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CISG CASE PRESENTATION

France 16 September 2008 Supreme Court (Potato seedling case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/080916f1.html]

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

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Case identification

DATE OF DECISION: 20080916 (16 September 2008)

JURISDICTION: France

TRIBUNAL: Cour de cassation [Supreme Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Pourvoi no. 07-11803; 07-12160

CASE NAME: Société Industrielle et Agricole du Pays de Caux (SIAC) v. Agrico Cooperatieve Handelsvereiniging Voor Akkerbouwgewassen BA

CASE HISTORY: 1st instance Tribunal de Grande Instance de Rouen 13 July 2005; 2d instance Cour d'appel Rouen 19 December 2006 [affirmed]

SELLER'S COUNTRY: Netherlands (defendant)

BUYER'S COUNTRY: France (plaintiff)

GOODS INVOLVED: Potato seedlings


UNCITRAL case abstract

FRANCE: Court of Cassation, Commercial Division (Potato seedling case) 16 September 2008

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/104],
CLOUT abstract no. 1028

Reproduced with permission of UNCITRAL

Abstract prepared by Claude Witz

A company based in France bought from an agricultural cooperative based in the Netherlands a large quantity of potato plants grown from seed produced by a Dutch farmer. Delivery took place in February 1998. The potatoes were planted out and harvested in September of the same year. Part of the crop was sold to retail potato producers and the rest was kept as seed. The tubers produced by the latter in September 1999 were sold on to various French growers, where they developed a bacterial disease, ralstonia solanacearum, commonly known as brown rot. A number of claims were lodged with the court of first instance in Rouen, one of which was by the French importer against the Dutch exporter. The others were lodged by French farmers whose crops had been affected by the disease and who claimed compensation for their loss from both the French and the Dutch company.

For the case relating to contractual liability brought by the plaintiff, the French importer, against the defendant, the Dutch seller, the Rouen Appeal Court applied CISG. It dismissed the plaintiff's claim because the two-year deadline set out in CISG, article 39, paragraph 2, had not been met. The goods had been delivered on 2 February 1998 and the deadline had expired on 2 February 2000, before the disease had appeared. Moreover, the Appeal Court declined to apply article 40, under which the two-year deadline could be set aside if the lack of conformity related to facts of which the seller knew or could not have been unaware and which he had not disclosed to the buyer.

The Court of Cassation rejected the plaintiff's appeal. Firstly, the Appeal Court had been justified in its decision not to apply CISG, article 40, on the grounds that the plants in question were accompanied by a certificate to show that tests for brown rot had been negative and that the Dutch farmer was not subject to any prohibition on production, since the mere fact that production areas surrounding the Dutch agricultural operation were contaminated with the disease was not, in itself, enough to infer that the seller had failed to give notice of a lack of conformity. Secondly, the plaintiff had claimed a breach of article 6 of the European Convention on Human Rights, which assured the right to a fair trial. In his appeal, the plaintiff had claimed that article 6 of the Convention prohibited a person from being denied a hearing upon the basis of a time limit for action in place before a defect was discovered, namely before proceedings were instituted. The plaintiff had raised this argument for the first time before the Court of Cassation, which found that line of reasoning inadmissible, since it was a new argument and was a mixture of the factual and the legal. The Court of Cassation did not, therefore, consider the merits of the compatibility of CISG, article 39, paragraph 2, with article 6 of the European Convention on Human Rights, unlike the reporting judge, who had firmly asserted the complete compatibility of CISG, article 39, paragraph 2, and the European Convention.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 40 [Also cited: Articles 35 ; 38 ; 39 ]

Classification of issues using UNCITRAL classification code numbers:

40B [Seller's knowledge of non-conformity (failure to disclose): seller loses right to rely on articles 38 and 39]

Descriptors: Lack of conformity known to seller

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1369&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (French): CISG-France database <http://www.cisg-france.org//decisions/160908v.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1369&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Supreme Court
Société SIAC v. Agrico

16 September 2008

Translation [*] by Andrea Vincze [**]

Edited by Leandro Tripodi [***]

The Commercial Panel of the Supreme Court handed down the following judgment.

