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CISG CASE PRESENTATION

Germany 30 January 2004 Appellate Court Düsseldorf (Generators case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040130g1.html]

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

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Case identification

DATE OF DECISION: 20040130 (30 January 2004)

JURISDICTION: Germany

TRIBUNAL: OLG Düsseldorf [OLG = Oberlandesgericht = Appellate Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 1-23 U 70/03

CASE NAME: German case citations do not identify parties to proceedings

CASE HISTORY: 1st instance LG Düsseldorf [reversed]

SELLER'S COUNTRY: Germany [plaintiff]

BUYER'S COUNTRY: Netherlands [defendant]

GOODS INVOLVED: Generators, motors [claim is for accrued hours of service by mechanics]


Case abstract

GERMANY: Oberlandesgericht Düsseldorf 30 January 2004

Case law on UNCITRAL texts (CLOUT) abstract no. 592

Reproduced with permission of UNCITRAL

Abstract prepared by Ulrich Magnus, National Correspondent, and Klaus Bitterich

The decision of the Regional Court of Appeal deals primarily with the requirements of the incorporation of a jurisdiction clause which is part of the standard terms which the seller must meet under the provision of article 23(1)(b) of the Council Regulation (EC) No. 44/2001 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters.

The plaintiff, a German company, delivered several devices to the defendant, a Dutch company, for the construction and operation of sand pumps on an excavator vessel. The plaintiff used order forms titled "Conditions of Delivery" containing on the front page the handwritten clause "ex works..." and the (printed) instruction "send back to: see overleaf". The back page of the form contained the address referred to by the cited instruction on the front page and, among other provisions, the stipulation of Düsseldorf as place of performance and place of jurisdiction. On the front page no reference was made to this particular provision. After the delivery was carried out, technicians provided by the plaintiff on the defendant's request, assisted the defendant in implementing the devices first on the premises of the defendant, later on board the excavator vessel which was docked for a time near the Belgian coast and then in Cuxhaven (Germany). As problems occurred during the operation of the sand pumps, the plaintiff again sent technicians to replace certain parts of the pumps; furthermore, he delivered replacement parts to the defendant. The plaintiff brought an action for payment of both the technicians and the replacement parts.

As far as the CISG is concerned, the Court ruled that, in accordance with German law, standard terms can only be validly incorporated into a sales contract pursuant to articles 8(3) and 9 CISG, as well as to the rule of interpretation provided for by article 8(2) CISG, if the party receiving the offer is given a reasonable opportunity to take notice of such terms. When it is a matter of incorporation of the standard terms, the offeree must be given the opportunity to take note of them in a reasonable manner. Similarly to German law, the CISG requires that the offeror's intention to incorporate his standard terms in the contract be recognizable by the party receiving the offer. The court found that this requirement was not met in the present case. The order forms used by the plaintiff made it not clear enough that he intended to undertake the obligation to deliver the goods only if the contract included the standard terms printed on the back of the order forms. The fact that reference was made to the text on the back of the forms only with regard to the address to which the form had to be sent back did not sufficiently make clear the plaintiff's intent to incorporate the standard terms printed on the back page. Furthermore, the Court noted that the handwritten provision "ex works...", concerning the risk of carriage could be understood by an attentive reader as a conclusive term of delivery.

Since the plaintiff failed to furnish evidence of an agreement to confer jurisdiction pursuant to article 23(1) of Regulation No. 44/2001, the Court had no jurisdiction over the claim which was therefore dismissed on procedural requirements.

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Classification of issues present

APPLICATION OF CISG: The court discussed the CISG and ruled that the same results follow whether or not the CISG applies to the transaction.

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 4 ; 8 ; 18 ; 57(1)(a) [Also cited: Articles 3 ; 9 ; 14 ]

Classification of issues using UNCITRAL classification code numbers:

4B [Scope of Convention (issues excluded): validity (issue addressed has to do with standard terms)];

8B ; 8C [Intent (interpretation of party's statements or other conduct): interpretation based on objective standards (understanding of reasonable person of same kind as other party, in the same circumstances as the other party); Interpretation in light of surrounding circumstances];

18A [Criteria for acceptance of offer];

57A [Place for payment: in absence of agreement, payment at seller's place of business]

Descriptors: Scope of Convention ; Validity ; Standard terms ; Battle of the forms ; Intent ; Acceptance of offer ; Jurisdiction

