Italy 28 August 2004 District Court Rovereto (Aquafili Textile Yarns S.p.A. v. Updeal Ltd) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040828i3.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 1224/03
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Italy (plaintiff)
BUYER'S COUNTRY: United Kingdom (defendant)
GOODS INVOLVED: Fabric
Prepared by Ryan E. Thompson
A buyer from the U.K. and a seller from Italy entered into a contract for the sale of textiles. Applying the Council Regulation (EC) no. 44/2001 on the Jurisdiction and Recognition of Judgments in Civil and Commercial Matters (the “Brussels 1 Regulation”) the court addressed which court had proper jurisdiction over the dispute between the parties. In determining the place of performance, for purposes of assessing jurisdiction, the court looked to where the goods were delivered or should have been delivered. In determining the definition of delivery, the Court did not apply CISG Art. 31(a), but rather determined that the term delivery was to be interpreted autonomously, concluding delivery is the place where the goods become available to the buyer.Go to Case Table of Contents
Abstract prepared by Francesco G. Mazzotta [*]
An Italian manufacturer entered into a contract with a British company for the sale of textiles, which were delivered during the year 1999. The British company in 2002 notified the Seller that it never received the goods. As a result, the Seller brought an action to recover the contract price plus interest.
The Court reviewed the correctness of the service of process upon the Defendant and since the Defendant failed to appear, it entered an order to proceed by default. The Court held that it lacked jurisdiction to hear the case pursuant to Council Regulation (EC) No. 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (hereinafter "Regulation"). The Regulation applies to the dispute because (1) it is a civil/commercial matter, (2) the Defendant is domiciled in a Member State (Great Britain) and (3) the legal proceeding commenced after 1 March 2002 (date in which the Regulation entered into force).
The court noted that the issue of which court had jurisdiction over the Defendant in a dispute concerning a sale of goods had been expressly resolved by the Regulation, which replaced the Brussels Convention of 1968 (hereinafter the "Convention"), providing that, for the purpose of this rule and unless otherwise agreed, a person domiciled in a Member State may be sued in the court of the place of performance of the obligation. In the case of a sale of goods, the place of performance is the place where, under the contract, the goods were delivered or should have been delivered. The court also held that, in a sale of goods dispute, regardless of the specific issue litigated by the parties, the relevant court was the one sitting in the place where the goods were to be delivered or should have been delivered. In the present case, thus, the proper court for purposes of jurisdiction would be the court where the buyer entered into possession of the goods, that is, Great Britain.
An additional question concerns the meaning of the term "delivery" under the Regulation. Given that a question of interpretation could not be submitted to the European Court of Justice by a trial court, it was the present court, therefore, that had to decide whether the Regulation intended to use the term "delivery" as it is ordinarily used or whether the meaning of the term should be determined pursuant to domestic law or the CISG. Noting that (1) a substantive law convention may not be used to interpret a procedural law convention, (2) there is not a substantive definition for the term "delivery of goods in a sale of goods", and (3) premise number 11 to the Regulation expressly provides for the domicile of a legal person to be defined autonomously so "as to make the common rules more transparent and avoid conflicts of jurisdiction", the court held that the term delivery, for the purpose of determining whether it was jurisdictionally competent, is the place where the goods become available to the buyer, which usually is the place where the defendant has its domicile. Finally, noting that the place of delivery for purposes of the Regulation may differ from the place of delivery for purposes of substantive law, the court nonetheless refused to pass judgment on it as it considered the matter committed to the European Legislator and not subject to judicial review.
APPLICATION OF CISG: No
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
31A [Place for delivery: contracts involving carriage of goods]
31A [Place for delivery: contracts involving carriage of goods]
CITATIONS TO OTHER ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=982&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (Italian): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/902.pdf>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=982&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 215Go to Case Table of Contents
Queen Mary Case Translation Programme
Translation by Francesco G. Mazzotta [*]
Reasons for the Decision
This court does not have jurisdiction over the dispute, which should instead be decided by a court in the United Kingdom. On the question of jurisdiction, this controversy falls within the scope of Council Regulation (EC) No. 44/2001 of 22 December 2000 on the Jurisdiction and Recognition of Judgments in Civil and Commercial matters (the so-called Brussels I Regulation, hereinafter the Regulation).
