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CISG CASE PRESENTATION

Austria 1 June 2004 Appellate Court Wein (Hydraulic pressure unit case) [detailed abstract available]
[Cite as: http://cisgw3.law.pace.edu/cases/040601a3.html]

Primary source(s) of information for case presentation: Austrian Supreme Court website

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Case identification

DATE OF DECISION: 20040601 (1 June 2004)

JURISDICTION: Austria

TRIBUNAL: OLG Wein [OLG = Oberlandesgericht = Provincial Appellate Court]

JUDGE(S): Dr. Mayer (Vorsitz), Dr. Lindner, Dr. Herberger

CASE NUMBER/DOCKET NUMBER: 3 R 68/04y

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

CASE HISTORY: 1st instance Landesgericht Wien (24 Cg 228/00-22) 26 November 2003

SELLER'S COUNTRY: Germany (defendant)

BUYER'S COUNTRY: Austria (plaintiff)

GOODS INVOLVED: Hydraulic pressure unit


Case abstract

AUSTRIA: Oberlandesgericht [OLG] Wien, 3R68/04y, 1 June 2004

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

-   Facts of the case
-   Parties' contentions on jurisdiction
-   Substantive issues
-   Jurisdiction and the question of place of performance
-   Decision on jurisdiction and on the merits

[FACTS OF THE CASE]

The Buyer of Austria ordered from the Seller of Germany two hydraulic pressure units on 1 June 1998, also including its General Conditions of Sale. The machines were to be assembled by Seller at the place of business of "ÖBB Linz" upon order for the goods which Buyer subsequently placed with Seller. The date of delivery was the 31st calendar week of 1998. Buyer paid the contract price of Deutsche Mark [DM] 237,760 (i.e., Austrian schillings [ATS] 1.4 million calculated at Buyer's exchange rate). The machines did not work properly and Seller's offers to repair them were unsuccessful. In consequence of the latter attempts, Buyer incurred ATS 141,512 as extra costs. As the machines still did not work properly, Buyer avoided the contract and requested repayment of the purchase price and payment of the extra costs under its damages claim.

[PARTIES' CONTENTIONS ON JURISDICTION]

Buyer contended that under its General Conditions of Sale, place of performance and place of proceedings shall be Wiener Neustadt and that Austrian law was agreed upon by the parties.

Seller objected to jurisdiction of that court claiming lack of international jurisdiction and territorial and subjective incompetence. Seller stated that the District Court (Landgericht) of Traunstein, Germany, has jurisdiction to hear the case. Seller alleged that:

   -    Wiener Neustadt was not agreed upon as the place of performance or as the place of proceedings. Buyer's General Conditions of Sale were not enclosed with the order, and
 
   -    Even if they had been enclosed, they do not contain any provision concerning jurisdiction of the courts of Austria;
 
   -    Moreover, the General Conditions of Sale of the Austrian Trade Union of the Machine and Steel Industry did not become part of the contract either because there was no "permanent business relationship" between the parties as required by these conditions.

Buyer's General Conditions of Sale referred to the application of Seller's law. On 3 July 2000, Seller sued Buyer for payment of the remaining purchase price, among other claims, before the District Court of Traunstein, Germany, i.e., the court having jurisdiction at the Seller's place of business.

The Landesgericht Wiener Neustadt [Court of First Instance of Austria] held that it had no jurisdiction and rejected the claim.

[SUBSTANTIVE ISSUES]

The parties did not agree upon the place of performance or the place of proceedings in either their oral communications or in any written document. The order was sent to Seller by fax but Buyer's General Conditions of Sale were not enclosed with it. It could not be proved whether the order was sent by post as well. In that case, the General Conditions of Sale would have been printed on the first page of the order. Seller did not subsequently confirm the order.

The bottom of the first page of the order contains the following text:

"Retention of property: The seller retains property of the goods until the total contract price is paid. Provisions of the General Conditions of Sale shall be applied to other issues. Complaints will be acknowledged only within eight days after delivery. Place of performance and place of proceedings shall be Wiener Neustadt."

