France 13 February 2007 Supreme Court (Coin change machines case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070213f2.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 05-10424
CASE HISTORY: 1st instance Tribunal de Commerce de Lyon 16 March 2001; 2d instance Cour d'appel de Lyon 18 December 2003
SELLER'S COUNTRY: Germany
BUYER'S COUNTRY: France
GOODS INVOLVED: Automatic banknote-to-coin change machines
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
4B [Scope of Convention (issues excluded): statute of limitations, claims by and against third parties] 7C23 [Gap-filling by domestic law]
4B [Scope of Convention (issues excluded): statute of limitations, claims by and against third parties]
7C23 [Gap-filling by domestic law]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (French): CISG-France database <http://www.cisg-france.org/decisions/130207bisv.htm>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
French: Claude Witz, Recueil Dalloz (23 October 2008) 2623-2624Go to Case Table of Contents
Case text (English translation)
Queen Mary Case Translation Programme
13 February 2007
Translation [*] by Nathalie Hofmann [**]
Edited by Linus Meyer [***]
[I. PROCEEDINGS BEFORE THE COURT OF FIRST INSTANCE]
According to the first instance judgment (Lyon 16 March 2001):
|-||In October 1995, Service Company P... [Seller] [of Germany] delivered automatic banknote-to-coin change machines to Public Transport Company (S...TC) [Buyer] [of France].
|-||The machines showed malfunctions. Despite the assistance by the manufacturer of the machines, Company Ge..., the machines could not be successfully repaired by Company F... The latter company is a retailer of the products of the German Company No... GA... in France and which was assigned by [Seller].
|-||After an expert opinion, the Court ordered [Seller] to pay damages to [Buyer] and, applying German law, the Court declared the claims of [Buyer] and [Seller] against Companies No... GA... and Ge... inadmissible due to expiration of the period of limitation.|
[II. PROCEEDINGS BEFORE THE COUR D'APPEL DE LYON]
The Court of Appeal (Lyon 18 December 2003) partly confirmed this judgment but held the Vienna Convention on International Sale of Goods of 11 April 1980 (CISG) to be applicable to the relations between Companies No... GA... and Ge..., on one side, and [Buyer], on the other side, without granting the claims of the [Buyer] against Companies No... GA... and Ge...
[III. THE APPEAL TO THE COUR DE CASSATION]
Appeal no. H 05-13.412, filed by Company Ge..., and appeal Appeal no. J 05-10.424, filed by [Buyer]: appeals on points of law directed at the same judgment.
[IV. ISSUES CONSIDERED]
[A] The grounds of Appeal no. H 05-13.412, combined
Company Ge... [the Manufacturer of the machines] complains about the decision of the Court of Appeal, having considered the CISG as applicable in the relations between [Seller] and Companies No...GA... and Ge..., on one side, and between Companies No... GA... and Ge... and [Buyer], on the other side, and having rejected the claims of Company Ge...
The grounds for appeal presented by Company Ge... are:
1. Art. 7(2) CISG provides that questions concerning matters governed by the Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.
Company Ge... [the Manufacturer of the machines] requested the Court of Appeal to rule that questions concerning prescription are not governed by the CISG and that the general sales conditions of Company No... GA... [the intermediary] which are applicable to the contract stipulate German law;
The Court of Appeal ruled that:
|-||German law includes the CISG which was ratified by Germany and France and that the Convention forms an integral part of German and French law;
|-||The present dispute is within the scope of application of the CISG; and
|-||The parties had not opted out of it by way of the general sales conditions of Company No...GA...|
Company Ge... alleged that the Court of Appeal, in fact, held that the reference to German law affirmed the applicability of the CISG, without explaining why this reference to German law would not refer to domestic German law only, excluding the CISG. It is Company Ge...'s position that the Court of Appeal thereby deprived its decision of a legal basis according to the Articles 1(1) et seq. and 7 et seq. of the Convention combined with Art. 3 of the French Civil Code;
2. Company Ge... refers to the provisions of Art. 7 CISG according to which questions concerning matters governed by the Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law, and alleges that, in consequence, the Hague Convention on the Law Applicable to International Sales of Goods of 15 June 1955 was applicable according to the French conflict-of-laws rule.