The requirements set forth by the Regulation, in fact, have been met:
a) The dispute concerns a civil or commercial matter, as it is about payment of supply of goods (Art. 1 of the Regulation);
b) The Defendant is domiciled in a Member State;
c) The proceeding commenced after 1 March 2002 (Art. 66, paragraph 1, of the Regulation), the date the Regulation entered into force (Art. 76).
The jurisdictional issue has been raised by the court (Art. 26, paragraph 1, of the Regulation) as the Defendant did not appear before the court (pursuant to Italian law, it is a default judgment) and, therefore, there will be no prorogation of jurisdiction pursuant to Art. 24 of the Regulation. With regard to requirement b) above, it should be noted that the Defendant is a British limited partnership having its place of incorporation in the United Kingdom. Pursuant to Article 60 of the Regulation, specifically the second paragraph, the partnership is domiciled in a Member State other than Italy, specifically the United Kingdom. The Regulation sets forth an "autonomous" definition of domicile for companies and legal entities, which prevents them from resorting to the definition of statutory seat as provided for by Art. 53 of the Brussels Convention of 27 September 1968 (hereinafter, the Convention), because the Regulation is meant to supersede the Convention (Art. 68, first paragraph). Thus, pursuant to Art. 60 of the Regulation, and in particular, pursuant to the requirements set forth by its second paragraph, UPDEAL is domiciled in the United Kingdom because, based on the scarce information available and the nature of the business entity, the place of incorporation of the company is located in the United Kingdom of Great Britain and Northern Ireland. Pursuant to the general rule set forth in Article 2 of the Regulation, UPDEAL may be sued in the United Kingdom. In fact, this provision, as previously provided for by Article 2 of the Convention, provides that persons domiciled in a Member State shall ... be sued in the courts of that Member State (forum rei).
The Plaintiff, however, is aware that the Italian court would not have had jurisdiction pursuant to Article 2, and therefore argues that the special jurisdiction rules set forth for contractual matters apply to the controversy (Art. 5(1) of the Regulation, previously Art. 5(1) of the Convention). In matters relating to contracts, both pursuant to the Convention and the Regulation, Art. 5 allows a plaintiff to bring suit against a defendant domiciled in a Member State before a court of another Member State. Specifically, a defendant may be sued in the court of the State where the goods were delivered or should have been delivered (forum destinatae solutionis). With reference to special jurisdiction based on the contractual matters, while the Brussels Convention was in force, the European Court of Justice [ECJ], with its first two decisions interpreting the provisions of the Convention (ECJ Decision 12/76 of 6 October 1976, Tessili v. Dunlop [...]; Decision 14/76 of 6 October 1976, De Bloos v. Boujer [...]), set forth two interpretative approaches subsequently reiterated by the Court (Decision C-288/92 of 29 June 1994, Custom Made Commercial [...]), until the Regulation entered into force (Decision C-440/97 of 28 September 1999, Groupe Concorde v. Sudawiharno Panjan [...]; Decision C-420/97 of 5 October 1999, Leathertex v. Bodetex [...]).
Pursuant to the first interpretative approach (De Bloos, cited), the obligation over which the parties are fighting in court is the actual cause of action before the court. Reliance on the concept of cause of action requires application of the so-called analytic method, which may result in several courts having jurisdiction over different obligations arising from the same contract (cf. Leathertex, cited), at least in those instances where different obligations must be performed in different States.
The second interpretative approach may be summarized as follows: "Art. 5, paragraph 1, on jurisdiction and recognition of judgments in civil and commercial matters is to be interpreted as though the expression place of performance of the obligation is to be determined by referring to the law which governs the obligation in question according to the conflict rules of the court seized" (Groupe Concorde, cited; also Tessili and Custom Made, cited).
