Argentina 21 July 2002 Appellate Court (Cervecería y Malteria Paysandú S.A. v. Cervecería Argentina S.A.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020721a1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: Unavailable
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Uruguay (plaintiff)
BUYER'S COUNTRY: Argentina (defendant)
GOODS INVOLVED: Malt
ARGENTINA: Cámara Nacional de Apelaciones en lo Comercial de Buenos Aires (Cervecería y Maltería Paysandú S.A. v. Cervecería Argentina S.A.) 21 July 2002
Case law on UNCITRAL texts (CLOUT) abstract no. 636
Reproduced with permission of UNCITRAL
The main focus of the case is on the procedure to determine the quality of the purchased goods when the buyer refuses to pay the price on the ground of nonconformity of the goods.
Cervecería y Maltería Paysandú S.A., an Uruguayan company (the seller) entered into a contract with Cervecería Argentina S.A. (the buyer), with its place of business in Argentina, for the purchase of malted barley to be delivered to the buyer's industrial plant in Zárate (Argentina), at the beginning of 1995 (article 30 CISG). The buyer accepted the delivery of the goods, but refused to fulfil his obligation to pay the price (article 53 CISG), alleging lack of conformity of the goods (articles 35 and 36 CISG). The seller brought suit for the payment of the price due plus interest.
Basing its ruling on several provisions of the Argentinean Commercial Code, the court of first instance upheld the seller's claim and ordered the buyer to pay the price, plus interest starting from the date the goods were delivered.
On appeal, the court stated that the CISG applied to the case by virtue of its article 1(1)(b), since the Argentinean rules of private international law pointed to the application of the law of Argentina, a contracting state of the CISG. Since Uruguay was not yet a party to the Convention at the time the contract was concluded, the Convention could not be applied by way of article 1(1)(a).
In order to determine the applicable law, the court considered the place of execution of the contractual obligation. This is where the "most characteristic performance" takes place and in a contract for the international sale of goods the "most characteristic performance" is the delivery of the goods rather than the payment of the purchase price. Therefore, since the goods were delivered in Argentina, Argentinean law was considered applicable.
With regard to the procedure to determine the nonconformity of the goods delivered, the court held that the issue was neither settled nor even contemplated by the CISG. Thus, on the basis of article 7(2) CISG, the court turned to the law applicable by virtue of the rules of private international law, i.e. Argentinean law. Article 476 of the Argentinean Commercial Code requires nonconformity of the goods to be established by a fixed procedure based on arbitration: a procedure that the buyer did not follow. Even if it can be assumed that arbitration is not mandatory and can be replaced by a different procedure based on tests by experts, the court stated that the buyer had failed to submit convincing evidence demonstrating that the goods did not conform to the contract. The court held therefore that the seller was entitled to payment of the purchase price (article 62 CISG) plus interest (article 78 CISG), thus upholding the judgment rendered by the lower court.Go to Case Table of Contents
APPLICATION OF CISG: Yes [Article 1(1)(b)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
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CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=925&step=Abstract>
Spanish: CISG-Spain and Latin America website <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/rargen11.htm>
CITATIONS TO TEXT OF DECISION
Original language (Spanish): CISG-Spain and Latin America website <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen11.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=925&step=FullText>; La Ley 18 June 2003
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: 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]; Anthony J. McMahon, 44 Columbia Journal of Transnational Law (2006) 992-1032 at Section IVGo to Case Table of Contents
Queen Mary Case Translation Programme
21 July 2002
Translation [*] by Jorge Oviedo Albán [**]
OPINION by Rodolfo A. Ramírez., concurred in by Helios A. Guerrero and Martín Arecha.
105.665 -- CNCom., Court room "E", 2002/11/July. -- Plaintiff Cervecería y Maltería Paysandú S.A. [Seller] of Uruguay v. Defendant Cervecería Argentina S.A., established in Argentina [Buyer]
Second instance. -- Buenos Aires, 7 November 2002.
