Belgium 28 April 2003 Appellate Court Liège (SA ED v. S.p.A. LP) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030428b1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2001/RG/817
CASE HISTORY: 1st instance Tribunal de commerce Verviers 7 May 2001
SELLER'S COUNTRY: Belgium (plaintiff)
BUYER'S COUNTRY: Italy (defendant)
GOODS INVOLVED: Textiles (wool scraps)
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
4B [Issues covered and excluded: validity]; 9C ; 9D [Practices established by the parties; Usages and practices]; 11A [Writing or other formality for conclusion of contract not required]; 18A3 [Criteria for acceptance: silence or inactivity insufficient]; 57A [Place for payment: in absence of agreement, payment at seller's place of business]
4B [Issues covered and excluded: validity];
9C ; 9D [Practices established by the parties; Usages and practices];
11A [Writing or other formality for conclusion of contract not required];
18A3 [Criteria for acceptance: silence or inactivity insufficient];
57A [Place for payment: in absence of agreement, payment at seller's place of business]
Overview comments (CISG-Belgium database): Jurisdiction – forum clause – Art. 17 Brussels Convention – not valid. Jurisdiction – place of performance – Art. 5 Brussels Convention – place of payment – according to Art. 57 – seat of seller – Belgium – Belgian court has jurisdiction. Validity – CISG not applicable. Formation of contract – CISG applicable. Contract not validly formed.Go to Case Table of Contents
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (French): CISG-Belgium database of Katholieke Universiteit Leuven <http://www.law.kuleuven.ac.be/ipr/eng/cases/2003-04-28.html>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
S.A. ED v S.p.A. LP
Translation [*] by Julia Hoffmann [**]
Edited by Linus Meyer [***]
APPELLANT: S.A. ED [Seller], having its registered office at 4910 Theux, listed on the Commercial Register of Verviers, represented by Maître Matray Didier, Court attorney at Liege. RESPONDENT: S.p.A. LP [Buyer], having its registered office at I - 59100 Prato (Italy), represented by Maître Vanchet Gérard, Court attorney at Paris (France)
In view of the transcript from the hearings on 6 September 2001, 18 March 2003, 25 March 2003 and today
In view of the appeals from the judgment delivered on 7 May 2001 by the Commercial Court of Verviers filed by [Seller] on 13 June 2001 and incidentally by [Buyer], a company formed under Italian law, in its submissions dated 23 December 2002 also containing, amongst other things, an incidental claim for damages for reckless and vexatious proceedings.
In consideration of the following ...
The [Seller] commenced proceedings against [Buyer] on 22 September 1999 for a provisional payment of 75 million Belgian francs [Bf] in indemnification of the lucrum cessans and damnum emergens that it suffered due to the wrongful repudiation, by way of a letter from the [Buyer] dated 1 June 1999, of five contracts entered into in 1997 and 1998. [Seller]'s claim was dismissed by the judges at first instance on the grounds that [Seller] had not provided proof of the said contracts, whose existence [Buyer] disputes.
On appeal, [Seller] reiterates its allegations and claims a final principal amount of 2,314,164.40 EURO (93,353,160 Bf) and a subsidiary amount of 1,693,021.80 EURO (68,296,330 Bf).
[Buyer] maintains its denial of the competence of the Belgian jurisdiction raised in limine litis at trial, in favor of the jurisdiction of the courts of Prato in Italy, on the grounds that no contractual clause of prorogation of jurisdiction can be applied to it in relation to the contracts, whose very existence [Buyer] disputes. In its opinion only article 2 of the Brussels Convention of 27 September 1968, designating the competence of the Italian courts, is applicable outside any contractual framework.
[Seller] invokes the current commercial ties between the parties since October 1995 in order to claim, in reverse, that the conferring clause granting jurisdiction to the Commercial Court of Verviers, which was included in the general conditions that figure as much in its contracts as in its invoices, entered into the scope of the contract between the parties.