The Court justified resorting to the conflict rules of the court by acknowledging that domestic contract laws differ greatly on the concept of place of performance of the obligation and that the place of performance of the obligation depends on the structure of the contract.
In fact, "some of the questions which might arise in this context, such as identification of the contractual obligation forming the basis of proceedings, as well as the principal obligation, where there are several obligations, could hardly be resolved without reference to the applicable law" (Groupe Concorde, cited). Because of these two approaches, determining the jurisdictionally proper court in contractual disputes under the Convention required a two-step analysis:
|-||The identification of the contract obligation or the main obligation when dealing with several obligations, disputed before the court;|
|-||The identification of the locus destinatae solutionis pursuant to the substantive law determined applicable by means of the private international law rules of the forum.|
Thus, in cases of disputes concerning the payment of goods, the concurrent special jurisdiction forum should be determined through the law determining the place of performance of the obligations to pay, which must be identified through the Italian private international law rules. Under the Convention and pursuant to the case law of the ECJ, the identification of the proper forum requires a complex logical approach, as acknowledged by the Advocates General (Advocate General Lenz in Custom Made; Advocate General Leger in Groupe Concorde; and Advocate General Colomer in Leathertex) and the same Court (GIE and Leathertex). The complexity, which depends on the identification and characterization of the obligation in dispute as well as on the difficulty of determining the lex cause pursuant to the applicable private international law rules, has been only attenuated, but not eliminated, by the uniform rules set forth by the Rome Convention of 1980 concerning the determination of the applicable law in contractual obligations (Custom Made Commercial, cited).
It should be noted, however, that the Regulation is aimed at simplifying, actually eliminating, the traditional approach for determining the court having special jurisdiction over sale of goods contracts.
Letter b), added by paragraph 1 of Article 5 of the Regulation, expressly provides: "for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be, in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered."
This rule introduces a precise place of performance test for obligations arising from the sale of goods contract and, for purposes of determining the jurisdictionally competent court (for the purpose of this provision), it focuses on the place of delivery of the goods.
This rule has the immediate effect of eliminating, in the case of the sale of goods, the so-called analytic approach; the legislature sets forth, clearly, that the place of performance of the obligations arising from a sale of goods, is, for purposes of determining the competent court, the place of delivery of the goods. This is the rule, regardless of what would be the determination of the place of performance pursuant to the lex cause.
In the present case, therefore, it is irrelevant that the obligation disputed before the court concerns the payment for the goods; for purposes of identifying the jurisdictionally competent judge, the important feature is that the obligation arose from a sale of goods. Thus, pursuant to Art. 5(1)(b) of the Regulation, the special jurisdiction criterion, that is the destinate solutionis forum of the obligation in dispute, is the forum of the place of delivery of the goods.
In order to determine whether this court has jurisdiction over this dispute, this court must only determine the place of delivery. The literal interpretation of Art. 5(1)(b) leads the court to identify the place of delivery as the place where the goods are actually available to the buyer, which, in the present case, is the buyer's place of business in the United Kingdom where the seller shipped the goods, as per the documentation offered in evidence.
It must be noted, however, that the term "delivery," in legal language, has a different meaning from that in lay language. Particularly, it must be noted that in matters relating to the international sales of goods, as in the instant case, the term delivery has a legal meaning which is different from its literal meaning. International sales of goods are governed by the Vienna Convention which introduced uniform rules of substantive law. Pursuant to Art. 31(a) of the Vienna Convention, the obligation of the seller, when the contract of sale involves the carriage of the goods, consists of handing the goods over to the carrier, which is the same as the rule set forth by the Italian Civil Code for sales of goods (Art. 1510 Civil Code, second paragraph).
