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CISG CASE PRESENTATION

France 4 October 2005 Supreme Court (Engine parts case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/051004f1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20051004 (4 October 2005)

JURISDICTION: France

TRIBUNAL: Cour de cassation [Supreme Court]

JUDGE(S): M. Ancel (président); Mme Pascal (conseiller rapporteur); MM. Pluyette, Yueudet, Taÿ, Rivière (conseillers); MM. Trassoudaine, Chauvin, Mmes Trapero, Ingali-Montagnier, Vassalo, Gorce (conseillers référendaires)

CASE NUMBER/DOCKET NUMBER: Arrêt no. 1303 FS-P+B; Pourvoi no. 02-15.981

CASE NAME: Société ISF v. Société Riv. SARL et al.

CASE HISTORY: 1st instance [-]; 2d instance Cour d’appel de Lyon 19 November 2000 [affirmed]

SELLER'S COUNTRY: Italy (defendant)

BUYER'S COUNTRY: France (plaintiff)

GOODS INVOLVED: Engine parts


Case abstract

FRANCE: Cour de cassation 4 October 2005

Case law on UNCITRAL texts [A/CN./SER.C/ABSTRACTS/82],
CLOUT abstract no. 838

Reproduced with permission of UNCITRAL

Abstract prepared by Claude Witz, National Correspondent, and Mathieu Richard

Between 1988 and 1990, the French company R, which subsequently became company E, a retailer, acting through an intermediary, company Rel., put in four orders for clutch shafts from their manufacturer, the Italian company ISF. The third batch was not accompanied by a summary analysis of the metal used, as provided for by the contract, but company R did not express any concern in that regard. In January 1992, the company MB, which had bought some of the shafts from the retailer (company R), pointed out some damage and had an analysis done. The results were inconsistent and it was only at the end of 1992 that the Italian manufacturer (company ISF) was advised of the non-conformity of the metal. Company MB, which thus stood in the relation of sub-purchaser to the Italian manufacturer, lodged an appeal for a technical expert assessment and this was ordered under an interim relief order of 22 April 1994. The Italian manufacturer, which had been issued with a writ dated 31 March 1994 and given notice to attend meetings, did not participate in the technical assessment. In the light of the expert's conclusions, the sub-purchaser (company MB) applied for damages for harm from the retailer (company E) and its insurer, company A, which issued warranty proceedings against the intermediary seller (company Rel.) and the Italian manufacturer.

The Lyon Appeal Court ruled, in a judgement of 16 November 2000, that the expert assessment carried out under the interim relief order of 22 April 1994 was enforceable against the manufacturer (company ISF) and ordered it to indemnify the retailer (company E) and its insurer (company A) for their convictions and to pay damages to the retailer (company E). The manufacturer (company ISF) applied for judicial review.

One of the claims made in the plea was that the Lyon Appeal Court had, in applying CISG article 40, wrongly concluded, merely on the basis of the fact that the original vendor was also the producer or manufacturer, that the vendor should have known about the defect affecting the composition of the metal, without ascertaining what grounds the retailer or the insurer had for maintaining that the manufacturer had or could not fail to have knowledge of the defect. The Court of Cassation dismissed this argument, recalling that the Appeal Court judgement had noted, first, that the Italian manufacturer had not, when supplying the third batch, provided the buyer (company E) with a certificate of analysis of the composition of the metal, as specified in the order; secondly, that some of the steel supplied on that occasion contained too much carbon and did not meet the technical specifications of the order; and, thirdly, that the defect was attributable to a mixture of materials during the casting of the metal. The Court of Cassation held that the Appeal Court had correctly concluded from these facts that the manufacturer, which, as producer, could not be ignorant of the defect but had, on the contrary deliberately concealed it from the buyer by not providing a certificate of analysis relating to the composition of the metal, could not claim that the buyer was not entitled to bring proceedings concerning the non-conformity of the goods. The Court of Cassation thus held that the Appeal Court had legally justified its decision with regard to CISG articles 39 and 40.

The Italian manufacturer had also maintained in its plea that the purchaser of the shafts had omitted to examine the goods, in breach of CISG article 38. The Court of Cassation dismissed this argument, noting that CISG applied to international contracts for the sale of goods and governed only the rights and obligations arising out of such contracts between a vendor and a buyer. The argument, which was based, in the absence of the verification required under CISG article 38 of the composition of the metal, on a breach of warranty by the sub-purchaser, who was not party to the international sales contract, was therefore invalid.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 40 [ Also cited: Articles 35 ; 38 ; 39 ]

Classification of issues using UNCITRAL classification code numbers:

40B [Seller's knowledge of non-conformity (seller fails to disclose known non-conformity): seller loses right to rely on articles 38 and 39]

Descriptors: Lack of conformity know to seller

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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=1324&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (French): CISG-France database <http://witz.jura.uni-sb.de/CISG/decisions/041005v.htm>; Bulletin civil 2005, I, No. 360; Légifrance: <http://www.legifrance.gouv.fr>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1324&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

French: Panorama, Droit uniforme de la vente internationale de marchandises (Dalloz 2007), p. 530, particularly pp. 532 and 539, obs. Claude Witz; Revue trimestrielle de droit civil, 2006, p. 272 et seq., obs. Remy-Corlay; Revue trimestrielle de droit commercial, 2006, p. 250, obs. Delebecque.