If Article 17 of the Brussels Convention provides that the Agreement by which the parties designated the court of a Contracting State to have exclusive jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, shall be either in writing or evidenced in writing or, in international trade or commerce and in the case of ongoing commercial relations between the parties, in a form which accords with practices in that trade or commerce of which the parties are or ought to have been aware, the latter modes of conclusion of the agreement do not benefit from "less rigourous requirements as to the formation of the agreement but only from an increased flexibility as to the methods of proof of that agreement" (Born, Fallon, Van Boxstael, Droit judiciaire international, Chronique de jurisprudence, 1991-1998, Les dossiers du J.T., p. 301).
[Seller] submits that the dispute by [Buyer] of the existence of the contracts in dispute has no effect on the application of Article 17 as "it is not possible to impose conditions other than those resulting from Article 17 of the Convention. To assess whether or not they have jurisdiction in relation to this provision, national courts must limit themselves to an examination on the basis of the rules of the Convention, without being bound to consider the substance of the case" (ECJ, 16 March 1999, C-159/97, Rec., p. I-1036).
"The two conditions upon which Article 17 subordinates the conferring clauses to which it is applied, relate, respectively, to the very existence of the agreement for the choice of forum resulting from the respect of certain 'forms', and to its purpose which must be to delimit the jurisdiction of the chosen judge by reference to the disputes 'which have arisen or which may arise in connection with a particular legal relationship'. ... This condition gives notice to limit the scope of an agreement conferring jurisdiction only for disputes which find their origin in the legal relationship at the time that the agreement was concluded" (Born, Le régime général des clauses attributives de juridiction dans la convention de Bruxelles, J.T. 1995, p. 359) with the objective being "to avoid a party being taken by surprise by the conferring of jurisdiction to a given forum for all disputes which may arise out of its relationship with the other party to the contract, where the dispute in issue may stem from a relationship other than that in connection with which the agreement conferring jurisdiction was made" (ECJ, Powell Duffryn of 10 March 1992, C214/89, Rec., 1992, p. I-1745).
The examination of these requirements alone leads, in this case, to dismissal of the application of the agreement for the choice of forum, of which the [Seller] avails itself.
The issue in dispute is the nature of the legal relationship, at the time that the agreement would have been concluded. The relationship, as described by [Seller], when contemplated at this stage of the proceedings, is not in the same category of current commercial relations held between the parties to date.
It is not a matter of limiting this concept to contracts with reduced financial issues but to consider, on this point, only comparable commercial relations normally maintained between the parties so as to exclude any risk of unfair surprise by the party against whom the clause is raised and to be assured in all good faith of the effective consent, at the very least, of a presumed agreement, of which it necessarily had to be aware for it to have been formed (Born, Fallon, Van Boxstael, op. cit., p. 302).
Now, [Seller] submits that even though it had already contracted ten or so times with [Buyer], it hesitated to agree to Contract n° 97.138 of 1 December 1997 at the source of the dispute, given the risk that it represented in view of the size of the amount ordered (500 tons at the start, ultimately raised, during the course of negotiations, to 1,675 tons). On 28 November 1997, [Seller] asked its agent "to emphasize to its client the risk entailed for us, today, in committing ourselves to such a large quantity and such a limited timeframe". [Seller] cannot seriously dispute that it did not itself realize that the operation greatly surpassed the type of habitual commercial relations between the parties, and was of a commercial and financial scale, without precedent to that which they had known up to that point.
In failing to be able to apply Article 17 of the Convention, it is not Article 2, as submitted by [Buyer], that is applicable, but instead Article 5.1.
[Seller] brought proceedings against [Buyer] for indemnification of the loss suffered as a result of the wrongful repudiation by the latter of five sale contracts.
The obligation for the party responsible for the repudiation of a contract to indemnify its ex-partner is a contractual obligation, as its basis is the failure to comply with a contractual obligation (ECJ, Arcado of 8 March 1988, 9/87, Rec., 1988, p. 1547).
