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CISG CASE PRESENTATION

Slovak Republic 5 February 2008 District Court in Bardejov (MDF Doors Case - 3) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/080205k3.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20080205 (5 February 2008)

JURISDICTION: Slovak Republic

TRIBUNAL: District Court in Bardejov

JUDGE(S): Jana Dubrivska

CASE NUMBER/DOCKET NUMBER: 1Cb/270/2005

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Poland [Plaintiff]

BUYER'S COUNTRY: Slovak Republic [Defendant]

GOODS INVOLVED: MDF doors


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7 ; 11 ; 30 ; 53 ; 59 ; 78

Classification of issues using UNCITRAL classification code numbers:

7C22 ; 7C231 [Recourse to general principles on which Convention is based ; Recourse to domestic law selected by Private International Law];

11A ; 11B [Writing or other formality for conclusion of contract ; Proof of contract by any means, including witnesses];

30A [Summary of seller’s obligations];

53A [Buyer’s obligation to pay price of goods];

59A ; 59B [Payment due at time fixed or determinable by contract or Convention ; No need for request by seller or other formality];

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Unavailable

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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

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Slovak): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

District Court in Bardejov

5 February 2008 [1Cb/270/2005]

Translation [*] by Juraj Kotrusz [**]


JUDGMENT
IN THE NAME OF THE SLOVAK REPUBLIC

The District Court in Bardejov, decided by a single judge, JUDr. Jana Dubrivska, in the case of Plaintiff S.G., Z.P.M.G " E.-I. [Seller], with its registered office in G., L. n., Republic of Poland …, represented by attorney JUDr. I.P.G., versus Defendant M. J.-N. [Buyer], with its registered office in R.N., B. [Slovak Republic] …, regarding payment of 111,455.20 Slovak koruna [Sk] and appurtenances

has decided as follows:

The [Buyer] is obliged to pay the [Seller] the sum of 111,455.20 Sk with interest of 16% annually for the period from 6 March 2004 until payment, all within three days after the judgment comes into force.

The [Buyer] must pay the [Seller] costs amounting to 25,624.- Slovak koruna [Sk] within three days of the effective date of this judgment on behalf of [Buyer]'s legal counsel, JUDr. I.P.G.

REASONING

The [Seller] asserted, by its action filed with the court on 27 June 2005, its right to payment of 111,455.20 Sk with interest of 12% annually for the period from 6 March 2004 until payment and compensation costs for the proceedings and the unpaid purchase price for the goods delivered by the [Seller] to the [Buyer]. The [Seller] justified its claim by stating that it delivered the goods to the [Buyer] and subsequently claimed the right to payment of the price by drawing invoice no. 110/EX/2004/RZ of 20 February 2004 for the sum of 11,710.10 Polish zloty [PLN] due on 5 March 2004. The [Buyer] failed to pay this invoice despite [Seller]'s efforts on 22 April 2005 for an out of court settlement of its claim. The [Seller] supported the asserted interest rate by referring to sec. 735 and 502 of the Slovak Commercial Code.

On 12 August 2005 the court issued the order to pay, rec. no.: 2Rob 160/2005-20, which was subsequently cancelled due to the inability to deliver the order to the [Buyer] and ordered a public hearing with reference to sec. 173 part 2 of the Slovak Civil Procedure Code (hereinafter referred to as "CPC").

At the hearing held on 21 September 2006, the [Buyer] stated that it did not oppose the [Seller]'s claim but asserted its right to unilateral set-off of its claim for damages asserted on 30 March 2004 arising from the contract on exclusive agency from 26 February 2002. The [Buyer] further stated that it did not pay the price because it set-off against the penalty arising out of breach of the [Seller]'s obligation of exclusivity which occurred for the first time at the exhibition in A. N. in March 2003, as it was precisely described in the [Buyer]'s opposition. The [Buyer] asked the court to interrogate witnesses - Mr. J.H., company D and Mr. H. and V.P. in order to prove its arguments. The [Buyer] also stated that according to its information, the [Seller] was being investigated for crimes connected to the subject matter of this dispute including fraud arising from illegal business activities in the Slovak Republic. The [Buyer] proved the alleged breach of exclusivity clause by submitting invoice no. 00651/EX/2003/B from 27 September 2003 to the court which proved that the [Seller] sold doors to other business entity, even though under sec. 2.2 of the contract the [Seller] was not allowed to provide the doors to a third person, not even for purpose of exhibition.

The [Seller] defended the claim it asserted in the action. The [Seller] explained that the parties entered into an oral contract of sale in which the parties agreed on specification of the goods and the price, as it is provided in the invoice, and with reference to relevant trade usages the parties have agreed on a due date of 5 March 2004. Since the parties did not agree upon an interest rate, the [Seller] claims the statutory interest rate. The [Seller] denied the [Buyer]'s claim, and [Seller] claims it did not breach the exclusivity contract. The [Seller] further asserts that the [Buyer] bears the burden of proof to prove its claim.

