México 30 August 2005 City of Tijuana, State of Baja California, Sixth Civil Court of First Instance (Banks Hardwoods California LP v. Jorge Angel Kyriakidez Garcia) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050830m1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 1594/2004
CASE HISTORY: 2d instance Superior Court of Baja California (Second Chamber) 2006
SELLER'S COUNTRY: U.S.A. (plaintiff)
BUYER'S COUNTRY: México (defendant)
GOODS INVOLVED: Wood
MEXICO: City of Tijuana, State of Baja California, Sixth Civil Court of First Instance
30 August 2005 (Banks Hardwoods California LP v. Jorge Angel Kyriakidez Garcia)
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/122]
CLOUT abstract no. 1183
Reproduced with permission of UNCITRAL
Abstract prepared by Arpan Kumar Gupta
The seller, a Californian corporation, agreed to deliver wood for sale and distribution within the territory of Mexico to the Mexican buyer. The goods were to be paid within a period of ten days following the date on which the buyer received the goods. The payment was guaranteed by the making of a cheque in an amount sufficient to cover each invoice. Between November 2003 and January 2004, several invoices were raised, which the buyer did not pay. The seller thus filed a commercial suit in Mexico claiming the outstanding amount.
The buyer raised as a defence that since there was no fixed date for payment in the contract, contrary to what required under Article 1080 of the Mexico Federal Civil Code, the seller never made a judicial demand for payment. The Court rejected this argument and stated that the CISG would be applicable in this case as this was a contract of sale between parties having their places of business in two different countries. The Court also considered a Supreme Court decision which had held that treaties held a superior position as compared to the federal law.
The Court then referred to Article 58(1) CISG, which states that if the buyer is not bound to pay the price at any other specific time, the price must be paid when the seller places either the goods or documents controlling their disposition at the buyer’s disposal according to the contract and the CISG. In the case at hand, there was a specific date at which the goods were sent to the buyer by the seller and which had also been admitted by the buyer; thus the buyer was liable to pay the said amount along with interest.Go to Case Table of Contents
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
58A [Time for payment: buyer to pay when goods placed at buyer's disposition]
58A [Time for payment: buyer to pay when goods placed at buyer's disposition]
CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1093&step=Abstract>
Spanish: CISG-Spain and Latin America website <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/rmexi6.htm>
CITATIONS TO TEXT OF DECISION
Original language (Spanish): CISG-Spain and Latin America website <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/smexi6.htm>; see also <http://www.tij.uia.mx/academia/licenciaturas/derecho/dmi/dictamen5.html>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1093&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Alejandro Osuna González, The Sixth Civil Court in Tijuana issues its Second CISG Judgment: Superior Court of Baja California Hands Down its First CISG Decision on Appeal (July 2006)Go to Case Table of Contents
30 August 2005 [No. 1594/2004]
Translation [*] by Alejandro Osuna [**]
HAVING REVIEWED the file to render a final judgment in case number 1594/2002, regarding the REGULAR COMMERCIAL lawsuit filed by Plaintiff B.H.C. [a California Corporation] (hereinafter [Seller]) against Defendant J.A.K.G. [a Mexican individual also mentioned as Mr. K.] (hereinafter [Buyer]),
I. By a memorandum filed on 7 December 2004, [Seller], appeared before this Court by means of its legal representative P.R.H.F., who filed a REGULAR COMMERCIAL lawsuit against [Buyer] praying for the following relief:
2) Payment of interest that has accrued to this date, and in amounts that continue to accrue until the [Buyer] pays the principal amount, that will be determined at the enforcement phase; and
3) The payment of costs and expenses related to this lawsuit that may be rendered in the final judgment that may be rendered.
He stated as the facts of the case, those that are stated in his initial memorandum, and based his claim on the provisions of law he deemed applicable and also made the usual petitions.