The dispute by [Buyer] as to the formation of the contracts does not affect the application of Article 5.1 under which it would be sufficient for "one of the parties to allege that the contract does not exist in order to defeat the rule contained in that provision" (ECJ, Effer of 4 March 1982, 38/81, Rec., 1982, p. 825).
"It follows from the provisions of the Convention, and in particular from those in section 7, that in the cases provided for in Article 5(1) of the Convention, the national court's jurisdiction to determine questions relating to a contract includes the power to consider the existence of the constituent parts of the contract itself" (ECJ, Effer cited above).
"We must not distinguish the obligation from its penalty: if a claim for damages is brought for the inexecution of an obligation, Article 5-1 designates the court of the place where that obligation should have been executed and not the place of payment of damages" (Gaudemet-Tallon, The Conventions of Brussels and Lugano, Paris, L.G.D.J., 1996, n° 163) .
The original and autonomous obligation serving as a basis for the claim was that of paying for the price of the goods in consideration for the delivery thereof. The loss claimed consists exactly of the difference between the price fixed in the contracts and the current market price at the moment of their resolution.
The place of execution of the principal obligation must be determined according to the applicable law of the contracts.
In the case of contracts for the sale of goods between parties whose places of business are in different States, when the States are both Contracting States to the Vienna Convention on Contracts for the International Sale of Goods, the situation enters into the domain of application of the Convention, without it being necessary to first consult the Belgian rule of Conflict of Laws, as the Vienna Convention contains a directly applicable rule which must have primacy (Fallon/Philippe, La Convention de Vienne sur les contrats de vente internationale de marchandises, JT 1998 p. 19, n° 13) .
The Vienna Convention sanctions the transferable nature of debts, as such "since the payment must be made at the seller's place of business in application of Article 57 ..., the Belgian judge will normally have jurisdiction in the case of a claim for payment brought by a Belgian seller against a foreign buyer, even in the absence of a choice of forum clause" (Fallon/Philippe, op. cit., p. 27, n° 59).
The Belgian jurisdictions seized by [Seller] are competent to determine the dispute in application of Article 5.1 of the Brussels Convention.
[Buyer] contests the applicability of the Vienna Convention to the substance of the dispute, considering that the question posed by the dispute, as to the existence or otherwise of the contracts in dispute, is expressly excluded by Article 4 of the Convention, which provides that it is not concerned with the validity of the contract.
The question still arises from the domain of the formation of the contracts, which the Convention expressly addresses at articles 11, and 14 to 29 and not from the problem of the validity of these articles which presume their existence, such that [Buyer] itself sets out in its submissions: "we cannot speak of validity of the contract or contracts as it would therefore be necessary for their existence to already be acknowledged or established so that we may then discuss their validity: we cannot discuss the validity of something that does not exist" (p. 10).
The Convention regulates "the mechanism for the formation of the contract by the coinciding of the offer and acceptance" -- which is at the heart of the dispute between the parties in this case - and not "the consequences of the factors vitiating consent on the validity of the contract" - a question which is foreign to this dispute (Neumayer et Ming, Convention de Vienne sur les contrats de vente internationale de marchandises, commentaire, CEDIDAC, Lausanne 1993, p. 67 et 71).
Article 11 of the Convention provides that the contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form, that it may be proved by any means, including witnesses, except as specifically required to this effect by a Contracting State in accordance with Article 12, a faculty of which neither Italy or Belgium has made use.
[Seller] submits that after much negotiation in November 1997, it came to an agreement with [Buyer] on 28 November 1997 for the sale of 500 tons of wool scraps at the price of 7 Deutsche Mark [DM]/kg deliverable on call from December 1997 to August 1998. [Seller] confirmed the agreement, as always, by a fax from its agent in Italy to its contact in [Buyer]'s company. [Seller] then drafted a sales contract, referred to in the fax as n° 97.138, and sent it to its Italian agent who forwarded it to [Buyer]. From December 1997 to February 1998, [Buyer] called for the delivery of 124.70 tons which were delivered, invoiced, and paid.