Company Ge... alleges that:
|-||Art. 3 of the 1955 Hague Convention provides that the sale shall be governed by the domestic law of the country in which the vendor has his habitual residence at the time when he receives the order, in the present case, by German law.
|-||Art. 3 of the German law of 5 July 1989 which incorporates the CISG into German law provides that "in matters of prescription the rights conferred to the buyer in Art. 45 of the CISG, in case of non-conformity of the goods, under the condition that the non-conformity is not based of facts known by the seller, or on a fact he should have known and has not communicated to the buyer, Articles 477 and 478 of the German Civil Code are to be applied by analogy, with the restriction that the delay provided by Art. 477 sect. 1 phrase 1 of the German Civil Code starts to run from the day the buyer
notified the seller of the non-conformity according to Art. 39 of the CISG."
|-||The Court of Appeal declared that German law included the CISG which was ratified by Germany and France and that the Convention formed an integral part of German and French law; that the present dispute entered its scope of application and that by way of the general sales conditions of Company No...GA... the parties had not opted out of it; that, in consequence, the reference to German law in fact affirmed the applicability of the CISG. This ruling was in error because the Court of Appeal did not examine whether the reference to German law in the general conditions would not result in the application of Art. 3 of the German law of 5 July 1989 incorporating the CISG into German law. Art. 3 of that law provides that the prescription period is six months. Therefore, it is Company Ge...'s position that, even if there were no clause exclusio juris, the Court of Appeal has not legally justified its decision with regards to Arts. 1(1) et. seq., 7 and 8 of the CISG combined with Art. 3 of the French Civil Code and Art. 3 of the German law of 5 July 1989.|
3. The buyer who discovers a lack of conformity must give notice to the seller within a reasonable time after he has discovered it or ought to have discovered it, and the notification must be within a period of two years from the date on which the goods were actually handed over to the buyer according to the conditions of Art. 39 CISG.
Given that the initial operation of the first machines occurred on 24 October 1995, that on 26 October 1995 [Buyer] has made several reservations concerning the non-conformity of the machines for the purpose for which they were destined because of malfunctions discovered during their operation, the Court of Appeal has not declared that the notification was made in accordance with the provisions of Articles 38 et seq. CISG and has therefore deprived its decision of a legal basis with regards to the mentioned provisions.
4. [...] Art. 47 provides that the buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations and specifies that during that period the buyer is not deprived thereby of any right to sue the seller.
In confirming that [Buyer] has given time to Company Ge...[the Manufacturer of the machines] to cure the malfunctions, notably in letting it test a new software, and in concluding that the prescription period would have been suspended although the time period of Art. 39 is a fixed period, the Court of Appeal has violated the above-mentioned provisions.
5. [...] In confirming that the prescription might also be interrupted by the seller's admission of its warranty, as resulting from the correspondence between [Seller] and [Buyer] and by further deducing that the claim filed on 23 October 1996 and on 16 January 1997 against Companies No... GA... and Ge... was neither premature nor too late although the fixed time period of Article 39(2) cannot be interrupted, the Court of Appeal has violated the above-mentioned provisions.
Ruling: The claims of Company Ge... are lacking in fact because the Court of Appeal has not, as alleged, rejected the claims of Company Ge...
[B] The first ground of [Buyer]'s Appeal no. J 05-10.424
[Buyer] has complained about the decision of the Court of Appeal having rejected its claim for restitution of the price of the defective machines against Company Ge... [the Manufacturer of the machines], and against the intermediary, Company No... GA...
[Buyer]'s grounds for complaint are:
1. Citing Art. 81(2) CISG which provides that a party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party has supplied or paid under the contract, [Buyer] alleges that the Court of Appeal has deprived its decision of a legal basis when it ordered only the French seller to restitute the price paid by [Buyer] while dismissing the claims against the manufacturer [Company Ge...] and the German intermediary [Company GA], after having found the CISG to be applicable to their relations and having established the breaches by the last mentioned companies towards the buyer.
