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CISG CASE PRESENTATION

Netherlands 18 July 2007 Rechtbank [District Court] Utrecht (Prodema S.A. v. Michon B.V.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070718n1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20070718 (18 July 2007)

JURISDICTION: Netherlands

TRIBUNAL: Rb Utrecht [Rb = Rechtbank = District Court)

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Rolnummer 219436 / HA ZA 06-2279 (date published: 31 July 2007)

CASE NAME: Prodema S.A. v. Michon B.V.

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Spain (plaintiff)

BUYER'S COUNTRY: Netherlands (defendant)

GOODS INVOLVED: Gable plates


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 25 ; 39 ; 49 ; 71

Classification of issues using UNCITRAL classification code numbers:

25B [Definition of fundamental breach: substantial deprivation of expectation, etc.];

39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time];

49B [Buyer's loss of right to declare avoidance after delivery];

71C [Suspension of performance (obligation of party suspending performance): immediately notify other party]

Descriptors: Avoidance ; Fundamental breach ; Lack of conformity notice, timeliness ; Suspension of performance

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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

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1395&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (Dutch): Website of the Dutch courts <http://www.rechtspraak.nl/>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

District Court (Rechtbank) Utrecht

18 July 2007 [219436 / HA ZA 06-2279]

Translation [*] by Thorsten Tepasse [**]

In the dispute between

PRODEMA S.A.[Seller],
seated in Legoretta, Spain,
Claimant in main claim and Respondent in counterclaim,
authorized proxy Mr. I.M. Jebbink,
Attorney Mr. H. Pijnacker,

vs.

MICHON B.V. [Buyer]
also acting under the name: MICHON DAK- EN GEVELTECHNIEK
seated in Vianen, the Netherlands
Respondent in main claim and Claimant in counterclaim,
authorized proxy Mr. B.F. Keulen,
Attorney Mr. H.J. Hulsbergen

1. THE PROCEEDING

      1.1.  The proceeding consists of:

            -    The interim judgment of 3 January 2007 in which the appearance of parties before court is ordered;
            -    [Seller]'s memorandum of 2 April 2007, in which the claim was extended;
            -    The oral proceeding held on 2 April 2007 when the parties appeared before court.

      1.2.  In the end, a judgment will be handed down.

2. THE FACTS

      2.1.  [Seller] produces gable plates, which are named BAQ plates or BAQ+ plates. BAQ plates were produced until approximately 1 January 2001 and from then on BAQ+ plates.

      2.2.  [Seller] is seated in Spain. In the Netherlands, the BAQ and BAQ+ plates manufactured by [Seller] are sold by Mikas Architectuur B.V. [*] (hereinafter referred to as Mikas), who represents [Seller] in the Netherlands.

      2.3.  [Buyer] regularly ordered BAQ plates from [Seller] and assembled them by order of its clients and architects in gables of new built houses and office buildings.

      2.4. In the end of 2003, [Buyer] was confronted with complaints regarding the laminate layers of [Seller]'s BAQ plates attatched by [Buyer] on outer gables. Generally. the problems arose roughly three years after the plates had been processed. As a result, the defective plates were replaced for account and risk of [Seller]. In this context, the BAQ+ plates were presented as improved gable plates which were suited for external use.

      2.5.  In the beginning of 2004, [Buyer] ordered BAQ+ plates and [Seller] delivered the plates. The plates were to be used for building projects in Rhoden and Wormerveer. [Buyer] received invoices for the deliveries on 29 January 2004 and 12 March 2004 in the total amount of 40,587.43 EURO. The invoices were left unpaid.

      2.6.  [Buyer] did not process the plates named under 2.5 because of the complaints regarding the plates manufactured by [Seller] and formerly attached to gables. This decision was made in summer 2004 after consulting the clients affected by this decision.

      2.7.  [Buyer] told [Seller] by faxes of 8 and 18 February 2005 that the plates delivered did not fulfil the expected requirements and that they could thus be picked up by [Seller].

      2.8.  [Seller] further asked [Buyer] to replace gable plates at a building project in Enschede and delivered new gable plates for that purpose. [Buyer] did not process the works, for which it sent an invoice on 17 May 2004 at a total sum of 22,160.00 EURO.

3. THE DISPUTE

In the [Seller]'s main claim

      3.1.  [Seller] seeks by summoning -- summarized -- to have the Court order [Buyer] to pay 24,217.13 EURO [Note by translator: This sum seems to be wrong as it is used the one and only time in this judgment. The correct sum must be 40,587.43 EURO.] plus costs and interest. To prove its claim [Seller] forwards that it has sold and delivered gable plates in the amount of 40,587.43 EURO to [Buyer], which [Buyer] left unpaid.

