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CISG CASE PRESENTATION

Switzerland 22 December 2004 Commercial Court Bern (Watches case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/041222s1.html]

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

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Case identification

DATE OF DECISION: 20041222 (22 December 2004)

JURISDICTION: Switzerland

TRIBUNAL: Handelsgericht [Commercial Court] Bern

JUDGE(S): Steiner (Vorsitz), Hartmann, Fankhauser

CASE NUMBER/DOCKET NUMBER: HG 02 8934/STH/STC

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Switzerland (plaintiff)

BUYERS' COUNTRY: Mexico (defendents)

GOODS INVOLVED: Watches


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 28 ; 53 ; 62 ; 78 [Also cited: Articles 58 ; 59 ]

Classification of issues using UNCITRAL classification code numbers:

28A [Restrictions on right to require specific performance: domestic rules of forum (no restriction present)];

53A [Buyer's obligation to pay the price];

62A [Seller's right to compel performance: payment of price];

78A ; 78B [Interest on delay in receiving price or any other sum in arrears; Rate of interest]

Descriptors: Specific performance ; Price ; Interest

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Editorial remarks

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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 (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1192.pdf> [cited as 1 December 2004]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Commercial Court (Handelsgericht) Bern

22 December 2004 [HG 02 8934/STH/STC]

Translation [*] by Jennifer Bryant [**]

Edited by Mariel Dimsey [***]

FACTS AND GROUNDS

I.   1. By statement of claim dated 29 April 2002, the Plaintiff [Seller] claimed:

"Defendants should pay to Plaintiff Swiss francs [CHF] 239,987.95 as well as interest in the amount of 10% as of 25 January 200, with costs and damages to follow the event."

      2. By order of 1 May 2002, the briefing judge set the Defendants [Buyer No. 1 and Buyer No. 2] a period of time of three weeks from the service of the claim to file a response and for the advance payment of court fees (p. 14). The order was able to be served on [Buyer No. 2] on 5 August 2002 by way of judicial assistance in accordance with the prerequisites of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (SR 0.274.131; Hague Convention) (p. 80). However, as to [Buyer No. 1], the service failed (p. 46).

      3. By order of 28 October 2002, the briefing judge declared that a response had not been filed, and the advance payment had not been made within the set period of time. A further demand was made to the [Buyers] to make the payment within fourteen days from the service of the order. In the order, the main proceeding was fixed for 7 May 2003 (p. 82). Again, the order could not be served on [Buyer No. 1] (p. 13). It was, however, duly delivered to [Buyer No. 2] on 8 January 2003 (p. 117).

      4. At the request of the [Seller], the main proceeding of 7 May 2003 was postponed by order of 7 May 2003 (entry of 6 May 2003; p. 122). Furthermore, the [Seller] was set a period of three weeks to comment on the service of process to [Buyer No. 1] (p. 124). On 30 May 2003, the [Seller] submitted a notary's deed which proved the correctness of the service address.

      5. By order of 5 June 2003, a demand was again made to [Buyer No. 1] to file a response and to make an advance payment of CHF 10,000 within three weeks of service (p. 130). The service of this order also failed. On 8 January 2004, the briefing judge set the [Seller] a period of time of three weeks to comment on the further procedure (p. 142). The [Seller] again confirmed the correctness of the service address mentioned by the [Seller] (p. 148).

      6. By order of 24 May 2004, the briefing judge fixed the date for the main proceeding. Furthermore, the [Buyers] were declared to be in default (p. 152). The writ of summons could be duly served on [Buyer No. 2] (p. 175). However, it could not be served on [Buyer No. 1] (p. 184). Consequently, the writ of summons was published in the Gazette of the Canton of Bern (p. 188).

      7. In regard to the main proceeding, the [Seller] amended its claim as to the interest, claiming 6 % (p. 175). Despite the writ of summons (p. 175), [Buyer No. 2] did not appear at the main proceeding. The [Buyers] were declared to be in default in all respects. (p. 190).

