Germany 15 July 2003 District Court Mönchengladbach (Filters case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030715g1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 7 O 221/02
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Italy [plaintiff]
BUYER'S COUNTRY: Germany [defendant]
GOODS INVOLVED: Filters
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
4B [Scope of Convention: issues excluded (set-off, rate of interest)]; 7C23 [Gap-filling by domestic law]; 78B [Rate of interest]
4B [Scope of Convention: issues excluded (set-off, rate of interest)];
7C23 [Gap-filling by domestic law];
78B [Rate of interest]
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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=967&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (German): [2003/5] Internationales Handelsrecht 229-231; cisg-online.ch website <http://www.cisg-online.ch/cisg/urteile/813.pdf>
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]Go to Case Table of Contents
Queen Mary Case Translation Programme
Judgment of 15 July 2003 [7 O 221/02]
Translation [*] by Elisabeth Corcoran [**]
Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
REASONS FOR THE DECISION
I. The Plaintiff [Seller]'s claim is justified except for a minor part of [Seller]'s claim for interest.
1. [Seller]'s claim for payment of the purchase price results from articles 64, 62(1)(a), 53 CISG. It is undisputed that the parties concluded purchase contracts from which follows by way of calculation an undisputed debit balance amounting to EUR 51,840.82 without the set-off Defendant [Buyer] claims. The latter will be considered under II, below. Whether this constitutes an acknowledgment of debt in view of the [Buyer]'s writings of 24 June 2002, 18 September 2002, and 10 October 2002 at the same time may remain open since the amount of the purchase price claim between the parties is not disputed.
II. The [Seller]'s claim for payment of the purchase price has not been extinguished as a result of the [Buyer]'s set-off claim. Even if, in favor of the Defendant [Buyer] -- by broad interpretation of the judgments of the European Court of Justice (EuGH) [*] of 13 July 1995 (NJW [*] 1996, 42) and the Federal Supreme Court (Bundesgerichtshof) of 7 November 2001 (BB [*] 2002, 14 et seq.) -- admissibility of the set-off is assumed even for unlinked counterclaims and the German court is regarded as having international jurisdiction based on art. 6 no. 3 EuGVO [*] analogous) and/or § 33 ZPO * (analogous), the [Buyer]'s set-off claim is unjustified for several reasons.
1. First of all, in the present case the set-off contradicts the principles of good faith according to §242 Civil Code (BGB) [*]. With [Buyer]'s letter of 24 June 2002, the [Buyer] submitted a proposal to pay by installments and led the [Seller] to believe in a temporary financial difficulty due to poor payment behavior on the part of [Buyer]'s customers.
In this letter, [Buyer] did not mention any defects or counterclaims. The [Buyer] further put the [Seller] off with [Buyer]'s letter of 18 September 2002 admitting to having cash flow problems.
As a sign of [Buyer]'s good will, [Buyer] proposed a payment of EUR 2,500.00 for that same day. Here, too, the [Seller] could not expect the [Buyer] to suddenly seek to discharge [Buyer]'s indebtedness by way of counterclaim (cf. BGHZ [*] 120, 394 regarding the comparable situation of a claim based on a settlement, when the counterclaim was known at the time of conclusion of settlement and reservation of a set-off was made).
2. Irrespective of the preceding arguments, however, the requirements for set-off have not been met according to Italian law. Article 7 CISG declares the right invoked by the private international law of the forum State to be applicable for questions that have not been regulated by the CISG.
According to the leading doctrine (Schlechtriem, Internationales UN-Kaufrecht, 2d edition, No. 42e; Piltz NJW [*] 2000, 553 556) and case law (Court of Appeal Oberlandesgericht Koblenz, RIW [*] 1993, 934; Court of Appeal (Oberlandesgericht) Stuttgart, RIW 1995, 943, 944; Court of Appeal (Oberlandesgericht) Düsseldorf of 11 July 1996 in [CISG-online.ch] No. 201), the subject of set-off is not regulated in the CISG.
It is true that the objection is raised that a set-off is regulated by the CISG if mutual claims are admissible for set-off within the Convention, i.e., if both the principal claim and counterclaim follow from a contractual relationship subject to the CISG (cf. Staudinger/Magnus, Article 4 CISG No. 47; Court of Appeal (Oberlandesgericht) Hamburg IHR [*] 2001, 19 et seq.; Court of Appeal (Oberlandesgericht) Munich of 9 July 1997, [CISG-online.ch] number 282), the court, however, does not agree with this minority opinion. Set-offs are not explicitly regulated in the CISG, only the offset of benefits on the basis of article 84(2) CISG or compliance with compulsory consideration regarding the obligation to effect performance matching with counter-performance. This, however, does not state anything concerning set-offs.
Set-off claims for delivery and compensation for the use and enjoyment or consideration of counter-performance, on the one hand, and set-off, on the other, are not comparable since in the set-off only pecuniary claims may be charged against each other, while this may not necessarily be the case with respect to the counter-performance in an adjudication matching performance with counter-performance.
Moreover, there are considerable differences between set-off, settlement and consideration of the obligation to perform in an adjudication matching performance with counter-performance with regard to the fact that a set-off -- as in German law -- requires a legal act which includes a voluntary act, namely, the statement of set-off, or -- at least, as is the case in Italian law -- a procedural assertion (cf. Kindler, Einführung in das italienische Recht, §14 No.15).
