Austria 25 January 2006 Oberster Gerichtshof [Supreme Court] (Frozen pork liver case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/060125a3.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 7 Ob 302/05w
CASE HISTORY: 1st instance BG Villach (GZ 16 C 156/04b-32) 6 May 2005; LG Klagenfurt (GZ 2 R 343/05a-36) 1 September 2005
SELLER'S COUNTRY: Austria (defendant)
BUYER'S COUNTRY: Serbia (plaintiff)
GOODS INVOLVED: Frozen pork liver
Reproduced from Internationales Handelsrecht [3/2006] 110
"The fitness of goods for ordinary use is generally to be determined by the standards of the seller’s country."Go to Case Table of Contents
AUSTRIA: Oberster Gerichtshof 25 January 2006
Case law on UNCITRAL texts (CLOUT) abstract no. 752
Reproduced with permission of UNCITRAL
Abstract prepared by Christian Rauscher
The Serbian claimant bought frozen pork-liver from the Austrian defendant in order to import it to Serbia. No specific level of quality was agreed upon nor any guidelines regarding the import to Serbia were given by the buyer. Although the goods were fully compatible with EU-regulations and absolutely qualified for consumption, they were regarded as defective and therefore rejected by the Serbian customs authorities. Due to the failed import of the goods the buyer suffered damages for which it sued the seller at an Austrian district court.
The lawsuit was dismissed by all three judicial instances. The Supreme Court confirmed that according to its constant jurisprudence the conformity of the goods to the purposes for which goods of the same description would ordinarily be used -- Art. 35(2)(a) CISG -- is to be assessed according to the standards in the country of the seller. It is up to the buyer to take into account the provisions and standards of its country and, if need be, to include them into a specific agreement according to Art. 35(1) or (2)(b). As in the given case the buyer had failed to specify particular requirements as to the quality of the product no liability of the seller was assumed.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
35A ; 35B [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law]
35A ; 35B [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law]
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1223.pdf>; Austria Supreme Court website [go to <http://www.ris.bka.gv.at/jus/>, check "jus texte" box, enter "7 Ob 302/05w" as "suchworte", click "suche starten"]; Internationales Handelsrecht (3/2006) 110-112
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
25 January 2006 [7 Ob 302/05w]
Translation [*] by Jan Henning Berg [**]
Edited by Institut für ausländisches und internationales
Privat- und Wirtschaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
According to § 508(1) ZPO [*], the Federal Supreme Court is not bound by the Appellate Court's ruling on the admissibility of the appeal. Contrary to what the Court held in the previous instance, the appeal is inadmissible as it is lacking a significant question of law. Under § 510(3)(4) ZPO, repudiation of such an appeal may be settled by mere explanation of the legal grounds of rejection.
[Buyer], residing in Serbia, purchased 18 pallets of frozen pork liver from [Seller], located in Austria. The goods were supposed to be imported to Serbia of which [Seller] had been aware. The parties neither talked about nor agreed upon any particular quality nor did they stipulate any auxiliary agreement. Furthermore, [Buyer] did not communicate to [Seller] any special regulations that were applicable to the import of goods to Serbia. Although the pork liver complied with EU [*] requirements and was in perfect condition for consumption, it was defined as defective by virtue of Serbian import provisions with the consequence that import was proscribed. The return of the goods and their subsequent sale below value, caused damages in the amount of EUR 8,403.
RULING IN PREVIOUS INSTANCES
The Court of First Instance denied [Buyer]'s claim for recovery of these damages. The goods had complied with the purpose for which goods of the same type were usually purchased. Provisions of public law in the buyer's country (e.g. concerning critical levels of toxic load for food) could not in itself set the required standard of quality under Art. 35 CISG (cf. Schwimann/Posch, CISG, Art. 35 para. 7). [Buyer] could not reasonably rely on [Seller] foreseeing whether or not Serbian authorities would ban the import. Since [Seller] had sufficiently performed its obligation, [Buyer] could not claim damages following avoidance of the contract according to Art. 49 CISG.
The Appellate Court affirmed this decision and held that further appeal was admissible, because the Federal Supreme Court had not yet decided on the issue whether provisions of public law in the buyer's country were relevant for a seller who is aware of a supposed export into that country.
POSITIONS OF THE PARTIES
This is also the position of [Buyer] in its appellate submission: The citation employed by the Appellate Court (Schwimann/Posch, CISG, Art. 35 para. 7) served as mere reference to the jurisprudence of the Appellate Court Frankfurt, Germany. Furthermore, it was not yet decided by the Federal Supreme Court whether an export of goods constituted a "particular purpose" in accordance with Art. 35(2)(b) CISG for which the goods must be fit if the seller knew that the buyer purchased them solely for this purpose and if the seller had appropriate experience with marketing these goods within the buyer's country.
