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CISG CASE PRESENTATION

Italy 20 September 2004 Supreme Court (Kling & Freitag GmbH v. Societá Reference Laboratory S.r.l.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040920i3.html]

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

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Case identification

DATE OF DECISION: 20040920 (20 September 2004)

JURISDICTION: Italy

TRIBUNAL: Corte Suprema di Cassazione [Supreme Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 18902

CASE NAME: Kling & Freitag GmbH v. Societá Reference Laboratory S.r.l.

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany

BUYER'S COUNTRY: Italy

GOODS INVOLVED: [-]


Case Summary

Prepared by Ryan E. Thompson

A buyer from Italy and a seller from Germany entered into a framework distribution contract. Applying the 1968 Brussels Jurisdiction and Enforcement Convention (Brussels Convention) the court addressed whether the place of performance was in seller's country, or buyer's country for purposes of determining whether the Italian court had proper jurisdiction over the dispute. The Court applied Art. 5 of the Brussels Convention, indicating that the place of performance was the place where seller was required to deliver the goods. Applying CISG Art. 31 the court concluded the place of delivery was in seller's country and the Italian court therefore lacked jurisdiction over the dispute.

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IHR headnote

Presented at 5 Internationales Handelsrecht (3/2005) 115

"In case of an action for damages by an authorized dealer against his supplier due to non-performance of the framework distribution contract (non-delivery of goods) the place of performance for the determination of international jurisdiction (art. 5(1) of the European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters) is to be ascertained on the basis of the CISG."

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Case abstract

ITALY Corte Suprema di Cassazione 20 September 2004

Case law on UNCITRAL texts (CLOUT) abstract no. 650

Produced with permission of UNCITRAL

Abstract prepared by Maria Chiara Malaguti, National Correspondent, and Davide Marcianó

Following a distributorship agreement between an Italian distributor and a German manufacturer, the distributor would purchase and distribute in Italy the products of the manufacturer over a period of three years. The manufacturer initiated performance of its obligations, however it refused to recognise the distributor the contractual right to act as a sole distributor. In a short time, the manufacturer refused any further performance. The distributor brought action for breach of contract before an Italian court of First Instance. The manufacturer objected to the jurisdiction of the Italian Court and brought the case before Italy's Supreme Court.

The Supreme Court concluded for the lack of jurisdiction of the Italian judge and in favour of the jurisdiction of the German court. The distributorship agreement was considered a framework agreement, whose essence was the obligation of the parties to order and deliver a certain quantity of specific goods over a certain period of time, executed through separate "deeds of sale".

Therefore, the claim of the distributor against the manufacturer was a claim for breach of individual sale contracts. The Supreme Court thus made straightforward reference to the CISG in order to determine the place of performance of the obligation. Since, according to art. 5(1) of the 1968 Brussels Jurisdiction and Enforcement Convention, applicable to the case, the place of performance is the place where the manufacturer has to deliver the goods, the Court applied art. 31 CISG. Germany was thus considered the place of delivery and the lack of jurisdiction of the Italian Court over the case was declared.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 4 [Also cited: Articles 7(2) ; 31 ]

Classification of issues using UNCITRAL classification code numbers:

4A ; 4B [Scope of Convention: sale of goods agreement vs. distributorship agreement]

Descriptors: Distributorship agreements ; 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=1037&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (Italian): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1015.pdf> [dated 1 July 2004]; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1037&step=FullText>

Translation (German): 5 Internationales Handelsrecht (3/2005) 115-117 [dated 1 July 2004]

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Corte Suprema di Cassazione [Italian Supreme Court], Plenary Session
Kling & Freitag GmbH v. Reference Laboratory S.r.l.

Date decision handed down: 1 July 2004
Date decision deposited: 20 September 2004

Translation [*] by Danielle Ferretti [**]

Translation edited by Michele Zamboni [***]

ORDER ON A JURISDICTIONAL OBJECTION

Factual background

Claimant Reference Laboratory S.r.l. [Distributor], with registered office in Italy, filed a lawsuit before the Tribunal of Ancona [Circuit Court of First Instance] against Respondent Kling & Freitag GmbH [Supplier], a company with its registered office in Germany, claiming that:

a) After negotiations conducted with International Consulting & Marketing GmbH, [not a party to this proceedings] empowered by [Supplier] to carry out the bargaining process, [Distributor] entered into a supply agreement with [Supplier], by which [Supplier] granted [Distributor] the exclusive rights to supply on its own behalf and for its own account, [Supplier]'s goods in Italy;

b) The Agreement -- pursuant to which [Distributor] undertook to purchase a minimum amount of goods equal to Deutsche Mark [DM] 250,000 -- was effective from 1 March 2000 to 28 February 2003 and renewable upon its expiration;

c) On 17 March 2000, [Distributor] was invited by [Supplier] to enter into a clarifying agreement, providing for some amendments to the original agreement;

d) [Distributor] did not comply with this request, considering that the contractual relationship was regulated by the foregoing agreement already executed by the parties;

e) Despite having commenced -- albeit partially -- the performance of the agreement, [Supplier] had repeatedly denied [Distributor] the contractual right to act as sole distributor for its goods, thereafter insisting on an amendment to the agreement;

f) All [contractual] relationships with [Supplier] were de facto interrupted as of June 2000.