I. [Seller] has brought suit to have [Buyer] pay the sum of US $37,213 plus interest, the price of 135,320 kilograms of malted barley delivered to [Buyer]'s industrial plant in Zárate, Buenos Aires Province in the beginning of 1995.
[Buyer] accepted receipt of the goods, but objected to [Seller]'s claim alleging that the malt was dreadful.
Verdict 458/462 sustained [Seller]'s claim and directed [Buyer] to pay the amount [Seller] claimed, plus interest starting from the date of delivery of the goods and to pay the costs of trial.
The Judge of the Court of First Instance based his ruling on articles 472 and 473 of the Commercial Code. [Buyer] did not give [Seller] timely notice of the alleged defects, nor did [Buyer] offer the test foreseen in article 476 of the Commercial Code. The Judge added that the goods were delivered on 24, 26, 30 and 31 January 1995 and [Buyer] had not exercised its right by commencing legal action inside the legal term.
II. [Buyer] appeals this verdict, maintaining its resource by means of writing Fs. 472/477, responded to fs. 479/484.
[Buyer] criticizes the ruling of the lower court, questions the application to this case of article 417 of the Procedural Code, and maintains that the witness declaration of Eduardo Muñoz Pastene and the legal opinion submitted in this case demonstrate the bad quality of the malt delivered by [Seller].
III. A threshold question is whether this case calls for the application of the United Nations Convention [CISG] adopted in Vienna on 11 April 1980, approved by Law 22.765.
According to its article 1(1), the CISG applies to contracts for the sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States, that is to say, that they have signed the Convention; or when (b) the rules of private international law lead to the application of the law of a Contracting State (see Carlos Gilberto Villegas, "Comercio Exterior...", Ed. Astrea, 1993, Cap. 1º, para. 3, pp. 30/31).
The contract in this case does not fit art. 1(1)(a), because although the Convention entered into effect in Argentina on 1 January 1988, it did not become effective in Uruguay until 1 February 2000; that is to say, after the transaction involved in this case (see "A propósito de la aplicación de La Convención de Las Naciones Unidas...", por Carolina D., in ED, 169-405 and et seq., especially Cap.V). It is therefore necessary analyze the situation in light of art. 1(1)(b).
As specified by qualified doctrine, in Argentine private international law, the Civil Code regime establishes general norms for all type of contracts. In accordance with articles 1209 and 1210 of the Civil Code of Argentina, the determinant is the place of execution of the contract (see María Susana Najurieta, "Compraventa International. Aportes..., in RDCO, Nº 121/123, June 1988, pto. 2.2.1., pp. 74/75).
It is therefore necessary to determine the place of execution of the contract in this case. In synallagmatic contracts, the most significant relationship is the reltionship that locates the contract with a juridical system. And being an international sale of goods, the functional benefit of the contract is the delivery of the goods; the non-monetary benefit that is the responsibility of the seller.
The merchandise was delivered to [Buyer]'s industrial plant in Argentina; it is thus clear that the most characteristic relationship of the contract was completed in Argentina (comp. this court's ruling in the case of "Expósito e Hijos S.r.l. v. Jocqueviel of Vieu", 10 October 1985, and doctrine there mentioned, La Ley, 1986-D, 46). In consequence, the rules of private international law designate the law of República Argentina. Argentina is a Contracting State. The Convention therefore applies by virtue of article 1(1)(b).
I call attention to the opinion of Bernard Audit who, when considering the sphere of application of the Convention, assigns considerable importance to art. 1(1)(b) as a method of incorporating the rules of the Convention in the law of States that are Contracting States, so that the Convention becomes the common law of the international sale of goods in the countries that adopt it (see "La Compraventa Internacional de Mercaderias", Zavalía editor, año 1994, Capi. 1, para. 21. p. 28).