Having acknowledged receipt of the lawsuit as submitted, it was ordered that the [Buyer] be served. Once this was complied with, by a memorandum dated 1 February 2005, [Buyer] filed his response in a timely manner, and raised the defenses he deemed adequate. By a procedural order dated 7 March 2005, a forty-day period to submit evidence was declared, at the end of which the parties submitted their evidence, which was admitted. Once the evidence was considered, a period to submit final arguments was declared; only the Claimant [Seller] made use of this period. This period for submission concluded by an order issued on 5 July 2005, and the parties were called for the rendering of the judgment, that is handed down today based on the following:
I. Pursuant to article 1194 of the Commerce Code, he who states has the burden of proof, therefore the Plaintiff [Seller] must prove his cause of action and the Defendant [Buyer] his defenses.
II. Article 1377 of the Code governing the subject matter provides that the disputes amongst parties that do not indicate any special form of resolution, shall be resolved in an ordinary law suit.
III. Generally, the [Seller] states in his initial memorandum the following facts: That ever since the year 2003, Mr. J.A.K.G. [Buyer], as representative or owner of the business known as la Carpintería, has been conducting business with the [Seller], a business that has consisted of the purchase and sale of wood for its sale and distribution within the national territory. For these purposes, [Seller] engaged in a commercial relation with the [Buyer], pursuant to the conditions that are set forth for all of its clients, that were confirmed by usage with the [Buyer]. [Seller] stated that these were the usual terms:
2) All of the requested items had to be paid within a period of ten days following the date [Buyer] received the goods, however, the payment was typically guaranteed by the making of a check in an amount sufficient to cover each invoice;
3) Failure to pay each of the invoices would result in a late interest charge of a monthly 2% (two per cent);
4) The [Buyer] would allow the [Seller] a tolerance of plus/minus 5% (five percent) of the requested wood, and the [Buyer] was obligated to purchase that excess or to accept the lesser amount;
5) The [Seller] would comply with his obligation to deliver the goods by placing them at [Buyer]'s disposal at [Seller]'s warehouse located in San Diego, California, USA, and the expenses related to the shipping of the goods was to be borne by [Buyer];
6) The importation of the goods was to be borne by [Buyer], who had the burden of paying the import duties, as well as to prepare the applications and other required filings;
7) The price to be paid for the goods was the one mentioned in each of the invoices issued by the [Seller].
[Seller] alleged that on 26 November 2003, the [Buyer] requested from the [Seller] the goods that were mentioned in Invoice 2791 of that same date, in the amount of US $1,254.60; Invoice 2794 in the amount of US $1,400.00; and on 22 December 2003, Invoices 2985 and 3002 dated 23 December 2003, the first invoice in the amount of $847.50, and the second one in the amount of US $859.95; on 23 December 2003 Invoice 3001 was issued, in the amount of US $177.65 (ONE HUNDRED AND SEVENTY SEVEN DOLLARS 00/100 UNITED STATES CURRENCY). On 29 December 2003, a request for goods was made and described in Invoice 3023 of 30 December 2003, in the amount of US $990.25 (NINE HUNDRED AND NINETY DOLLARS 25/100 UNITED STATES CURRENCY), and on 5 January 2004 Invoice 3041 was issued for the amount of US $2,130.00 (TWO THOUSAND ONE HUNDRED AND THIRTY DOLLARS 00/100 UNITED STATES CURRENCY); and on 13 January 2004, Invoice 3116 was made for the amount of US $1,100.95 (ONE THOUSAND ONE HUNDRED DOLLARS 95/100 UNITED STATES CURRENCY); also, on 14 January 2004, the [buyer] made a request for goods that was documented in Invoice 3130, in the amount of US $526.20 (FIVE HUNDRED AND TWENTY SIX DOLLARS 20/100 UNITED STATES CURRENCY), and after the [Buyer] received the goods as mentioned, and after the period to pay elapsed, the [Buyer], without any justification, refrained from making payment on any of the described invoices, and not withstanding the requests that were made to recover the amount owed, it was necessary to file this lawsuit in the proposed manner.
