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CISG CASE PRESENTATION

Slovak Republic 28 February 2001 Supreme Court (Machinery case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010228k1.html]

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

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Case identification

DATE OF DECISION: 20010228 (28 February 2001)

JURISDICTION: Slovak Republic

TRIBUNAL: Supreme Court of the Slovak Republic

JUDGE(S): JUDr. Agnesa Cierna (Chair); JUDr. Ladislav Gorasz, JUDr. Jana Bajankova

CASE NUMBER/DOCKET NUMBER: 12 Cdo/114/2000

CASE NAME: Unavailable

CASE HISTORY: 1st instance District Court in Spisska Nova Ves (8 C/22/96-135) 18 December 1998; 2d instance Regional Court Kosice (11 Co/74/99) 23 May 2000 [reversed and remanded]

SELLER'S COUNTRY: Switzerland (plaintiff)

BUYER'S COUNTRY: Slovak Republic (defendant)

GOODS INVOLVED: Machinery for window production


Classification of issues present

APPLICATION OF CISG: Uncertain. Case remanded to determine whether the CISG does or does not apply.

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 4

Classification of issues using UNCITRAL classification code numbers:

4A [Issues covered]

Descriptors: Avoidance ; Application of Convention

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Slovak): Click here for Slovak text of case; see also CISG-Slovak Republic website <http://www.cisg.sk/sk/2cdo-114-2000.html>

Translation (English): Text presented below; see also CISG-Slovak Republic website <http://www.cisg.sk/en/2cdo-114-2000.html>

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Supreme Court of the Slovak Republic

28 February 2001 [2 Cdo 114/2000]

Translation [*] by Juraj Kotrusz [**]

RESOLUTION

The Supreme Court of the Slovak Republic deciding in a panel composed of the Chair JUDr. Agnesa Cierna and members JUDr. Ladislav Gorasz and JUDr. Jana Bajankova in the case of Plaintiff 1.) ___ [Seller], with its registered office in ___, Switzerland, represented by attorney JUDr. J.B. and Plaintiff 2.) ___ with its residence in Switzerland, versus Defendant Ing. ___ [Buyer], with its residence in S.N.V. [Slovak Republic] on invalidity of avoidance of contract, and on the counterclaim of the [Buyer] and Mrs. ___ represented by attorney JUDr. M. S., on invalidity of contract, deciding about appeal on points of law of the defendants against the judgment of the Regional Court in Kosice of 23 May 2000, rec. no. 11 Co 74/99

h a s   d e c i d e d   a s   f o l l o w s:

The challenged judgment of the Regional Court in Kosice of 23 May 2000, rec. no. 11 Co 74/99 and the judgment of the District Court in Spisska Nova Ves of 18 December 1998, rec. no.: 8 C 22/96-135 are cancelled and the case is returned to the District Court in Spisska Nova Ves for further proceedings.

REASONING

The Plaintiffs claimed in their action filed with the Court on 3 November 1995 invalidity of the avoidance of contract and other agreements from 20 February 1995. The Plaintiffs stated that, in its declaration of avoidance of 30 May 1995, the [Buyer] referred to a false cause when [Buyer] stated that it did not receive title to the goods, as the goods - machinery -- were customs declared only for a temporary usage.

The District Court in Spisska Nova Ves upheld the [Seller]'s action by its judgment of 11 June 1996, rec. no. 8 C 22/96-67 and decided that the [Buyer] had invalidly declared the contract avoided.

Upon appeal of the [Buyer], the Regional Court in Kosice cancelled by its judgment of 18 November 1997, rec. no.: 11 Co 459/96 the judgment of the Court of First Instance and returned the case for further proceedings.

The [Buyer] and his wife filed on 19 February 1998 with the District Court a counterclaim and asked the Court to decide about invalidity of the contract of sale of machinery for window production of 20 February 1995.