3. According to articles 32 No. 2.28(1) and (2) EGBGB [*], the law invoked by the forum State's private international law is Italian law.
The performance which is characteristic of a contract in a sales agreement is the performance of the seller. This was pointed out by the court in the hearing of 3 June 2003. The requirements for a set-off according to Italian law have not been met. Italian law only knows three kinds of set-off: set-off by agreement (art.1252 C.c. [*]), set-off by law (art. 1243(1)), and set-off per curiam (art. 1243(2) C.c.). None of these requirements is met. Set-off by agreement fails due to the fact that the [Buyer]'s claims for defects are contested by the [Seller]. Requirements for a set-off by law ipso jure are not given either, since claims must be of a similar nature, collectible and ready for judgment according to art. 1243 C.c., and this last condition is not fulfilled.
Claims are only ready for judgment when they have not been contested or have only been contested by the opposite party in a clearly unjustified way (cf. Kindler, Einführung in das italienische Recht. §14 No. 15). The [Buyer]'s claims for liability for defects have been contested by the [Seller]. There are many indications that the [Buyer] may not have met the Article 39(1) CISG deadline for complaint about defects; therefore, counterclaims arising from liability for defects might be precluded. Furthermore, prerequisites for a set-off per curiam are not present since in this case claims would have to be easily and quickly ascertainable. This is not the case in view of the [Buyer]'s extensive argument. Even if the Article 39(1) deadline for notice of lack of conformity had been met, it would have to be established for every specific case by taking of evidence whether the filters delivered to the [Buyer] were leaky. Moreover, even if this were to be proven, the amount of the damages would have to be established (cost of complaint, traveling expenses, and lost profit) in detail by extensive taking of evidence.
III. As far as the [Buyer] argues to have agreed on payment by installments, [Buyer]'s argument is inconclusive and irrelevant. The [Buyer] has not produced the document in which the alleged payment by installments is evidenced. [Buyer] has not stated when this allegedly had been agreed upon. [Buyer] has not produced evidence in this respect and, moreover, has not stated to have complied with a possible agreement for payment by installments.
IV. The claim for interest at the rate of 10.25% during the period 29 November 2002 to 5 December 2002 and at the rate of 9.75% as of 6 December 2003 is justified under Arts. 78, 58(1) CISG in conjunction with Art. 28(1) (2) EGBGB [*], Art.1284 C.c. [*], Decreto Ministeriale del Ministro del Tesoro of 11 December 2000 and Art. 5(1) of Directives on Delay in Payment 2000/35/EG of 29 June 2000.
The [Seller's] claim for payment of the purchase price is due within the meaning of Art. 58(1) CISG. The goods have already been handed over to the [Buyer]. At the time of pendency, according to German law, the claim for payment of purchase price was also due. To the extent that the [Seller] proceeds from the applicability of German law for the claim for interest, it must be pointed out that interest at the rate of "8% above the basic interest rate" could only apply under German law. However, with regard to the claim for interest at issue, German law is inapplicable. The rate of interest is 7% percentage points above the rate of interest applied by the European Central Bank to their latest main refinancing operation (cf. Kindler RIW [*] 4/2003, 241, 244). These interest rates are 10.25% from 29 November 2002 to 5 December 2002, and 9.75% as of 6 December 2003. The [Seller] has applied for interest in the amount of 8% above the basic interest rate. On 29 November 2002, this amounted to 10.47%. Pursuant to Italian law, the [Seller]'s claim for interest in excess of the above mentioned amounts of 10.25% and 9.75% is to be dismissed. Italian law is applicable since the rate of interest is not regulated by the CISG (cf. Schlechtriem/Eberstein/Bacher, Kommentar zum Einheitlichen UN-Kaufrecht, 2d edition, Article 78 no. 21)) and therefore, according to leading doctrine, the law which governs the lex causae applies, since it has the closest linkage to the contractual relationship. Italian law is applicable as the lex causae in the present case according to Art. 28(1) (2) EGBGB.[*]
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Italy is referred to as [Seller]; the Defendant of Germany is referred to as [Buyer].
Translator's note on abbreviations: BB = Betriebsberater [German legal magazine]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGHZ = Entscheidungen des Bundesgerichtshofes in Zivilsachen [Official Reporter of Decisions of the German Federal Supreme Court on Civil Matters]; C.c. = Codice civile [Italian Civil Code]; EGBGB = Einf rungsgesetzbuch zum B gerlichen Gesetzbuche [German Code on Private International Law]; EuGH = Europäischer Gerichtshof [European Court of Justice]; EuGVO = Europäische Gerichtsstands- und Vollstreckungsverordnung [ Council Regulations (EC) No 44/2001 of December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters]; IHR = Internationales Handesrecht [German legal magazine]; NJW = Neue Juristische Wochenschrift [German legal magazine]; RIW = Recht der Internationalen Wirtschaft [German legal magazine]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Elisabeth Corcoran, student at Humboldt University, Berlin, since 1999. Guest student at Oxford Brookes University (England) and Università degli Studi, Florence.
*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.Go to Case Table of Contents