Joint appeals No. N 07-12. 160 and No. Z 07-11. 803 which challenged this judgment:

Acknowledging the withdrawal of the appeal by Mr. X..., Companies Deve, Bigot, Hêtres, by Ms. Y..., Z..., Company La Chapelle, by Ms. A..., B..., L..., M..., N..., by Ms. C..., D..., by Ms. E..., F..., G... and Companies Forest and Vandermersch (Plaintiffs) against Companies Agrico Cooperatieve Handelsvereiniging Voor Akkerbouwgewassen BA Company, Yemanville and Company Régie and Mr. H;

Ruling on both the principal appeal filed by "Société industrielle et agricole du pays de Caux" [Industrial and Agricultural Company of the Caux Region], Mr. I..., in the official capacity of administrator and legal representative, by Mr. X and the other 18 appellants and on the ancillary appeal raised by Company Régie;

Whereas, pursuant to the appealed judgment (Rouen, 19 December 2006), on 5 February 1998, the Dutch corporation "Agrico Cooperatieve Handelsvereiniging Voor Akkerbouwgewassen BA" [Seller] delivered to the "Société industrielle et agricole du pays de Caux" [Buyer] twenty-five tons of potatoes purchased from Mr. S, who grew the crops, a part of which was used for a second reproduction.

The tubers grown during this second reproduction in September 1999 were sold to other producers. During the course of the year 2000, these tubers developed the symptoms of a bacterial infection called "ralstonia solanacearum", requiring severe prophylactic measures.

A forensic expert concluded that the only possible source of the contamination was the potato lot purchased by [Buyer] from [Seller].

[Buyer] requested compensation from [Seller], while Company Régie and nineteen other farmers whose crops were affected by the bacteria requested compensation from [Buyer] and [Seller].

Concerning the first argument in appeal No. 07-12.160:

[Buyer] contests the judgment in that the Court of Appeal dismissed [Buyer]'s claim of lack of conformity for not having filed a claim within the period of two years and consequently reversed the judgment against [Seller].

[Buyer] presents the following arguments:

1. Article 40 of the Vienna Convention on the International Sale of Goods prevents a seller from relying on a denial of remedy to a buyer under the Convention where the buyer fails to notify the seller of lack of conformity within the specified two-year period, if the seller was aware of such risk and did not notify the buyer about it. Therefore, in this case, as it was not examined whether [Seller] knew about the risk of contamination of the products from Mr. S despite a negative test, the decision of the Court of Appeal lacked legal basis with regard to Article 40 of the Vienna Convention.

2. In its appeal claims submitted on 28 June 2006, [Buyer] raised a plea of judicial admission by [Seller] on first instance, which recognized its knowledge that Mr. S 's land was contaminated and that it did not ignore the existence of that source of infection.

In not responding to [Buyer]'s conclusive findings concerning [Seller]'s judicial admission, the Court of Appeal violated Article 455 of the Code of Civil Procedure.

3. In any event, the Court of Appeal noted:

   -    First, that "the contractual terms prohibiting reproduction two years in a row amounted to implicit assumption of risk: had the bacteria not existed at the time of dispatch, no concerns would have existed as to the reproduction, yet the reproduction by [Buyer] allowed detection of the bacteria and prevention of spreading within the territory;" and
 
   -    Second, that "no [consequences] can be drawn merely from these elements of significant conclusions regarding the presence or absence of the ralstonia solanacearum germs found in the seedlings imported during the delivery."

By thus ruling based on contradictory grounds, the Court of Appeal violated Article 455 of the Code of Civil Procedure.

4. The Court of Appeal noted that Mr. S., the producer of the seedlings in dispute, was required "to perform the tests specified in Article 16 bis of Directive 77/93/EEC on at least 200 tubers per every shipment of 25 tons and declare that the samples were not infected by ralstonia solanacearum", and "concerning the tests in 1998, at the time of the introduction [of the crops] in France, one sample of the 1,000 tubers called "Demazieres" proved to be positive in two IF tests, and upon request for confirmation by laboratory PV in Rennes, it tested positive on clavibacter rather than ralstonia solanaceanum."

Based on these findings, as no tests were performed as to the ralstonia solanacearum, the Court of Appeal could not reasonably find that the certification relating to the lot in dispute authorized Mr. S. and consequently [Seller] to put the goods on the market because the tests did not meet the requirements of the Directive.

Therefore, as it was decided that since the seedlings in dispute received a certification with negative test results, [Buyer] cannot argue that [Seller] concealed the defect alleging that the decision of the Court of Appeal, having not examined whether [Seller] should have known about the defect, lacks legal basis because it is not in conformity with Article 40 of the Vienna Convention.

5. In any event, under Article 6 of the European Convention on Human Rights, everyone has a right to fair trial.

This right presupposes that the right to access to a tribunal is not challenged by a requirement to comply with a deadline to act that runs before the defect is discovered, that is, before the action is commenced.

Therefore, in this case, pursuant to Articles 38 and 39 of the Vienna Convention, the Court of Appeal could not find that [Buyer] was able to act only until 2 February 2000, whereas [Buyer] discovered the defect in October 2000, i.e., after the deadline expired. Therefore, with this ruling the Court of Appeal violated Article 6 of the European Convention on Human Rights.

