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CISG CASE PRESENTATION

Austria 29 March 2004 Supreme Court (Paint mist vacuuming machine case) [detailed abstract available]
[Cite as: http://cisgw3.law.pace.edu/cases/040329a3.html]

Primary source(s) of information for case presentation: OGH website

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Case identification

DATE OF DECISION: 20040329 (29 March 2004)

JURISDICTION: Austria

TRIBUNAL: OGH [ = Oberster Gerichtshof = Supreme Court]

JUDGE(S): Dr. Langer (Vorsitz), Dr. Flossmann, Dr. Baumann, Dr. Hurch, Dr. Kalivoda

CASE NUMBER/DOCKET NUMBER: 5 Ob 313/03w

CASE NAME: Austrian case citations do not generally identify parties to proceedings

CASE HISTORY: 1st instance Bezirksksgericht Bregenz (GZ 4 C 1962/00i-12) 14 July 2003; 2d instance Landesgericht Feldkirch (3 R 263/03d-17) 20 October 2003 [reversed]

SELLER'S COUNTRY: Austria (plaintiff)

BUYER'S COUNTRY: Italy (defendant)

GOODS INVOLVED: Paint mist vacuuming machine


Case abstract

AUSTRIA: Oberster Gerichtshof [OGH], 5Ob313/03w, 29 March 2004

Case abstract [*] prepared by dr. Andrea Vincze [**]

The Supreme Court of Austria [OGH] ruled that the objection against international jurisdiction is rejected. Defendant [Buyer] is ordered to pay Plaintiff [Seller] EUR 2,342.16 (with EUR 390.36 VAT [*] included).

[Buyer], of Italy, ordered from the [Seller], of Austria, paint mist vacuuming machines that were specifically developed and designed for [Buyer]'s purposes. [Buyer] did not provide any of the raw material for the production of the machines. The parties agreed to deliver the goods "drop ship". The first installment was delivered on 23 March 1998 and [Seller] sent the invoice for this partial delivery on 9 February 1998 [translator's note: probably a mistake with the dates in the original text]. Afterwards, [Buyer] failed to take timely delivery of the machines delivered by [Seller] in subsequent installments.

[Seller] sued [Buyer] for damages following avoidance of the contract for failing to take over the goods and upon [Buyer]'s non-compliance with the [Seller]'s invoices concerning payment for the partial deliveries of the goods.

To support the jurisdiction of the Court of First Instance (Bezirksgericht, i.e., District Court) of Bregenz, [Seller] relied on Art. 5 EuGVÜ [*] substantiating jurisdiction based on the place of performance. [Seller] alleged that, pursuant to Art. 57(1)(a) CISG, the place of payment of the contract price is the seller's place of business even in cases of contracts for the supply goods. This is also confirmed by Art. 5 EuGVÜ.

[Buyer] stated that there was no international jurisdiction and the instant court had no material jurisdiction. [Buyer] alleged that [Seller] is not requesting payment of the full contract price but has presented a secondary contractual claim, i.e., [Seller] claims damages for failing to take delivery of the goods. The decisive factor is the place of performing the contractual obligations breach, of which is alleged by [Seller]. Art. 57(1)(a) CISG 1s not applicable. The place of taking delivery was Brixen.

The Court of First Instance rejected the [Seller]'s claim for lack of international jurisdiction. It concluded that [Seller] was trying to pursue a secondary contractual obligation. The place of performance was held to be the place where the primary contractual obligation should be performed. Place of performance concerning the last delivery was [Buyer]'s place of business in Italy.

The Appellate Court, the Landesgericht of Feldkirch, affirmed this decision holding that, in cases of claims for damages, repayment claims or secondary claims deriving from defective performance, the place of performing the primary contractual obligations is relevant, breach of which would qualify as the basis of the claim. The Appellate Court held that Art. 57 CISG is applicable only to the issue of payment of the price, therefore concerning payment of damages, no exact place of performance is determined by it. Art. 57 was found to be inapplicable to the instant requests for payment of other claims. As in the instant case the subject of the claim was the purchase price, the place of performance is not governed by Art. 57 CISG. Pursuant to Art. 5(1) EuGVÜ [*] the place of performance is governed by the conflict of laws rules which the competent court shall apply. The Appellate Court held that, pursuant to Art. 36 IPRG, [*] that law is that of the seat of the obligee carrying out the characteristic performance, which is the [Seller] in the instant case. Consequently, the law of Austria shall be applied, which also determines the place of performance. The place of performance concerning the secondary obligation shall be the place where the primary obligation, which was undoubtedly agreed upon by the parties, was to be fulfilled. [Buyer]'s primary obligation was payment of the purchase price and the price of production. Pursuant to Austrian law, i.e., Art. 905(2) ABGB [*], when in doubt, monetary obligations are regarded as so-called "delivery obligations" (Schickschuld), and their place of performance is the obligee's place of business at the time of contracting. Therefore, the place of performance for [Seller]'s secondary claims is [Buyer]'s place of business in Italy. The Appellate Court found the [Seller]'s claim inadmissible in lack of an adequately founded question of law. [Seller] has appealed, requesting the Supreme Court to reverse this ruling. [Buyer] asks the Supreme Court to reject the [Seller]'s appeal.

