Slovak Republic 10 October 2007 Regional Court in Bratislava (Spare parts case) [translation
[Cite as: http://cisgw3.law.pace.edu/cases/071010k1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 3 Cb/102/2007
CASE HISTORY: 1st instance District Court Bratislava III (22 Cb 72/05-202) 10 April 2007 [affirmed]
SELLER'S COUNTRY: Austria (plaintiff)
BUYER'S COUNTRY: Slovak Republic (defendant)
GOODS INVOLVED: Spare parts
APPLICATION OF CISG: No [Court held that a pleading of the Slovak Commercial Code equals an implied exclusion of the Convention]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
6A1 [Implied exclusion of Convention]
6A1 [Implied exclusion of Convention]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Slovak): Click here for Slovak text
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
10 October 2007 [3 Cb/102/2007]
Translation [*] by Juraj Kotrusz [**]
IN THE NAME OF THE SLOVAK REPUBLIC
The Regional Court in Bratislava, deciding by a panel consisting of the chair JUDr. Elena Ondrisova and judges JUDr. Helena Skrinarova and JUDr. Miroslava Janeckova, in the case of Plaintiff A. C., S.r.o. [Seller], with its registered office in P.P. ___, Republic of Austria, represented by attorney J.A.D., versus Defendant L. Spol. S.r.o. [Buyer], with its registered office in B., ___, [Slovak Republic], represented by attorney J.J.M., regarding payment of 1,843,647.87 Slovak koruna [Sk], and appurtenances, ruling on the appeal of both parties to the proceedings against the judgment of the District Court Bratislava III of 10 April 2007, rec. no.: 22 Cb 72/05-202
h a s d e c i d e d a s f o l l o w s:
The judgment of the District Court Bratislava III of 10 April 2007, rec. no.: 22 Cb 72/05-202 is upheld.
The [Seller] is obliged to pay to the [Buyer] a reimbursement of costs of the proceedings in sum of 39,479.- Slovak koruna [Sk] within three days after the judgment comes into force.
The Court of First Instance decided in the challenged judgment that the parties to the proceedings are obliged to make restitution of whatever they gained under the contract of sale concluded on 22 March 2002 and
|-||Bound the [Seller] to return to the [Buyer] the paid purchase price in the sum of
1,504,248.78 Sk within three days after the judgment comes into force; and
|-||Bound the [Buyer] to return to the [Seller] the goods - spare parts in value of 1,362,297.80 Sk recorded in the list of spare parts mutually agreed by the parties, rec. no. 174 to 181 - within three days after the judgment comes into force and to pay the sum of 1,528,533.46 Sk as a compensation for the part of the goods which the [Buyer] is not able to restitute, within three days after the judgment comes into force.|
The Court of First Instance dismissed the action in the residual part and decided that neither of the parties has the right to reimbursement of costs of the proceedings. The Court of First Instance respected the opinio iuris of the Appellate Court expressed in the judgment of the Regional court in Bratislava of 7 June 2006, rec. no. 3 Cb 8/06-146 which stated that the [Buyer] legally avoided the contract since the [Seller] was in default with its performance and with respect to the particular circumstances of this relationship, such default constituted a substantial breach of contract and therefore under sec. 351 part 2 of the Slovak Commercial Code (hereinafter referred to as "CC") both parties must perform restitution of the performance received under the contract.
When determining the value of the goods already used by the [Buyer], the court referred to the purchase price for which the [Buyer] received them. The Court of First Instance did not uphold the [Seller]'s claim for restitution of the market price of the spare parts and the loss of profit amounting to 5,097,636.70 Sk, since that claim refers to damages which were not incurred by the [Seller], as the [Seller] was the breaching party in the relationship, since it failed to deliver part of the goods and the [Buyer] avoided the contract lawfully and acted in good faith when taking possession of the goods and therefore such a claim would contravene sec. 265 CC. Furthermore, in case of avoidance of the contract, the parties are obliged to restitute the performance actually received under the contract. Therefore the court dismissed the action with respect to this part. The Court of First Instance ruled on the reimbursement of costs of the proceedings under sec. 142 part 2 of the Slovak Civil Procedure Code (hereinafter referred to as "CPC") as both parties were partially successful in the proceedings.
The [Seller] filed an appeal against the judgment and asked the Appellate Court to cancel it and return the action to the Court of First Instance. The [Seller] argued that the Court of First Instance did not pay attention to the fact that the relationship contained a foreign aspect and therefore the court had to qualify it under the UN Convention on Contracts for the International Sale of Goods published in the Collection of Acts as no. 160/1991 Coll. Under article 84(2)(b) of the Convention, the buyer must account to the seller for all benefits which he has derived from the goods or part of them if it is impossible for him to make restitution of all or part of the goods or to make restitution of all or part of the goods substantially in the condition in which he received them, but he has nevertheless declared the contract avoided or required the seller to deliver substitute goods. The Court of First Instance therefore should have examined the amount of benefits derived from using of the spare parts. The [Seller] also argued that if the action should have been qualified under the provisions of the CC, this act does not regulate the manner of the restitution in cases in which a restitution in naturae cannot be performed. Therefore the court must apply sec. 458 part 1 of the Slovak Civil Code which stipulates that the actual value of the performance received has to be restituted and not a nominal value expressed as a purchase price in the contract of sale, since the [Seller] granted to the [Buyer] a considerable discount and therefore the actual equivalent of the goods delivered should be the current market price of these goods.