IV. The documents justifying the cause of action are within those contemplated in Articles 371, 372 and 373 of the Commerce Code, since these are invoices with which the [Buyer] purchased the wood. These were recognized by the [Buyer] in his response to the facts number 5, 6, 7, 8, 9, 10, 11 and 12 of the lawsuit filed against him, when he acknowledged that he received the goods described in the invoices, on the said dates and for the amounts that were demanded by the [Seller] which in sum are worth US $9,287.10. Because these documents were not objected, they are given full evidentiary value as provided for under Article 1296 of the Commerce Code, and also because the [Buyer] as mentioned before, acknowledged that. on the dates mentioned in the invoices justifying the cause of action, he received the goods described therein, and for the price that is claimed. The acknowledgments were perfected by means of the evidence consisting of the recognition of documents and signature made by the [Buyer] at the hearing that took place on 19 May 2005, where he acknowledged both the signature and contents of the invoices. Therefore, as provided under Article 1235 of the Commerce Code, the admission made by the [Buyer] in his response to the lawsuit is given full evidentiary value.
VI. In his response, the [Buyer] raised the following defenses:
LACK OF AUTHORITY TO REPRESENT, which was resolved by an interlocutory judgment dated 24 February 2005;
A defense based on the issue that: THE [SELLER] NEVER MADE A JUDICIAL DEMAND FOR PAYMENT, because there was never a fixed date of make payment as provided for under Article 1080 of the Federal Civil Code and the corresponding local provision, which apply subsidiary to the Commerce Code. This defense was found to be baseless, since the case involves the sale of goods (wood) between the [Seller] and [Buyer] who have their places of business in different countries; therefore, they are subject to the United Nations Convention on Contracts for the International Sale of Goods, which provides in Article 58(1) the following:
Therefore, the Court considers this provision; since it was proven that there is a precise date on which the goods were placed at [Buyer]'s disposals, which is precisely the date that is mentioned in the lawsuit. As acknowledged by the [Buyer], he received the wood sold by the [Seller] on the dates mentioned therein, an admission that has been analyzed under the terms of Article 1235 of the Commerce Code. The Court also notes that the [Buyer]'s evidence did not show that he was not bound to pay for the goods within the ten days following receipt of the goods. And with regard to the evidence consisting of the acknowledgment of facts and witness testimony, these did not serve his intention, and even desisted from the testimonial evidence at the hearing that took place on 25 May 2005.
The following Supreme Court decision serves as the basis for our findings:
"Legal doctrine has consistently asked the question with regard to the legal hierarchy of legal rules in our legal system. There is unanimity with regards to the issue that the Federal Constitution is the fundamental law and that even though the expression '... shall be the Supreme Law of the Union ...' seems to indicate that not only our Magna Charta is supreme, the objection is overcome by the Fact that the laws must emanate from the Constitution and must be approved by an existing body, such as the Congress of the Union, and that treaties must be in accordance with our Fundamental Law, which clearly indicates that only the Constitution is the Supreme Law. The problem with regards to the hierarchy of the rest of the legal system has found, both in case law and in doctrine, different solutions, amongst those: supremacy of federal law before local law, and the same hierarchy, with regards to "constitutional laws", and the other that says that supreme law will be deemed as such if deemed constitutional. Notwithstanding, this Supreme Court of Justice considers international treaties to be on a second plane immediately following the Fundamental Law, but above federal and local law. This interpretation of article 133 derived from the Fact that these international commitments are assumed by the Mexican State as a whole and that they bind all levels of authority before the international community; this explains why the drafters of the Constitution gave the president of the Republic authority to make treaties as head of State, and also why the Senate intervenes as a representative of the will of the federal entities and, with their ratification, they bind their authorities. Another important aspect to consider this hierarchy of treaties, is that there are no boundaries between the Federal and State Government's, that is, that the authority to legislate in Federal or State matters is not taken into account when a treaty is made, but rather with the authority vested under article 133, the President of the Republic and the Senate may bind the Mexican State in any subject matter, even if these matters fall within the scope of the State-s authority to legislate. Consequently, this interpretation of Article 133 leads to consider that federal and local law are in a third tier but at the same level, as provided for under Article 124 of the Fundamental Law, which reads 'The authority that is not expressly reserved by this Constitution to the Federal Government, are understood to be reserved to the States.' It is worth noting that this Maximum Tribunal had previously adopted a different opinion in thesis number P.C/92, published in the Gazette of the Judicial Weekly, Number 60, December 1992, at page 27, under the heading 'FEDERAL LAWS AND INTERNATIONAL TREATIES. THEY HAVE THE SAME HIERARCHY,' however this Supreme Court acting in full session considers that is time to abandon said criteria and that we assume the view that treaties have a superior position vis-à-vis federal law."