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=969&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/821.pdf>; Internationales Handelsrecht (May/June 2004) 108-113; OLGR Düsseldorf (2004) 208; <http://www.justiz.nrw.de/RB/nrwe/index.html>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 paras. 55, 56

German: Herber, Ammerkung zu OLG Düsseldorf 1-23 U 70/03 und LGH Trier 7 HKO 134/03, Internationales Handelsrecht (May/June 2004) 117-118

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Case text (English translation)

Queen Mary Case Translation Programme

Court of Appeal (Oberlandesgericht) Düsseldorf

30 January 2004 (1-23 U 70/03)

Translation [*] by Rolf Eicke [**]

Edited by Jakob Heidbrink [***]

RULING

On appeal of the Defendant [Buyer], the provisional judgment is altered. By final judgment, the Plaintiff [Seller]'s claim is dismissed as inadmissible. The costs of the lawsuit will be borne by the [Seller]. This judgment is provisionally enforceable. The [Seller] may prevent the enforcement by depositing as security 120% of the enforceable amount due pursuant to this judgment, unless the [Buyer], before enforcement, deposits as security 120% of the enforceable amount. The appeal is admitted.

REASONS

A. In February/March 1997, the [Seller], formerly known as A... GmbH, with its headquarters in Düsseldorf, Germany, delivered to the [Buyer], of the Netherlands, two generators, engines, and converters, respectively. They were to operate two sand pumps on a dredger of [Buyer]īs customer. They were produced by the parent company of the [Seller].

The deliveries are the subject of the confirmation of an order to the [Seller] of 9 October 1996 (K3), and of the [Seller]'s subsequent invoice of 3 November 1997 (K4). The forms the [Seller] used contain in the upper front area the preprinted words "Conditions of Delivery". Underneath these words are inserted the words "From plant I..." In the lower front area are printed the words: "Return to: see overleaf".

On the back of the standard forms are stated: in the lower area, the address referred to on the front of the form, and, in the upper area, the [Seller]'s terms and conditions, which contain, i.a., the following information: "Place of delivery and of payment is Düsseldorf. The District Court of Düsseldorf has jurisdiction". The invoice of the [Seller] was paid, the last installment on 2 October 1997.

In response to the demand of the [Buyer], the [Seller], in October and December 1997, as well as several times in January 1998, provided service technicians from the plant of the parent company in I.... The technicians assisted the [Buyer] in his assembly shop in the Netherlands with the preparation for installing the delivered devices, and later with the installation on board the dredger, which was temporarily anchored off the B... coast, and finally off Cuxhaven. After an explosion in February 1998 of two phases of one of the converters, the [Seller]'s technicians exchanged the destroyed phases aboard the dredger. After further explosions in 1999, the technicians were again consulted. In this context, the [Seller] delivered more phases to substitute for the destroyed phases. These were partly paid for by the [Buyer].

The subject of the present claim, which was filed on 28 November 2001 and served on the [Buyer] in the N... on 11 April 2002, is payment for the working hours of the mechanics accrued from 21 October 1997 onward and for materials delivered.

For the details of the conclusions of the District Court, reference is made to the judgment appealed against.

The District Court of Düsseldorf, upon the challenge of its jurisdiction and by means of the provisional judgment appealed against, assumed provisional jurisdiction according to sec. 280(2) of the Civil Procedure Rules, and supplied the following justification:

The legal relationship in the present case is a contract for work and materials to which the CISG applies. In the absence of any further agreement, the place of payment and of performance, according to Art. 57(1)(a) of the CISG, is the place of the seat of the [Seller], i.e., Düsseldorf. Therefore, and in accordance with Art. 5(1) of the 1968 Brussels Convention, the [Seller] is entitled to sue the Dutch-based [Buyer] in Düsseldorf.

The [Buyer] appealed.

[Position of the Buyer]

The [Buyer] objects to the application of the 1968 Brussels Convention and argues that as of March 2002, the new European Council Regulation (no. 44/2001) on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (hereinafter "the European Council Regulation") is applicable, which replaced the 1968 Brussels Convention. The [Buyer] alleges that pursuant to Art. 5(1)(b) of the European Council Regulation, the Netherlands have jurisdiction for the present claims. The [Buyer] also alleges that the CISG is not applicable, as the subject of the claim is the performance of work, and the achievement of a certain result. Furthermore, the [Buyer] objects to the fact that the District Court overlooked its submission that the [Seller] was made privy to the construction contract between the [Buyer], the [Seller] and its client. Finally, the [Buyer] objects to the fact that the District Court denied the validity of the incorporation of the [Buyer]'s standard forms. The [Buyer] claims that the original contract between the parties was concluded on the terms of the order confirmation of 19 July 1996, and refers to the fact that [Buyer] had attached its standard forms to all its orders with the [Seller] since 27 August 1973.