The District Court in Spisska Nova Ves decided by its judgment of 18 December 1998, rec. no. 8 C 22/96-135 that the [Buyer]'s declaration of avoidance of the contract of 20 February 1995 is invalid. The counterclaim of the [Buyer] and his wife on invalidity of contract of sale was dismissed by the Court and the [Buyer] was obliged to reimburse costs of the proceedings to the [Seller]

The Regional Court in Kosice upon appeal of the [Buyer] affirmed the judgment of the Court of First Instance by its judgment of 23 May 2000, rec. no.: 11 Co 74/99 and bound the [Buyer] to pay to the plaintiffs the reimbursement of costs of the proceedings. The Appellate Court granted the right to file an appeal on points of law against this judgment.

The Appellate Court affirmed the judgment of the Court of First Instance, as it considered the judgment substantially correct. The Appellate Court considered that the contract of sale of machinery was validly concluded. The Court found that the [Seller] was the owner of the machinery, as it received title to the machinery upon the contract of sale of 12 February 1991 concluded with Company Instabau und Handels AG 9434 Au. The Appellate Court found it to be proved that the [Buyer] handed over the goods and the [Seller] did not conceal from the [Buyer] the fact that there was a customs debt imposed on the goods. The [Buyer] therefore avoided the contract without just cause. The Appellate Court found its decision to be of a cardinal importance "with reference to the presumed validity of the contract of sale of 12 February 1991 and the fact that the Customs Office in Poprade decided about the customs debt imposed on the company Alfena, s.r.o. which is a distinct subject from the owner of the machinery in question" and therefore granted a right to file an appeal on points of law against this judgment under sec. 238 part 3 a) of the Slovak Civil Procedure Code (hereinafter referred to as "CPC").

The [Buyer] filed an appeal on points of law against this judgment and asked the Court to dismiss the action of the plaintiffs on invalidity of the avoidance of contract and to decide about invalidity of the contract of sale (although the proceedings about the appeal on points of law is based on the principle of cassation which enables the court only to cancel the challenged judgment or to dismiss the appeal on points of law - sec. 243b part 1 CPC).

The [Buyer] argued that the contract of sale of 12 February 1991 under which the plaintiffs should have acquired title to the goods is invalid, as the seller in this contract was represented by a person without authority to act in its name. The Appellate Court also did not take into consideration the fact that the machinery in question was customs declared only for a temporary usage and therefore could not be sold. At the present time, it is not even possible to remedy this defect, as the machinery was forfeited by customs authorities in order to settle the customs debt.

The [Seller] asked the Court to dismiss the appeal on points of law, as the challenged judgment of the Appellate Court is substantially correct.

The Supreme Court of the Slovak Republic as the competent court found that the appeal on points of law was filed with the Court on time and is admissible and therefore tried the case and decided that the challenged judgment is incorrect.

Under sec. 242 part 1 CPC, the Court is bound by the scope of the appeal on points of law and its reasoning in revising the challenged judgment. Besides this scope, the Court always revises defects of proceedings which could have led to an incorrect decision, as they are enumerated in sec. 237 a) to g) CPC:

a)    decision was made in a matter not falling under the jurisdiction of courts;
 
b)    the person acting as a party to the proceedings lacked capacity to be party to the proceedings;
 
c)    the party to the proceedings lacked procedural capacity and was not duly represented;
 
d)    an earlier final decision has already been made in the same matter or proceedings have already started in the same matter earlier;
 
e)    no petition to commence proceedings has been filed though it was necessary under the law;
 
f)    a party to the proceedings has been deprived of the possibility to act before a court as a consequence of the procedure by the court;
 
g)    an excluded judge was deciding or the court was incorrectly set up unless a panel decided instead of a single judge.

The court thereby determined the following situation:

The plaintiffs asked the District Court in Spisska Nova Ves by their action to decide about invalidity of the declaration of avoidance of the contract of 20 February 1995 concluded between the plaintiffs and the [Buyer] which concerned delivery of machinery for wooden widow production, as it was specified in the contract (total amount of 63 pieces). The [Buyer] and his wife E. B. asked the Court by their counterclaim to decide about invalidity of the contract of sale.

