Switzerland 11 December 2003 District Court Zug (Plastic granulate case) [detailed abstract available]
[Cite as: http://cisgw3.law.pace.edu/cases/031211s1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: A2 02 93
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Germany (defendant)
BUYER'S COUNTRY: Switzerland (plaintiff)
GOODS INVOLVED: Plastic granulate
SWITZERLAND: Kantonsgericht des Kantons Zug [A3 02 93] 11 December 2003
Case abstract [*] prepared by dr. Andrea Vincze [**]
Facts of the case
Defendant, a German Seller, made a binding offer to Plaintiff, a Swiss Buyer, on 5 March 2001, Buyer ordered the goods (70 tons of a special kind of plastic) on 19 March 2001. The order included the following: "net price, VAT not included, drop ship". Buyer's order was confirmed by Seller on 21 March 2001 and, in that confirmation, an express reference was made to the application of Seller's General Conditions of Sale. Seller stated in its Response to the Claim that the General Conditions of Sale were enclosed with the confirmation of the order but Buyer stated that they were submitted only after the proceedings before the Magistrates' Court had begun. Yet, Seller contended that the General Conditions of Sale were also printed on the backside of the invoice and the bill of delivery which were dispatched to Buyer already at the (first) delivery. As there is no sufficient evidence concerning the problem of the General Conditions of Sale, the Court based its ruling on the fact that they were sent to Buyer at the time of the first delivery at the earliest in the above-mentioned way.
Parties' contentions on jurisdiction
Plaintiff Buyer based jurisdiction of the court (KG [*] Zug) on the fact that pursuant to Art. 5(1) LugÜ [*], Seller's main obligation was to hand over the power of disposition of the goods. Buyer requested payment of damages based on Seller's non-delivery, defective performance and because of the fact that withdrawal from the contract originated the right of returning what has already been fulfilled and this return right qualifies as a secondary duty on the obligee's side. Therefore, pursuant to Art. 5(1) LugÜ, the claim was to be submitted before the court having jurisdiction over the place where the main obligation - the duty to deliver - was performed.
As the parties did not agree upon the applicable law and the contract in dispute is for the sale of goods and both Switzerland and Germany are CISG Contracting States, substantive issues shall be resolved according to the CISG. Art. 31 CISG governs the place of delivery, specifically providing for the case where the seller is obliged to deliver the goods to the buyer's place of business. In the instant case, the parties agreed upon Buyer's address in Neuheim, Switzerland as the place of delivery. The goods were subsequently delivered to this address, therefore the court before which the claim was submitted was found to have subjective and territorial jurisdiction on the case (see Art. 5(1) LugÜ, cf. Art. 10 GOG [*]).
In its Response to the Claim, Seller contested jurisdiction of the court, claiming that the parties had agreed upon jurisdiction of German courts with regard to any dispute arising out of the contract (see Art. 17(1)(c) LugÜ). Seller referred to the fact that after it made a binding offer to Buyer on 5 March 2001, Buyer ordered the goods on 19 March 2001. Buyer's order was confirmed by Seller on 21 March 2001 and, in that, an express reference was made to the application of Seller's General Conditions of Sale which, among others, provided for jurisdiction of the courts at the Seller's place of business (cf. Art. 17(1)(c)). As Buyer was engaged in international business transactions, in order to exclude the application of the General Conditions of Sale, it should have made an express statement concerning the latter, as is usual in international business. As the Buyer failed to do so, Seller asserted that KG Zug does not have jurisdiction because the prior agreement on jurisdiction was effective and that provided for jurisdiction of the courts of Germany.
Seller further stated that the decisive factor in determining the place of performance in connection with Art. 5(1) LugÜ is the place where the main obligation shall be performed. In the instant case the main obligation was dispatching the goods, i.e., the seller's place of business was alleged to be the place of proceedings, thereby jurisdiction of the courts of Germany was confirmed. Seller contested Buyer's assertion that the instant case would include a so-called Bringschuld, meaning that Buyer's place of business was allegedly been agreed upon as the place of performance. Seller contended that this allegation is unsupported by the wording of the General Conditions of Sale.
Furthermore, pursuant to the General Conditions of Sale, Seller contended that the parties agreed to apply German law and thereby application of the CISG is excluded.
Decision on jurisdiction with references to the merits of the case
The court found that the legal relationship between the parties shall be governed by the CISG because an international sale of goods is present and application of the CISG does not depend on whether or not the General Conditions of Sale are part of the contract. The General Conditions of Sale refer to application of German law which, in cases of international sale of goods, shall be applied as the law of a certain State provided the parties did not expressly exclude its application. As exclusion did not take place because none of the parties argued for it and the documents do not support it either, the CISG was found to be applicable to the dispute.
The court further held that CISG Arts. 8, 14 et seq. and 25 et seq. include diverse provisions on conclusion and modification of the contract. However, formal requirements of jurisdictional clauses in connection with sales of goods are not governed by the CISG but by applicable national law, i.e., procedural law of the lex fori which is the LugÜ [*] in the instant case.
- Analysis of Seller's contentions
Firstly, the court examined Seller's contentions on jurisdiction. The court found that requirements set by Art. 17(1)(a) and (b) LugÜ were not fulfilled, therefore they are not applicable.