By its resolution of 4 December 2006, rec. no.: 1Cb/270/2005-45, the court allowed changing the action with respect to the claimed interest, where the [Buyer] shall be obliged to pay 111,455.20 Sk with interest of 16% annually for the period of 6 March 2004 until payment and to pay the reimbursement of costs of the proceedings.

At the hearing held on 31 January 2008 the [Seller] specified that the contract of sale was finalized upon a telefax order the [Buyer] sent a week or two before delivery of the goods sometime in March 2004. The [Buyer] confirmed this. Concerning its alleged breach of the exclusivity clause, the [Seller] referred to article 7 section 7.2 of the contract which stated that all disputes arising from this contract shall be tried by the competent court of the Republic of Poland and therefore the District Court in Bardejov does not have jurisdiction to try this claim. The [Seller] further referred to the letter from the [Buyer] represented as a cancellation of the contract on exclusive agency which stated that the [Buyer] cancels the contract on 16 January 2004 and the [Seller] accepted this act. The [Seller] argued that the parties were also dealing with each other after cancellation of the contract on exclusive agency, as they were under the contract that is the object of this proceeding. The [Seller] repeated that he was not aware of any conduct that would constitute a breach of the exclusivity clause and that no such breach was proved by the [Buyer].

The [Buyer] responded by referencing a rapid decrease in sales subsequent to the [Seller]'s breach of the exclusivity clause. The [Buyer] confirmed that it did purchase the goods and that the [Seller] invoiced the agreed purchase price, as stated in the action, but asserts that it did not pay the price because the [Seller] breached the exclusivity clause. The [Buyer] confirmed that it continued dealings with the [Seller] subsequent to the alleged breach of the exclusivity clause but these dealings were in a substantially smaller amount than prior to the breach. The [Buyer] therefore asked the court to dismiss the action and stressed that it will claim its rights under the contract on exclusive agency before the competent court.

The court gathered evidence by interrogating the [Seller], represented by its attorney, reading documents submitted to the court, i.e. invoice no. 000110/EX/2004/RZ of 20 February 2004, the contract of sale finalized by the parties to the proceedings on 26 February 2002, letter from Mr. V addressed to the [Buyer] submitted in the proceedings, rec. no. 1Cb/266/2005, call for payment of 50,000- Euro [EUR] from 29 March 2004, invoice no. 00651/EX/2003/B, documents submitted in the proceedings, rec. no.: 1Cb/265/05 and 1Cb/266/05, records of the parties to the proceedings from trade registers and thereby investigated this factual situation:

The [Seller] and the [Buyer] created a contract of sale when the [Buyer] sent a purchase order via telefax and the [Seller] accepted. Pursuant to this contract, the [Seller] delivered the goods to the [Buyer] - MDF doors and other goods as specified in invoice no. 000110/EX/2004/RZ; the [Buyer] handed over the goods; this fact was not challenged by the parties. The parties also did not oppose the fact that the price of the goods delivered was included in the abovementioned invoice for the sum of 11,170.- PLN which corresponds to the sum of 111,450.20 Sk. This invoice also prescribed the due date and the price, as agreed by the parties when they finalized the contract.

The [Buyer] did not oppose the [Seller]'s claims that [Buyer] did not pay the price but the [Buyer] claimed that it acted so because the [Seller] breached the 26 February 2002 contract on exclusive agency. The court analyzed the issues by reviewing the records of the proceedings maintained by this court under no. 1Cb/265/05 and 1Cb 266/05 where the [Seller] also claims the price for the goods delivered and where the [Buyer] counterclaimed for damages for breach of the contract on exclusive agency by filing oppositions against orders to pay and asked the court to dismiss the respective actions and to bind the [Seller] to pay 50,000.- EUR with interest of 12% annually for the period from 29 March 2004 until payment, deducting the sums claimed by invoices no. 35/04, 110/04, and 131/04 amounting to 47,301.- PLN.

The [Seller] has its registered office in the Republic of Poland; the [Buyer] has its place of business in the Slovak Republic. This constitutes an international relationship. The court therefore had to determine whether it had jurisdiction over the [Seller]'s claim for the purchase price and whether it had jurisdiction over the [Buyer]'s related claim for contractual penalty, which had already been examined in prior proceedings, 1Cb/265/05 and 1Cb/266/05. Since the proceedings concern an international relationship, the court must also determine the law that will govern the [Seller]'s claim for the purchase price. Since both the Republic of Poland and the Slovak Republic are European Union member states, the court's jurisdiction shall be examined under the Regulation of the Council no. 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters in effect from 1 March 2002 which is binding on all EU member states and directly applicable in accordance with the Treaty on the establishment of the European Economic Community (article 76 of the Regulation). These states are not party to any bilateral treaty governing the jurisdiction of the court in commercial matters and this issue is not governed by the UN Convention on Contracts for the International Sale of Goods (hereinafter referred to as the "Convention") published in the Collection of Acts as no. 160/1991 Coll. which shall be applied to qualify the [Seller]'s claim for purchase price.

Under article 2 part 1 of the Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

Under article 60 part 1 of the Regulation, for the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its statutory seat, or central administration, or principal place of business.

Under article 3 part 1 of the Regulation, persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter.

