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CISG CASE PRESENTATION

Belgium 27 June 2001 Appellate Court Antwerp (S.r.l. R.C. v. BV BA R.T.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010627b1.html]

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

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Case identification

DATE OF DECISION: 20010627 (27 June 2001)

JURISDICTION: Belgium

TRIBUNAL: Hof van Beroep [Appellate Court] Antwerpen

JUDGE(S): L. Van Gelder, K. Allegaert, M. Van Rompay

CASE NUMBER/DOCKET NUMBER: 1997/AR/1554

CASE NAME: S.r.l. R.C. v. BV BA R.T.

CASE HISTORY: 1st instance Rb van eerste aanleg Antwerpen 25 January 1993, 15 March 1993 and 7 April 1997

SELLER'S COUNTRY: Italy (defendant)

BUYER'S COUNTRY: Belgium (plaintiff)

GOODS INVOLVED: Tiles


Case outline

Reproduced with permission from CISG-Belgium database of Katholieke Universiteit Leuven

Applicable law: Convention on the Law Applicable to Contracts for the International Sale of Goods (Hague Conference 15 June 1955). Place of Seller: Italy; Italian law applicable; CISG applicable in Italy; CISG applied

Good faith: applicable by art. 40; in absence of good faith, seller cannot rely on art. 39

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7 ; 36 ; 39 ; 40 ; 74 Articles [Also cited: Article 45 ]

Classification of issues using UNCITRAL classification code numbers:

7A3 [Principles of interpretation: observance of good faith];

36A [Time for assessing conformity of goods: conformity determined as of time when risk passes to buyer];

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

40B [Seller fails to disclose known non-conformity: seller loses right to rely on articles 38 and 39];

74A [General rules for measuring damages]

Descriptors: Good faith ; Conformity of goods ; Lack of conformity notice, timeliness ; Lack of conformity known to seller ; Damages

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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 (Dutch): CISG Belgium database of Katholieke Universiteit Leuven <http://www.law.kuleuven.ac.be/ipr/eng/cases/2001-06-27.html>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at 401 ("case characterized Article 40 as the application of the 'good faith' principle, noting that if the seller knows of the non-conformity and fails to reveal it, he cannot fall back upon the buyer's failure to tell him what he already knew"); [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 114

French: Papandréou-Deterville, Receuil Dalloz - Cahier Droit des Affairs No. 34 (October 2003) 2365-2366

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Case text (English translation)

Queen Mary Case Translation Programme

Appellate Court (Hof van Beroep) of Antwerp

S.r.l. R.C. v. B.V. B.A. R.T.

27 June 2001

Translation by [*] by Vincent Naveaux [**]

Translation edited by Sieg Eiselen [***]

PARTIES: COUNSEL. S.r.l. R.C. [seller], a company established under Italian law, having its head office in Italy, and electing domicile at the office of its counsel Mr. L. Malfroid, Attorney at law, 3550 Heusden-Zolder […] [seller], Appellant against the judgments rendered on 25 January 1993, 15 March 1993 and 7 April 1997 by the Court of First Instance of Antwerp, represented by Me L. Malfroid, Attorney at law, 3550 Heusden-Zolder […], versus Respondents 1 and 2, S., electrician, and his spouse, J.L., cleaning lady, both residing at 2070 Zwijndrecht […], both represented by Mr. C. Teurelincx acting on behalf of Mr. M. Gadisseur, advocate, 2170 Merksem […]; Respondent 3, M., flooring contractor, living at 9190 Stekene […], represented by Mr. K. Roekens acting on behalf of Mr. M. Dassen, advocate, 2070 Zwijndrecht […]; Respondent 4, B.V.B.A. R.T. [buyer], having its head office at 2240 Massenhoven […] [buyer], represented by Mr. L. Verstraeten acting on behalf of Mr. W. Looveren, Attorney at law, 2018 Antwerp […]

I. PRIOR HISTORY

The Appellate Court delivered an interlocutory judgment on 28 June 2000 in terms of which:

-   The [seller]'s principal appeal against the first and second respondents [electrician and cleaning lady] was declared inadmissible;
- The appeal against the [buyer] was declared admissible;
- Prior to the decision on the question of the admissibility of the higher appeal against the third respondent [flooring contractor] and the incidental appeal against the first and second respondents, the debates were reopened in order to enable the [seller] and the first, second and third respondents to make submissions.

II.  FACTS AND PLEADINGS

Considering the [seller]'s submissions of 22 August 2000 and the third respondent's submissions of 27 November 2000;

The [seller] relies on his earlier submissions;

The third respondent submitted that [seller]'s appeal was inadmissible or at least unfounded and therefore entered a counterclaim for damages on the grounds of a reckless and vexing appeal, estimated ex aequo et bono at Bf [Belgian francs] 100,000 plus legal interest. The third respondent also submitted that [buyer]'s incidental appeal against him was inadmissible or at least unfounded. The third respondent persisted, in the alternative, in his incidental appeal against the first and second respondents.

