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France 28 November 2002 Appellate Court Grenoble (Machinery case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/021128f2.html]

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

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Case identification

DATE OF DECISION: 20021128 (28 November 2002)


TRIBUNAL: CA Grenoble [CA = Cour d'appel = Appellate Court]

JUDGE(S): Allain Uran, president; Christiane Beroujon, Jean-Louis Bernaud, conseillers; Eliane Pelisson, greffier


CASE NAME: SA AZ I... v. Entreprise Em... de Su... In...

CASE HISTORY: 1st instance Tribunal de Commerce (RG OOJ01373) 26 January 2001

SELLER'S COUNTRY: Cuba (plaintiff)

BUYER'S COUNTRY: France (defendant)


Classification of issues present

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


Key CISG provisions at issue: Articles 11 ; 12 ; 74 ; 78

Classification of issues using UNCITRAL classification code numbers:

11A [Formal requirements: writing or other formality not required for conclusion of contract];

74A [General rules for measuring damages];

78B [Rate of Interest]

Descriptors: Formal requirements ; Damages ; Burden of proof ; Interest

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Editorial remarks

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Citations to case abstracts, texts, and commentaries


(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=923&step=Abstract>


Original language (French): CISG-France website <http://Witz.jura.uni-sb.de/CISG/decisions/281102av.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=923&step=FullText>; [2003] Juris Classeur Périodique, pan. 1083, p. 1215

Translation (English): Text presented below


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]

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeal (Cour d'Appel) of Grenoble

28 November 2002 [2002/18702]

Translation [*] by Julia Hoffmann [**]

PARTICULARS. Appeal from a decision (N RG OOJ01373 - Commercial List) delivered by the Commercial Court of Grenoble dated 26 January 2001, following the declaration of appeal dated 30 March 2001. APPELLANT: SA AZ I... "[Buyer]" appearing by way of its legal representative exercising in such capacity at the said registered office, (...), represented by the Selarl D... & N..., court attorneys assisted by Me A... CH... , barrister at the Grenoble bar, replaced by Me Sch... , barrister at the Grenoble bar. RESPONDENT: Entreprise ESI - Em... de SU... In... "[Seller]" appearing by way of its legal representative exercising in such capacity at the said registered office (...), Havana (H. Vieja - Cuba, represented by the SCP G... , court attorneys assisted by Me O... barrister at the Grenoble bar, replacing Me G... B... , barrister at the Paris bar. COMPOSITION OF THE COURT at the Hearing and Deliberation: Monsieur Allain Uran, Président de Chambre; Madame Christiane Beroujon, Conseiller; Monsieur Jean-Louis Berbayd, Conseiller; Assisted at the hearing: Assistés by Madame Eliane Pelisson, Greffier.

At the public hearing on 24 October 2002, the court attorneys and the barristers submitted their pleadings and presented their oral submissions. The Court then deliberated and delivered its judgment on that day.

On 30 March 2001, [Buyer] appealed from a judgment of the Tribunal de Commerce [Commercial Court] of Grenoble [Court of First Instance] dated 26 January 2001 which ordered it to pay to [Seller] the amount of US $58,238.57 (or the same value of this amount in French francs at the date of payment), which represented the balance of various invoices for materials remaining unpaid, and the sum of 4,000 French francs in application of Article 700 of the New Code of Civil Procedure.


In view of the [Buyer]'s pleadings dated 24 September 2002,
In view of the [Seller]'s pleadings dated 5 April 2002,

In opposition to the demand for payment by [Seller], [Buyer] raises several different procedural and substantive grounds.

I - Appeal asserting the incompetence of the French state jurisdictions

The Appellant [Buyer] invokes an Accord concluded on 25 April 1997 between the Government of the Republic of Cuba and the Government of the French Republic for the reciprocal encouragement and protection of investments, which at article 10 stipulates that "all disputes relating to investments between the Contracting Parties and a national or a company of the other Contracting Party are to be determined amicably between the two parties concerned" and that "if a dispute is not able to be resolved within a period of six months ... it is to be submitted, at the request of one or other of the parties, to arbitration by an ad-hoc arbitral tribunal established according to the CNUDCF rules."

However, other than the consideration of the exception of incompetence of the French state jurisdictions to that of the arbitral tribunal, which [Buyer] has not sought to constitute, and has raised tardily, the cited international convention is not applicable to the case in dispute, [Buyer] having made no "investment" in Cuba, but only ordered various machines from a Cuban company in order to re-sell them to sugar processing factories located either in the French DOM-TOM or overseas.

This basis for appeal is rejected.

II - [Seller]'s lack of standing

The Cuban Republic and the French Republic are linked by a bilateral convention signed in 1929, of which Article 7 stipulates that a civil, commercial, industrial, financial and other type of company ... formed in one of the two countries in accordance with the laws of the latter and having its registered office in that place shall be considered to be properly formed by the other Contracting Party. The legality of a company's constitution and the company's capacity to act in proceedings is to be determined according to its articles of association and according to the law of the country where the company was formed.

According to Cuban law, all acts relating to international sales, must be undertaken by entities specially authorized by the Minister of Foreign Commerce, even if the importing foreign company necessarily has a commercial relationship with the Cuban company fabricating the products that it seeks to import. [Seller] is such an authorized entity.

The contracts of sale concluded in August and November 1997 cite, among other things, the [Seller] as the vendor and subsequent invoices also emanate from [Seller].

The [Buyer] who claims to know the Cuban market well, and whose representative Monsieur J... , placed his signature on at least two of the four contracts that were concluded in 1997 cannot deny [Seller] the right to seek payment, even if the maker of the machines is Company P... M... , with whom [Buyer] had an ongoing relationship and, on two successive occasions, concluded a settlement agreement pursuant to which [Buyer] acknowledged its obligation to pay its partner a sum of US $44,909.46.