Under article 5 of the Regulation, a person domiciled in a Member State may, in another Member State, be sued:

1.   (a)   in matters relating to a contract, in the courts for the place of performance of the obligation in question;
  (b)   for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:
    -   in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,
    -   in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,
  (c)   if subparagraph (b) does not apply then subparagraph (a) applies;

Under article 6 part 3 of the Regulation, a person domiciled in a Member State may also be sued on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending.

Under article 23 part 1 of the Regulation, if the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be ether in writing or evidenced in writing; or in a form which accords with practices which the parties have established between themselves; or in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

Under article 24 of the Regulation, apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22.

Under article 26 part 1 of the Regulation, where a defendant domiciled in one Member State is sued in a court of another Member State and does not enter an appearance, the court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of this Regulation.

With reference to article 2 part 1 of the Regulation the court of the Slovak Republic has jurisdiction to try the [Seller]'s claim for payment of 111,455.20 Sk as the unpaid price for the goods delivered. Taking the [Buyer]'s place of business into account, the Bardejov District Court is competent to try this case.

Nevertheless, according to article 23 part 1 and article 26 part 1 of the Regulation, the Bardejov District Court does not have jurisdiction to try the [Buyer]'s counterclaim, which was asserted in the proceedings, rec. no. 1Cb/265/05 and 1Cb/266/05, since the abovementioned contract on exclusive agency prescribes in its 7 part 7.2 that all disputes arising from this contract shall be resolved by the competent court of the Republic of Poland.

Under sec. 2 of act no. 97/1963 Coll. on international private and procedural law as amended, the provisions of this act can only be used, unless a particular international convention ratified by the Slovak republic or an act created to implement such convention, stipulates otherwise.

Therefore, the court only decided the [Seller]'s claim for payment of the purchase price for the goods delivered. Each party to the proceeding has its registered office (in case of the [Buyer] its place of business) in a different state.

Under section 756 of the Slovak Commercial Code, provisions of this act shall be applied only if not otherwise provided by an international convention that is binding for the Slovak Republic and that was published in the Collection of Acts.

Contracts for sale of goods entered into by parties who have their places of business in different states, which are member states of the Convention, shall be governed by the UN Convention on Contracts for the International Sale of Goods (hereinafter referred to as the "Convention") published in the Collection of Acts as no. 160/1991 Coll.

The [Seller] has its registered office in the Republic of Poland and this fact was obvious to the [Buyer] from the invoice, which was also written in the Polish language. The [Buyer]'s place of business is in the Slovak Republic. Both states are member states of the Convention and no opting out of the Convention was proved in the proceedings, therefore the Convention is applicable to this relationship.

-   Under article 11 of the Convention, a contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.
 
-   Under article 30 of the Convention, the seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention. The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention (article 53 of the Convention).
 
-   Under article 59 of the Convention, the buyer must pay the price on the date fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller.
 
-   Under article 78 of the Convention, if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it.
 
-   Under article 7 of the Convention, questions concerning matters governed by this 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.

With reference to the evidence gathered, the court found that the [Seller] performed its obligation from the contract of sale and delivered the goods, as was also approved by the [Buyer]. The court also determined that the [Buyer] failed to fulfil its obligation to pay the price for the goods delivered. The [Buyer] conceded this fact and supported its position by claiming that the [Seller] breached its obligation from a separate contract on exclusive agency. Since this claim has no impact on the existence of the [Buyer]'s obligation to pay the price arising from the contract of sale and since the court does not have jurisdiction to decide the [Buyer]'s counterclaim, the court found, from the gathered evidence and by application of the Convention, that the claim asserted by the [Seller] in its action is justified and therefore the court upheld the action in its entirety and bound the [Buyer] to pay the sum of 111,455.20 Sk with interest of 16% annually for the period from 6 March 2004 until payment. The [Buyer] had the obligation to pay the purchase price for the goods delivered, as asserted by invoice no. 000110/EX/2004/RZ, until 5 March 2004. The [Buyer] failed to fulfil this obligation and therefore was in default of performance of this obligation from the day after the due date of the invoice, where the interest rate was calculated in accordance with sec. 369 of the Slovak Commercial Code.

The court considered the reimbursement of the costs of judicial proceedings under sec. 142 part 1 CPC in connection with sec. 151 part 1 CPC and granted a full reimbursement of the costs to the [Seller], since the [Seller] was successful in asserting its claim in its entirety.

Instruction: An appeal against this judgment must be filed via the District Court in Bardejov within fifteen days of its receipt.

District Court in Bardejov, 5 February 2008

JUDr. Jana Dubivska, Judge


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the Republic of Poland is referred to as [Seller] and Defendant of the Slovak Republic is referred to as [Buyer]. Amounts in the currency of the Republic of Poland (Polish zloty) are indicated as [PLN]; amounts in the currency of the Slovak Republic (Slovak koruna) are indicated as [Sk], amounts in the currency of the European Union (Euro) are indicated as [EUR].

** 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.

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Pace Law School Institute of International Commercial Law - Last updated April 14, 2011
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