The Supreme Court found the [Seller]'s request admissible and well-founded. At the time of filing the request the EuGVVO [*] was not yet in force. The parties had not agreed upon jurisdiction or on a specific place of performance. The agreement for delivery "drop ship" did not imply an agreement upon a specific place of performance. It is rather an agreement upon the allocation of shipping costs, means of delivery and bearing of risk which are not connected with the issue of jurisdiction. Art. 5Z(1)1 EuGVÜ [*] governs the question of jurisdiction. Under that article, "a contract and claims deriving from the contract" are to be determined separately. The EuGVÜ uses the expression '"obligation" for primary contractual claims concerning payment of the purchase price and delivery of the goods. The basis of jurisdiction is the place of performance of the disputed main contractual obligation. When secondary contractual claims are submitted (e.g., claims for damages or requests to repay the price of the goods), the place of performance will be that of the relevant primary obligation that is breached.

Since a decision on 6 October 1976, the EuGH [*] has held that the Court shall observe three duties in order to establish jurisdiction:

  1. Based upon all details and circumstances of the case, the Court shall determine and characterize the contractual obligation which is the basis of the legal dispute;

  2. The Court shall determine whether the relevant contractual obligation is governed by any international source of law;

  3. The Court shall determine the applicable law based on the national law of conflict of laws or the EVÜ [Convention on the Law Applicable to Contractual Obligations].

Beyond doubt, the instant contract is a contract for the supply of goods under Art. 3(1) CISG. Basically, the same rules apply to contracts for the supply of goods as to contracts for the sale of goods, except where the buyer itself provides a greater part of the raw material for the goods. In the instant case, the claim is for damages upon avoidance of the contract.

Art. 57(1)(a) CISG provides that if the parties have not agreed otherwise, which is the case here, the buyer shall pay the purchase price at the seller's place of business. The wording of Art 57 CISG does not clarify whether it is also applicable to the payment of secondary contractual claims such as damages. However, as established above, the place of performance of secondary obligations is that of the primary obligations even in the absence of exact provisions in Art. 57(1)(a).

The Supreme Court therefore rules that that the Court does have jurisdiction to deal with such monetary claims and that analogously, the place of performance will be the place of business of the party expecting payment from the other. Consequently, the place of performance is also the seller's place of business.


FOOTNOTES

* For the purposes of this abstract, the Italian Defendant is referred to as [Buyer], the Austrian Plaintiff is referred to as [Seller]. Amounts in European currency are indicated as [EUR].

Note on other abbreviations: ABGB = Allegemeines Búrgerliches Gesetzbuch [Civil Code of Austria]; EuGH = Europäischer Gerichtshof [European Court of Justice]; EuGVÜ = Europäisches Gerichtsstands- und Vollstreckungsübereinkommen, 1968 [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters]; EuGVVO = Verordnung über die gerichtliche Zuständigkeit und die Anerkennung und Vollstreckung von Entscheidungen in Zivil- und Handelssachen [Ordinance on Jurisdiction of the Courts and Recognition and Enforcement of Civil and Commercial Decisions]; EVÜ = Übereinkommen über das auf vertragliche Schuldverhältnisse anzuwendende Recht [Convention on the Law Applicable to Contractual Obligations]; IPRG = Gesetz über das Internationale Privatrecht [Austrian Code on Private International Law]; OGH = Oberster Gerichtshof [Supreme Court of Austria]; VAT = Value Added Tax.

** 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 fromthe 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. She has also dealt with cross-border and Internet-related copyright issues.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7(2) ; 57(1)(a) ; 74 [Also cited: Articles 3(1) ; 61(b) ; 64 ]

Classification of issues using UNCITRAL classification code numbers:

7C22 [Gap-filling (resort to general principles on which Convention is based): place of payment of damages and secondary obligations is place for payment of primary payment obligations];

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

74C [Damages (other issues): place of payment of damages]

Descriptors: Gap-filling ; General principles ; Payment, place of ; Damages ; Jurisdiction

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): Austria Supreme Court website [go to <http://www.ris.bka.gv.at/jus/>, check "jus texte" box, enter "5 Ob 313/03w" as "suchworte", click "suche starten"]

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Pace Law School Institute of International Commercial Law - Last updated April 26, 2005
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