According to [Seller], [Buyer] sought the modification of the contract because the market price of wool scraps had fallen. The parties agreed to cancel the balance of the initial contract and to conclude two new contracts for the goods at a price closer to the market rate, but for greater quantities as compensation to [Seller]. These were Contracts dated 24 February 1998 n° 98.018 B for 625 tons at the price of 6.5 DM/kg and n° 8.019 for 250 tons at 5.75 DM/kg, i.e., a total of 875 tons to be delivered up to September 1998.
[Seller] submits that the market price of wool scraps continued to drop, [Buyer] requested a further revision of the two contracts on which it had made no call for delivery. [Seller] once again accepted according to the same scenario. Contract 98.018 B was avoided and replaced on 16 March 1998 by contracts n° 98.027 (500 tons at 5.75 DM/kg) and n° 98.018 C (925 tons at 6 DM/kg) with delivery spread out until July 1999. As [Buyer] subsequently still made no call for any goods, a further negotiation gave the following result on 25 May 1998:
|-||Contract 98.019 was replaced by n° 98.019 B (250 tons for 4.60 DM/kg deliverable by December 98);
|-||Contract 98.018 C was replaced up to the amount of 460 tons by Contract 98.018 D (460 tons at 4.80 DM/kg). The remaining for 465 tons were maintained for delivery up to July 1999;
|-||Which means, with Contract 98.027 not modified, a total of 1,675 tons upon which [Buyer] was thus engaged.|
[Buyer] formally disputes these allegations and objects that [Seller] does not have any contract signed in its name, even though those upon which it relies expressly provide that the copy must be returned duly signed, and that [Seller] has not proved that these contracts would have been returned, nor has [Seller] shown any evidence of [Buyer]'supposed intervention to obtain the different amendments related to these contracts.
[Buyer] acknowledges having contracted with [Seller], but uniquely by specific orders relating each time to limit quantities of goods, delivered by V to L's agent on the basis of samples that the latter had just presented. These orders were delivered, invoiced and paid such that [Buyer] is not liable for any obligation that was not executed in relation to [Seller].
The contracts produced by [Seller] are effectively not signed by [Buyer] but that [Seller] avails itself of a practice in the profession, to which two professional associations attest, consisting of the oral conclusion of contracts, even for significant quantities of wool scraps, deliverable on demand, and subsequently confirmed in writing without necessarily waiting for the return of the counter signature. [Seller] claims that [Buyer] was very familiar with this practice given that the previous sales which were executed to their mutual satisfaction did not result in signed contracts either.
[Seller] has not established that the documents addressed as confirmation of the contracts were provided to [Buyer]. The attestations emanating from its Italian agent or personnel thereof, to the exclusion of the employee designated as being the one to have personally proceeded with the return of the contracts (G) cannot have any greater probative value than that which is accorded to unilateral agreements.
No parallel can be drawn from the fact that the invoices were duly received by [Buyer], since the latter claims that these were directly addressed, to the contrary, by [Seller].
Only some facsimile confirmations addressed to [Buyer] are produced as proof of the sending by L to [Buyer], marked to the attention of V, of ongoing sales summaries, which made reference to the formal sending of written contracts. These undated fax confirmations, do not detail the content of the documents transmitted, even though the recourse to this mode of correspondence must have been frequent between the parties in commercial relations.
[Seller] considers that the receipt of the contracts by the [Buyer] and acceptance by the latter, is proved by the fact that they were executed in conformity with each of their provisions, with the exception of Contract no. 97.138 - the basis of this dispute, which was only partially executed.
If the examination of the various sales invoiced up until that time leads one to think that [Buyer] was not satisfied by ad hoc orders promptly delivered, but also contracted for sales with successive deliveries on demand, it does not establish that the contracts were executed word for word.
