Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography
Search the entire CISG Database (case data + other data)

CISG CASE PRESENTATION

France 4 November 2004 Appellate Court Paris (Kiwis case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/041104f1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20041104 (4 November 2004)

JURISDICTION: France

TRIBUNAL: Cour d'appel [Appellate Court] de Paris

JUDGE(S): Périé (president), Matet (conseiller), Hfascher (conseiller qui en on délibéré), Ferrie (greffier)

CASE NUMBER/DOCKET NUMBER: 2003/21489

CASE NAME: Société F... Trading Co v. Société L..., S.A. Comte Bernard C...., La compagnie française pour le commerce extérieur, Société British Bank of the M... D...

CASE HISTORY:1st instance Tribunal de Commerce de Paris (1994/83479) 19 March 1999 [affirmed]

SELLER'S COUNTRY: France (plaintiff)

BUYER'S COUNTRY: United Arab Emirates (defendant)

GOODS INVOLVED: Kiwis


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 38 [Also cited: Article 53 ]

Classification of issues using UNCITRAL classification code numbers:

38A [Buyer's obligation to examine goods: time for examining goods]

Descriptors: Examining goods

Go to Case Table of Contents

Editorial remarks

Go to Case Table of Contents

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 (French): CISG-France website <http://witz.jura.uni-sb.de/CISG/decisions/041104v.htm>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

Go to Case Table of Contents

Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeal of Paris

Company F. Trading Co. v. Company L. S.A., Comte Bernard C., La
Compagnie française pour le commerce extérieur [COFACE],
Company British Bank of the M.E.

4 November 2004

Translation [*] by Andrea Vincze [**]

[...]

JUDGMENT

"F." Trading, hereinafter referred to as "[Buyer]", a company subject to the laws of the United Arab Emirates, appealed on 22 September 1999 the judgment of the Commercial Court of Paris made on 19 March 1999, which, concerning the purchase of kiwis:

   -    Ordered [Buyer] to pay to "S.", hereinafter referred to as [Seller], a company subject to French law, the sum of US $54,516, as well as 15,000 French francs pursuant to Art. 700 of the New Code of Civil Procedure;
 
   -    Ordered COFACE, herinafter referred to as [Seller's insurer], to pay to [Seller] the compensation to which it is entitled based on a failure by [Buyer] to obtain a first order bank guarantee in favor of [Seller] concerning the latter amount; and
 
   -    Ordered British Bank of the M.E. of Dubai to pay [Seller] a penalty of 30,000 French francs and 10,000 French francs for unjustified refusal to perform, as well as 10,000 French francs to the French Treasury; all the latter to be enforced by provisional measures.

Requesting reversal of the latter decision, [Buyer] states that there is no contractual relationship between itself and [Seller] which has acted only as agent of Company "C.". [Buyer] therefore requests the court to order Company "C." to pay to [Buyer], after offsetting against previous transactions, US $45,479.81 due to lack of conformity of the goods delivered.

[Buyer] further requests the Court to order Company "C." to bear the costs of the first instance proceedings and the appeal. [Buyer] did not submit any arguments to the Court concerning its own viewpoints.

Company "L.", previously called "S.", hereinafter referred to [Seller's successor], requests confirmation of the judgment appealed. It states that there is a direct contractual relationship between [Seller's successor] and [Buyer], and that Company "C." merely acted as a broker bringing the parties together. [Seller's successor] stated that [Buyer] cannot, therefore, claim any compensation for an alleged debt raised against Company "C., or the debt arising out of the deliveries in dispute. [Seller's successor] adds that [Seller's insurer] must perform its obligation to provide coverage under the insurance policy taken out by it; and concludes that the court must find that the [Buyer]. the [Seller's insurer] and "C." share joint and several liability, concerning all costs as well, and that [Seller's successor] must be paid a sum of EUR 1,000 pursuant to Art. 700 of the New Code of Civil Procedure.