The General Conditions of Sale of the Austrian Trade Union of the Machine and Steel Industry contain the following provisions:

"2.1. The contract is considered concluded when the seller dispatches confirmation of the offer.

2.2. Alterations and additions to the contract are valid only if seller accepts them in writing. The buyer's conditions of purchase are valid only if the seller expressly acknowledges them.

[...]

12.1. Place of proceedings concerning disputes arising directly or indirectly out of the contract shall be the Austrian court which has territorial jurisdiction over the seller's place of business. However, the seller can refer the dispute to another court having jurisdiction over the buyer.

12.3. The contract shall be governed by the seller's law.

12.4. Place of performance concerning delivery and payment shall be the seller's place of business even in cases where delivery is agreed to take place elsewhere."

On 3 July 2000, Seller requested the District Court of Traunstein, Germany, to order Buyer to pay DM 52,170 altogether(in connection with additional orders). Seller based jurisdiction of the Court upon Art. 5 EuGVÜ [*] cf. Art. 57(1) CISG. The claim partly refers to a yet unpaid purchase price.

[JURISDICTION AND THE QUESTION OF PLACE OF PERFORMANCE]

The Landesgericht Wiener Neustadt [Court of First Instance of Austria] ruled that jurisdiction was governed by the LGVÜ [*]. The conditions set by its Art. 17 were not met because there was neither a written agreement nor an oral agreement. No agreement on jurisdiction can be derived from the parties' practices nor from any international customs.

Pursuant to Art. 5 LGVÜ, a party having its place of business in a Contracting State can be sued before a court at the place of performance if the bases of the suit are contractual claims. Determination of the place of performance is governed by the parties' agreement which is not subject to the strict conditions set by Art. 17 EuGVÜ [*]. The General Conditions of Sale refer to the seller's place of business as the place of performance. If there is no agreement on the place of performance, it shall be determined based upon the applicable law which has been agreed upon by the parties. This method is not applicable, however, if there is a governing uniform substantive law, application of which is independent of the conflict of laws rules of the country where the proceedings are instituted. This is the case here since the CISG is applicable.

Applying the CISG, no place of performance in Austria can be substantiated because Art. 57 refers to the seller's place of business. This leads to lack of jurisdiction by the Landesgericht Wiener Neustadt [the Court of First Instance of Austria].

Furthermore, reference in the footnotes to jurisdiction of the Court of Wiener Neustadt is not sufficient either.

Pursuant to Art. 5 EuGVÜ [*], a person or entity having its seat in a Contracting State can be sued before the court of another Contracting State where a contractual obligation is performed or should have been performed.

There are no specific formal requirements as to the agreement on the place of performance. Not only primary contractual obligations but also secondary obligations relating to the latter can be presented before the court at the place of performance. Such secondary claims are, for example, damages or repayment claims which substitute for the non-performed primary obligations. The place of performance shall be determined in accordance with the law applicable to the contract.

In accordance with Arts. 1(1)(a) and 3 CISG, the CISG was found applicable in the instant case because it was neither stated nor ruled that Seller's duty to assemble the machines equals more than half of the duty to supply. Therefore, the governing law of the place of performance is the CISG.

An agreement concerning the Buyer's place of business as the place of performance could not be substantiated. Such a clause should not have been put into the footnotes. Buyer's General Conditions of Sale provided that the seller's law shall be applied.

Even if it is clear that Buyer did not intend to agree that Seller's place of business in Germany would be the place of performance, the General Conditions of Sale, which were dispatched late, did not imply an agreement that the place of performance would be Wiener Neustadt of Austria. Yet, based on the rules of the CISG, place of performance should have been in Austria at Linz because the goods were to be delivered and assembled there.

Whether the parties agreed upon Linz as the place of performance shall not be examined by the Court because the Landesgericht Wiener Neustadt [Court of First Instance of Austria] does not have jurisdiction over Linz.