In light of the above [Distributor], deeming [Supplier] to be in breach of its contractual obligations, submitted a claim to the Italian tribunal, seeking (i) a declaration that the agreement was terminated due to [Supplier]'s breach of contract and (ii) compensation for damages.

[Supplier], appearing before the Italian court, filed a plea to the jurisdiction. During the procedings, the [Supplier] commenced a proceeding to determine jurisdiction (Regolamento preventivo di giurisdizione) challenging the jurisdiction of the Tribunale. [Distributor] replied with a counterclaim. The General Attorney, who received the petition under Article 375 of the Italian Code of Civil Procedure, pleaded for the Italian judge's jurisdiction. [Supplier] filed a defense statement.

Law

As a preliminary remark, it should be noted that, taking into consideration the acknowledgement of receipt of the initial writ (atto di citazione) (21 June 2000), Council Regulation (EC) no. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, that entered into force on 1 March 2002, does not apply to the present proceedings.

[Supplier], in support of the jurisdiction of the German courts (rather than the Italian courts), argues that:

a) Article 5 of the Brussels Convention does not apply since, in light of the statements provided by [Distributor] to uphold its claim, the dispute in the present matter does not concern, rationae materiae, the existence of the agreement between the parties, due to clear absence of a contractual deed, furthermore, a pre-contractual liability is not even at issue in the present dispute, whereas [Distributor] has itself admitted to have interrupted the bargaining process; [Distributor]'s claim, represents a claim for damages, which should have been submitted before the judge of the place where Respondent has its registered office.

b) Even assuming that the parties have entered into an agreement, such an agreement should be characterized as a supply agreement (contratto di somministraxione a fornitura merce) granting exclusive rights to [Distributor]. Consequently,

      (i) Since the parties have failed to choose the applicable law under the Law 18 December 1984 no. 975 [Law implementing the Rome Convention of 1980 in Italy], the agreement would be regulated by "the law of the country where the party who is to effect the performance which is characteristic of the contract that is most closely connected"; in the present matter, this performance has to be determined in the contractual obligations undertaken by [Supplier];

      (ii) Given that supplies are generally carried out through a sales process between supplier and distributor, which is governed either by the general terms and conditions imposed by the seller or by the provisions of the United Nations Convention on Contracts for the International Sale of Goods (Law 11 December 1985 no. 765), in both cases jurisdiction over this dispute by the German court should be declared, as the goods were delivered to the carrier in Germany;

      (iii) Whereas the contractual obligation to grant exclusive rights cannot be determined with regard to a specific place of business, the breach of such contractual obligation, should be consistently regarded as being regulated by Article 2 rather than Article 5 of the Brussels Convention.

[Distributor] challenges [Supplier]'s defense as to the failed execution of the agreement, claiming that the parties have undertaken and agreed upon a supply agreement with exclusive rights; subsequently, considering that the contractual obligation had to be carried out in Italy, which is the place where [Distributor] has its registered office. [Distributor] seeks an order to declare the Italian judge's jurisdiction.

[Reasoning]

The absence of jurisdiction of the Italian court over this dispute must be declared.

[Distributor] has filed a claim seeking for (i) a declaration that the agreement -- purportedly entered into with [Supplier] -- is terminated and (ii) an award of damages.

[Distributor] (at pages 2 and 3 of its writ) alleges to have undertaken, by means of the agreement, the obligation "to purchase a minimum amount of goods equal to Deutsche Mark [DM] 250,000, for the first three years"; [Distributor], moreover, states that the performance of the agreement was commenced, since [Supplier] had delivered goods for an amount of Euro 13,402, as evidenced by invoices no. 206375 and no. 206376 of 24 March 2000.

It is undisputed that, as argued by [Distributor] in its counterclaim, the supply agreement granting exclusive rights to [Distributor], is a framework agreement; it is also undispued that such agreement can be performed in accordance with different contractual schemes, the regulation of which reference must be made in order to determine (i) the jurisdiction, (ii) the national court's competence, and (iii) the substantive provisions to be applied to the contractual relationship at issue.

In the present matter, as made clear by [Distributor]'s statements, the supply of goods by [Supplier] to [Distributor], had to be carried out (and was partially carried out) by means of deeds of sale, with reference to which the related invoices were issued.

The agreement, in the broad context of the contractual framework agreed by the parties, was hence executed through separate deeds of sale, according to which exclusive rights were assigned to [Distributor] to resell goods in Italy.

In such a matter, total breach thereof, it is worthwhile to emphasize the essence of the agreement, which consists of mutual obligations of the parties. Particularly, the obligations, in supplying goods by means of different deeds of sale, and, on the other hand, in purchasing a certain amounts of goods (the latter condition foreseen in order to enable the renewal of the agreement, originally for a three-years term).

