Belgium 14 April 2004 Appellate Court Antwerp (ING Insurance v. BVBA HVA Koeling and Fagard Winand; HVA Koeling BVBA v. Fagard Winand and Besseling Agri-Technic BV) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040414b1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2002/AR902 and 2002/AR/1946
CASE HISTORY: 1st instance Rechtbank van Koophandel Hasselt 26 February 2002
SELLER'S COUNTRY: Netherlands (defendant)
BUYER'S COUNTRY: Belgium (plaintiff)
GOODS INVOLVED: Cooling installation - sensors
Reproduced from CISG-Belgian database
"The CISG is part of Dutch internal law and thus applicable if Dutch law is applicable.
"A period of 12 months is not 'reasonable' to give notice of non-conformity. The alleged breach of a duty of information does not change this. The period does not start when the delivered goods caused damage to other goods, but when the defect of the delivered goods itself was discovered. The phrase 'exchange for defect one' on the invoice, does not free the buyer of his obligation to give timely notice.
"A party can only be held liable on an extra-contractual basis if the fault is a breach not of a contractual obligation, but of a general duty of care and the fault has caused other damage than that caused by a defective performance of the contract. A breach of the duty of information is a contractual breach.
"The seller is liable if he has delivered goods that are not fit for the purposes for which they would be used.
"If the buyer is not a specialist, he can rely on the expertise of the seller, so that the seller has to give a special warning about possible problems."Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
39A2 ; 39A11 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time; Degree of specificity required]
39A2 ; 39A11 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time; Degree of specificity required]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Dutch): CISG-Belgium database <http://www.law.kuleuven.ac.be/ipr/eng/cases/2004-04-14%20Antwerpen.html>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
14 April 2004 [2002/AR/902 and 2002/AR/1946]
Translation [*] by Kristof Cox [**]
1. Facts and antecedents
In the judgment under appeal of the Commercial Court of Hasselt of 26 February 2002 the claims and relevant facts were appropriately described. The Court refers to those.
The Court of First Instance ruled that the claim and interlocutory claim of [Buyer's customer] against [Buyer] and [Buyer's insurer] were admissible and founded, the interlocutory order of [Buyer's customer] against [Seller] admissible though unfounded. Further, the Court ruled that the claim in indemnification of [Buyer] was admissible and founded against [Buyer's insurer] but unfounded against [Seller].
The Court of First Instance ordered [Buyer] and [Buyer's insurer] to jointly pay [Buyer's customer] 12,965.93 € and [Buyer] was ordered to pay [Buyer's customer] 619.73 €.
Further, the Court of First Instance ordered [Buyer's insurer] to indemnify [Buyer] for 12,965.93 €.
The Court ordered [Buyer's insurer] to pay the costs of the procedure in indemnification.
[Buyer] is ordered to pay the costs towards [Seller].
Further, the Court declared the judgment immediately enforceable, notwithstanding any remedy.
[Buyer's insurer] filed an appeal on 12 April 2002 and [Buyer] filed an appeal on 31 July 2002.
The appeals known under 2002/AR/902 and 2002/AR/1946 concern an appeal against the same judgment, rendered between the same parties, so that judicial economy requires these cases to be consolidated.
a. Law applicable to the relation between [Buyer] and [Seller]
The Court of First Instance decided very correctly that under Article 2.1 of the Convention of The Hague of 15 June 1955 the international contract of sale is governed by the law chosen by the contracting parties. It the parties have not chosen the applicable law - as in this case - the contract is governed by the internal law of the country where the seller has his residence at the moment he receives the order, in this case the Netherlands.
The Court of First Instance correctly decided that Dutch law was applicable to the relation between [Buyer] and [Seller].
Since the CISG had entered into force in the Netherlands on 1 January 1992 and was part of the internal legal order, the Court of First Instance decided correctly that this Convention was applicable to this case.
This is no longer disputed.
b. Lateness of the action in indemnification of [Buyer] against [Seller]
On appeal, [Buyer] holds to its position that its action in indemnification against [Seller] is not late.
The Court of First Instance was correct not to agree with that.
According to Article 39(1) CISG, the buyer loses his right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.
In this case, [Buyer] only gave notice to [Seller] in December 1998 of the problems, while it is a given fact that it was already aware of the problem in December 1997.
The Court of First Instance decided correctly that twelve months is not a reasonable time, as meant in the said Article.
The allegation of [Buyer] that [Seller] had breached its duty of information, does not alter its failing to inform [Seller] within a reasonable time.