III.  APPELLATE COURT'S REASONING

      1.  The admissibility of [seller]’s appeal against third respondent [flooring contractor] and third respondent’s incidental appeal against [seller]

          1.1  Seller's appeal against the third respondent is inadmissible

The third respondent, answering the official question relating to the admissibility of the appeal pursued against him, asserts correctly that [seller] had no interest in bringing him into the appeal procedure, since the Court of First Instance in the challenged judgment of 7 April 1997 had declared the interlocutory claim for compensation – in the amount of Bf 25,000 -- and filed by the third respondent against the [buyer] and the [seller], as unfounded.

Consequently, the higher appeal against the third respondent is held to be inadmissible, due to a lack of interest.

          1.2 Incidental appeal of the third respondent is admissible

Whereas the inadmissibility of the appeal for lack of interest bears no influence on the admissibility of the third respondent's incidental appeal, this incidental appeal against [seller] is held admissible.

      2. The counterclaim of the third respondent against the [seller] for payment of compensation for a reckless and vexing appeal

The third respondent by submissions made on 27 November 2000, and thus after the interlocutory judgment ordering the reopening of the debates, files a totally new claim for damages. The third respondent does not appeal against the dismissal of his earlier appeal, but claims "only" damages for the reckless and vexing appeal lodged by the [seller] against him.

However, the debate was reopened only on issues determined by the Appellate Court, by virtue of Article 775 of the Judicial Code; the third respondent's counterclaim falling outside the issues of the reopening was not admissible.

      3. The grounds of the [seller]'s appeal against [buyer]

          3.1 The inadmissibility of [buyer]'s late original interlocutory claim for indemification against [seller]

                3.1.1 Applicable law

No agreement exists between [seller] and [buyer] in respect of the application of Italian law to the contract of sale concluded between them.

Indeed, the parties had not made any choice of applicable law, while both Belgium and Italy have enacted in their legal order the Hague Convention on the Law Applicable to Contracts for International Sale of Goods (15 June 1955) [hereinafter Hague Convention 1955]. Hence, by virtue of Article 3 of the Hague Convention 1955, in the absence of a declaration of applicable law by the parties, the contract of sale is regulated by the domestic law of the country where the seller had his habitual residence at the time when he received the offer - i.e., Italian law in this instance.

On 11 December 1986, Italy ratified the United Nations (Vienna) Convention on Contracts for the International Sale of Goods of 11 April 1980 [hereinafter CISG], with the result that from 1 January 1988, Italy was no longer bound by the Convention Relating to a Uniform Law on the International Sale of Goods concluded at The Hague on 1 July 1964 [hereinafter ULIS].

The [seller] argues incorrectly for the application to the contract of a law no longer applicable, namely ULIS; after all, the contract of sale is dated April 1988, i.e., after 1 January 1988.

                3.1.2 Notice of lack of conformity - Art. 39 CISG

The question of compliance with "the reasonable time" with regards to the maximum "period of two years" (Art. 39 CISG) in order to rely on a lack of conformity is a question of expiration, namely the expiration of a claim in guarantee.

The drafters of the CISG, by imposing a "reasonable time" with regard to the maximum of two years, have linked the right to rely on an obligation of guarantee to the accomplishment of a formality; namely, the buyer has to give notice to the seller specifying the lack of conformity within the respective periods.

The Court of First Instance correctly decided that compliance with this period has to be regarded as an admissibility requirement.

The Court of First Instance correctly declared that the [buyer]'s interlocutory claim for indemnification against [seller] was admissible. Besides the question of any acquiescence due to the submissions of 18 January 1993, by which the [seller] argued against the admissibility of the interlocutory claim for indemnification against him, the seller, by virtue of Article 40 CISG, is not entitled to rely on the provisions of Article 39 if the lack of conformity relates to facts of which he knew or could not have been unaware of and which he did not disclose to the buyer.

Article 40 CISG, mentioned above, is an application of the good faith principle. Not only must the [seller], as a professional seller, be considered to have known of the defect, but it also emerges from the nature of the discovered defects on the contentious tiles and the earlier damages cases which gave rise to a settlement in the total amount of Bf 570,000 (see expert report under point 8) -- even if it were, as [seller] contends, only on commercial account -- that the [seller] knew or at least could not have been unaware of the defects, while he did not disclose the defects to the buyer. Consequently, the [seller] has violated the principle of good faith by concluding the contract of sale.