The [Buyer] requests that the judgment appealed against be altered, and that the [Seller]'s claim be dismissed.

[Position of the Seller]

The [Seller] requests the dismissal of the appeal.

The [Seller] argues that the District Court of Düsseldorf has jurisdiction under the [Seller]'s terms and conditions which contain clauses as to jurisdiction and the place of performance. The [Seller] argues that, in the course of the business relationship between the parties, the terms had always been printed on the back of order confirmations and invoices. [Seller] further alleges that it is not bound by the contrary standard form of the [Buyer], as the [Buyer] presented its terms in the Dutch language, which the [Seller] could neither speak nor understand. Further, Dutch was not agreed upon as the language the contract. Also, the terms were not made available to the [Seller] in a reasonable way. Moreover, the [Seller] argues that the 1968 Brussels Convention and the CISG are applicable, and that the jurisdiction of the District Court of Düsseldorf follows from the provisions of these Conventions.

For further details, reference is made to the memoranda of the parties, including appendices; the additional requests of the parties at the hearing of 20 January 2004 will be referred to under B. below

[Opinion of the Court]

B. The [Buyer]'s appeal is admissible and well-founded.

The conclusion of the District Court of Düsseldorf that it has jurisdiction rests on an error of law, sec. 513 of the Civil Procedure Rules. Based on the facts relevant to sec. 529 of the Civil Procedure Rules, the [Seller]'s claim cannot be admitted, as the District Court of Düsseldorf does not have jurisdiction.

The Court of Appeals is entitled to assess its own jurisdiction. Sec. 513(2) of the Civil Procedure Rules does not lead to a different conclusion. This rule does not refer to the jurisdiction of the Court in international cases, despite its broad wording - the same is true of sec. 545(2) of the Civil Procedure Rules as regards the appellate procedure (German Supreme Court NJW 2003, 426; Zöllner/Gummer/Geßler, op. cit. sec. 513 of the Civil Procedure Rules no. 8). This interpretation relies on the importance of the rule for the choice of the applicable law, and is motivated by the need of ensuring that the supreme Federal Courts of Germany, and other Courts of Appeal, fulfill their duty to present questions of construction to the European Court of Justice for a preliminary ruling (Art. 68 of the Treaty, or - as the case may be - the Luxemburg Protocol of Interpretation of 3 June1971 - BGBl. 1972 II 846 as amended by the Fourth Accession Agreement, cf. Zöllner-Geimer, Civil Procedure Rules, 24. ed. Annex I, Art. 1 of the European Council Regulation no. 5).

I. International jurisdiction cannot be derived from the provisions of Art. 5 (1) of the 1968 Brussels Convention as compared to Arts. 1(1), 3(1), 57(1)(a) of the CISG, which were applied by the Appellate Court. The 1968 Brussels Convention is not applicable. It was replaced on 1 March 2002 (before the pending suit) by the European Council Regulation, which is applicable in all EU Member States except Denmark. According to Art. 66(1) of the European Council Regulation, its provisions are applicable to all kinds of suits which are filed after the Regulation enters into force. The question as to when a suit, in the sense of the Regulation, is filed will be decided according to German law if the suit is filed in a German court. Thus, sec. 253(1) of the Civil Procedure Rules will be applied, according to which a suit is filed when notice of process is served (German Supreme Court WM 12976, 400 and Kropholler, Commentary to the 1968 Brussels Convention, 6th ed., Art. 54 no. 2 on the identical transitional rule of Art. 54(1) of the 1968 Brussels Convention; Kropholler, Europäisches Zivilprozessrecht, 7th ed. 2002, Art. 66 of the European Council Regulation no.2, suggesting that Art. 30 of the European Council Regulation, beyond its wording, ought to be applied also when applying Art. 66 of the Brussels Convention; Senate 23 U 199/02, decision of 7 March 2003).