II.  1.  a) The prerequisites of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Convention) as to service of process are fulfilled in regard to [Buyer No. 2] (cf. p. 80, 117, and 175). The point of time of the service, without a doubt, would have enabled [Buyer No. 1] to provide an effective line of defense in the sense of art. 15 of the Hague Convention. The writ of summons was also served in accordance with the prerequisites of art. 100 et seq. ZPO [Swiss Code of Civil Procedure]. Therefore, the Commercial Court can act on the assumption that the writ of summons was duly served. Since [Buyer No. 2] had neither filed a response, nor made the advance payment and, additionally, had not appeared in the main proceeding, [Buyer No. 2] was declared to be in default as to these matters (p. 190).

            b) The question of which prerequisites must be fulfilled for the foreign service of documents, which has not actually taken place, to be deemed served, and the consequences of such fictitious service must be answered according to the law of the seat of the court (A. Buehler, Commentary on the Code of Civil Procedure of the Canton of Aargau, 2nd ed., Aarau 1998, para. 8 on art. 93). As a consequence of the parties' obligation to act in good faith, from the beginning of the procedural relationship, the parties to the proceedings are obliged to ensure their ability to be served with writs of summons or important documents and decisions concerning the proceedings (ZR 1999 no. 43 p. 195; BGE [decisions of the Swiss Federal Supreme Court] 116 la 90 E, 2a). However, the duty of receipt still presupposes knowledge of the proceedings. The addressee must expect the service of an official document with a certain probability (BGE 116 la 90 E; Buehler, l.c. para 8 on art. 91). If the first service of official documents of the court fails, the lack of service of the documents cannot be equated with deemed service, except when the addressee makes potential actual acceptance impossible by refusing to accept the documents (Buehler, l.c. para. 10 on art. 92) or when the serving authority can reasonably rely on the presumption that the addressee has already gained knowledge of the pending proceedings and, thus, of its status as a party to these proceedings in another way.

In the instant case, the service of the documents by the competent Mexican authority continued to fail because the each time, the potential recipients declined acceptance. The potential recipients explained that [Buyer No. 1] had changed its seat of business two years ago (p. 46), or that [Buyer No. 1] did not have its seat at the address given and that the actual seat was not known (p. 113; 184). The declarative notarial deed submitted by the [Seller] evidences the statement of the employee of [Buyer No. 2], who stated that the business premises of both [Buyer No. 1] and [Buyer No. 2], were located at the address provided. Therefore, it can be held that the attempts at service by the competent Mexican authorities took place at the correct address of [Buyer No. 1], who frustrated the service of the documents on purpose and contrary to good faith. Thus, service is deemed to have taken place.

Moreover, it can reasonably be assumed that [Buyer No. 1] knew about the claim against itself and [Buyer No. 2]. Both firms are mentioned in the records of the orders which were duly served on [Buyer No. 2]. Presumably, the sole administrative director of [Buyer No. 2], S. W. (administrador unico; KB 4), knew about the pending proceedings and about the documents served. Since S. W. is also the sole administrative director of [Buyer No. 1] (administrador unico; KB 3), it can reasonably be assumed that [Buyer No. 1] knew about the pending proceedings and the procedural issues related to these proceedings, as well. This knowledge is sufficient to impose the duty on [Buyer No. 1] to accept the service of documents. However, [Buyer No. 1] breached this duty by declining acceptance. As a consequence, service of the legal documents is deemed to have taken place.

Since [Buyer No. 1] did not file a response, nor did it make the advance payment or appear in the main proceedings, it was also declared to be in default in regard to these issues (p. 190).

       2. Due to the fact that the [Buyers] were in default, the Commercial Court can reasonably assume a version of the facts of the case that, if fully established, would not be in favor of the [Buyers] (Art. 280 ZPO). The Court's judgment is therefore based solely on the [Seller]'s claim (Art. 280 ZPO). So far, [Buyers No. 1 and No. 2] have not made any submissions which could be considered (Art. 283 last sentence ZPO). The objections to the avoidance, which can be derived from the documents of correspondence handed in by the [Seller], have not been asserted during the proceedings. Moreover, they do not concern the instant case (cf. later IV B. 2). The degree of consideration to be attributed to the [Seller]'s timely claim is subject to the Commercial Court's discretion (Art. 283a 1st sentence ZPO).

In the instant case, there are no doubts as to the correctness of the [Seller]'s statements which would require an evidentiary procedure (Art. 283a 2nd sentence ZPO). Furthermore, [Buyers No. 1 and No. 2] have not made any contradictory statements. Consequently, the [Seller's] credibility as to its allegations is sufficient for the Court (Leuch / Marbach / Kellerhals / Sterchi, [Commentary on] The Code of Civil Procedure of the Canton of Berne, 5th ed., Berne 2000, para. 1 on art. 283a ZPO). As a consequence of the circumstances of the case at hand, the Court considered an evidentiary procedure unnecessary (p. 190).