Under sec. 9 part 3 letter c) point 12 CPC, regional courts are competent to try cases of commercial nature which emerge from international trade conducted by legal persons and natural persons including cases where jurisdiction of Slovak courts was established by choice of parties made in a written form.

Relationships emerging from international trade include also proprietary relationships in which title to goods or other forms of propriety is transferred for a certain consideration between subjects which do not have their registered office (residence) in the territory of a single state. On the contrary, relationships established between subjects with their registered office (residence) in different states which are entered into for personal use by at least one of the parties to the relationship, cannot be considered as relationships emerging from international trade.

It is clear from the contract of sale concluded on 20 February 1995 and from circumstances connected with its formation that it was not concluded for personal, family or household use of the [Buyer]. The Court determined from the investigation so far performed that the machinery was intended for business activities of the [Buyer].

With reference to the abovementioned, this relationship clearly constitutes a relationship emerging from international trade and therefore the case should have been tried by the Regional Court in the first instance. The Lower Court incorrectly qualified the nature of the dispute when it decided that it was competent to try it. This constitutes a defect of the proceedings under sec. 237 letter f) CPC.

As the defect presents a serious violation of rights of the parties to the proceedings, the Court decided by this judgment about incorrectness of both judgments of the District Court in Spisska Nova Ves and the Regional Court in Kosice and returned the case to the Court of First Instance which shall at first resolve the issue of its competence to try the case under sec. 104a part 2 CPC.

The Court also points out that the conclusion of the lower courts about the Slovak law being applicable to the case was inappropriate. As the case constitutes a relationship with a foreign aspect, the court must at first investigate whether any bilateral convention is signed by Switzerland and Slovakia or whether it is subject to regulation of a multilateral convention, e.g., the UN Convention on Contracts for the International Sale of Goods published in the Collection of Acts as no. 160/1991 which came into force for the former Czechoslovak Federal Republic on 1 April 1991 and for Slovakia on 1 January 1993 after its succession from 28 May 1993 and which was ratified also by Switzerland on 21 February 1990. Only after the Court investigates that the case cannot be qualified under the UN Convention (e.g.. under its article 4), can it investigate the applicable law under the rules of private international law contained in the act no. 97/1963 Coll. on private international and procedural law.

With reference to the actual degree of investigation, the Court can conclude that the lower courts incorrectly decided about the invalidity of the avoidance of contract, as the plaintiffs did not present any arguments proving such invalidity of this unilateral act of the [Buyer]. Invalidity of the avoidance of contract cannot be confused with its legal force which commences at the moment it is performed from a just cause under relevant legal provisions. The plaintiffs opposed the claimed cause for avoidance provided by the [Buyer], i.e., opposed the avoidance coming into force. The Court stresses that a party to a contract can only avoid a valid contract; the Lower Court will therefore have to primarily examine whether the contract of sale of 20 February 1995 was valid or not.

With reference to the "presumed validity of the contract of sale of 12 February 1991", the Court agrees that this issue is important for final decision but opposes the procedure of its qualification performed by the Lower Court which incorrectly qualified the contract of sale concluded exclusively by Swiss subject in Switzerland under the Slovak law.

Instruction: An appeal against this decision is not admissible.

Bratislava, 28 February 2001

JUDr. Agnesa Cierna
Chairman of the Panel


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff 1.) of the Swiss Confederation (Switzerland) is referred to as [Seller] and Defendant of the Slovak Republic is referred to as [Buyer].

** Juraj Kotrusz is a Slovak lawyer who studied law at the University of Trnava, Slovakia, and at the Hague Academy of International Law. He is the Editor of the CISG Slovakia website.

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Pace Law School Institute of International Commercial Law - Last updated November 22, 2013
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