Certainly, [Buyer], for example, paid approximately 15 invoices from October 1996 to April 1997, curiously expressly referring to the sole and same contract n° 96.104 of 15 October 1996 and paying for the goods in each invoice at the same unitary price for the entire period. These documents do not align correctly with the theory that there are as many contracts as there are invoices, negotiated separately at each time.
Even so, in relation to the nine contracts for delivery on demand for which [Seller] claims that they were "executed in precise conformity with all of their provisions" it must be observed that:
|-||As to n° 95.113, even though the deliveries were to be finished by May 1996, only 67.80 tons were called at that time out of the 100 planned. The contractual periods of six months were exceeded by half without any reaction from [Seller].
|-||As to n° 96.102, only 16 tons of the 73 agreed were called during the time period. Once again, there was a delay of four months upon an initial delay of two months is observed, and again the [Seller] has not proved nor alleged that it reacted.
|-||As to n° 96.103, the quantities do not correspond. The contract provided for the sale of 75 tons where only 14 were delivered. [Seller] has no evidence of having issued a reminder. [Seller] submits that the balance would have been cancelled or replaced by contract n° 96.103 B, but no evidence filed supports and intervention by [Buyer] in this manner.
|-||As to n° 96.104, the goods were delivered at a rate that excluded the contract. Even though the contract provided for a delivery of 15/20 tons/months and that [Seller] specified that the planned monthly amounts could not be exceeded (...). [Buyer] was, for example, to be delivered 57 tons in the month of February alone, without protest from the opposing party, the entirety of the tonnage being called two months earlier than planned;
|-||As to n° 96.116, the execution of the contract exceeds by double the agreed period of time;
|-||As to n° 96.117, instead of successive deliveries from November 1996 to January 1997 as agreed in the contract, all the merchandise was delivered in a block at the beginning of February 1997;
|-||As to n° 97.069, the remark is even more striking because there was no call for goods within the three months contractually agreed, but instead all of the goods were called outside the time frame. [Seller] has no proof of any reminder to respect the terms of the contract.|
Therefore in seven out of nine cases, the execution was not in conformity with the contractual clauses. It is surprising, that in the sales with successive delivery on demand, where compliance with the agreed time frames was an important element of the agreement, that [Seller] did not even once officially remind [Buyer] of strict compliance with its contractual obligations during the entire agreed period (if [Seller] was able to rely on the contracts produced).
[Seller] has not been able to provide the missing proof that the written evidence that it exhibits was received by [Buyer] and confirmed the obligations undertaken by the latter in relation to the execution of the contracts passed before the arising of this dispute (of which its silence could not amount to acceptance). A fortiori it cannot draw the conclusion that the unexecuted contracts in dispute would, nevertheless, be received by [Buyer] and reflect the exact agreement of contractual obligations assented to by the latter, notwithstanding "its silence or inactivity", which on the contrary "does not of itself amount to acceptance" as made clear by article 18(1) of the Vienna Convention.
If the behavior of [Buyer] after the arising of the dispute is barely decisive, that of [Seller] support to the contrary the [Buyer]'s version according to which it had not contracted to undertake the obligations in dispute.
Obviously, it is surprising that [Buyer] did not respond to the registered mail that it received in May 1998 by which [Seller] urged [Buyer] to call for the goods under the contracts in dispute. Nevertheless, in taking the position that it took to the only reminder sent a year later (the receipt of the registered mail dated 30 April 1999 is not established) does not permit the drawing of any significant consequence. Effectively, on 1 January 1999, [Buyer] point blank refused the registered mail that [Seller] sent it "in an effort to give shape to a contract (or more - we have not understood) which has never existed" and [Buyer] wished to "put clearly into writing, once and for all, that we have entered into no contract with you other than those executed to date".