      3.2.  [Seller] modified its claim during appearance before court with a sum of 22,160.00 EURO, which is the sum it formerly deducted from the main sum as owed to [Buyer]. Thus the claim amounts to 40,587.43 EURO plus interest and costs.

      3.3.  [Buyer] rejects the claim. It submits that [Seller] must not seek payment of a sum that it conceded to [Buyer] at the time of summoning. Concerning the unpaid invoices. [Buyer] first relies on an avoidance of contract because of defectiveness of the goods delivered and subsidiary on a right to retention based on [Seller]'s fault. Moreover; [Buyer] states that if it is at all obliged to pay [Seller] anything, that claim has to be charged against [Buyer]'s counterclaim.

The parties' submissions will be, as far as decisive, discussed in detail.

In the [Buyer]'s counterclaim

      3.4.  [Buyer] requests -- summarized -- the Court to:

            a)  Order [Seller] to pay 22,610.00 EURO based on an invoice of 17 May 2004 plus interest;
 
            b)  Find that the gable plates of the type BAQ and BAQ+ delivered by [Seller] o [Buyer] were defective and that [Seller] is obliged to compensate damages suffered until now and in the future towards [Buyer];
 
            c)  Order [Seller] to pay 35,924.79 EURO for attorney's fees plus interest;
 
            d)  Order [Seller] to pay 37,200.00 EURO plus interest for man hours accumulated for handling the damages occurred;
 
            e)  Order [Seller] to pay 35,560.00 EURO plus interest for other costs occurred due to handling the damages suffered;
 
            f)  Order [Seller] to compensate any further loss, especially inevitable costs, loss of reputation and profit as well as other losses to be listed at a later point in time;
 
            g)  Order [Seller] to bear the costs of the proceeding.

      3.5.  Regarding points b - f, [Buyer] submits that the gable plates delivered by [Seller] were defective and that it thus suffered damages and will suffer damages. Concerning the invoice of 17 May 2004 (see above, subparagraph a)), [Buyer] states that [Seller] asked for fulfillment of works regarding the replacement of gable plates at a building project in Enschede, whereat an agreement was made that payment should take place in advance. [Buyer] argues that [Seller] did not pay in advance for the works and that therefore unilateral avoidance of the order by [Seller] was unlawful.

      3.6.  [Seller] rejects the claim. It first states that this Court is not competent to decide on the counterclaim, since there is no legal or factual connection to the main claim. The disputes do not arise from the same contracts, but only from different contracts relating to different projects. Further, [Seller] submits that the gable plates were not defective and subsidiary that the [Buyer] did not rely on the defectiveness in a reasonable time. The parties' submissions will be, as far as decisive, discussed in detail.

4. THE REASONING

In the [Seller]'s main claim

      4.1.  [Seller] conceded in the summoning that it owes [Buyer] the amount positioned by [Buyer], which is in total 22,610.00 EURO. [Buyer] seeks payment of this sum in the counterclaim. In the following, [Seller] submitted by memorandum that it is not liable for this sum, since -- as written in the reasoning -- [Buyer] did not execute the work for which the invoice was written. Hence, [Seller] enriched its claim with the sum it formerly deducted from the main claim and [Buyer] rejected this position.

The Court holds that the modification of the claim is in itself admissible and does not contravene the principles of a good procedure. The reasoning [Buyer] put forward deals moreover not with the question if the modification is lawful, but if [Buyer] is at all obliged to pay the money to [Seller]. The Court will thus rule on [Seller]'s claim as it is filed after modification.

      4.2.  It is undisputed that [Seller] delivered the plates of which it seeks payment to [Buyer]. [Buyer] adduces that the contract was avoided by fax sent to [Seller] on 8 February 2005, since the plates were defective. Taken for granted that the plates were not in conformity with the contract, it has first to be determined if [Buyer] was prevented from avoiding the contract, since it relied -- as [Seller] invokes -- on defectiveness of the goods too late.

      4.3.  The Court first lays down that the case at hand concerns a contract on the sale of moveable goods between a Spanish party and a Dutch party. Spain as well as the Netherlands are parties to the United Nations Convention on Contracts for the International Sale of Goods concluded in Vienna in 1980 (hereinafter referred to as CISG). Further the parties did neither invoke nor prove that they intended to exclude applicability of the CISG. As a result the provisions of the CISG have to be applied to the instant case.