REASONING OF THE COURT
The appeal, however, is not admissible.
Contrary to what is set out above in respect to the admissibility of the legal remedy in question, it is in accordance with jurisprudence that if there is no provision on a certain quality of goods in an international contract of sale, the required quality will be determined by the objective minimum standards under Art. 35(2) CISG. With reference to the case at hand, it must be determined whether the goods are fit for the ordinary use (Art. 35(2)(a) CISG) or a particular purpose (Art. 35(2)(b) CISG). The ordinary use is generally determined by standards prevailing in the seller's country (RIS-Justiz [*] RS0113448; most recently: 2 Ob 48/02a), unless there is an exceptional case as enumerated by SZ [*] 73/70. Thus, both the Appellate Court and [Buyer] overlooked the fact that the Federal Supreme Court had already dealt with the relevant questions of law in its decision of 13 April 2000, 2 Ob 100/00w (SZ 73/70 = IPRax [*] 2001/15, 149 (criticized by Schlechtriem) 161). The Federal Supreme Court held that:
"In accordance with Art. 35(1) CISG, the seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract. If, however, the parties to an international contract of sale fail to specify the required quality of the goods, the objective minimum standard provided by Art. 35(2) CISG will be decisive: Whether there is a breach of the duty to deliver depends on whether the goods conform to the ordinary use, particular purpose, possess the quality of a sample or model or are contained or packaged in an usual and adequate manner (Schwimann/Posch, Art. 35 para. 7). With respect to fitness for ordinary use, the standards in the seller's country are generally of primary significance. This fitness for ordinary use does not imply that the goods conform to any provisions for safety, identification or composition in the importing country (Schwimann/Posch, Art. 35 para. 7; Staudinger/Magnus, Art. 35 para. 22; Honsell/Magnus, Art. 35 para. 14; Piltz, Internationales Kaufrecht, § 5 para. 41). It cannot be expected from a seller to be aware of any particular provisions in the country of the buyer or wherever else the goods are to be used. Even the fact that the buyer mentioned the country of destination to the seller cannot impose an obligation on the seller to observe the applicable provisions of public law in that place. On the contrary, it is for the buyer to take the provisions of the country where the goods will be put to their use into account. It is hence his task to include them into the contract in accordance with Art. 35(1) or Art. 35(2)(b) CISG (Schlechtriem/Schwenzer, Kommentar zum Einheitlichen UN-Kaufrecht , Art. 35 para. 17). Therefore, special provisions in the buyer's country are of relevance only if they do apply likewise in the seller's country or if they were agreed upon or if they had been made known to the seller under Art. 35(2)(b) CISG (Staudinger/Magnus, Art. 35 para. 22; BGH [*] IPRax [*] 1996, 29)." (SZ [*] 73/70)
The court also adhered to this judgment in its recent decision of 27 February 2003 (2 Ob 48/02a). In his affirming review (IPRax 2004, 358 (359)), P. Huber points out that the leading doctrine does in general not consider the country of the buyer or wherever else the goods are to be used, but the seller's country in respect to the compliance of goods with public law provisions. It cannot be expected from the seller to be aware of any such provisions in the buyer's country (Huber, ibidem). Consequently, special provisions in the buyer's country are of relevance only if they do apply likewise in the seller's country or if they were agreed upon or if they had been made known to the seller under Art. 35(2)(b) CISG. The Federal Supreme Court rightfully followed this in the decision of 27 February 2003
Undisputedly, none of these requirements are met in the present case. The assessments made by the courts in previous instances correspond to the principles of jurisprudence of the Federal Supreme Court (cf. above). Thus, the prerequisites of § 502(1) ZPO [*] are not fulfilled. Under the given factual basis, there is no necessity to comment on the partial criticism to decision SZ [*] 73/70 (cf. Schlechtriem/Schwenzer/Schwenzer, Art. 35 para. 17a and Lurger, Die neuere Rechtsprechungsentwicklung zum UN-Kaufrecht, JBl [*] 2002, 750 (762 et seq.), both with reference to Schlechtriem, Internationales UN-Kaufrecht, paras. 137 et seq.).