The English version of Arts. 66 and 30 of the European Council Regulation presented by the counsel of the [Seller] at the hearing on 20 January 2004 does not justify the suspicion that the official German version of Art. 66 of the European Council Regulation would not comply with the intention of the legislator. Contrary to Art. 30 of the European Council Regulation, the English version of the transitional provision of Art. 66 of the European Council Regulation does not regard either as decisive the time at which the suit is lodged with the court, but the time at which legal proceedings were instituted. The German wording of Art. 30 "bei Gericht eingereicht" is equivalent to the English words "lodged with the court". Contrary to this, Art. 66, in the English version, speaks of "legal proceedings instituted", which is equivalent to the German "Klagen, die erhoben worden sind". Nor does any different translation emerge from a copy of the dictionary by Dietl/Lorenz presented at the hearing by counsel of [Seller]. The authors of the dictionary translate the sentence "to institute (legal) proceedings against" by "gerichtliches Verfahren einleiten gegen jdn.". But the "Einleitung" of legal proceedings is something different from the mere "Einreichen eines verfahrenseinleitenden Schriftstücks bei Gericht". The former is equivalent to "Rechtshängigkeit" under German law, which - until the entry into force of the European Council Regulation - was decisive for the determination of the time of the beginning of legal proceedings. If the legislator had wished to refer to the same point in time in Art. 30 and in Art. 66 of the European Council Regulation, he would have used the same words.

An application by analogy of Art. 30 of the European Council Regulation cannot be based on a reference to the introduction to the European Council Regulation, in particular not on the justification of the rule in paragraph 15. According to paragraph 15, "(t)here must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending. For the purposes of this Regulation, that time should be defined autonomously." The [Seller] overlooks that this intention of the legislator means that [Seller]'s argument cannot be used to ascertain the entry into force of the Regulation. Regarding this question, it is stated under no. 19 of the preamble of the European Council Regulation: "Continuity between the Brussels Convention and this Regulation should be ensured, and transitional provisions should be laid down to that end." It is therefore in accordance with the intentions of the legislator to apply the transitional provision of Art. 66(1) of the European Council Regulation (as well as in the transitional provision of Art. 54(1) of the 1968 Brussels Convention) as concerns the entry into force of the European Council Regulation with regard to the time of the institution of legal proceedings. As shown above, this time is to be ascertained, not autonomously, but according to the law of the State in which the proceedings were instituted.

Before 1 March 2002, the present claim was merely lodged with the court, but not pending, and therefore not yet instituted. According to sec. 167 of the Civil Procedure Rules, German law makes provision for bringing forward the legal effects of lis pendens to the time at which the claim is lodged only when service of process is intended to safeguard the observance of a time limit, or when a time bar is to be suspended. The purpose of the law is to relieve the plaintiff from the risk of delay of the official service of process, which lies beyond his sphere of influence; it does not aim to protect the plaintiff from the court he has turned to denying its jurisdiction due to reasons which arose after the claim was lodged. The Civil Procedure Rules do not contain any provision to the effect that the legal effects of lis pendens can be brought forward in order to determine the international or other jurisdiction of a court.