III. Based on the documents at hand, the following facts of the case are considered to be established:

       1. a) The [Seller] is a dependent company of the S. Group and has its seat of business in L. It possessed its own distribution company for its watches in Mexico and therefore worked with local distribution partners.

            b) [Buyers No. 1 and No. 2] are companies which share the same purpose as determined by the statutes of each company and both have Mr. S. W. as their respective sole administrative director (KB [annex to the claim] 3 and 4). They both have their seats of business in Mexico. Among other things, both companies deal with the import and the distribution of watches in Mexico.

       2. On 30 March 1994 and on 12 May 1994, the [Seller] and [Buyer No. 1], represented by Mr. D. W., signed a sole distributorship agreement (KB 1). This agreement granted [Buyer No. 1] an exclusive distributorship for RADO watches throughout the whole of Mexico (KB 1, Art. II). The contract includes, furthermore, a choice of forum as well as a choice of law clause (Art. XXIV). After the agreement ended in December 2000, five invoices resulting from several orders as well as a debit note amounting in total to CHF 248,076.15 had not been paid (KB 9 - 14). This amount is calculated as follows:

Bill No. 1012258 of 08/22/2000 (KB 9)    CHF  16,862.70
Bill No. 1507130 of 09/19/2000 (KB 10) CHF    1,884.90
Bill No. 1012599 of 09/21/2000 (KB 11) CHF  88,377.70
Bill No. 1012747 of 09/29/2000 (KB 12) CHF  63,849.00
Debit note 57640 of 10/20/2000 (KB 13) CHF         68.00
Bill No. 1013410 of 11/21/2000 (KB 14)    CHF  77,033.85
TOTAL CHF 248,076.15

After the deduction of a credit of 31 October 2000 in the amount of CHF 8,088.20 (KB 15), the amount of CHF 239,987.95 remained unpaid. A collection notice as to the outstanding payments was sent to [Buyer No. 2] on 23 January 2001 (KB 16). On 22 May 2001, S. W., representing [Buyer No. 2], commented on the unpaid bills, referring to the previous correspondence of the parties. He denied neither the existence nor the amount of the [Seller]'s claims regarding the bills. Furthermore, he declared that he was aware of the deferred charges of [Buyer No. 2] in favor of the [Seller] (KB 21).

IV. A.  1. Since the [Seller] has its seat of business in Switzerland, and the [Buyers] both have their seats of business in Mexico, an international relationship within the meaning of Art. 1 IPRG [Swiss Code of Conflict of Laws] can be assumed in the instant case.

             2. With regard to [Buyer No. 1], the jurisdiction of the Canton of Bern is derived from the choice of forum clause contained in the distributorship agreement of 30 March 1994 (KB 1, Art. XXIV). The choice of forum clause calls for exclusive jurisdiction at the seat of business of the [Seller], Lengnau, for all claims arising from the contract. Thereby, the choice of forum clause is in written form. It refers to all future disputes arising from a certain legal relationship. Therefore, the prerequisites of Art. 17 LugUe [Lugano Convention] are met. Consequently, the jurisdiction of the courts of Bern is given with respect to the claim against [Buyer No. 1].

The [Seller] seeks to hold the [Buyers] jointly and severally liable in the present case. Thus, claims are also raised against [Buyer No. 2] as joint debtor. However, it was not a party to the agreement of 30 March 1994 (KB 1). The [Seller] is correct in not arguing that, in accordance with Art. 17 of the Lugano Convention, the Canton of Berne also has jurisdiction with respect to [Buyer No. 2]. Since the state where the [Buyers] have their seats of business is not a member state to the Lugano Convention, a consolidation of claims cannot be based on Art. 6 of the Lugano Convention. The IPRG [Swiss Code of Conflict of Laws], which is applicable instead, however, only provides for a consolidation of claims where those claims arise from intellectual property or from tort law, but not where the claims arise from a contractual relationship as in the instant case (Volken, Commentary on the Swiss Code of Civil Procedure, 2nd ed., Zurich 2004, art. 8 para. 10). As a consequence, [Buyer No. 2] is to be subjected to the ordinary or special jurisdiction. Pursuant to Art. 113 IPRG, the place of jurisdiction is the place of performance if the defendant neither has its seat of business or domicile nor its usual residence in Switzerland, and if the performance of the contract is to take place in Switzerland. In order to determine the place of performance, the lex fori, here, the Swiss Law of Obligations, is to be applied (Keller / Kren Kostkiewicz, Zurich Commentary on the IPRG, 2nd ed., Zurich 2004, art. 113 para. 9). The obligation of [Buyer No. 2] in the present case is the payment of money. Pursuant to Art. 74 subsection 2 no. 1 of the Swiss Law of Obligations, obligations which consist of the payment of money are to be fulfilled at the seat of the creditor, thus the seat of the [Seller] in the Canton of Bern in the present case. Therefore, the Canton of Bern as the place of performance also has jurisdiction with regard to the claim against [Buyer No. 2].

