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CISG CASE PRESENTATION

Belgium 15 January 2002 District Court Namur (SA P. v. AWS) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020115b1.html]

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

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Case identification

DATE OF DECISION: 20020115 (15 January 2002)

JURISDICTION: Belgium

TRIBUNAL: Tribunal de commerce [District Court] Namur

JUDGE(S): L. Derenne, J.M. Ledoux, M. Collot

CASE NUMBER/DOCKET NUMBER: R.G. no. 985/01

CASE NAME: SA P. v. AWS

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Belgium (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Milling machine


Case outline

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

Jurisdiction: jurisdiction clause: place of provider; Belgian courts have jurisdiction

Application of CISG: CISG applicable in Belgium and Germany: CISG applied

Fact that contract in German: not sufficient to deduce that parties wanted to exclude CISG and have German domestic law applicable

Damages for late delivery: buyer entitled, but must prove loss

Defaults that existed before delivery: seller liable, but buyer must prove

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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 ; 33 ; 36 ; 74 ; 78 [Also cited: Articles 3 ; 45 ; 47 ; 59 ]

Classification of issues using UNCITRAL classification code numbers:

6B [Choice of law: agreement (implied) to apply Convention];

33A [Time for delivery: on date fixed by or determined by contract];

36A2 [Conformity determined as of time when risk passes to buyer: seller responsible when lack of conformity becomes apparent later];

74A [General rules for measuring damages];

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Choice of law ; Delivery ; Conformity of goods ; Damages ; Burden of proof ; Interest

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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

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=745&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (French): CISG Belgium database of Katholieke Universiteit Leuven <http://www.law.kuleuven.ac.be/ipr/eng/cases/2002-01-15.html>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=745&step=FullText>

Translation (English): Text presented below

Translation (Portuguese): CISG Brazil database <http://www.cisg-brasil.net/downloads/casos/SA_P_v._AWS_case.pdf>

CITATIONS TO COMMENTS ON DECISION

English: Liu Chengwei, Recovery of interest (November 2003) n.99; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.569, 612, 615; [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 173; Article 78 and rate of interest: Mazzotta, Endless disagreement among commentators, much less among courts (2004) [citing this case and 275 other court and arbitral rulings];; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 45 para. 28

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Case text (English translation)

Queen Mary Case Translation Programme

Tribunal de commerce, Namur

15 January 2002 [RG no. 985/01]

Translation [*] by Charles Sant 'Elia [**]

Translation edited by Thalia Kruger [***]

[CASE PARTICULARS]

[Seller] SA P., whose principal place of business is 5300 Andenne [Belgium] (...), recorded in the commercial register of Namur (...), Plaintiff on the principal claim, Defendant on the counterclaim, appearing by Paul Crahay, barrister in 4000 Liège (...) v. [buyer] the German company AWS  GmbH, whose principal place of business is 39401 Stassfurt (...) (Germany), Defendant on the principal claim, Plaintiff on the counterclaim, appearing by De Boeck in place of Joost Verlanden, barrister in 1000 Bruxelles (...); having seen the summons served on the 19 January 2001 by writ, timely and recorded, of Mr. B. Deleuze, process server assisting Mr. G. More, process server residing in Namur; having seen the briefs and files of the parties; having heard at the hearing on the 20 November 2001, Mr. P. Crahay and Mr. B. De Boeck.

I. STATEMENT OF THE SUIT

     1.1. The Facts

On 27 November 1998, the Defendant, hereinafter [buyer], ordered from the Plaintiff, hereinafter [seller], a "processing center" of the "Flexivit no. 3" type (cf. section no. 1 of [seller]'s file). The agreement, drafted in German, refers to the delivery conditions of appliances within the framework of (German) national transactions excluding section IV/4 of those conditions. The price is 1,582,000.- DM [Deutsche Mark] payable in three installments, 10% upon the order, 80% upon delivery 10% upon final receipt. The delivery date is fixed during the twenty-second week of the year 1999 (that is, the week of 31 May to 6 June 1999), delivery being defined as the completion of the machine, not including the transport, the assembly, putting the milling machine in service and receipt.

It emerges from an examination of the files that the following was initially envisioned:

(a) The construction of the machine in [seller]'s workshops;
(b) Provisional receipt;
(c) The dissembling and the transport of the parts in [buyer]'s establishments;
(d) Assembling the machine and putting it in service;
(e) Final receipt.

The order follows a "protocol of the final negotiations" signed on the 16 October 1998 by the German company GmbH "P.P.", German subsidiary of the [seller]. That company made a first offer for a processing center of the "Flexivit no. 2" type on 30 July 1998, then a second offer for a processing center of the "Flexivit no. 3" type on 16 October 1998 (cf. sections no. 1 & 2 of [buyer]'s file).