II. The jurisdiction of the Court does not follow from Art. 5(1) of the European Council Regulation.

As the place of performance, according to Art. 5(1)(b) of the European Council Regulation, is to be determined autonomously, and as concerns the law of sales and the performance of services, the place of performance is no longer to be ascertained according to the international private law of the country of Court, as was the case under the 1968 Brussels Convention (European Court of Justice NJW 2000, 719). Only that place is determinative at which the goods, according to the contract, were delivered or ought to have been delivered, or - as the case may be - the place where the services, according to the contract, were rendered or ought to have been rendered. Regardless of whether performance or counter-performance is concerned, the place at which the obligation characteristic for the contract was performed is now decisive, without any regard to the rules of international private law. Only if the place of performance determined according to this rule is outside the geographic sphere of application of the European Council Regulation, will the place of performance be determined according to the rule in Art. 5 (1)(c), (a) of the European Council Regulation, i.e., according to the international private law of the country of the Court (Zöllner-Geimer, 24th ed., Annex I, Art. 5 of the European Council Regulation, nos. 3-7). The term services, too, is determined autonomously under European Community law, and not according to the legal classifications of individual member states (Kropholler, op. cit., Art. 5 of the European Council Regulation, no. 35; Schlosser, EU-Zivilprozessrecht, 2nd ed., Art. 5 of the European Council Regulation, n. 10b; Musielak-Weth, ZPO, 3rd ed., Art. 5 of the European Council Regulation, n. 7; Senat, op. cit.). Already in Art. 13 of the Convention on the Law Applicable to Contractual Obligations, the term services is used to determine jurisdiction in consumer cases. Also according Art. 5 of the Rome Convention on the Applicable Law to Contractual Obligations of 19 June 1980, the applicable law is determined by whether services are the subject of the contract. As regards these rules, it is generally accepted that the term services is to be determined autonomously under the agreement, to ensure a uniform application of the provisions in the Member States (German Supreme Court NJW 1994, 262, 263). The purpose of a uniform application of the Regulation, too, makes it necessary to construe the term services in Art. 5 of the European Council Regulation autonomously under European Community law. Services in the sense of European Community law, however, also comprises contracts for work and labor, as well as contracts for work and materials (German Supreme Court NJW 1994, 262, 263). In this context, reference can also be made to Art. 50 of the Treaty of Rome Establishing the European Community of 25 March 1957, in its wording according to the Treaty of Amsterdam of 2 October 1997, which defines commercial as well as industrial and technical activities as services. In the present case, the [Seller] advances a claim based on a contract for work and labor, and on a contract for work and material, and possibly also on independent contracts of sale, in which the obligation characteristic of the contract (i.e., assistance of the [Buyer] in the installation of generators, engines, and converters delivered in 1997, as well as in the later exchange of destroyed phases and the delivery of substitute phases) was to be performed either at the plant of the [Buyer] in the Netherlands or on board of the dredger "A..." or in I.... (in the case of delivery "ex works"). Court of Düsseldorf did not have jurisdiction for any of these claims, as all the obligations characteristic of the contract had to be performed outside the court district of Düsseldorf in another Member State.

III. Finally, the jurisdiction of the District Court of Düsseldorf cannot be derived either from any agreement between the parties as to jurisdiction, or as to the place of performance, overriding the provisions of Art. 5(1)(b) of the European Council Regulation.

     1. No valid agreement on jurisdiction

The terms and conditions of the [Seller], including the jurisdiction clause, on the back of its order confirmation and its invoice cannot lead to the jurisdiction of the Court of Düsseldorf, because the agreement on jurisdiction does not comply with the provision of Art. 17(1), second sentence, of the 1968 Brussels Convention, and the identical provision in Art. 2(1), third sentence of the European Council Regulation. According to those rules, an agreement on jurisdiction must be either (a) in writing, or oral followed by a written confirmation (so-called Halbschriftlichkeit ["half in writing", translator's remark]); or (b) in a form complying with the usages between the parties; or (c) in a form usual in international trade of which the parties knew or ought to have known, or of which parties to contracts of this kind in the respective branch of business generally know, and which they normally follow.

          a. The [Seller] does not claim to have made an oral agreement as to jurisdiction with the [Buyer], which would later have been confirmed in writing.

However, nor did the parties validly agree in writing on the jurisdiction of a German court. An agreement is deemed to be in writing when each party's intent has been declared in writing. Such may be the case when the contract is signed by both parties, but also - deviating from sec. 126(2) of the German Civil Code - when the declarations are contained in separate documents, as long as it clearly emerges from the documents that the parties have agreed on a certain jurisdiction. Thus, which is the only feasible possibility in the present case, an exchange of letters would suffice. When the jurisdiction clause, however, is contained in the standard terms, reference must be made to the standard terms either in both declarations of intent, or at least in the acceptance of the offer. It does not suffice for the requirement of writing to be fulfilled that the jurisdiction clause be contained in standard terms printed on the back of a document signed by both parties. Such a procedure would not ensure that the other party really agreed to the clause. Rather, reference must be made on the front of the contract to the standard terms on the back. Such a reference must be so clear that it may reasonably be demanded of the other party that it, by employing reasonable care, note the jurisdiction clause (European Court of Justice NJW 1977, 494, 495; German Supreme Court NJW 1994, 2699f; NJW 1996, 1819f). These requirements are not met in the present case as the acceptance of the [Seller] of 10 September 1996 did not contain a reference to the conditions of delivery on the back. Furthermore, there is no written acquiescence by the [Buyer] to the jurisdiction clause contained in the terms and conditions of the [Seller]. The fact that the [Buyer] does not object to a unilateral order confirmation by the other party must not be construed as an acceptance (European Court of Justice NJW 1977, 495; German Supreme Court NJW 1994, 2699/2700). Therefore, the further allegations of the [Seller] concerning the formation of the original contract, and concerning the incorporation of the [Seller]īs standard terms into this contract, are irrelevant.