      4.4.  Art. 49 CISG states that the buyer may declare the contract avoided if there is a fundamental breach of contract in the sense of Art. 25 CISG. Further, the buyer must terminate the contract within a reasonable time after it has or ought to have discovered the breach of contract. Taken for granted that the quality of the plates [Seller] delivered amounts to a fundamental breach, it has to be decided if [Buyer] declared the contract avoided within a reasonable time. There is no dispute between the parties that [Buyer]'s fax of 8 February 2005 has to be interpreted as an avoidance of the sales contract. It is further an established fact that the plates in dispute were delivered during the first three months of 2004. During its appearance before court, [Buyer] stated that there were first complaints about the BAQ plates at the end of 2003. Those plates were replaced by BAQ+ plates, which should withstand weather influences and similar threats better. It has not become clear, when exactly [Buyer] recognized for the first time that the BAQ+ gable plates were defective. However, [Buyer] substantiated that the decision of not processing the BAQ+ plates delivered due to defectiveness of BAQ+ plates already handled was made during the summer of 2004. As [Buyer] did not submit or prove anything else, the Court assumes -- assuming the plates were defective -- that [Buyer] recognized the defects in the summer of 2004, i.e., at the latest at the end of September 2004. As a result, [Buyer] let a time span of nearly five months pass by before it told [Seller] that it did not accept the plates and that the respective accounts should be credited. According to the comprehension of this Court, this period is too long to allude to a reasonable time as foreseen in the relevant provisions, as those provisions intend to anticipate insecurity and indistinctness between the contracting parties i.e., that even if the delivered BAQ+ plates were defective and deviated in a considerable manner from what could be expected due to the wording of the contract, [Buyer] sent its complaint too late to avoid the contract on this basis. The parties are thus still bound to the contract they concluded regarding the BAQ+ plates.

      4.5.  Also [Buyer]'s subsidiary plea that it was entitled to a right of retention of its duty to pay is based on the assumption that the plates were defective. A right of retention is foreseen in Art. 71 CISG, but however this provision requires a prospective breach of contract and furthermore, that the party suspending performance informs the other party immediately (Art. 71(3) CISG). The situation described in this provision is not the situation at hand, as [Buyer] neither submitted nor proved that it relied on a right to suspend performance ever since beginning of this proceeding. As a result, also [Buyer]'s subsidiary plea has to be rejected.

      4.6.  Since all of [Buyer]'s arguments against its debt towards [Seller] are rejected and the amount in itself is undisputed, the sum claimed by [Seller] is from on the beginning comprehensible to be awarded. [Seller] thus seeks payment of the whole sum it accounted, whereas it initially seeked payment of a lower sum, acting on the assumption that it owed this amount to [Buyer]. The Court holds in contrast to [Buyer]'s position, that [Seller] did not concede in the sense of Art. 154 RV [*] to be obliged to pay [Buyer]'s invoice. The provision states that there is only a legal acknowledgement at hand, if a party expressly recognizes the opponent's submission as true in a pending procedure. This did not happen in this proceeding; [Seller] did not recognize its obligation as a reaction to [Buyer]'s submissions or evidence. It acted on the assumption that it was obliged to pay [Buyer] for workings which already took place. Precautionarily, the Court alludes to the fact that -- given the case speaking of a legal acknowledgement -- [Seller] could revoke that acknowledgement, since it mistook the fact that the workings were already processed. That means that [Seller] is not bound to the formerly filed settlement of accounts, but that the modified claim is in total comprehensible for allocation.

      4.7.  As another subsidiary argument, [Buyer] submitted that if it is ordered to pay anything to [Seller], one has to deduct a compensation for damages, [Seller] has to perform for [Buyer]'s benefit due to defectiveness of the plates from the sum awarded. [Buyer] argues that it received gable plates for 16 building projects -- in total approximately 15,000 m -- which were all defective. By letter of 26 July 2005, [Buyer] held [Seller] liable for the damages already suffered and to be suffered in the future in connection with defectiveness of the gable plates. In the counterclaim, it seeks payment of this compensation for damages.

The Court holds that setting off a counterclaim as part of a defense is only admissible where the basis of this defense can be determined straightforward. (De rechtbank stelt voorop dat verrekening met een tegenvordering als verweer alleen kan slagen indien de gegrondheid van dat verweer op eenvoudige wijze vast te stellen is.) As far as [Buyer] is relying on a set-off against the main claim, this assertion fails, since the conclusiveness of the counterclaim cannot be determined without further inquiries, whereas the main claim is as expatiated on above, from on the beginning comprehensible awardable.