Pursuant to Art. 17(1)(c), agreement on jurisdiction can also take a form which accords with any commercial customs which the parties knew or could not have been unaware of and the parties in the same field of business generally know and regularly follow. The court found that such a custom was present in then instant case because it is widely acknowledged, in Switzerland and Germany, too and in most fields of business, that a contract can be concluded even if a party is silent upon confirmation of an order. Yet, an agreement on jurisdiction can only be effective if the other party can become aware of its provisions at the time of concluding the contract at the latest. As stated above, this was not the case here because the General Conditions of Sale were only sent to Buyer printed on the backside of the bill of delivery at the time of delivery at the earliest and including that provision on a bill of delivery does not qualify as business custom either.
Upon the above considerations, the court found that it has no jurisdiction to hear the case.
- Analysis of Buyer's contentions
The court also examined Buyer's contentions based on Art. 5(1) LugÜ [*] providing that the court at the place of performance has jurisdiction if the contract or any contractual claims are subject of the dispute. The meaning of "contract" and "contractual claims" shall be derived from the system and general aims of the LugÜ, whereas determination of the place of performance shall be governed by the law applicable to the contract, i.e., the CISG in the instant case. In the case of synallagmatic contracts the primary obligation is relevant. As Plaintiff of the case at hand has claims deriving from alleged breach of the duty to deliver, the place of performing this primary obligation is to be determined.
Buyer argued that the order on 19 March 2001 under the heading "Conditions" included that place of delivery was to be Buyer's address and the parties also agreed there to deliver „drop ship", should the parties have agreed Neuheim, Switzerland ….to be the place of delivery (cf. Art. 5(1) LugÜ). In contrary to this statement, the court held that the conditions in the above-mentioned order were not unanimously agreed upon by the parties and that Seller did not consent to those "Conditions" but rather referred to its own General Conditions of Sale in its confirmation of the order dated 21 March 2001, which subsequently became part of the contract. The court found that Seller thereby expressed its unwillingness to accept any further provisions other than those set in its General Conditions of Sale to become part of the contract. The court held that even though the text of Seller's General Conditions of Sale was not printed on the backside of the confirmation of the order and therefore, Buyer could not become aware of them, Buyer should not have asserted, pursuant to Art. 8 CISG, that the mere reference to the application of Seller's General Conditions of Sale qualifies as acceptance of Buyer's conditions originally included in the order.
The court further found that the provision in Seller's General Conditions of Sale concerning the place of performance being the place of dispatching the goods did not become part of the contract. As stated earlier, Buyer could become aware of the Seller's General Conditions of Sale only at the time of the first delivery at the earliest but this does not mean that, at that time, Buyer intended to agree upon the place of performance based on Art. 5(1) LugÜ just because it did not object to application of Seller's General Conditions of Sale printed on the backside of the bill of delivery.
Consequently, the Court ruled that there was no agreement between the parties as to the place of performance and therefore it shall be determined by Art. 31 CISG. This provision infers that it is the seller's duty to deliver the goods to the buyer and not that the place where the goods shall be delivered would be agreed upon as the place of performance. Therefore, the court found that the place where the goods shall be transported does not qualify as place of proceedings in cases of non-delivery but rather Art. 31(a) CISG provides for the place of proceedings being the seller's place of business. The court consequently found that it lacks territorial jurisdiction upon the present dispute.
The court further argued that it would not have jurisdiction even if the conditions set in the order of 19 March 2001 (i.e., the place of delivery being Neuheim, Switzerland and the provision "drop ship") had become part of the contract. A provision for the place of delivery does not qualify as a provision for the place of performance. Furthermore, the provision "drop ship" infers that Seller's duty is to deliver the goods to a certain place (i.e., Bringschuld) but delivery clauses of INCOTERMS, methods of delivery, etc., cannot be interpreted in a way that, besides providing for the issues of costs, methods of delivery, etc., they also determine the place of proceedings.
The Court did not go further with the merits of the case, therefore only references to the merits with regard to the issue of jurisdiction were dealt with as detailed above.
* For the purposes of this abstract, the Swiss Plaintiff is referred to as [Buyer], and the German Defendant is referred to as [Seller]. Amounts in European currency are indicated as [Euro]; amounts in the former French currency [French francs] are indicated as [Frf].
Note on other abbreviations: GOG = Gesetz über die Organisation der richterlichen Behörden, 1992 [Swiss Code on the Organization of the Judicial Administration of 17 May 1992]; KG = Kantonsgericht [District Court]; LugÜ = Luganoer Gerichtsstands- und Vollstreckungsübereinkommen [Lugano Convention between the EU and EFTA countries on the Jurisdiction and Enforcement of Foreign Judgments].
** Dr. Andrea Vincze is a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, in 2002. Currently, she is a Ph.D. candidate at that university, working on her research project on international commercial arbitration and ICSID arbitration.Go to Case Table of Contents
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
8A [Interpretation of party statements or other conduct: intent of party making statement or engaging in conduct]; 31A [Place for delivery: contracts involving carriage]
8A [Interpretation of party statements or other conduct: intent of party making statement or engaging in conduct];
31A [Place for delivery: contracts involving carriage]
CITATIONS TO OTHER ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/958.pdf>; 5 Internationales Handelsrecht (3/2005) 119-122
CITATIONS TO COMMENTS ON DECISION
German: Fountoulakis, 5 Internationales Handelsrecht (3/2005) 122-124Go to Case Table of Contents