          b. Nor does the application of alternative (b) of Art. 17(1), second sentence, of the 1968 Brussels Convention, and Art. 23(1), third sentence, of the European Council Regulation - concerning usages between the parties - lead to the jurisdiction of the District Court of Düsseldorf. This alternative presupposes that the parties previously agreed to base all their contractual relationships on the terms and conditions of the [Seller], including the jurisdiction clause (German Supreme Court NJW 1994, 2699/2700). But this cannot be deemed to have been the case even if the submissions of the [Seller] are accepted. The requisite meeting of the parties' minds cannot be derived from the fact that [Seller], in its relationship with the [Buyer], for several years used standard forms for order confirmation, or for invoices, on whose back side were printed the terms and conditions without any reference to them on the front of the document. Just as alternative (a), alternative (b) of Art. 17(1), second sentence, of the 1968 Brussels Convention, and Art. 23(1), third sentence, of the European Council Regulation requires that the parties consciously agree on a jurisdiction clause. The requisite meeting of the parties' minds in alternative (a) refers to the concrete transaction (OLG Düsseldorf, 16th Civil Court of Appeal, RIW 1990, 577/579), and must in alternative (b) be ascertainable for past transactions to an extent that there may be deemed to be a usage between the parties.

This poses the preliminary question as to which legal system governs the assessment of whether the terms and conditions of the [Buyer] were ever incorporated into the contract, or whether this - according to Art. 17 of the 1968 Brussels Convention, or Art. 23 of the European Council Regulation - is to be determined autonomously. The answer to this preliminary question can remain open, as all possible connecting factors lead to the same result, viz. the absence of any agreement on a jurisdiction clause covering either the present case, or past transactions.

               aa. According to the case law of the European Court of Justice, the prerequisites for the validity of a jurisdiction clause are to be construed narrowly. This applies not only to formal requirements, but would apply also if the substantive requirements for the conclusion of an agreement were to be ascertained by way of an autonomous interpretation of Art. 17 of the 1968 Brussels Convention, or of Art. 23 of the European Council Regulation. The intention of the drafters of the 1968 Brussels Convention and of the European Council Regulation was that the provisions should ensure that jurisdiction clauses could not become part of the contract without the parties' being aware of it (Report of Janard concerning Art. 17, BZ-Drucksache IV/1973 p. 82; Schlosser, Zivilprozessrecht, op. cit., Art. 23 of the European Council Regulation no. 1). Thus, the European Court of Justice (NJW 1977, 294) requires for the incorporation of a jurisdiction clause through standard forms of agreement to be valid that there be a clear reference, capable of being followed up by affected parties of normal carefulness. In the absence of a reference, the European Court of Justice does not deem sufficient in the sense of Art. 17 of the 1968 Brussels Convention the printing on the backside of the contract of standard terms containing a jurisdiction clause, as such would not ensure that the other party really agreed to the jurisdiction clause. As a genuine meeting of the minds is impossible when a contract contains a surprising clause, the attempt of one party to include a jurisdiction clause in this way must, for the sake of consistency, be deemed illegitimate (OLG Düsseldorf, as above; Schlosser, op. cit.).

               bb. Assuming that Art. 17 of the 1968 Brussels Convention and Art 23 of the European Council Regulation do not contain any substantive prerequisites for the formation of a contract - and, in particular, do not contain any provisions as to if and under which circumstances standard terms become part of the contract (for a survey of the controversy see Court of Appeal Düsseldorf as above) - the question as to substantive validity must be solved by applying national law. In this case, the law applicable is the law to which the rules of private international law of the court seized of the claim refer (European Court of Justice NJW 1977, 491; NJW 2000, 719).