The [seller]'s arguments in relation to the non-compliance with the reasonable period requirement and the resulting inadmissibility of the claim appear totally unfounded.

          3.2 The ground of [buyer]'s indemnification claim against the [seller]

Regarding the ground of [buyer]'s indemnification claim against the [seller], it is referred to in the judicious reasoning of the Court of First Instance, which is deemed to be incorporated here, since the Appellate Court considers that no new arguments were brought forward which were not known by the Court of First Instance and to which the Court of First Instance responded appropriately.

The Court of First Instance deduced, with reason, from the technical assessments of the court-appointed expert, which was not adequately refuted, that the tiles sold by the [seller] to the [buyer] contained production defects and did not conform with the goods specified in the contract. Therefore, under Article 36 CISG, the seller was liable for this lack of conformity, so that the Court of First Instance could grant to the buyer damages in an amount of Bf 184,450 under Articles 45(b) and 74 CISG, in accordance with the assessment of the damages by the expert, which was not disputed:

-   Indeed it emerges from the laboratory tests, considered under point 18 of the expert's report, that the tiles, allegedly from class 4 with a high resistance to wear and tear, fitted by the first and second respondents [electrician and cleaning lady], belonged only to class 3 and the tiles that were not fitted belonged only to class 2, while the laboratory report of 19 November 1987, produced by counsel of the [seller], showed that the tile mentioned therein belonged to class 4 according to the same PEI-test. Therefore, the expert had to decide that an obvious difference in quality existed between the different results;
- The [seller] continued to dispute the assessments of the expert and the value of the tests, despite the fact that the expert (see under point 21 of the report) responded sufficiently to [seller]'s remarks and objections with a reasoned explanation as to why the request to secure new tests according to the European norm EN87 was rejected:

a) Regarding the applied testing method, the expert pointed out that nothing prevented the [seller] as a producer from performing additional tests on his own with the method he considered necessary. Furthermore, the tests ordered were performed by a laboratory with a good reputation and the method was representative,

b) Regarding the request to secure a new test according to the European norm EN87, it was considered that the tests already performed according to the testing method described, performed by a recognized laboratory, had provided enough clarity for both fitted and unused tiles;

- Indeed it can be expected from the [seller] as a producer, that it would be acquainted with its own production process, that it controls it and adapts it, especially after [seller] became aware of the various complaints;
- The expert, under points 9, 10, and 11 of his report, made a detailed assessment of the damages.

The [seller] is liable to compensate the [buyer] for the loss [buyer] suffered as a consequence of the breach of [seller]'s obligations; in this case, it is the amount that [buyer] had to pay in accordance with the assessment of the expert, plus interest and costs, as determined in the challenged judgment.

      4. The incidental appeal of the third respondent [flooring contractor]

Whereas the incidental appeal of the third respondent was only filed insofar as the Appellate Court would not agree with the Court of First Instance, it has to be decided that the incidental appeal has become irrelevant.

      5. The incidental appeal of the [buyer] against third respondent

Regarding the incidental appeal of the [buyer], the Appellate Court relies on the judicious and exhaustive reasoning of the Court of First Instance, in particular to the answer in respect of the provisions of clause 8 of the standard conditions of sale concerning the lateness of the claim, to which nothing has to be added and which must be considered as incorporated here.

With reference to the exculpatory clause contained in clause 9, it has to be emphasized that the [buyer], as a specialized seller acting in bad faith, also cannot rely on any limitation of [buyer]'s liability since [buyer] in fact knew of the defect. Besides, the circumstance that [buyer] was not dealing with a private individual, but with a specialized retailer [third respondent] with whom [buyer] had a regular commercial relationship, does not detract from this.

Accordingly, the [buyer] could not limit its own liability.

Consequently, the challenged judgments must be upheld in respect of all their conclusions.

IV. APPELLATE COURT'S RULING

On these grounds, the Appellate Court, having heard the parties and considering Article 24 of the Law of 15 June 1935:

        Declares inadmissible the appeal of [seller] against the third respondent [flooring contractor] and this respondent's counterclaim;

[…]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Appellant of Italy is referred to as [seller]; the Fourth Respondent of Belgium is referred to as [buyer]. Monetary amounts in Belgian francs are indicated as [Bf].

** Vincent Naveaux, Attorney at Law, Brussels Bar, Stibbe in association with Gleiss Lutz and Herbert Smith, Lic. Jur. (University of Louvain, 2000), LL.M. (University of London, Queen Mary, 2001). The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

*** Sieg Eiselen is Professor in Private Law, University of South Africa, Advocate of the High Court of South Africa.

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Pace Law School Institute of International Commercial Law - Last updated November 9, 2004
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