Pursuant to the Vienna Convention and the Italian Code, the place of delivery of the goods, shipped by AQUAFIL to UPDEAL, should be Italy, because AQUAFIL handed the goods over to the carrier in Italy. Moreover, it should be noted that pursuant to the Vienna Convention Art. 55(a), which is identical to Art. 1182, third paragraph, of the Civil Code, the place of payment for the goods is also located in Italy. [Note by translator: As there is no CISG Art. 55(a) and CISG Art. 57(1)(a) fits this context, it is reasonable to assume that the court meant to cite CISG Art. 57(1)(a).]
In this situation, the court must establish whether the Regulation, by introducing the rule on jurisdiction linked to the place of delivery of the goods, meant to establish an autonomous concept of delivery, matching its literal meaning, or, instead, meant to establish a concept subject to being interpreted differently depending on whether it was construed through domestic law or the uniform rules of substantive law set forth by the Vienna Convention. The latter approach also requires establishing whether the court, for purposes of determining the existence of jurisdiction, must also engage in the logical analysis applied by the Court when the Brussels Convention was in force (see Tessili, Custom Made Commercial and Groupe Concorde, cited), that is, determining, pursuant to the domestic rules of private international law, which law governs the obligation to deliver the goods. This issue, which was tackled at the trial, must be determined by this court, because it cannot be referred to the Court of Justice for a preliminary ruling, because the Court cannot hear issues raised before the trial court, as per the Interpretative Protocol to the Brussels Convention of 27 September 1968, and also raised before higher courts if not of last resort (cf. Art. 68 of the Treaty, which is more restrictive that Art. 234).
The answer to the question depends on the construction of the Regulation as the source of the law. In support of the approach negating the autonomous concept of interpretation introduced by the Regulation, there are arguments based on legality and reasonableness.
As to the legal argument, it should be noted that pursuant to the nineteenth preamble to the Regulation, continuity between the Brussels Convention and the Regulation should be ensured. To this end, therefore, the interpretative case law dealing with issues related to the determination of the place of performance of the obligation (see Tessili, Custom Made and Groupe Concorde, cited) should be used also for purposes of determining the place of delivery because, in determining the place of delivery of the goods as well as the place of performance of the obligation, it is likely that domestic laws are conflicting.
As to the 'reasonableness' argument, this is an argument which implies determining the will of the legislature. It would be unreasonable for the Legislature to adopt, for purposes of determining the court's jurisdiction, an autonomous 'delivery' concept, as the place where the buyer has actual availability of the goods, because this would conflict with the substantive discipline set forth in the Vienna Convention, normally applicable to these disputes.
These arguments, however, cannot stand up against interpretative arguments suggesting the contrary.
It must be noted that the principle of interpretative continuity between the Brussels Convention and the Regulation, while applicable to those areas of similar discipline under both the Treaty and the Regulation, cannot be applied to matters newly introduced.
There are no doubts, as evidenced by the Committee 99/348 for the revision of the Brussels Convention, that Art. 5(b)(1) has been introduced with the purpose of creating a 'discontinuity' with respect to the case law of the Court of Justice concerning the place of performance of the obligations, and therefore, remove any complexity connected with the logical method for determining the jurisdiction of the court when dealing with contract disputes.
To this end, there should be no reference to the above mentioned case law (Tessili, Custom Made and Groupe Concorde), because reference should be made only to those decisions of the Court dealing with the principles underpinning the Brussels Convention, also for purposes of interpreting the new rule.
Thus, in support of the autonomous interpretation approach, it should be recalled that the Court of Justice has favored, as much as possible, an autonomous interpretation of the Brussels Convention to "ensure fully its force in conformity with the goals set forth by Art. 220 of the EC Treaty (now Art. 293), which are the goals on which the Convention has been agreed upon." (ECJ, decision of 13 July 1993, Mulox IBC, C-125/92 [...]).
Moreover, the Court, has reiterated that the principle of certainty of the law is one the goals of the Brussels Convention (ECJ, Decision C-129/92 of 20 January 1994, Owens Bank, I-117 [...]) and that the principle requires in particular that special rules limiting the scope of the general principle of forum rei, as Art. 5(1), should be interpreted to ensure that a defendant can reasonably determine before which court, if different from the courts of his State, he could be sued (ECJ, Decision C-261/9 of 17 June 1992, Handte [...]).