2. [Buyer] alleges that, in not addressing the claim based on the provisions of the CISG according to which the producer who delivers a non-conforming machine must bear all the resulting consequences just like the intermediary, the Court of Appeal has violated Art. 455 of the new Code of Civil Procedure.
Ruling: When finding that [Buyer] claims the restitution of the sums that it had to pay to [Seller] on the basis of the contract for the delivery of material and that in consequence [Seller] would have to pay 1,105,177.64 Ff, coming to 160,860.70 Euros, to [Buyer] in restitution of these sums, the Court of Appeal has pointed out that the claim of [Buyer] was not against the other party to the sales contract and has therefore implicitly but necessarily rejected the claim of [Buyer] which was based on the necessary condemnation in solidum [*] of the companies which have concurred in the realization of the damage.
[Buyer]'s claim is unfounded.
[C] The second ground of [Buyer]'s Appeal no. J 05-10.424
The [Buyer] has also appealed the decision of the Court of Appeal that rejected its claim for damages for defective performance against the intermediary, Company No. GA..., and against Company Ge... [the Manufacturer of the machines].
[Buyer]'s grounds for this aspect of the appeal are:
1. The application of the CISG to the relations between two or more parties implies the
exclusion of French law; that in reproaching the [Buyer] for not having based its claim
for damages against companies No...GA... and Ge on quasi-tortious liability while at
the same time admitting that the CISG was applicable to their relations, the Court of
Appeal has violated the provisions of Art. 45(b) and Art. 74 to 77 CISG by refusing to
2. After having found, in applying the CISG, that [Buyer] was justified in seeking reparation of the damage incurred caused by the breaches committed by the German companies, the Court of Appeal has not drawn the proper legal consequences from its findings by rejecting the claim of [Buyer] in violation of the provisions of Art. 45(b) and Arts. 74 to 77 CISG.
3. A judge is to decide a dispute in conformity with the rules of the applicable law. Even assuming the claim of the buyer to be quasi-tortious, the Court of Appeal misconceived Art. 12 of the new Code of Civil Procedure by concluding that, in order to reject the claim for damages for delayed contract execution, the buyer has not founded its claim on a quasi-tortious basis although it should have decided the claim after having found the legal basis itself.
Ruling: The Cour de Cassation rules that:
First, the Court of Appeal before which [Buyer] sought the application of Art. 10 of the agreement, which provides explicitly for the sanction of delay in the execution, could find without facing the first two complaints that such a claim could only be made against the [Seller] which is the only one obliged by the contract with regards to the penalty clause agreed on;
Second, the Court of Appeal, although it could itself have looked for the rule of law applicable to the dispute, did not have the obligation to do so since the claimant specified the legal basis of its claim.
FOR THESE REASONS
Wherefrom follows that the claims are unfounded on all grounds.
Accordingly, the Cour de Cassation:
|-||Rejects the appeals;|
|-||Orders Company Ge...and [Buyer] to pay the court fees; and|
|-||Rejects the claims based on Art. 700 of the new Code of Civil Procedure.|
So held and decided by the Cour de Cassation, commercial, financial and economic chamber, and pronounced by the President in the public hearing of the thirteenth of February two thousand and seven.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Public Transport Company (S...TC) of France, which has since become Company K...L..., is referred to as [Buyer], and Service Company P... of Germany is referred to as [Seller].
Translator's note as to definition of in solidum: The term is similar to "joint and several liability"; in other words, where there are several debtors, each is liable in full payment or performance and the creditor may choose which he will sue.
** Nathalie Hofmann is a law student at Humboldt University Berlin studying at the University of Geneva in the "Certificat du droit transnational" program during the academic year 2007-2008 and a member of the Geneva team at the 15th Willem C. Vis International Commercial Arbitration Moot.
*** Linus Meyer has studied law in Osnabrueck, Germany and Lausanne, Switzerland. He was a participant in the 12th and a coach in the 13th Willem C. Vis Moot.Go to Case Table of Contents