The Convention regulates the seller's obligations in detail regarding the delivery of the goods and the buyer's rights in event that the goods do not correspond to the quantity, quality and type specified in the contract (see, among other provisions of the Convention, articles 30, 35, 36, 39 and 45 to 52); regulations that coincide in essence with those contained our Civil Code and Commercial Code (see exhibition of reasons accompanying Argentina's ratification of the CISG in 22.765). However, the CISG does not contain any rule -- or general principle -- concerning the procedure to follow to determine the quality of the goods, when it is refuted by the buyer.
In ruling on this, one should look to the solution contemplated in article 7(2) of the CISG: "Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law" (see "Villegas", op. cit., para. 4, p. 31). That is to say, in the latter situation, the Convention remits to the national systems of private international law (see again, exhibition of reasons of the law 22.765).
In these circumstances, the question of justification of the existence of hidden defects attributed to the merchandises should be governed by the Commercial Code.
I recall having had opportunity to pronounce in this same sense when casting my vote in a case that has marked analogies with the present case (see 24 April 2000, "in re": "Mayer, Alejandro v. Wave Hofferle GmbH & Co.", ED, 194-495).
Set down it, I notice that the [Buyer]'s demand has ignored the procedure fixed imperatively by article 476 of the Commercial Code, according to which the buyer who refutes the quality of the goods should appeal to the know-how by arbitration. Such an omission, in my opinion, seals the adverse luck of the resource; expert arbitration is the road legally contemplated to settle this type of controversy as regards commercial sales of goods (comp. this court "in re": "Donato, Vicente v.. Papelera San Justo", 27/2/90, and its appointments, ED, 140-745).
This does not foreclose the conclusion that follows from the result of the material analysis accompanying the answer, presumably carried out by a German laboratory (see fs fax. 95 and annexed translation, without foliating), but that evidence does not replace the trial of expert arbitrators -- without which [Buyer]'s allegations are not proven.
IV. The testimony and the know-how highlighted in [Buyer]'s pleadings constitute an inadmissible test to certify the lack of quality of the merchandise.
Lastly, although it is understood that the mentioned legal mechanism is not imperative and that it can be replaced by means of the test of experts regulated by the Procedural Code, the certain thing is that the grounds for technical verdict set forth in this case in the application of the [Buyer] lack all probative effectiveness. The [Buyer]'s application indicates that the designated engineer expert had not examined the goods, but rather founded its opinion on facsimiles of apparent laboratory results given by the [Buyer] (fs. 267/270), four of which do not even accompany the answer nor have they been translated to the national language (see fs. 260/264).
V. Consistent with the above, I judge that the sentence that orders [Buyer] to pay the demanded price with its interest be affirmed, adjusted to accord with articles 28, 53, 59, 61, 62, 78 and concordances of the United Nations Convention ratified by Law 22.765.
VI. The award is converted to pesos, with foundation in that prepared in the art. 1º of the dec. 214/02.
To my approach, the one outlines it exceeds the mark of the resource because: 1. The sentence has been dictated previously to the entrance in validity of the one mentioned ordinance, and 2. The appealed part has outlined in eventual form the unconstitutionality of that normative one, question that cannot be resolved without the debtor's audience.
In consequence, it corresponds to underrate that requested in the point 3 of the writing of expression of grievance, without prejudice -- of course -- to the [Buyer]'s right to restate the chapter before the tribunal of first instance in the stage of sentence execution.
VII. I propose:
Doctor Guerrero stated: "I share the foundations presented in the above opinion. I concur with this solution. I vote, in consequence, in equal sense." For similar reasons, Doctor Arecha also concurs.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Uruguay is referred to as [Seller] and the Defendant of Argentina is referred to as [Buyer].
** Lawyer (J.D.) Especial degree in Commercial Law Pontificia Universidad Javeriana; Commercial Law Professor, Universidad de La Sabana Bogotá D.C., Urgina & Oviedo Abogados, Bogatá DC, Colombia.Go to Case Table of Contents