The [Buyer] asked the Appellate Court to uphold the judgment and stated that the equivalent of the goods shall be always the purchase price prescribed in the contract. The [Buyer] also argued that article 84(2)(b) of the Convention must not be considered separately and if it is treated in connection with other provisions of the Convention, one will reach the same conclusion as under the Slovak Commercial Code.
The [Buyer] filed an appeal against the judgment in its part concerning reimbursement of costs of the proceedings and asked the court to change the judgment in this part and oblige the [Seller] to reimburse its costs of the proceedings entirely.
The Appellate Court tried the case with reference to sec. 212 part 1 and sec. 214 part 1 CPC and ruled that the judgment of the Court of First Instance is correct in its subject-matter and that the Court of First Instance investigated the factual situation to a proper degree of certainty.
Under sec. 9 part 1 of act no. 97/1963 Coll., the parties to the contract can choose the law applicable to their mutual relationships and such choice can be express or implied if, with reference to the circumstances of the particular relationship, there is no doubt about the intent of the parties to make a choice of law.
Under sec. 9 part 2 of this act, if not otherwise agreed by the parties, the applicable law is applied with exclusion of its choice-of-law provisions.
With reference to the evidence gathered, the Appellate Court found that the Court of First Instance qualified the relationship in question correctly under the Slovak Commercial Code. The Appellate Court found that the parties to the proceedings have impliedly chosen the Slovak Commercial Code under sec. 9 part 1 of act no. 97/1963 Coll., since the [Seller] itself referred to the CC in its action and neither of the parties objected in the course of the proceedings to its application. The [Seller] objected to its application for the first time in its appeal, despite referring to the CC in its action. Since the CC does not regulate the situation when the restitution in naturae is not possible, it is necessary to apply sec. 458 part 1 of the Slovak Civil Code per analogiam which prescribes that the parties must restitute all performance unjustly acquired and if it is not possible, they must restitute the monetary equivalent of its value. The monetary equivalent of the value presents an economic equivalent to the performance at the time of acquiring the unjust enrichment.
The Appellate Court did not uphold the argument of the [Seller] that the monetary equivalent should always be presented as the actual market price of the spare parts and in this case the object of sale were not only the spare parts. As stated by the executive of the [Seller], J.M., they were selling larger amount of spare parts where some of them were of a greater value and others of a smaller value and the purchase price referred to the entire collection of these spare parts. Therefore the Appellate Court considered the purchase price to be equivalent to the value of the goods, although a 15% discount had been granted to the [Buyer], since the expert witness also confirmed that the purchase price stipulated in the contract was equivalent to the value of the goods at the time the contract was concluded.
The Appellate Court remarks that if the contract were qualified under the UN Convention on Contracts for the International Sale of Goods, the Appellate Court disagrees with the interpretation of the term "benefits derived from the goods" performed by the [Seller] who claimed that it refers to any value gained by the [Buyer] by using or selling the goods in question. The price for which the goods were subsequently sold by the [Buyer] may have been influenced by special circumstances of that particular relationship which had no connection to the original relationship between the parties to the proceedings and therefore the final "benefit" might even be lower than the original purchase price of the goods.
The Appellate Court therefore upheld the judgment of the first instance being correct with reference to the principal and the reimbursement of costs of the proceedings under sec. 220 CPC.
The court ruled on the reimbursement of the costs of the appellate proceedings under sec. 224 part 1 and sec. 142 part 1 CPC and since the [Buyer] was successful in the proceedings in defending its rights in entirety, the court granted to the [Buyer] a full reimbursement of the costs of the proceedings consisting of the costs of the legal aid amounting to 39,479.- Sk.
Instruction: An appeal against this judgment is not admissible.
Regional Court in Bratislava, 10 October 2007.
JUDr. Elena Ondrisova,
Chairman of thePanel
*All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the Republic of Austria is referred to as [Seller] and Defendant of the Slovak Republic is referred to as [Buyer]. Amounts in the currency of the Slovak Republic (Slovak koruna) are indicated as [Sk].
** Juraj Kotrusz is a Slovak lawyer who studied law at the University of Trnava, Slovakia, and at the Hague Academy of International Law. He is the Editor of the CISG Slovakia website.Go to Case Table of Contents