             3. a) The subject-matter jurisdiction of this Court is derived from Art. 5(a) ZPO in connection with Art. 55 GOG [Swiss Code of Court Organization]. The parties to these proceedings are registered in the commercial register. The dispute pertains to the business enterprises of the parties and is of a contractual nature. Similarly, the claim exceeds the minimum value required. The admissibility of the dispute to the appellate court requires further explanation as to the applicable law. In regard to [Buyer No. 1], the admissibility is clearly founded. The contract between the [Seller] and [Buyer No. 1] contains a choice of law clause in favor of Swiss law. As a consequence, an appeal to the Supreme Court is possible (Art. 43 OG [Higher Court]). Since the choice of law does not concern [Buyer No. 2], the law applicable with regard to [Buyer No. 2] is to be determined separately.

                   b) By letter dated 22 May 2001 (KB 21), [Buyer No. 2] notified the [Seller] of its liability as to the claim against [Buyer No. 1]. However, an express agreement between the [Seller] and [Buyer No. 2] about the external assumption of the debts, thereby freeing [Buyer No. 1] from liability, is neither alleged, nor could it be derived from the record. Therefore, an internal assumption of the debts, resulting in joint liability of the [Buyers], is to be assumed. The joint liability concerns the payment for the watches ordered and delivered on the basis of the distributorship contract between the [Seller] and [Buyer No. 1]. This contract must be understood as an exclusive distributorship agreement. In contrast to commission or agency contracts, [Buyer No. 1] acts on its own behalf and own account (KB 1, Art. II). The minimum supply (KB 1, Art. 7 no. 3), the duty to promote the distribution (KB 1, Art. VII), the non-competition clause (KB 1, Art. V), the guarantee to protect the area and the duty to obtain the goods exclusively under the contract (KB 1, Art. 3) are typical of exclusive distributorship agreements (cf. Schluep/Armstutz, Basel Commentary, Law of Obligations I, 3rd ed., Basel 2003, paras. 131 et seq. on the introduction to Arts. 184 et seq.). These agreements are mixed (permanent) contracts containing primary and secondary obligations. Purchases made on the basis of such agreements constitute primary obligations to which sales or work-delivery contract law is applicable (cf. Schluep/Amstutz, l.c., para. 134 on the intro. to Arts. 184 et seq.). In the instant case, the goods sold under the contract were standard products of the [Seller], which allows the assumption of a sales contract. Since both Switzerland and Mexico have ratified the Vienna Convention on the International Sale of Goods (CISG), the CISG is applicable pursuant to Art. 1(1)(a) CISG to the purchases of watches, which is the subject matter of this dispute. Therefore, the claim is also admissible to the appellate court with regard to [Buyer No. 2].

In any case, it must be noted with respect to [Buyer 1] that Swiss law, without excluding international treaties, was agreed upon in the distributorship agreement concluded, with the consequence that the Vienna Convention would also be applicable to this contractual relationship regarding the purchases in question.

                   c) In conclusion, this Court has both territorial and subject-matter jurisdiction to decide the claim.

             4. An attempt to reconcile does not take place pursuant to Art. 145 subs. 1(b) ZPO.

      B.   1. Art. 62 CISG gives the seller the right to require performance by the buyer of all of his obligations. This includes the obligation to pay the contract price pursuant to Art. 53 CISG. The seller's right to require performance is restricted by Art. 28 CISG, pursuant to which a court is not bound to give judgment for specific performance unless it would do so under its own law in respect of similar contracts of sale not governed by the CISG. Art. 148 of the Swiss Law of Obligations provides for the independent right of the seller to require the contract price. In contrast to the Common Law, the seller can claim payment independently from claims for damages. Thus, the restriction under Art. 28 CISG can be disregarded in the case at hand.

Since the [Seller] credibly asserted the existence of its claim in the amount of CHF 239,987.95 (cf. earlier no. III.2), and since the joint liability of the [Buyers] has been determined, the claim in the amount of CHF 239,987.95 is allowed, resulting in joint liability of the [Buyers].