                    (1) If one accepts the submission of the [Seller] that the present case is governed by the CISG, then - pursuant to Art. 3 of the German Code of Private International Law, which stipulates the precedence of international conventions over the German Code of Private International Law - the validity of the incorporation of the standard terms is to be determined according to the provisions of the CISG dealing with the formation of contracts. Only in as far as national provisions or rules hold specific clauses to be invalid can they, according to Art. 4(a) of the CISG, prevail over the CISG (Schlechtriem, Commentary to the CISG, 3rd ed., Arts. 14-24 no. 1). Pursuant to Art. 8(3) and Art. 9 of the CISG, agreements can be derived from negotiations or usages between the parties, or from international custom. Failing guidance from these sources, the understanding of a "reasonable person of the same kind as the other party" is determinative (Art. 8(2) of the CISG). As regards the incorporation of standard terms, case law and academic writers alike require that the offeree reasonably be able to obtain knowledge of the content of standard terms that are to be incorporated into the contract by way of a reference in the offer (German Supreme Court NJW 2002, 370/371; Schlechtriem, op. cit., Art. 14 note 16).

As with the German Civil Code, the CISG requires that the offeree be able to realize the intention of the offeror to incorporate its standard terms into the contract (German Supreme Court, as above). Even following the submissions of the [Seller], it cannot be said that this requirement was fulfilled at any time during the parties' long-lasting business relationship. Given the drafting and lay-out of the order confirmation and the invoice of the [Seller] in ways similar to the documents of 10 September 1996, or of 11 March 1997, the [Buyer], employing ordinary care, was not sufficiently able to understand that the [Seller] was prepared to conclude the contract only provided the terms and conditions printed on the back of its business paper were incorporated. Quite to the contrary, the preprinted and manually inserted text on the front gave reason to believe that the terms and conditions on the back were not to be part of the contract. The insertion on the front under the preprinted heading Conditions of Delivery of the words "ex works I..." might have given the attentive reader the impression that this term was final as regards the risk of transportation. This impression of the [Buyer] was apt to be reinforced by the fact the reference on the frontside to the backside only concerned the return address. Such doubts would still remain if the contract were on several pages, where possibly one might notice the terms and conditions printed on the backside when turning the pages.

This interpretation of the contract and the invoice forms used by the [Seller] is not affected by the fact that jurisdiction clauses in standard terms are commonly used in international business, nor by the fact that this practice must be had regard to by the [Buyer] when interpreting the statements of the [Seller]. The [Buyer], whose point of view is crucial for the interpretation of the declarations of the [Seller], was entitled to assume that its own standard terms - referred to in a footnote on its business paper -would be noted by the [Seller]. Even though those standard terms cannot validly establish Dutch jurisdiction - since the reference to them was not made in German, nor in the lingua franca of the world, English, but in Dutch; since they were not made available to the [Seller] in the manner demanded by the German Supreme Court (NJW 2002, 370, 371); and/or because they did not contain a jurisdiction clause for the sort of transaction currently under consideration - their existence alone militates against the conclusion that the [Buyer] intended to agree to the jurisdiction clause contained in the standard form of the [Seller], and naming Düsseldorf as the Court having jurisdiction (cf. Court of Appeal Düsseldorf, RIW 1990, 577/580).

In this context, it is to be noted that the [Buyer] still in July 1996 - on the occasion of ordering the generators/engines/converters that are the subject of the contractual obligations relevant to these proceedings - for its order confirmation of 19 July 1996 used a business form which on its front page contains a remark in Dutch reading:

"Every offer, every contract, and every agreement concluded with us is based on the standard form deposited on 27 August 1973 as number 6828 at the office of the District Court of Dordrecht."

The standard form no. 6828 deposited at the District Court of Dordrecht reads, in Dutch:

"Every agreement entered into with Elektrobau Slidrecht will be deemed to have been concluded in Dordrecht and is subject to Dutch law. All disputes arising out of, or in connection with, this agreement are under the jurisdiction of Dordrecht, except for the appeal."

The doubts concerning the identity between the translation in Court File No. BK1 (Bl. 212 GA) and the standard terms deposited at the District Court of Dordrecht under no. 6828, which were expressed by counsel for the [Seller] at the hearing of 20 January 2004 cannot be accepted. Even though only excerpts of the standard terms in the Dutch version (B1), and of the translation (BK1), were submitted, there is no indication that the [Buyer] submitted standard terms different from those referred to on the front of the confirmation letter of 19 July 1996. Where, as in the present case, both parties base their contractual statements on conflicting standard terms, regardless of whether national or international business usage is considered, and barring special circumstances, the jurisdiction clause of neither party can be taken to govern the relationship between them, be it due to silence when receiving a confirmation letter, to any other form of business usage, or even due to usage between the parties.