In light of this jurisprudence, it may be deemed that, as a result of the communitarization of procedural rules, already set forth by the Brussels Convention, the Community Legislature intended to strengthen the need for certainty and predictability of Community civil procedure.
That certainty and predictability of the competent forum are the reasons behind the goals of the Community Legislature in setting forth Art. 5(1)(b), can be seen by considering the third preamble of the Regulation, which makes reference to the need to "unify the rules of conflict of jurisdiction in civil and commercial matters" and the eleventh preamble which states that "The rules of jurisdiction must be highly predictable."
Therefore, based on the Regulation and the jurisprudence of the Court in connection with the Brussels Convention - in furtherance of the 'interpretative continuity' principle, the interpretation of the new Art.5(1)(b) of the Regulation should be autonomous and aimed at simplifying the rules on jurisdiction and serving the goals of certainty and predictability.
Reliance on the Vienna Convention of 1980, as suggested by the plaintiff, although appealing, would not be useful for purposes of interpreting the Regulation. Theoretically, the Vienna Convention could be relevant under the Brussels Convention if one considers that the Brussels Convention is an international treaty, and as such subject to the interpretative rules of the Vienna Convention of 1969 on the interpretation of treaties. According to Art. 31 of the Vienna Convention of 1969, any relevant rules of international law applicable in the relations between the parties should be taken into account when interpreting the treaty. However, the relevant doctrine excludes reliance on treaties of substantive law for purposes of interpreting treaties on procedural rules. The Regulation, however, although enacted pursuant to Art. 65 of the EC Treaty, as amended by the Amsterdam Treaty, is a legislative act of a community institution, which prevails over domestic legislative rules and conventional rules.
The key to interpreting the Regulation must be found in EU law. Therefore, the phrase 'place of delivery' mentioned by Art. 5(1)(b) must be interpreted autonomously to serve the goals of certainty and predictability, which form the basis of the provision. For purposes of an autonomous interpretation, there is no need to make reference to the Vienna Convention, because it is not EC law, but rather a convention of substantive law. It is not possible to find within EC law a definition of "delivery of goods in a sales contract" that can be relied upon for purpose of a 'systematic' interpretation.
The only possible interpretation, a literal interpretation, results in identifying the place of delivery as the place where the goods are actually made available to the buyer, which is normally the place of business of the defendant, as per the eleventh preamble to the Regulation.
There could be only one more uncertainty in light of the principle set forth in the twelfth preamble to the Regulation, whereby alternative grounds of jurisdiction should be "based on a close link between the court and the action."
With reference to the sale of goods, the uniform substantive rules set forth by the Vienna Convention as well as the Italian rules suggest that the place of business of the seller would be relevant, which is normally the place where the goods are handed over to a carrier and the place where the price must be paid. Pursuant to the autonomous interpretation of Art. 5(1)(b), the court of the place where delivery takes place, which is relevant for purposes of determining a court's jurisdiction, is different from the place of performance of the obligation as determined pursuant to the otherwise applicable substantive rules.
Such a consideration, however, is not because of the interpretation of the Regulation, which requires a different interpretative approach, but because of discretional choice of the Community Legislature in characterizing the close link between the court and the action. Such a choice is not subject to judicial review. In the instant case, the place of delivery is the United Kingdom. Thus, this court does not have jurisdiction over the dispute.
For these reasons
The court holds that it does not have jurisdiction over the dispute.
Rovereto, 28 August 2004; Judge:Luca Perilli
* Dottore in Giurisprudenza Universitá degli Studi di Napoli, "Feederico II", Italy (1993); LL.M. in International & Comparative Law, University of Pittsburgh School of Law, U.S.A. (2000); Associate, Institution of International Commercial Law, Pace University School of Law.
All translations should be verified by cross-checking against the original text.Go to Case Table of Contents