[Buyer] does not present sufficient reasons to decide differently.
[Buyer] wrongly starts from the moment the damage to the goods was discovered.
In this case, it knew much earlier about the problems, which it attributes to the faulty functioning of the sensor delivered by [Seller].
It is the moment at which it knew about the faulty functioning that should be taken as the starting point for the determination of the reasonable time.
[Seller] delivered the first sensor in August 1997 and afterwards replaced in December 1997. Shortly after the replacement in December 1997, deviations in the measurements were discovered. Then, it waited twelve months before it gave notice to [Seller].
[Buyer] alleges that, although it has waived its rights to rely on the non-conformity of the sensor that was delivered in August 1997, this was certainly not the case with regard to the sensor delivered in December 1997.
Nevertheless, it does not dispute that initially this new sensor also caused problems for which the sensor was calibrated again.
Taking the prior problems into account, this was another reason to inform [Seller] about this and not to wait twelve months so that all evidence had disappeared. (see later)
It is only when new problems arose in December 1998 that [Buyer] informed [Seller].
This was not correct.
The problems that apparently occurred with the sensor had already occurred shortly after August 1997. Thus, the notice in December 1998 certainly does not fulfill the requirement of a reasonable time.
The fact that [Seller] noted on its invoice of 7 December 1998: "exchange for defect" cannot remedy the failure of [Buyer] to inform [Seller] within a reasonable time. As [Seller] correctly states (p. 15 of its memo), it can be remarked that the reason of the defect is not indicated by this note. One cannot deduce the recognition of liability from this note.
Given all this, it is not necessary to go into the arguments regarding the period of limitation with respect to the claim of [Buyer] against [Seller].
The claim in indemnification of [Buyer] against [Seller] thus is inadmissible, in so far as it is based on contractual liability, given the failure to respect the reasonable time.
In this sense the appealed judgment should be reformed.
c. Extra-contractual liability of [Seller] towards [Buyer]
With regard to the extra-contractual liability of [Seller] towards [Buyer], the Court of First Instance decided very correctly that [Buyer] did not prove that the damage that it would suffer is another damage than the damage it would suffer from a faulty performance of the agreement.
In this case, [Buyer] indeed failed to prove that the conditions to invoke extra-contractual liability are fulfilled.
A contracting party that commits a fault in the performance of the agreement, can only be held liable on an extra-contractual basis if the alleged fault is a not a fault against a contractual obligation but against the general duty of care and if that fault causes other damage than the damage caused by faulty performance of the agreement.
The claim of [Buyer] against [Seller] based on Article 1382 of the Belgian Civil Code [liability for tort] was correctly declined by the Court of First Instance.
The fault relied on by [Buyer] on appeal, namely a lack of information by [Seller] in relation to the use of the sensor and this more precisely in combination with lime slaked cooling cells, is a contractual breach.
Moreover, again, [Buyer] does not prove that the damage is another damage than that cause by faulty performance of the contract by [Seller].
The arguments whether the letter of [Seller] about the use of the sensor in combination with lime slaked cooling cells (not using) was received, are not relevant.
d. Liability of [Buyer] towards [Buyer's customer] - fault of [Buyer's customer]
It cannot be disputed that the damage was caused by the fact that the oxygen level in the cooling cells was not automatically maintained by the automatic installation.
[Buyer] does not contest that the damage is the consequence of a bad functioning of the sensor, be it as a consequence of a fault in the sensor, be it because the sensor that was installed was not fit for the type of cooling installation.
There has been an expert investigation into the cause, but the expert could not determine whether the oxygen sensor functioned poorly because of a fault, or because of the fact that it was unsettled by alien gasses.
The Court of First Instance decided correctly that [Buyer] as the seller-contractor is responsible towards [Buyer's customer]. [Buyer] is also contractually bound towards [Buyer's customer].
It is a given fact that [Buyer] has delivered a cooling cell to [Buyer's customer] that was not fit for the purpose for which it would be used. The cooling cell was defective (be it a defective sensor, be it the wrong type of sensor) and [Buyer] is liable for that defect.
[Buyer] does not dispute this, but contends that [Buyer's customer] committed a fault because it did not check the fruit after the defect was discovered.
The Court of First Instance referred to the formal notice in indemnification of [Buyer] (4 April 2001) to [Seller] and [Buyer's insurer], from which the judge could correctly deduce that [Buyer] conceded its fault, namely not checking the goods in the cooling cells immediately at the moment of the defect.