With respect to the further appellate submissions, it still has to be held that recently, even Posch (in cases which are to be resolved by Art. 35(2)(a) and (b) CISG) holds a view that is "basically identical to the opinion expressed by the Federal Supreme Court" (Schwimann/Posch, IV, Art. 35 paras. 7 et seq.). He expressly relies on the decision SZ 73/70 as well as on further German, French and US-American jurisprudence (Schwimann/Posch, ibidem, footnote 4) and explains:
|-||"As a question of major practical relevance, it must be determined to what extent provisions of public law in the buyer's country (e.g. concerning critical levels of toxic load for food) can establish a required quality that needs to be observed by the seller. This is only the case if (1) the relevant provisions do apply likewise in the seller's country, (2) the buyer drew the seller's attention to their existence or (3) the seller knew or could not have been unaware of them under the circumstances of the case."|
Magnus argues with essentially the same result (Staudinger/Magnus, Art. 35 para. 22). He, however, expressly states that the compliance of goods with compulsory provisions in the importing country is generally not part of their ordinary use (Art. 35(2)(a) CISG). Consequently, he assesses the usability of goods in its own country as the risk of the buyer. Just as the decision SZ 73/70, he mentions only the first two of the exceptions enumerated above and for the rest merely concedes that it might follow from "the particular circumstances" that the seller is in a position to be obliged to observe statutory provisions in the country of destination. For example, this concept would apply whenever a seller runs an office in that place or if it advertises into that country or if the sale into that country traces back to its own initiative. However, under the approach of Staudinger (Staudinger/Magnus, Art. 35 para. 34), this provision can only be applied with certain restrictions in order to find whether a particular purpose, Art. 35(2)(b) CISG, does also embody the compliance of the goods with requirements of public law. An application is only possible if the buyer has communicated the country in which the goods were supposed to be used as well as their purpose and if he can reasonably rely on the understanding of these provisions by the seller, e.g., because he is specialized in exporting goods to that country.
Apparently, [Buyer] relied on this exception -- which was not mentioned in the above jurisprudence of the Federal Supreme Court -- in its appellate submission. It argues that according to Schwenzer (Schlechtriem/Schwenzer, Art. 35 para. 17), restrictions imposed by public law were to be observed by the seller even without an express notification by the buyer if the seller had already been aware of them, e.g., from previous transactions with the buyer or, as in the case at hand, if he regularly exports goods into that country. Moreover, it had to be considered as a sufficiently communicated particular purpose under Art. 35(2)(b) CISG when the seller is aware that the goods are to be exported in a certain country. Therefore, the buyer in this case could reasonably expect from the seller (as an experienced salesman in international trade) to deliver goods that are fit for an export into Serbia, as has been the case in all prior sales transactions between them.
The issue whether these circumstances are able to establish another exception from the principle mentioned above does not, however, need be resolved, since the required factual basis is lacking in the present dispute. The Court's findings are based on the following facts:
There had been no problems with goods that had been sold to Serbia by [Seller] through other transactions. Also [Buyer] had already previously (by way of company F.) purchased pork liver from [Seller] and -- as [Buyer] has itself stated -- imported to Serbia without any difficulties.
With reference to the delivery in question, Serbian authorities had pointed to germs found in samples of the pork liver. Since these particular germs could be basically detected in any sample of liver, a quantification of the germs was necessary in order to determine if the goods were indeed spoilt. This had not taken place in Serbia. The assay results of the Serbian authorities, do not allow any definite conclusion that the liver was indeed spoilt. If Serbia demanded that no germs at all were allowed in frozen pork liver, an import would need to be banned from basically all over the EU [*], because it was "absolutely impossible" to free raw liver products from all germs before transport. This, however, implies that [Seller] did not know or must not have been aware of the Serbian import restrictions which have prevented the import in the case at hand. These restrictions required raw pork liver to be germ free, being a condition that was "absolutely impossible". Furthermore, it cannot be assumed that [Buyer] had any particular reason in this regard to rely on a superior knowledge of [Seller], which cannot be assumed without further proof (cf. Staudinger/Magnus, Art. 35 para. 34 with further references). The appellate issues raised by [Buyer] are therefore irrelevant to this dispute.
Lacking questions of legal significance, [Buyer]'s appeal has to be dismissed.
The decision on costs and expenses is based on §§ 41, 50 ZPO [*]. [Seller] has pointed in its appellate response to the remedy's inadmissibility.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Serbia is referred to as [Buyer] and Defendant of Austria is referred to as [Seller]. Amounts in the uniform European currency (Euro) are indicated as [EUR].
Translator's note on other abbreviations: BGH = Bundesgerichtshof [German Federal Supreme Court]; EU = European Union; IPRax = Praxis des Internationalen Privat- und Verfahrensrechts [German Law Journal]; JBl = Juristische Blätter [Austrian Law Journal]; RIS-Justiz = Rechtsinformationssystem des Bundes [Austrian Federal Database on Law]; SZ = Sammlung Zivilsachen [Austrian Collection of Civil Law Judgments]; ZPO = Zivilprozessordnung [Austrian Code of Civil Procedure].
** Jan Henning Berg is a law student at the University of Osnabrück, Germany and participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück.
*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.Go to Case Table of Contents