[Seller's insurer] relies on the principal appeal by [Buyer] but requests reversal of the judgment of the Commercial Court concerning the relationship between it and [Seller]. [Seller's insurer] states that, according to the terms and conditions, compensation is deferred until the dispute is settled by an arbitral or judicial decision, and the latter is declared enforceable in the debtor's country, therefore [Seller]'s insurer wishes to defer compensation until the insured arranged for enforceability of the decision condemning [Buyer] in the United Arab Emirates. Alternatively, [Seller's insurer] requests the Court to stay the proceedings until the appeal of the commercial ruling against [Seller] and [Buyer] is finalized by a decision in the United Arab Emirates. In the alternative, [Seller's insurer] states that the compensation payable to [Seller] amounts only to the EUR 39,100 if the insurance policy is resorted to. [Seller's insurer] finally requests the Court to find that [Seller] is liable, that it must pay all costs of the first instance proceedings and the appeal, and that [Seller] must pay [Seller's insurer] a sum of EUR 4,000 pursuant to Art. 700 of the New Code of Civil Procedure.

Company "Comte Bernard C." ("C.") requests confirmation of the judgment of the Commercial Court dated 19 March 1999. It states that it only acted as agent between [Buyer] and [Seller] which had already sold kiwis through Comte Bernard. Therefore, without a direct contractual relationship with [Buyer], it cannot be a matter of an ordinary set-off between the debt concerning the contract of March 1992 concluded by [Buyer] and [Seller], and other debts that Company "C." may eventually have towards [Buyer]. Company "C." requests the Court to hold that [Buyer] must pay the costs of the first instance proceedings and the appeal, and must pay Company "C." a sum of EUR 10,000 pursuant to Art. 700 of the New Code of Civil Procedure.

British Bank of the M.E. which opened the letter of credit and has its principal place of business in Dubai had been summoned before the court of first instance and the court of appeal, under Art. 683 et seq. and Art. 908 of the New Code of Civil Procedure on 4 February and 23 April 2003, but it did not appear before the court.

The parties were finally invited to the "pre-trial hearing" on 4 September 2000 to make a decision, if necessary, concerning applicability of the Hague Convention of 15 June 1955 on the Law Applicable to International Sale of Goods and the Hague Convention of 14 March 1978 on the Law Applicable to Agency, as well as the Vienna Convention of 11 April 1980 on Contracts for the International Sale of Goods.

After being successfully removed from jurisdiction of the Court on 9 March 2001 and 9 September 2003, the case was once again re-filed on 17 December 2003 and finally tried on 7 October 2004.

THE COURT MAKES THE FOLLOWING JUDGMENT

The Court considers the submission by [Buyer] that the real seller of the kiwis is Company "C." rather than [Seller], which it describes as a brokerage company, as well as the seller and debtor of [Seller], claiming to be the seller; which is shown in the fax sent on 17 March 1992 by Company "C." to [Buyer] where it is suggested that [Seller], which had already sold kiwis through Company "C." in December 1991, can send another certain quantity of kiwis which [Seller] performed following acceptance by [Buyer] on 18 March 1992, and, concerning the deliveries that took place on 20 and 22 April 1992 and were contracted for "C and F, Dubai", two invoices were issued on 24 and 30 March 1992 to [Buyer] for the payment of US $27,730 and US $26,786, respectively.

The judgment of the Commercial Court that [Buyer] indeed acted as purchaser of the kiwis from [Seller], today [Seller's successor], must be confirmed, and the request by [Buyer] to establish liability of Company "C." is therefore rejected.

The Court considered that, in its arguments above, [Buyer] designates the Vienna Convention of 11 April 1980 on Contracts for the International Sale of Goods as the law applicable to the contract whose existence is not contested by [Buyer], and this choice of law was not contested by the other parties either, even though [Buyer] took the risk to consider the agent as the debtor.