In the [Buyer]'s counterclaim

      4.8.  Based on [Seller]'s plea, the Court will first decide on the issue if the Court is compentent to decide on [Buyer]'s counterclaim. [Seller] relied on Art. 6 no. 3 Regulation EC 44/2001 [*] , which states that "a person domiciled in a Member State may also be sued on a counterclaim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending." [Seller] submits that the breach of contract on which [Buyer]'s counterclaim is based, arises from gable plates ordered and deliviered earlier and that it does thus not arise from the same contract or facts. Consequently, [Buyer]'s counterclaim is inadmissible. [Buyer] replies that the Court should not look at all deliveries independently, but see them as a whole legal relationship. As a result, the judge deciding on the merits of the main claim would also be competent to decide on the merits of the counterclaim, which is in a close connection to the deliveries of the main claim.

      4.9.  The Court holds first, that the question of competence has in fact to be decided on the basis of Art. 6 no. 3 Regulation EC 44/2001 [*] . The provision states that the counterclaim must arise from a contract on which the original claim is based. The contracts on which [Seller] based its claim were two orders of BAQ+ plates of which the invoices were left unpaid. In its counterclaim, [Buyer] requests payment of an invoice for workings requested by [Seller] for a project in Enschede and further for damages suffered and to be suffered in the future due to defectiveness of gable plates delivered earlier.

The Court holds that the claim regarding the workings in Enschede does in any case not arise from the contracts on which [Seller]'s claim is based; thus it is not competent to rule on this issue. Concerning the compensation of damages because of defective plates delivered, this conclusion cannot be drawn that easy. In the instant case, the interpretation of Art. 6 Regulation EC 44/2001 [*] is decisive as well as the question whether subsequent orders and deliveries of the gable plates can be seen as one contract in the sense of this article. The Court attaches importance to the fact that [Buyer] must have placed its orders depending on the question whether gable plates [Seller] produced were demanded at the building sites, whereupon choice was made concerning measures and colors of the plates. It is therefore proven by the submissions of the parties and documents forwarded that initially BAQ plates were always ordered and delivered and that later on -- and in any case in those orders at hand in the main claim -- BAQ+ plates were ordered and delivered. [Buyer] bases its claim namely on the defectiveness of the BAQ plates delivered. Albeit, the business relationship is about the same parties and orders of gable plates, neither the orders nor the way of conclusion of the contracts nor the kind of products involved are, in the opinion of the Court, so closely connected that there can be talk about one contract in the sense of the Regulation EC 44/2001 [*] . The Court holds further that the word "facts" in Art. 6 no. 3 Regulation EC 44/2001 [*] , does not have an independent relevance and that the term is thus not foreseen for claims arising from contracts, but, e.g., from tort claims.

      4.10.  This reasoning leads to the result that the Court is not competent to decide on [Buyer]'s counterclaim.

      4.11.  [Buyer] bears the costs of this proceeding as it loses the main claim and brought up the counterclaim unlawfully. On the part of [Seller], the costs amount to:

      In the [Seller]'s main claim

      -   summoning 71.31 EURO
      -   basic charge 820.00 EURO
      -   costs for authorized proxy  1,788.00 EURO (2 points tariff 894.00 EURO)

      Total  2,679.31 EURO

      In the [Buyer]'s counterclaim

      -   costs for authorized proxy 1,421.00 EURO (2 x 0,5 points, tariff 1,421.00 EURO)

5. THE JUDGMENT

The Court

      In the [Seller]'s main claim

      5.1.  Orders [Buyer] to pay [Seller] the amount of 40,587.43 EURO plus judicial interest on this sum as foreseen in Art. 6:119a BW [*] since 22 September 2006 until full payment,

      5.2.  Orders [Buyer] to pay the costs of this proceeding, which are on the part of the [Seller] until today 2,679.31 EURO,

      5.3.  Declares this judgment enforceable upon providing security,

      In the [Buyer]'s counterclaim

      5.4.  Declares itself not competent to decide on the claim invoked,

      5.5.  Orders [Buyer] to bear the costs of this proceeding, which are on the part of the [Seller] until today 1,421.00 EURO,

      5.6.  Declares the judgment concerning the costs enforceable upon providing security.

Judgment handed down by Mr. P. Dondorp in public on 18 July 2007.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Spain is referred to as [Seller]; Defendant of the Netherlands is referred to as [Buyer]. Amounts in European currency are indicated as [EURO].

Translator's note on other abbreviations: BV = Besloten Vennootschap met beperkte aansprakelijkheid [limited liability company under Dutch law]; BW = Burgerlijk Wetboek [Dutch Civil Code]; Regulation EC 44/2001 = European Council Regulation No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [Link to text: <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32001R0044:EN:HTML>; RV = Wetboek van Rechtsvordering [Dutch Civil Procedure Code]; SA = Sociedad Anonimá [corporation under Spanish law].

** Thorsten Tepasse is a law student at the University of Osnabrück, Germany and participated in the 12th Willem C. Vis Moot with the team of the University of Osnabrück.

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