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of cassation, First Civil Chamber [1]

ISEF v. E Corp., R Industry Corp., A France Assurances Corp., MB Corp., Rel. Corp.

4 October 2005

Translation by Lorraine de Germiny [2]

  1. Parties
  2. Background
  3. Reasoning of the Court
  4. Holding of the Court

The French Republic in the name of the French people, the Court of Cassation, First Civil Chamber, rendered the following decision.[3]

[...]

I. PARTIES

Appellant: I...S...E...F (ISEF), an Italian corporation, whose head office is in Carnago, Italy, appeals the 16 November 2000 decision of the Appellate Court of Lyon (Third Civil Chamber) in favor of Respondents.

Respondents: The Respondents include:

   -    E Corp., SA, formerly R Corp., whose head office is in Montfaucon-en-Velay;
   -    R Industry Corp., SARL, whose head office is in Saint-Etienne;
   -    A France Assurances Corp., SA, formerly A Assurances Corp., whose head office is in Paris and whose place of business is in Saint-Etienne;
   -    MB Corp., SA, whose head office is in Marseille;
   -    Rel. Corp., SARL, whose head office is in Migne-Auxances.

[...]

II. BACKGROUND

On four different occasions between 1988 and 1990, R Industry Corp., which became E Corp. [hereinafter "Buyer"], insured by A Assurances Corp., ordered metallic goods from the Italian corporation ISEF [hereinafter "Seller"] through the intermediary of Rel. Corp. The parties had agreed on the type of metal and upon delivery the manufacturer was to produce an accredited laboratory test report of the metal. Except for the third delivery, the goods were delivered along with the test reports, and no objections were made. In 1992, MB Corp, a customer of [Buyer] that purchased certain parts from [Buyer] [herinafter "Buyer's customer"], discovered defects in the metal, tests were run and [Seller] was notified of the metal's non-conformity in late 1992. [Buyer's customer] requested an expert opinion and on 22 April 1994, the court [4] ordered such an expert opinion. In light of the expert conclusions, [Buyer's customer] brought suit before the commercial court against [Buyer] and its insurer, which impleaded Rel Corp. and [Seller].

III. REASONING OF THE COURT

1. The Expertise

The [Seller[ claims that the lower court erred in ordering it first to guarantee the debts of [Buyer] and its insurer and second to pay damages to [Buyer].

The Appellate Court had stated that [Seller] was properly brought before the court in April 1994 and that it was properly ordered to be present at the expertise. [Seller] neither appeared, nor did it give any explanation for its absence. The Appellate Court further stated that there does not have to be notice of a decision made en référé ordering an expertise prior to the expertise. The court concluded that [Seller] could be held to the court-ordered expertise, which no party contested or appealed, even though [Seller] was notified of the expertise only after 22 April 1994 (the day the expertise was ordered). [Seller] could be held to the order, because first, [Buyer] and its insurer stated that [Seller] had signed upon receiving the bailiff's 6 April 1994 letter and second, because [Seller] had contested the validity of the expertise only on appeal. Thus, the Appellate Court properly held that the expertise was valid.

2. The [Seller]'s knowledge

The Appellate Court found:

First, that [Seller] had not given [Buyer] the accredited laboratory test report giving the metal composition of the goods delivered; and

Second, that a part of the metals delivered were non-conforming in that they contained an excess of carbon.

Third, it found that this defect was due to a mix of substances at the time of the pouring and casting of the metal.

The Appellate Court held that [Seller], as the manufacturer of the goods, must have been not only aware of this defect, but also that it must have deliberately concealed from the buyer the defect by not delivering the test report showing the composition of the metal. As a result, [Seller] could not argue that the buyer had lost its rights to claim non-conformity of the goods and the Appellate Court properly ruled under Articles 39 and 40 CISG.

3. The application of the CISG

The CISG applies to international sales contracts and governs exclusively the rights and duties of buyers and sellers to such contracts. Because [Buyer's customer] was not a party to the international contract at issue here, any argument arising out of its alleged failure to inspect the goods and to verify the composition of the metal does not apply under Article 38 CISG.

IV. HOLDING

FOR THESE REASONS, THE COURT,

   -    Confirms the Appellate Court's decision;
   -    Orders [Seller] to pay all costs;
   -    Dismisses all claims under Article 700 of the New Code of Civil Procedure.


FOOTNOTES

1. Case number 1303 FS-P+B; Appeal number 02-15.981

2. LL.M. Columbia Law School (2006), Juris Doctor Tulane Law School (2005), Licence Rennes I University, School of Law (2003).

3. The Court, organized pursuant to Article L. 131-6-1 of the Code of Judicial Organization, held a public audience on 5 July 2005 where the following were present:

   -    Mr. Ancel, President
   -    Chief Clerk of Court, Ms. Pascal
   -    Counselors Mr. Pluyette, Mr. Gueudet, Mr. Taÿ, Mr. Rivière
   -    Referendary Counselors Mr. Trassoudaine, Mr. Chauvin. Ms. Trapero, Ms. Ingall-Montagnier, Ms. Vassallo, Ms. Gorce
   -    General Counsel, Mr. Cavarroc
   -    Clerk of Court, Ms. Aydalot.

4. The expertise was ordered by a juge des référés, who is a judge sitting in Chambers to deal with urgent matters.

* All translations should be verified by cross-checking against the original text.

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Pace Law School Institute of International Commercial Law - Last updated March 16, 2010
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