It is on the other hand revealing that [Seller] accepted to deliver to [Buyer] by prompt delivery up to the amount of 20 tons on 30 September 1998 at market price, even though at this time, according to its thesis, [Buyer] remained in default of calling more than 1,600 tons under Contracts 98.019 B, 98.027, 98.018 C et 98.018 D for several million DM. It is contradictory that [Seller], who complained in its registered letter of May 1998 of having had to finance "several hundred tons of wool scraps intended to cover" these contracts with "the very heavy drain on finances that represents ... their immobilization", nevertheless contracts with [Buyer], upon the simple request by the latter, the quick supply of other goods at a different price, that are delivered, invoiced and duly paid.
It is further revealing the fact that [Seller] is incapable of objectifying in any way the reality of the claimed preparations carried out with the view to whatever execution of the contracts in dispute.
The observation is not made with the purpose of ascertaining if, with respect to the provisions of the Vienna Convention, [Seller] can be satisfied to calculate its loss in an abstract manner, without having to prove that which it would have effectively suffered.
It subscribes to the contrary in the prolongation of [Seller]'s own declarations - repeated three times in its registered mail for the months of May 1998 and May 1999 and in the meeting that its representatives attended with the company delegate of [Buyer] on 6 July 1999 - according to which [Seller] bought a considerable quantity of goods to satisfy the execution of the contracts and suffered enormous losses due to this immobilized stock , bought for double the price for which it was sold at the time of the meeting (...).
[Seller] is entirely incapable of putting forward any proof of its purchases, even at the appeal level, despite the fact that the judges at first instance had seized upon this revealing dichotomy of the absence of indication of the existence of these contracts in dispute.
[Seller] accepts that the law sanctions the claim by Piero P for the recording of the meeting on 6 July 1999 without the knowledge of its participants. In any case, the illegal obtaining of evidence failed to provide [Seller] with the missing evidence. In knowledge of the fact that this evidence is disregarded in the proceedings, [Seller] relies primarily on the contents of the recording for its argument.
In reality, the contents do not shed any further light in the sense that it cannot be found that Piero P at any time acknowledged that he was bound by the contracts that he disputes. It appears furthermore that to avoid open conflict he envisaged the possibility of accepting the goods in dispute from [Seller] but at market prices over an unfixed time period. This attitude is even more comprehensible, as [Buyer] must have felt vulnerable from the threats made by the other party, which took form by the words of the Director of the department glousser des Chargeurs, a group of which [Seller] is a member, that openly threatened [Buyer] to close all doors for the supply of wool scraps in the future. The fact of [Buyer] reverting to the measure of recording the conversation is indicative of its assessment of the turn that the events were taking.
For these reasons the judgment delivered must be upheld.
It cannot be considered that [Seller] had a reckless and vexatious attitude in commencing proceedings, where the importance of the financial issues in dispute gave no cause for doubt as to the procedure to be taken by [Seller] when [Buyer] refused to take part in arbitration.
FOR THESE REASONS
In view of Article 24 of the Law of 15 June 1935,
|-||The Court rules contradictoirement, [the matter is still under dispute],
|-||Allows the appeals and the incidental request,
|-||Upholds the judgment at first instance, Rejects the [Buyer]'s incidental request for damages for vexatious and reckless procedure,
|-||Orders the [Seller] to pay the [Buyer]'s liquidated costs of appeal to the amount of procedural indemnity, i.e., 446.21 EURO.|
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellant S.A. of Belgium is referred to as [Seller]; Defendant-Respondent S.p.A. LP of France is referred to as [Buyer].
** Julia Hoffmann, BA, Dip. Lang, LLB (Hons) (Adel.). LLM (Paris I), Solicitor of the Supreme Courts of New South Wales and South Australia.
*** Linus Meyer has studied in Osnabrueck, Germany, and Lausanne, Switzerland. He was a participant in the 12th and a coach in the 13th Willem C. Vis Moot.Go to Case Table of Contents