Nor can the [Seller] reach any other result on the basis of the [Buyer]'s letters of September 1996 (B7), of 7 October 1996 (B6), and of 6 February 1997 (B13) - after the buyer had changed its name, and all dated before the time the performance of the obligations in the present case were due - referring on their front to standard terms deposited as no. 6819 at the District Court of Dordrecht, the content of which has not been filed with the Court. This result cannot be altered by a letter of the [Buyer] of 27 July 1999 concerning installations relevant in this case (K23), which in the footnote contains a completely altered reference in Dutch, a translation of which reference has not been submitted. There is no indication that the [Buyer], when it changed its name, had ceased to apply the jurisdiction clause it had used until at least the summer of 1996, and instead had agreed to the standard terms of the [Seller].

Furthermore, there is no indication that the parties in the past consciously had based their transactions on the conditions of the [Seller], in particular not as regards the jurisdiction clause contained in the terms and conditions of the [Seller], and thus impliedly had agreed on these conditions. Even if this had been the case with regard to isolated contracts of sale between the parties, the [Buyer] would not have been bound by the terms and condition of the [Seller] in the present contract for work and material, as it was unusual for the relationship between the parties, and since the terms and conditions of the [Seller], according to their wording, only apply to the delivery of goods.

                    (2) Even if one follows the submission of the [Buyer] that the contract is not subject to the CISG, the result still remains the same.

In this case, and departing from the [Seller]'s assumption that the parties have not agreed to any other law to govern the contract, the validity of the incorporation of the terms and conditions of the [Seller] would be determined according to German law, pursuant to Art. 28 of the German Code of Private International Law. According to Art. 28 of the German Code of Private International Law, the relevant closest connection of the present orders, as well as of past deliveries, is to Germany. According to Art. 28(2) of the German Code of Private International Law, the contract is assumed to be most closely connected with the country in which the party having to perform the characteristic obligation of the contract has its residence, or - in the case of corporations, associations, or legal persons - its seat. In the present contract, as well as in earlier contracts for the delivery of goods, the characteristic obligation had to be performed by the [Seller]. Thus, the applicable law is the law of the country in which the [Seller] has its headquarters, and that is the Federal Republic of Germany. German law, too, requires an explicit agreement, or at least an implied agreement subject to certain prerequisites, for standard terms to become part of the contract (German Supreme Court NJW 1985, 1838, 1839). Such case law as, for individual cases (e.g., German Supreme Court NJW 2000, 1154/1155 concerning retention of title clauses), holds that standards terms printed on the back of a confirmation letter may become part of the contract merely by the other party not objecting and accepting delivery, cannot be applied without caution in an international context. Moreover, there will still be an absence of meeting of minds even if one assumes that jurisdiction clauses are common in international transactions. Reference is made to the explanations of the Court above under (1) for a justification of this finding.

          c. Finally, alternative (c) of Art. 17(1), second sentence, of the 1968 Brussels Convention, and of Art. 23(1), third sentence, of the European Council Regulation, is not applicable. There is no international usage which could be applied.

     2. There was no valid agreement on the place of performance which precludes the application of Art. 5(1)(b) of the European Council Regulation.

The formation, and the validity, of an agreement concerning the place of performance under Art. 5 of the European Council Regulation are determined according to the domestic law applicable to the contract. They affect jurisdiction regardless of whether the formal requirements of Art. 17 of the 1968 Brussels Convention, or of Art. 23 of the European Council Regulation, have been complied with (European Court of Justice WM 1980, 720; Court of Appeal Karlsruhe RIW 1994, 1046, 1047).

However, from the explanations provided above under 1(1)(b) it appears that the clause concerning the place of performance in the terms and conditions of the [Seller] is not adequate to establish the jurisdiction of the District Court of Düsseldorf.

C. The sub-decisions are based on sec. 91, 708 (10), and 711 Civil Procedure Rules. The appeal is admitted without any restrictions. Amount in dispute in the second instance: Euro 210,885.01.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellee of Germany is referred to as [Seller]; the Defendant-Appellant of Netherlands is referred to as [Buyer].

** Rolf Eicke, Assistant at the Tax Law Institute of the University of Freiburg, Germany.

*** Jakob Heidbrink, LL.D. M.Jur. (Oxon), Lecturer in Law at Jönköping International Business School.

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Pace Law School Institute of International Commercial Law - Last updated May 17, 2006
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