The Court considered that Art. 38 of the Vienna Convention provides that the buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances; that phytosanitary certifications of the two deliveries show, as noted by the judges ["juges consulaires"], that the sanitary condition of the kiwis was satisfactory; that the expert report prepared the following May by SGS Dubai Marine, on behalf of [Seller], the following May stated that the kiwis perished during transportation because the temperature was inappropriate during transportation, not "understanding why the recipient failed to demand the expert report concerning the goods for ten days after its notice to the sender, which contributed to a more serious deterioration of the kiwis"; and that [Buyer], which did not bring any proof that it performed the examination of the perishable goods, can no longer rely on lack of conformity of the goods.

The Court considered that, pursuant to Art. 53 of the Vienna Convention of 11 April 1980, [Buyer] had the duty to pay the price and take delivery of the goods under the terms of the contract and the Convention, therefore, the judgment of the Commercial Court, that ordered [Buyer] to pay to [Seller] the sum of US $54,516, or its equivalent in EUR on the date of payment, representing the two missing payments, must be confirmed.

The Court considered that [Seller] took out an insurance policy from [Seller's insurer] on 20 September 1989 in order to guarantee reimbursement for losses concerning the exports, that [Seller] may suffer in case of a credit risk, and under which [Seller] requests the Court to find that [Seller's insurer] must pay to [Seller] the unpaid monies owed by [Buyer].

Under Art. 15(3) of the general conditions of the insurance policy, "if there is a dispute concerning the amount, validity of the rights of the insured or the debts owed to the insured, compensation is deferred until such dispute is settled by an arbitral or judicial decision, that was declared enforceable in the debtor's country", a condition that [Seller] finds almost impossible because introduction and litigation of an exequatur in the United Arab Emirates poses significant difficulties from certain procedural and substantive aspects, in particular, because of the extreme costs that would burden [Seller] in such proceedings.

The Court considered that an insurer cannot be ordered to pay compensation before the conditions of the guarantee occur, that the possibility of paying compensation before the dispute is settled with the insured furnishing a bank guarantee specified in Art. 15 of the general conditions is within the sole discretion of the [Seller's insurer]; and that the judgment must be reversed concerning the obligation of [Seller's insurer] to pay [Seller] a compensation to which it is entitled based on a failure by [Buyer] to obtain a first order bank guarantee in favor of [Seller] concerning the [respective] amount.

The Court considered that [Seller] cannot seriously maintain that an exequatur of the present decision would be too difficult to obtain in the United Arab Emirates and it did not look for an applicable convention on judicial assistance, therefore, its request concerning the guarantee by [Seller's insurer] is rejected at this stage.

The Court considered that equity does not mandate an award under Art. 700 of the New Code of Civil Procedure concerning Company "C.", [Buyer] and [Seller's insurer]; and that [Buyer] must bear two-thirds of the appeal costs, and [Seller's successor] must bear one third of the appeal costs.

FOR THE ABOVE REASONS:

This Court confirms the judgment of the Commercial Court of Paris dated 19 March 1999, except that it orders [Seller's insurer] to pay [Seller], i.e., [Seller's successor], the compensation to which it is entitled based on a failure by [Buyer] to obtain a first order bank guarantee in favor of [Seller] concerning the [respective] amount. In doing so, the Court rejects the request by [Seller's successor] concerning the guarantee by [Seller's insurer], and rejects all other requests by the parties.

The Court orders [Buyer] to bear two-thirds of the costs of the appeal, [Seller's successor] to bear one-third of the costs of the appeal, and awards solicitors SCP B., C., C. and SCP F., C., B. as well as SCP R. and SCP M.G. to enforce their right under Art. 699 of the New Code of Civil Procedure subject to the limits stated therein.


FOOTNOTES

* All translations should be cross-checked against the original text. For purposes of this translation, Defendant "F." Trading of the United Arab Emirates is referred to as [Buyer] and Company "S." of France is referred to as [Seller]. Company "L." is referred to as [Seller's successor], and La Compagnie française pour le commerce extérieur or "COFACE" is referred to as [Seller's insurer].

** 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, and her LL.M. at Pace Law School. She is working on her Ph.D. on ICSID arbitration, and is researching international commercial law and ADR.

Go to Case Table of Contents
Pace Law School Institute of International Commercial Law - Last updated June 19, 2009
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography