial Court] Zürich [Switzerland], November 30, 1998 [text available at <http://cisgw3.law.pace.edu/cases/981130s1.html>]), just as notice declaring only that the goods are "defective" does not satisfy the particularity requirement (see the decision of the OLG [Appellate Court] Frankfurt [Germany], January 18, 1994 [text + English translation available at <http://cisgw3.law.pace.edu/cases/940118g1.html>]). In fact, plaintiff [buyer's assignee] failed to produce in court a copy of the notice sent from [buyer] to [seller] in July 1994 (document no. 1 of [plaintiff] exhibits concerns a complaint relating to prior transactions unconnected to the subject of this action, as the contents of the letter clearly demonstrate; although the July 1994 letter is missing from the record, it is clear that the notice was given in this month). Thus proof is lacking that the notice was sufficiently specific (indeed, according to the [seller] the notice simply indicated that "some soles made of SOLREX material supplied to the Austrian customer ... had problems" -- see p. 2 of the appearance and answer).

[19] From what has been said it is clear that the buyer, and the [buyer's assignee] which is subrogated to the rights of the buyer, lost the right to seek a remedy for lack of conformity in the goods for two reasons: first, because the buyer did not timely give notice of defects in the goods (or rather, because the [buyer's assignee] failed to offer proof that notice was timely), and second, because it failed to prove that the notice sufficiently specified the nature of defects.

[20] CISG Articles 40 and 44, moreover, are not applicable to the instant case. These provisions permit a buyer, in certain circumstances, to obtain a remedy for a lack of conformity without having given proper notice. There is, however no evidence that the [seller] knew or could not have been unaware of the defects in the material it supplied (Article 40), nor have facts been [page 219] shown that would permit a finding that there was a "reasonable excuse" for the buyer's failure to give the required notice.

[21] What is said above would be sufficient to justify rejecting the request of the [buyer's assignee]. There is, however, another reason, independent of considerations relating to the promptness and particularity of the buyer's notice of defects, that [buyer's assignee]'s claim must fail. The controversy before the court raises an important question concerning the burden of proving that goods did not conform to a contract for an international sale of goods.

[22] According to a minority of courts and commentators (see the decision of the International Chamber of Commerce Court of Arbitration, (arbitral decision) arbitration # 6653 [text + English translation available at <http://cisgw3.law.pace.edu/cases/936653i1.html>]), the United Nations Convention does not govern the burden of proof issue. To justify their conclusion, these authorities refer to Article 4 of the Convention, which does not mention the issue of burden of proof among those dealt with by the Convention. The first sentence of Article 4 does indeed state, "This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract." Because Article 4 fails to mention the issue of burden of proof, it is argued, "the conclusion should be drawn that domestic law will govern that issue" (see the decision of the Court of Appeals of Lugano [Switzerland], January 15, 1998 [text + English translation available at <http://cisgw3.law.pace.edu/cases/980115s1.html>]).

[23] According to better-reasoned and more numerous authorities, however, the United Nations Convention governs the burden of proof issue although it does not directly deal with it. To support the argument that the burden of proof issue is not excluded from the reach of the Convention, so that the issue of the burden of proof is not beyond the scope of the regime of international sales law introduced by the Convention, these authorities refer (correctly, in the view of this Tribunal) to Article 79(1) of the Convention, which expressly refers to the burden of proof concerning exemption from damages for breach. According to this provision, "A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences." Thus, the issue of the burden of proof cannot be deemed beyond the ambit of the Convention, in contrast to, e.g., the issue of set-off (see the decision of the OLG [Appellate Court] München [Germany], July 9, 1997 [text + English translation available at <http://cisgw3.law.pace.edu/cases/970709g1.html>]; and the decision of the OLG [Appellate Court] Koblenz [Germany], January 31, 1997 [text available at <http://cisgw3.law.pace.edu/cases/970131g1.html>]), the issue [page 220] of the statute of limitations (see the decision of the LG [District Court] Düsseldorf [Germany], October 11, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/951011g1.html>]; the decision of the OLG [Appellate Court] Hamm [Germany], June 9, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950609g1.html>]; and the decision of the International Chamber of Commerce Court of Arbitration, (arbitral decision), arbitration # 7660 [English text available at <http://cisgw3.law.pace.edu/cases/947660i1.html>]), the issue of the validity of an assignment of rights arising from a sales contract (see the decision of the OLG [Appellate Court] Hamm [Germany], February 8, 1995 [text available at <http://cisgw3.law.pace.edu/cases/950208g3.html>]), the issue of an agent's authority to act for another (see the decision of the Austrian Supreme Court, June 29, 1997 in Osterreichische Juristenzeitung, 1997, 829 ss.; the decision of the AG [Lower Court] Alsfeld [Germany], [May 12, 1995] [text available at <http://cisgw3.law.pace.edu/cases/950512g1.html>]), and the issue of the validity of a penalty clause limiting compensation for breach of a contract to an agreed amount (see the decision of the International Chamber of Commerce Court of Arbitration, (arbitral decision), arbitration # 7331 [English text available at <http://cisgw3.law.pace.edu/cases/947331i1.html>]; and the decision of the OLG [Appellate Court] München [Germany], February 8, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950208g1.html>]).