The exclusive rights were intended to serve a merely ancillary role and, in any case, they should not be taken into consideration in the present dispute, since, according to [Distributor]'s claim, [Supplier], refusing to perform the agreement, alleging that it was not executed, has breached the contractual obligation to sell the goods agreed to be supplied thereunder.

In light of the forgoing, whereas the matter at issue is contractual in nature, to the extent of the petitum and the causa petendi of the plaintiff's pleading, the jurisdictional issue raised by [Supplier] must be decided in light of Article 5 of the Brussels Convention (ratified and implemented by Law 21 June 1971 no. 804), which states:

"A person domiciled in a Contracting State may be sued in another Contracting State in matters relating to a contract, in the courts for the place of performance of the obligation in question."

In this regard, [Supplier]'s argument, according to which Article 5 of the Brussels Convention does not apply due to the absence of a contractual deed, is overruled. Indeed, in order to rule on jurisdiction, it is not necessary to assess whether or not the contractual deed, which constitutes the grounds on which the claim is submitted, did exist. In fact, notwithstanding that [Supplier], who has been sued either for the enforcement or the termination of an agreement, challenges the existence of the agreement, it is undisputed that the matter is related to a "contractual subject" (European Court of Justice, 4 March 1982, case Effer vs. Kanter).

The assessment of the circumstances which may lead to a favorable rule, is thus related to the merits of the dispute, being the points at issue (i) whether an agreement was effectively executed by the parties; and, eventually, (ii) whether the alleged breach of contract in light of which the termination of the agreement was claimed, occurred; such assessment, however, is not affected by the final judgment as to jurisdiction, considering that such judgment shall acquire the force of res judicata only on jurisdiction, but not on the merits of the dispute.

Having said that, as above remarked, the claim in the present matter relates to the termination of an agreement, in which a (purported) breach of contract in supplying goods, undertaken by [Supplier], a company with its registered office in Germany, in favor of [Distributor], a company with its registered office in Italy, Accordingly, the breach of contract at issue arises out of a sales agreement.

Whereas an international agreement for the sale of goods was entered into by the parties, it is not therefore necessary, in order to determine the place of the performance thereof, to determine the law applicable to the relationship in compliance with the rules of private international law (norme di conflitto) of the relevant judge. It is straightforward, conversely, to make reference to the Vienna Convention on the International Sales of Goods dated 11 April 1980, ratified with Law 11 December 1985 no. 765, whose provisions, setting forth a uniform regulation on sales of goods, applying irrespective of the international private set of rules of the two Contracting States (Arts. 1 and Art. 7(2) of the Vienna Convention) and thereto are not useful to determine the applicable law in this matter (Cass., Plenary Session, no. 14837/2002; Cass., Plenary Session, no. 7503/2003).

Article 31 of the Vienna Convention states:

"If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists:

(a) if the contract of sale involves carriage of the goods -- in handing the goods over to the first carrier for transmission to the buyer;

(b) if, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at the time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place -- in placing the goods at the buyer's disposal at that place;

(c) in other cases -- in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract".

In view of the aforementioned criteria, in the absence of derogation thereon -- which is not present in this matter -- it can be inferred that Germany was the place of the delivery of the goods sold by means of each sale and purchase deed.

According to the criterion set forth in Article 5(1) of the Brussels Convention, Germany was the place of performance of the obligation in dispute (supply of goods); this Court therefore holds that the Italian court lacks jurisdiction over the present case. Equitable reasons exist to set-off trial costs between the parties.

For these reasons:

This Court declares that the Italian court does not have jurisdiction over the present case. The Court also decide to set-off legal costs and expenses. So decided in Rome on 1 July 2004. Deposited on 20 September 2004 in the Chancery Court.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purpose of this translation, Reference Laboratory S.r.l, Claimant before the Court of First Instance (Tribunale) and Defendant before the Supreme Court, is referred to as [Distributor]; and Kling & Freitag GmbH, of Germany, Respondent before the Court of First Instance (Tribunale) and Plaintiff before the Supreme Court, is referred to as [Supplier].

Translator's note on abbreviations: Cass. = Corte di Cassazione [Italian Supreme Court]; C.p.c. = Codice di procedura civil [Italian Civil Procedure Code of 1984]; DM = Deutsche Mark [German former currency]; GmbH = Gesellschaft mit beschränkter Haftung [Limited liability company incorporated under German law] L. = Italian ordinary law, enacted by the Italian Parliament; S.r.l. = Societá a responsabilitá limitata [Limited liability company incorporated under Italian law].

Translator's note on dates of the case: There are two dates to take into consideration: the date on which the decision is rendered (1 July 2004) and the date on which the decision is deposited, meaning before which it cannot have effect (20 September 2004). When citing a case, the latter date is generally used.

** Danielle Ferretti [add bio data].

*** Michele Zamboni, LL.M. Freshfields Bruckhous Deringer, Milan, Specializing in Italian Civil Procedural Law, University of Urbino (Italy).

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Pace Law School Institute of International Commercial Law - Last updated November 9, 2011
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