The grounds of appeal based on the [Seller]'s lack of standing is rejected.

III - Other issues

1. [Applicable law, matters of form,] payment of price [and interest]

Pursuant to article 4 1 of the Rome Convention of 19 June 1980, where the parties have failed to make any choice of law between themselves, an international contract is subject to the laws of the country with which it is most closely connected; that country is presumed to be the one where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate, its central administration. In a sales transaction, the law that is internationally competent is that of the seller. Accordingly, it is appropriate to apply Cuban law.

As the Republic of Cuba, like France, signed and ratified the Vienna Convention of 11 April 1980 providing a uniform law on the international sale of goods (CISG), the Convention is applicable to this dispute. The CISG excludes all formalism in relation to both the validity and the proof of a contract of sale.

It is therefore of little significance that the contracts put before the court do not bear the signature of Monsieur J... The invoice procedure followed is in accordance with the contractual stipulations. [Buyer] acknowledged its debt in multiple letters, justifying its delay on the basis of transitory cash flow problems. By a fax dated 16 October 1998, P... M... provided its client with an extremely accurate breakdown of its debt, on the basis of the contracts and invoices set up by [Seller].

The breakdown which sets the [Buyer]'s debt at US $48,257.26 is expressly referred to in a conciliation agreement dated 11 November 1998, bearing the signature of Monsieur J... , according to which P... M... accepted to reduce its debt to US $44,909.46. Ultimately this first conciliation agreement was followed by a second, dated 9 November 1999, which loyally reproduces the tenor of the first agreement.

[Buyer] may not, in these conditions, hide behind any exception of non-performance in an attempt to escape its obligations and even less in order to claim damages and interest.

The contracts that it claims were not executed by [Seller] correspond to the orders passed at the end of 1998. At that date, it had still not settled the price of the materials delivered at the end of 1997 despite its repeated promises and two settlements according to which [Seller] allowed a significant discount as a commercial gesture.

The [Seller] who in various letters had expressly subjected its further relations with [Buyer] to a precondition of the offset of its debt, was not required to honor the further orders by [Buyer]. If [Seller] avails itself of the non-performance of the settlement agreements signed by Monsieur J... on 11 November 1998 and 9 November 1999 to invoke their ineffectiveness and claim payment of the entirety of its debt, by invoking certain provisions of the Civil Code or the Cuban Commercial Code, the Court notes that it has not done so in its pleadings, because it seeks an order that [Buyer] pay it the sum of US $44,909.46 in principal and not US $48,257.26.

According to article 78 of the Vienna Convention of 11 April 1980, "if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under article 74."

The [Seller] has produced a certificate from the Banco Popular Ahorro which establishes that the legal interest rate in Cuba was 14% in1998 and 1999 and 12% in 2000.

It is appropriate, in view of the evidence, to order [Buyer] to pay [Seller] the sum of US $44,905 with interest at a rate of 14 % to be calculated from 16 October 1998 to 31 December 1999 and at a rate of 12 % from 1 January 2000 to 31 December 2000.

As no evidence was submitted by [Seller] as to the legal interest rate in Cuba in 2001 and 2002, it is the official French interest rate which applies, in order to overcome any difficulties that may be encountered for the execution of this judgment between the two parties.

The exchange rate applicable will be, in accordance with the contractual stipulations, the average New York market rate, according to page FXZZ of the Reuter Money Report Services at 4:30 p.m., three open banking days before the date of payment.

2. Damages and interest [and legal costs]

If Article 74 of the Vienna Convention provides that the party that is a victim of the non-performance can claim damages and interest, must it still prove that an independent loss has been suffered by the simple delay in payment?

[Seller] has not produced any evidence and cannot be non-suited of its claim. It would be inequitable to leave it responsible for its irrecoverable legal costs, accordingly in application of Article 700 of the New Code of Civil Procedure it will obtain a sum of 5,000 Euros which will be added to the 4,000 francs awarded at first instance.


In open court, by its decision contradictoire, having deliberated in accordance with the law, this Appellate Court partially quashes the judgment of the Court of First Instance and:

   -    Orders [Buyer] to pay to the [Seller] the sum of US $44,909.46 or its equivalent in Euros, as well as interest at a rate of 14 % from 16 October 1998 to 31 December 1999, and at 12 % from 1 January 2000 to 31 December 2000, and at the official French interest rate from 1 January 2001;
   -    Declares that the applicable exchange rate will be the average New York market rate, according to page FXZZ of the Reuter Money Report Services at 4:30 p.m., three open banking days before the date of payment;
   -    Rejects all other further or contrary claims of the parties.
   -    Orders [Buyer] to pay [Seller] the sum of 5,000 Euros in application of article 700 of the New Code of Civil Procedure, to be added to the amount of 4,000 French francs awarded to the [Seller] at first instance.
   -    Orders [Buyer] to pay all costs at first instance and on appeal, and for the latter authorizes the la SCP G... , Court attorneys, to recover these costs in accordance with Article 699 of the New Code of Civil Procedure.

Delivered in open court by Madame Beroujon, Judge, and signed by Monsieur Uran, Presiding Judge, and Madame Pelisson, Court Clerk.


* For purposes of this translation, Defendant-Appellant SA AZ I... of France is referred to as [Buyer], Plaintiff-Respondent Entreprise ESI - Em... de SU... In... of Cuba is referred to as [Seller].

** Julia Hoffmann, BA, Dip. Lang, LLB (Hons) (Adel.). LLM (Paris I), Solicitor of the Supreme Courts of New South Wales and South Australia.

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Pace Law School Institute of International Commercial Law - Last updated June 15, 2005
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