[24] Unlike those issues which, because they are not governed by the United Nations Convention, must be resolved according to the law determined by the private international law rules of the forum, the issue of the burden of proof must, like other issues governed by but not expressly settled in the Convention, be resolved under Article 7(2) in conformity with the general principles upon with the Convention is based (see the decision of the LG [District Court] Frankfurt [Germany], July 6, 1994 [text available at <http://cisgw3.law.pace.edu/cases/940706g1.html>]). The Convention's general principle on the burden of proof seems to be ei incumbit probation qui dicit, non qui negat: The burden of proof rests upon the one who affirms, not the one who denies. Article 79 affirms such a rule when it provides that a breaching party has to prove that its failure to perform was due to an impediment beyond its control. In so providing, Article 79 implies that proof of the breach should be offered by the other party -- i.e., the party who was to receive the performance. A corollary of this principle, affirmed many times by foreign courts, is that objections must be proved by the party who raises them (see the decision of the HG [Commercial Court] Zürich [Switzerland], November 30, 1998 [text available at <http://cisgw3.law.pace.edu/cases/981130s1.html>]). Thus, for example, a party who claims that the Convention does not apply because the transaction is not international must prove the lack of internationality, and a party who claims that the Convention does not apply because its applicability has been [page 221] excluded as provided in Article 6 must prove the existence of the agreement to exclude. There is no doubt that a party who seeks damages for breach by the other party must prove the breach, the damage and the causal nexus between the two, and it has to show that the damages are recoverable under Article 74 of the Convention (see the decision of the HG [Commercial Court] Zürich [Switzerland], April 26, 1995 [text available at <http://cisgw3.law.pace.edu/cases/950426s1.html>]).

[25] Concerning the question of the lack of conformity of the goods in the instant case, the aforementioned general principle yields a result similar to the outcome under Italian and German law -- that it is the buyer's responsibility to prove the existence of a lack of conformity (in questo senso see the decision of the HG [Commercial Court] Zürich [Switzerland], November 30, 1998 [text available at <http://cisgw3.law.pace.edu/cases/981130s1.html>]; the decision of the HG Zurich, April 26, 1995, [id.]; and the decision of the OLG [Appellate Court] Innsbruck [Austria], July 1, 1994 [text + English translation available at <http://cisgw3.law.pace.edu/cases/940701a3.html>]) and the damages that arise from it. Since such proof has not been offered, nor could it be because the items sold are no longer available due to the [buyer's assignee]'s actions ([buyer's assignee] disposed of all shoes whose soles were said to be defective because of the vulcanized rubber furnished by [seller], without retaining even a sample of the goods), the Court is unable to determine whether the goods were defective, and consequently it cannot establish whether the [seller] was in breach or whether the [buyer's assignee] suffered any damage (or the amount of any such damage). Thus the Court cannot require the buyer to pay compensation. In addition, even if it were true that the alleged defects "should be deemed hidden" and "identifiable only through an expert report," as claimed by the [buyer's assignee] (see page 2 of its final statement justifying filing a late claim), we cannot understand why [buyer's assignee] did not save at least a part of the defective goods so as to allow for the only method of ascertaining whether the defects existed -- a report by an expert. In addition, if the shoe soles were found defective, an expert report would have permitted us to determine whether the defect was due to the raw material furnished by [seller] or to the processing done by [buyer] (the latter possibility cannot be excluded a priori).

[26] As for the letter sent by [seller] to [buyer] on July 7, 1994 in which, according to the plaintiff [buyer's assignee], the [seller] admitted the existence of defects in the sheets of rubber it supplied, it should be noted that the full document has not been offered into evidence by the plaintiff (document # 2 of the plaintiff's exhibits reproduces only the first part of the letter), so that it is impossible to know the exact content of the letter. In any event, the portion of the letter available to us refers to the results of a test done by [seller] on samples from the "last delivery." It is evident that the letter refers to the delivery of June 3, 1994 (bill # 2408), [page 222] which is not involved in this litigation. In fact, [plaintiff]'s statement of claim complained only about defects in the vulcanized rubber sheets sold by [buyer] on January 5, 7 and 21, 1994, and on February 2, 1994, and raised no claim as to any other delivery before or after the aforementioned dates.