             2. The damages of the [Buyers], which were mentioned by the [Seller] (claim, p. 10), were not claimed by the [Buyers], neither by way of an objection nor of a counterclaim. Nor was any respective amount mentioned. Therefore, they can be disregarded in the instant case.

             3. In the amendment of the claim, the [Seller] also claims interest in the amount of 6 % on CHF 239,987.95 from 25 January 2001. The general obligation to pay interest on monetary debts that are due follows from Art. 78 CISG. If the parties have not agreed on a specific point in time for the performance, the default rule is that performance by the buyer is due when the seller places the goods at the buyer's disposal (Art. 58(1) CISG). According to the contract, all bills were due 60 days from billing (KB 1, Art. XII no. 3). A reminder or notice for payment by the seller is not required pursuant to Art. 59 CISG. The last outstanding invoice is dated 21 November 2000 (KB 14). Therefore, the point in time from which the [Seller] claims interest in regard to the total amount claimed commences after the period of 60 days has expired, and thus, after payment became due. The amount of interest follows from the contractual agreement. According to the contract, the interest owed shall amount to 2 % above the prime bank lending rate for unsecured loans in the Canton of Bern (Art. XII, no. 3). According to the Judge at the Commercial Court, Mr. Hartmann, this amount can never be determined with the transparency required and thus cannot be relied on (p. 190). As a result, the interest rate which the parties have agreed on cannot be applied. Consequently, the contract is to be supplemented according to the parties' will. The parties did not want to agree on a fixed interest rate, but rather opted for a variable reference interest rate for financial investments in Switzerland. It is therefore reasonable to assume that the parties would have agreed on the LIBOR (London Inter Bank Offered Rate) for Swiss francs, had they known of the inapplicability of the reference rate actually agreed on. According to the Judge at the Commercial Court, Mr. Hartmann, the LIBOR was 4 % for the period of time concerned (p. 190). Thus, in accordance with the amended claim of the [Seller], interest in the amount of 6 % is owed on the total sum of CHF 239,987.95 from 25 January 2001.

     IV.  1. The entire costs of these proceedings are allocated to the [Buyers], who were entirely unsuccessful. In addition, they are held to also pay the [Seller]'s costs caused by these proceedings (Art. 57(1) and Art. 58(1) ZPO).

             2. The value of the dispute is CHF 239,987.95. The court fees are determined at CHF 7,000.00 per party pursuant to Art. 20 subs. 1 GebDZiv [Decree on the Costs of Proceedings at Civil Courts], which makes CHF 14,000.00 in total. The [Seller] is, furthermore, awarded compensation in the amount of CHF 16,242.10 as claimed pursuant to Art. 10 subs. 1 DAG [German Code of Extradition].

             3. Even though the [Buyers] were in default, the advance payment by the [Seller] shall be used for the [Seller]'s respective court fees in the amount of CHF 7,000 (cf. art. 57(1) ZPO and the decision of the Appellate Court of 12 September 1997 on this matter). However, the [Seller] has a right of recourse in this amount.

DECISION

1. The [Buyers] are held jointly liable to pay the [Seller] CHF 239,987.95 as well as interest in the amount of 6 % from 25 January 2001.

2. The court fees, consisting of a lump-sum of CHF 7,000.00 per party and in total thus CHF 14,000.00 (including expenses), are allocated to the [Buyers] in joint liability. One half of the total costs is taken from the advance payment made by the [Seller]. The [Seller] has a right of recourse in this amount.

3. The [Buyers] are held jointly liable to compensate the following costs of these proceedings, which the [Seller] has incurred:

a)   Attorneys' fees CHF  15,000.00
b) Expenses by the attorneys CHF         94.90
c) Value-added taxes on a) and b) CHF    1,147.20
Attorneys' fees in total CHF  16,242.10
d) Payback of the advance payment     CHF    7,000.00
TOTAL CHF  23,242.10

4. The judgment is to be disclosed to the parties in writing and rendered to the [Buyers] by way of judicial assistance.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Switzerland is referred to as [Seller] and Defendants of Mexico are referred to as [Buyer No. 1] and [Buyer No. 2]. Amounts in the currency of Switzerland (Swiss francs) are indicated as [CHF].

** Jennifer Bryant, University of Cologne, Faculty of Law since 2003.

*** Mariel Dimsey, LL.M., is a Research Assistant and Teaching Assistant at the University of Basel, Switzerland.

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