But whereas, firstly, having accepted that when the seedlings in dispute received a certification of negative test results, [Buyer] could not have argued that [Seller] concealed a quality defect which [Seller] ignored, Mr. S. was not subject to any production ban, and the fact that the seedlings were bred in an area affected by potato brown rot could not by itself constitute concealment under Article 40 of the Vienna Convention on the International Sale of Goods, the Court of Appeal, without examination of the issues set out in paragraphs 1 and 4 and holding that the answer in paragraph 2 is irrelevant, made its ruling without going into a contradiction based on a non-binding expert opinion.

Whereas, secondly, the 5th paragraph contending a violation of Article 6-1 of the European Convention on the protection of fundamental human rights and liberties consists of a new argument raising issues of both facts and law.

Therefore, it follows that the claim is inadmissible as to paragraph 5, and thus the rest cannot be accepted either.

Concerning the sole argument in the ancillary appeal:

Whereas, Company Régie objects to the judgment for rejecting its request for compensation from the [Seller], arguing that:

1. Having established that the tests in 1998, at the time of introduction [of the crops] in France, were performed regarding clavibacter rather than ralstonia, the Court of Appeal cannot confirm without contradicting itself that producer S was not affected by ralstonia solanacearum; and therefore, it violated Article 455 of the Code of Civil Procedure.

2. The Court of Appeal affirmed that [Seller] did not commit any default in having taken the risk for marketing the seed potatoes produced in a contaminated area by a producer subject to strict control, noting, on the other hand, that Mr. S., the producer, also lent its equipment to his neighbor Mr. B who was not subject to strict control, and this represents a default concerning the guarantees provided by the former, and it is a fact that in the polders, brackish waters interact and convey ralstonia solanacearum.

Therefore, considering that under such conditions [Seller] did not act recklessly, the Court violated Article 1382 of the Civil Code.

But whereas, the Court of Appeal, without any contradiction, assessing technical details of the tests and non-binding conclusions of the forensic expert, held that it cannot draw any [consequences] merely from conclusions regarding the presence or absence of the ralstonia solanacearum germs found in the seedlings imported during the delivery and that it was not characterized as misconduct, negligence or recklessness by [Seller], the risk assumed by the latter in stocking up seed potatoes from a contaminated area but produced by a farmer subject to strict control, known to be free from any contamination by ralstonia solanaceraum and not subject to a production ban, cannot be considered as reckless conduct.

Based on these findings and assessments, the decision of the Court of Appeal was correct; accordingly, the argument is unfounded.

Concerning the sole argument in appeal No. Z 07-11. 803:

Whereas, the appellants object to the judgment for holding that they must bear their own appeal costs, whereas, according to the argument, the losing party must pay the costs unless the judge rules that he allocates all costs or a part of them to another party.

Placing this liability is required by the law.

By conditioning the order that [Buyer] must pay the costs of appeal of all non-losing appellants on a request by the latter parties, the Court of Appeal violated Article 696 of the Code of Civil Procedure.

But whereas, it is within discretionary powers of the Court of Appeal to order the appellants to pay the costs of appeal as their claims are defeated by those of [Seller].

And whereas, the second ground of appeal in appeal No. 07-12.160 is not likely to permit admission of this appeal,

FOR THE ABOVE REASONS:

THE COURT REJECTS the primary and the ancillary appeals;

And establishes liability of la Société industrielle et agricole du pays de Caux [Buyer], Mr. B..., in the official capacity of administrator and legal representative, and the Company Régie concerning the legal costs on appeal No. N 07-12. 160, and Mr. X. and the other 18 appellants concerning the costs on appeal No. Z 07-11. 803;

Pursuant to Article 700 of the Code of Civil Procedure, the claims are rejected.

This is the judgment of the Panel of Commerce, Finance and Economy of the Supreme Court, as declared by its President at an open trial on the sixteenth of September two-thousand-eight.


FOOTNOTES

* All translations should be cross-checked against the original text. For purposes of this translation, Plaintiff-Appellee Agrico Cooperative Handelsvereiniging Voor Akkerbouwgewassen BA of the Netherlands is referred to as [Seller] and Defendant-Appellant Société industrielle et agricole du pays de Caux of France is referred to as [Buyer].

** Andrea Vincze is a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, and her LL.M. at Pace Law School. She is working on her Ph.D. on ICSID arbitration, and is researching international commercial law and ADR.

*** Leandro Tripodi is a law student at the University of São Paulo and was a member of its team in the 16th Willem C. Vis International Commercial Arbitration Moot. He is an associate of the Brazilian Arbitration Committee (CBAr) and an employee at Brazil's Ministry of Finance.

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Pace Law School Institute of International Commercial Law - Last updated March 18, 2011
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