[Buyer] recognizes that it was its task to check the fruit. However, it alleges that this was not only its task, but just as well the task of [Buyer's customer].
[Buyer's customer] states in its Memorandum (p. 2) that in any event [Buyer] never made known that there would be any problem with regard to the apples.
Moreover, [Buyer's customer] alleges that it was the fault of [Buyer] that it did not check the fruit after the replacement of the sensor.
It was [Buyer]'s task to check the fruit, which it has conceded.
[Buyer's customer] correctly notes that it is not a specialist in cooling cells or techniques of preservation. It could rely on the expertise of [Buyer], so that the latter should have given a special warning about possible problems.
e. Claim of [Buyer's customer] against [Seller] - incidental appeal of [Buyer's customer]
[Buyer's customer] files a claim against [Seller] based on Article 1382 of the Belgian Civil Code [liability for tort].
The Court of First Instance declined this claim, after having decided that [Buyer] did not prove that the conditions for extra-contractual liability were fulfilled in this case. For the same reasons, the claim of [Buyer's customer] against [Seller] was declined.
[Buyer's customer] does not present sufficient reasons to rebut this.
Needless to say, [Buyer's customer] does not prove [Seller]'s fault.
[Buyer's customer] alleges that either the sensor was defective, or the wrong sensor was used and [Seller] breached its duty of information.
A defect in the sensor is not proven, nor that the damage was the result of the wrong type of sensor. The report that was made at the request of the insurer of [Buyer] brings no certainty.
There were no determinations as to the possible causes of the damage. The sensors were not examined.
Reading the report, it seems that a theoretical approach to the possible cause of the damage was given without concretely examining the possible defects.
As to the lack of information, [Buyer's customer] does not show that [Seller] breached its duties.
[Buyer's customer] was not a contracting partner of [Seller].
Moreover, [Seller] contends having informed its contracting partner.
But this would already be under the assumption that it would be certainly proven that the wrong type of sensor for this type of cooling cell was the cause of the damage (in combination with lime sacks).
f. Claim against the insurer
[Buyer's insurer] keeps disputing that it is bound to coverage. It keeps invoking Article 21 of the policy.
This Article 21.3 states:
"The agreement does not guarantee: ...
3° The damage that merely results from the fact that the delivered goods or works were not fit for the purpose and, inter alia, do not conform to the specifications as to the performance, efficiency, fitness, durability or quality."
[Buyer's insurer] alleges that the original sensor was not fit to be used in cooling installations with lime scrubbing, so that these damages would fall under the named Article.
As mentioned before, it is not proven that the cause of the damage was the type of sensor in combination with cooling installations with lime scrubbing.
The Court of First Instance decided correctly that if [Buyer's insurer] alleges it is not held to coverage, it has to prove this according to Article 1315, 2° of the Belgian Civil Code.
It cannot be derived from the evidence that the original sensor was not fit for that type of cooling installation.
The Court of First Instance decided correctly that [Buyer]'s claim in indemnification was founded.
Given the direct right of action of [Buyer's customer] against [Buyer's insurer], the Court of First Instance correctly granted this claim.
As to the damages, the Court of First Instance stressed correctly that in this case an expert was appointed by [Buyer's insurer], who could agree with a sum of 13,585.66 €.
Thus, [Buyer's insurer] cannot dispute this amount.
As to [Buyer], it should be said that it cannot seriously dispute the amount of damages.
The remarks [Buyer] has about the numbers of the damage, which are the same as before the Court of First Instance, are not sufficiently supported.
Further, the damages were approved by the expert of its insurer.
Given the conflict of interest between [Buyer's customer] and [Buyer's insurer], the Court accepts that there are sufficient guarantees as to the correctness of the suggested sums, as did the Court of First Instance.
Between [Buyer] and [Buyer's insurer] the contractually agreed franchise of 619.73 € should be taken into account.
FOR THOSE REASONS
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellant of Belgium is referred to as [Buyer] and Defendant-Appellee of Netherlands is referred to as [Seller]
** Kristof Cox is a researcher at the Institute for International Trade Law at the Catholic University of Leuven (Belgium). He is preparing a Ph.D. on the effects of an arbitration award on third parties. Further, he regularly publishes articles and case notes on the CISG and International Commercial Arbitration. Kristof Cox can be contacted at <Kristof.firstname.lastname@example.org>.Go to Case Table of Contents