The remaining defenses were that the checks that were submitted by the [Seller] with his lawsuit do not satisfy the requirements provided for under Article 196, in relation to Articles 142, 143, 144, 148, 149 of the Negotiable Instruments and Credit Transactions Law, a defense that is deemed unfounded, because the documents that gave birth to the cause of action were the invoices that the [Seller] included with the lawsuit, and not the checks that are described by the [Buyer], since said checks, as acknowledged by the [Buyer] when he responded to the allegations in the lawsuit, were issued to guaranty the debt assumed with the [Seller]; therefore, it is irrelevant to this case that the checks did not satisfy the requirement provided for under Article 148 of the Negotiable Instruments and Credit Transactions Law that governs checks, which is related to Article 196 of the same statute.
For the foregoing reasons it is decided that the [Seller] proved his action and that the [Buyer] failed to prove his defenses, therefore the latter shall be ordered to pay the principal amount, as well as the payment of court costs since the [Buyer] raised unfounded defenses pursuant to Article 1084 fraction V of the Commerce Code, which shall be determined at the judgment enforcement phase. Additionally, the [Buyer] must pay the statutory interest that has accrued from the date he became delinquent until the date payment is made in full of the debt, since the [Seller] did not prove that a 2% monthly interest had been agreed to. Based on the foregoing and on Articles 1321, 1322, 1324 and 1325 of the Commerce Code, it is:
FIRST. The regular commercial lawsuit has been properly filed, and the [Seller] proved the facts supporting his action, but the [Buyer] failed to prove the defenses he raised.
SECOND. Consequently, the [Seller] is awarded US $9,287.10 (NINE THOUSAND TWO HUNDRED AND EIGHTY SEVEN DOLLARS 10/100 CURRENCY OF THE UNITED STATES OF AMERICA), as the principle amount, or its equivalent in national currency at the moment payment is effected, plus legal interests, expenses and costs that are legally justified.
THIRD. The [Buyer] is given a period of five days to voluntarily comply with the judgment, as of the day alter this judgment is declared final, and if said payment is not made, it is ordered that property be attached to guaranty the payment of said debt.
FOURTH. BE IT PERSONALLY NOTIFIED.
It was so decided and signed by the Sixth Civil Judge ADRIAN H. MURILLO GONZALEZ, before his Court Secretary, COLUMBA L. AMADOR GUILLEN, who certifies.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the United States is referred to as [Seller] and Defendant of Mexico is referred to as [Buyer].
** Alejandro Osuna Gonzalez practices law in the City of Tijuana, Baja California with the law firm of Osuna y Rivero, S.C., advising clients on matters of international commercial law, arbitration, foreign investments and intellectual property. He has taught at the Tijuana Campus of the Universidad Iberoamericana, and has been a Visiting Professor at the University of Puerto Rico. Architect of the CISG-Mexico website <http://www.tij.uia.mx/academia/licenciaturas/derecho/dmi>, he has authored many articles and commentaries on International Commercial Law, and in 2004 published a case book in Spanish on the CISG. His e-mail address is <firstname.lastname@example.org>Go to Case Table of Contents