[Seller] invoiced the 10% installment on 31 December 1998. [Buyer] paid the installment on 2 February 1999.

On 6 April 1999, "P.P." GmbH. sent [buyer] a further offer for a milling machine head for the price of 115,000.- DM and a period of six months for delivery. This offer was accepted the following day (cf. document no. 8 of [buyer]'s file).

[Seller] exhibited several postponements of the provisional receipt up until the 31st week and of the delivery up until the 33rd week (cf. document no. 10 of [buyer]'s file). Finally, the parties agreed to partially compensate this delay by canceling the assembly phase in [seller]'s workshops and the provisional receipt.

On 29 June 1999, [seller] notified [buyer] that the machine can be assembled in [buyer]'s workshops during the twenty-seventh week, that is, from 5 to 11 July 1999. The machine was finally shipped on 12 July 1999, at [buyer]'s request, the concrete slab of the hall still not being ready.

A memorandum of final receipt was signed on 1 October 1999 which acknowledges a complete delivery that conforms to the contract (cf. document no. 11 of [seller]'s file). Some reservations were nonetheless made for part of the documentation and the list of spare parts which were not provided and a part of the training courses for the personnel.

The balance of the price (90%) was invoiced on 31 August 1999 (1,423,800.- DM). This invoice was partially paid by [buyer] in October 1999, in the amount of 759,740.- DM. [Buyer] refused to settle the remaining 664,060.- DM.

On 16 October 2000, at the request of [buyer], the Landgericht Magdeburg ordered a judicial expert examination bearing in particular on the question of the conformity of the framework of the processing center to the technical specifications of the order, [buyer] maintaining that this framework was not made of steel and not cast iron. This judicial expert examination is still in progress.

     1.2. The Claims

The [seller] asks that the [buyer] be ordered to pay it 664,060.- DM, that is, the balance of the 31 August 1999 invoice, plus interest calculated at the legal rate since 1 September 1999 on 505,860.- DM and since 1 October 1999 on 158,200.- DM, until complete payment. It likewise desires that the [buyer] be ordered to pay it 385.- DM as interest calculated at the legal rate on the sum of 22,000.- DM according to an invoice of 19 November 1999, from that date and until 22 February 2000, the date of payment.

As a counterclaim, the [buyer] asks that the [seller] be ordered to pay it a sum of 976,864.62.- DM as damages and interest for partial non-performance of the agreement, invoking, on one hand, some delays in the delivery of the machine, and on the other hand, defects affecting it and having caused two breakdowns.

II. ON THE LAW

     2.1. As to the Procedure

There is no occasion to set aside any arguments, briefs or pieces of evidence for lack of communication.

The [buyer] challenges the jurisdiction of the Belgian courts for the reason that the agreement had in reality been concluded between [buyer] and GmbH. "P.P.", German subsidiary of the [seller]. That opinion cannot be accepted. It follows in effect both from the contract signed on 27 November 1998 between the parties and from the invoices and from the memorandum of final acceptance drawn up later on, that the texts set forth on 30 July and 16 October 1998 by the [seller]'s subsidiary were nothing but some pre-contractual documents and that the sale was concluded between the parties.

The use of the term "confirmation of the order" does not exclude the will of the parties to conclude a contract between them, excluding the [seller]'s subsidiary which only intervened as an intermediary with a view to negotiate the formation of the contract.

By the terms of Article X of the delivery conditions to which the contract refers, any suit resulting from the latter is within the jurisdiction of the courts of the seller's principal place of business. The [seller] having its business headquarters in Andenne [Belgium], the present court clearly has jurisdiction.

No other grounds for lack of jurisdiction or failure to state a claim was offered; it did not appear necessary to raise them sua sponte.

     2.2 - As to the Merits

   2.2.1 - The applicable law

The contract formed between the parties on 27 November 1998 is for the sale of an appliance by a commercial company established in Belgium to a commercial company established in Germany;

This contract is consequently governed by the United Nations Convention on Contracts for the International Sale of Goods, signed at Vienna on 11 April 1980, ratified by Belgian law on 4 September 1996, likewise in force in Germany since 1 January 1991 (hereinafter "the CISG");

If Article 6 of the CISG reserves the parties' option to set aside, totally or partially, its application, it is still proper that this will be expressed in a clear manner (cf. M. Fallon & D. Philippe, "La Convention de Vienne sur les contrats de vente internationale de marchandises", no. 20, J.T.,1998, p. 21).

The contract does not contain any clause expressly designating the applicable law, nor a fortiori excluding the application of the CISG. It cannot be deduced from the sole circumstance that it was drawn up in the German language that the parties would have wanted to refer to German national law, moreover, to exclude the application of the CISG which is an integral part of German law.