[27] Moreover, even if [seller]'s letter were construed to refer to a delivery involved in this suit, I do not agree that the letter contains an admission of the defects claimed in this action. The [seller]'s letter states that "the features of the material in the last delivery do not match the features of the sample," adding that such "discrepancies" "are hardly ascertainable or avoidable," presumably meaning that it was not possible to supply material that had exactly identical physical and mechanical specifications. Even if the seller's letter were deemed an admission of defects in the goods, furthermore, the [buyer's assignee] does not have the shoe soles in question because it negligently disposed of the shoes to others. Thus, it would be impossible to determine whether the defects found by the subsequent buyers were caused by the qualitative differences in the raw material delivered by the seller from the sample that the parties considered in their dealings (or perhaps to discrepancies from other specifications arising in the international trade for this kind of material), or to ascertain what portion of the seller's deliveries were defective. In short, the July 27, 1994 letter cannot fill the gaps in the [buyer's assignee]'s offered evidence on issues for which it bears the burden of proof, particularly where the [buyer's assignee]'s own conduct has made it impossible to ascertain the facts of the dispute with adequate accuracy.

[28] Nor could the witnesses offered by the plaintiff [buyer's assignee] overcome the evidentiary problems arising from the impossibility of obtaining an expert report. These witnesses cannot be asked to give a technical opinion and assessment because, under Italian procedure, such an opinion can be rendered only by an expert witness appointed by the court. For the same reason, the report by Dr. Wilhelm Fisher dated February 16, 1995 and offered by the plaintiff (see document #3 of the plaintiff's exhibits) cannot be taken into consideration because the report is done on behalf of one of the parties, and it thus lacks the objectivity of a neutral third party.

[29] The [seller]'s counterclaim also cannot be sustained, because [seller] did not prove that the [buyer's assignee] succeeded to the [buyer]'s debt. [Buyer's assignee] was subrogated to the buyer's right to compensation, but not to the buyer's debt. [seller]'s counterclaim could be raised as a defense against [buyer's assignee] in order to offset (at least partially) the [buyer's assignee]'s claim for compensation, so long as the counterclaim relates to the price for the defective goods rather than the price for previous or subsequent [page 223] deliveries not involved in [buyer's assignee]'s subrogation claim. Because [buyer's assignee]'s claim has been rejected, however, there is no need to examine the set-off defense.

30] Responsibility for the trial expenses of the [buyer's assignee] and the [seller] is to be determined by the loser-pay rule as provided by statute.

[31] Because we have rejected the claim asserted against the [seller], it is not necessary to deal with the demand for indemnity made by the [seller] against Allianz Subalpina S.p.a.

[32] Adequate reasons exist to entirely set-off the trial expenses of the claim by [seller] against Allianz Subalpina, in part because no legal representative appeared at the hearing for examination of the facts offered by Allianz. Thus, the Court had no opportunity to ask for further clarifications or to attempt reconciliation between the parties.

For these reasons

The Tribunal of Vigevano, sitting by sole judge, and definitively determining dispute #856/1997 in the General Register, involving a claim brought by [buyer's assignee], with offices in Neuss (Germany), by a statement of claim dated December 16, 1997, against [seller], with offices in Vigevano (PV), along with a third-party claim against Allianz Subalpina S.p.a. brought by the [seller] by a statement of claim dated March 31, 1998, and disregarding any other request, motion, and objection, decides as follows:

1) The Court rejects the claim advanced by the [buyer's assignee];

2) The Court rejects the counterclaim advanced by the [seller];

3) The Court orders [buyer's assignee], with its office in Neuss (Germany), to indemnify [seller] for the expenses of this trial in the total amount of 6,600,000 lire, including 2,200,000 lire for court expenses and 3,200,000 lire for lawyer's fees, plus VAT and CPA (Cassa Avvocati) as required by law;

4) The Court orders that the trial expenses between [seller] and Allianz Subalpina S.p.a. be set-off. [page 224]


FOOTNOTES

* The Journal of Law and Commerce adheres to The Bluebook Uniform System of Citation, but the Journal of Law and Commerce has created uniform citations for certain sources not addressed by The Bluebook. Moreover, with respect to foreign language sources for which the Journal of Law and Commerce was not provided an English translation, the editors have relied on the author for the veracity of the statement drawn from such sources. All translations should be verified by cross-checking against the original text.

** Draft as revised by Professor Flechtner.

*** Translated by Francesco G. Mazzotta, LL.M. University of Pittsburgh, 2000.

1. Translator's note: the hearing held by an Italian court pursuant to article 183 of the Italian Code of Civil Procedure ("c.p.c."), which the court refers to here, marks the beginning of the actual trial of the dispute in the litigation. The article 183 hearing follows an initial hearing that is designed to ensure that the parties are notified of the litigation.

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