Art. 31 CISG governing the seller's duty to deliver applies only if the parties did not agree that the seller deliver the goods to a specific place. Such an agreement was indeed made in the instant case because Seller was obliged to deliver the goods and assemble them in Linz. Art. 31 CISG is therefore not applicable. Art. 31(c) CISG lays down the principle that the seller must perform where its place of business is at the time of conclusion of the contract.

[DECISION ON JURISDICTION AND ON THE MERITS]

Art. 57(1) CISG governs the place of payment where there is no specific agreement on it between the parties. As there was no such agreement in the instant case, the place of payment is the seller's place of business (pursuant to Art. 57(1)(a) CISG).

Pursuant to Art. 81 CISG, avoidance of the contract releases both parties from their original contractual obligations except for the obligation to pay damages. Pursuant to para. (2) of the same provision, a party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party has supplied or paid under the contract. If both parties are bound to make restitution, they must do so concurrently.

There are debates about whether there is a specific place of performance determined in Art. 81 CISG concerning return of that which has already been performed.

The Court found that there was no such specific place of performance determined in the CISG, yet, harmonizing with what is laid down by the BGH [*], the place of return shall be the place of performing the primary contractual obligations.

Art. 21 EuGVÜ [*] provides that if claims concerning the same parties and the same subject are submitted to courts of different Contracting States, the court to which the claim was submitted later shall suspend the proceedings until the court to which the claim was submitted earlier decides on its own jurisdiction. Until that time the court to which the claim was submitted later shall declare its own incompetence in favor of the jurisdiction of the other court.

Therefore, contradictory judgments of different Contracting States shall be taken into consideration. Based on the practice of the European Court of Justice, such claims shall be decided upon autonomously when the same claim is involved.

This means that Seller's claim submitted to the District Court of Traunstein of Germany in July 2000 presents an obstacle to the proceedings before this court

Both proceedings concern the issue of whether the Seller delivered as it had been required by the contract. If it is so, [Plaintiff] Buyer of the revision proceedings, i.e., [Defendant] in the proceedings before the District Court of Traunstein must pay the remaining purchase price. If it is not so, the question shall be whether avoidance was effective and, if so, Seller must repay the purchase price.

Concerning whether the proceedings shall be continued or discontinued, the core of the question is whether the court which started the proceedings earlier had already made a decision on jurisdiction.

On the other hand, Buyer expressed that in the proceedings before the District Court of Traunstein of Germany a decision was made and it was not appealed against. The District Court of Traunstein found that it had jurisdiction.

Furthermore, it was clear from the decision of the District Court of Traunstein (14 December 2001) that taking of evidence had already been finished and an expert had already been appointed. Therefore, pursuant to Art. 21(2) EuGVÜ [*], the Landesgericht Wiener Neustadt [Court of First Instance of Austria] in this proceeding ruled that it did not have jurisdiction.


FOOTNOTES

* For the purposes of this abstract, the Austrian Plaintiff is referred to as [Buyer], and the German Defendant is referred to as [Seller]. Amounts in former German currency are indicated as [DM] and former Austrian currency is referred to as [ATS].

Note on other abbreviations: EuGVÜ = Europäisches Gerichtsstands- und Vollstreckungsübereinkommen, 1968 [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters]; LGVÜ = 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. She has also dealt with cross-border and Internet-related copyright issues.

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Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 3 ; 31(1) ; 57(1) ; 81

Classification of issues using UNCITRAL classification code numbers:

3B [Exclusions from the Convention (services preponderant part of obligation): court found no indication that seller's duty to assemble the machines amounted to more than half the duty to supply];

31B1 [Place for delivery: goods to be placed at disposal at known place];

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

81C [Restitution by each party of benefits received: place of return held to be place of performing the primary contractual obligations]

Descriptors: Services ; Delivery ; Payment, place of ; Restitution ; 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

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): Austrian Supreme Court website: Go to <http://www.ris.bka.gv.at/jus/>; click "jus texte" box; enter "3R6804y" 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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