The simple reference to the delivery conditions applicable in the case of a national sale ("Inlandsgeschäfte") no more allows one to conclude that the parties had intended to exclude the application of the CISG. These delivery conditions are in effect some clauses recommended by the German association of appliance manufacturers ("Verband Deutscher Maschinen- und Anlagenbau") and not legislative or regulatory norms stemming from German law. Moreover, if these delivery conditions contain provisions which complete or clarify those of the CISG, they do not bear any clauses that are incompatible with the latter.

The disputed contract falls within the sphere of application of the CISG which provides, in its Article 3, that contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production, which is not the case in the present suit. It follows that it is proper to apply in the case at bar (a) the provisions of the contract formed on 27 November 1998, including the delivery terms and attachments, and (b) the CISG.

   2.2.2 As to the principal claim 

           a) The balance of the 31 August 1999 invoice

Pursuant to Article 59 of the CISG, the buyer must pay the price on the date fixed by the contract or determinable from the contract. According to Article 3 of the 27 November 1998 contract, 10% of the price is payable upon order, 80% of the price upon delivery and 10% of the price upon final receipt;

In addition, according to Article III. 3 of the delivery conditions annexed to the contract, the withholding of payments or compensation with potential credits of the client that challenged by the supplier is not permitted.

Pursuant to Article 4 of the 27 November 1998 contract, delivery is deemed to correspond to the completion of the machine after a final inspection and the notification by the supplier that it is ready to be dispatched. Such a definition necessarily implies verification by the buyer that all the parts of the machine are built and that the latter is consequently in the condition to be delivered.

From the time the parties agreed to spare the assembly of the machine and its provisional receipt in [seller]'s workshops, delivery cannot be deemed completed before receipt in [buyer]'s workshops, that is, before 1 October 1999. After all, a portion of the parts of the processing center was not delivered in July 1999 (cf. document no. 9 of [seller]'s file & the documents no. 22a and 23 of [buyer]'s file). By contrast, it follows from the memorandum set forth on 1 October 1999 that by that date receipt was complete.

It follows that the balance of the sale price (90%) was due from 1 October 1999. Pursuant to Article 59 of the CISG and Article 111.3 of the delivery conditions, [buyer] cannot seek to withhold from [seller] any compensation whatsoever with a credit of damages and interest for partial non-performance of the contract, since this credit is the subject of a major dispute. The sum of 664,060.- DM is due and must be converted to the sum of 339,528.49 EUR.

            b) The interest (intérêts moratoires) on the 19 November 1999 invoice

The 19 November 1999 invoice is not challenged and was moreover paid. That invoice relates to some performances regarding the regulation of the machine; those performances are connected to the sale in such a way that the interest on the unpaid invoiced sum is owed notwithstanding the absence of a warning notice pursuant to Article 78 of the CISG. The calculation of interest is not contested as such. The sum of 385.- DM is due and must be converted to the sum of 196.85 EUR.

   2.2.3 The counterclaim

            a) Damages and interest for the delay in delivery

Pursuant to Article 33(a) of the CISG, the seller must deliver the goods on the date fixed by the contract or determinable by reference to the contract. According to Article 4 of the 27 November 1998 contract, the delivery of the machine was initially foreseen for the course of the twenty-second week of the year 1999, that is, for the beginning of the month of June 1999.

Pursuant to Article 47 of the CISG, the buyer can grant the seller an additional time of reasonable length for performance by the seller of his obligations, without the penalty of damages and interest for a delay in performance.

Now, on one hand, the parties did not envision sanctions in the case of exceeding the delivery time, the contract expressly excluding Article IV.4 of the delivery conditions, and, on the other hand, that additional time had been deferred several times. Pursuant to Articles 45 and 74 of the CISG, [buyer] still has the right to seek from [seller] damages and interest for the delay in delivery, but it is up to [buyer] to demonstrate the loss suffered or the loss of profit that arose from that delay. Under the circumstances, those damages are not sufficiently established, neither in their amount, nor in principle, since the industrial hall in which the processing center had been installed was still under construction during the summer of 1999.

The expenditures which [buyer] sets forth on page thirty-two of its concluding brief concern the use of a machine which is not shown by any element of the file to be similar to the machine under dispute. That machine was moreover used during a period (from January to September 1999) which does not correspond exactly to the period of the delay in the delivery (from June to September 1999) (cf. document no. 43 of [buyer]'s file). It is thus not established that one is dealing with a replacement machine and that the late delivery had entailed a loss of use for the [buyer].

            b) Damages for lack of conformity of the processing center

Pursuant to Article 36 of the CISG, the seller is responsible for any lack of conformity which exists at the moment when the risk passes to the buyer, even if the lack of conformity becomes apparent later or any lack of conformity which occurs after the transfer but which is imputable to the non-performance of one of [seller]'s obligations.

In the case at bar, [buyer] acknowledged by signing the 1 October 1999 memorandum of final receipt that the delivery was complete and conformed to the contract, subject to three minor reservations (a part of the documentation, the list of spare parts and a part of the training course) which do not impede the use of the machine as from October 1999. Consequently, it falls to [buyer] to show that the two breakdowns that suddenly occurred after fifteen and twenty-two months of use originated from defects which affected the machine at the time of the transfer of risk or which unexpectedly happened subsequently but which resulted from a breach on the part of [seller] of one of its obligations and that these defects were not apparent at the time of the final receipt on 1 October 1999.

That proof is not borne out by any evidence and can no longer be, the breakdowns which [buyer] sets forth not being the object of any contradictory findings between the parties before reparation by a third party. Furthermore, the milling machine head was not ordered on 27 November 1998; that part was the object of distinct negotiations and a subsequent offer of 7 April 1999.

If, as it maintains, [buyer] had acquired an automatic adjusting milling machine head, an essential condition of the sale, [buyer] would have at least made mention of it at the time of the conclusion of the contract. The 27 November 1998 order does not contain any reservation as to that device

In these circumstances, [buyer] has not proved that the order for the ensemble of the machine was made conditional upon the possibility of subsequently adapting to it an automatic adjusting milling machine head (and not just manual) and that [seller] would endeavor to supply a processing center being able to receive this type of device.

We must postpone ruling on the conformity of the framework of the machine to the technical specifications of the order, pending the submission of the judicial expert's briefs as designated by the decisions rendered on 16 October 2000 and 6 February 2001, after a full hearing of the parties, by the Landgericht Magdeburg and, in the theory whereby this framework was not made of cast-iron but steel, to allow the parties to be heard on the visible nature or not of this potential non-conformity;

Since Article 111.3 of the delivery conditions adjoined to the 27 November 1998 contract excludes any compensation and any withholding of payment for a potential debt of the buyer contested by the seller, it is proper, by application of Article 810 of the Judicial Code, to judge separately the principal claim and the counterclaim.

   2.2.4 The provisional enforcement

It is proper to order provisional enforcement (notwithstanding any petition and without surety) which is justly sought. By application of Article 1406 of the Judicial Code, it is not proper, however, to withhold the right to hold the goods, the [seller] not having shown that the delay bears on the settling of the amount owed and exposes it to a grave harm; holding the goods is for the [buyer] a right intended to secure it against the risk of the [seller]'s insolvency in case of modification of the judgment.

FOR THESE REASONS

In view of the provisions of the law of 15 June 1935 on the use of languages in judicial matters, the Court, holding after a full hearing on the merits and in the first instance, after having deliberated, setting aside, as baseless, any other contrary or broader claims:

-   Declares itself competent, having jurisdiction;
- Declares the principal claim and counterclaim admissible;
- Declares the principal claim as having merit to the extent clarified hereinafter;
- Orders the Defendant [buyer] to pay the Plaintiff [seller] the sum of three hundred thirty-nine thousand seven hundred twenty-five Euros and thirty-four cents (339,725.34 EUR) plus interest calculated on the sum of three hundred thirty-nine thousand five hundred twenty-eight Euros and forty-nine cents (339,528.49 EUR) at the legal rate to be counted from the first of October nineteen hundred and ninety-nine until full payment;
- Dismisses the remainder of [seller]'s claims;
- Declares as unfounded, the counterclaim for damages and interest for any delay in delivery and for any lack of conformity, other than that potentially affecting the framework of the machine;
- Rejects [buyer]'s counterclaim;
- Postpones ruling on the merits of the counterclaim for damages and interest for non-conformity of the machine's framework;
- Invites the [buyer] to submit the conclusions of the report by the judicial expert designated by the decisions rendered on 16 October 2000 and 6 February 2001 after a full hearing of the parties by the Landgericht Magdeburg, and invites the parties to explain themselves on the meaning of those documents;
- Orders sua sponte the reopening of argument only to the only extent set forth above; removes the suit from the hearing docket and places it again on the general docket;
- Reserves the costs;
- Orders provisional enforcement.

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Belgium is referred to as [seller] and the Defendant of Germany is referred to as [buyer]. Amounts in the currency of Germany (Deutsche Mark) are indicated as [DM]; amounts in European currency (Euros) are indicated as [EUR].

** Charles Sant 'Elia has a B.A. in Political Science and Italian Literature from New York University and studied Political Science at the Universitá degli Studi di Firenze. He received his J.D. from Pace University School of Law and is admitted to the Bar of the States of New York and Connecticut.

*** Thalia Kruger, assistant of Private International Law, Katholieke Universiteit Leuven, where she is currently preparing a doctoral thesis on international jurisdiction. LL.B. Stellenbosch, South Africa.

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Pace Law School Institute of International Commercial Law - Last updated May 22, 2014
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