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CISG CASE PRESENTATION

Netherlands 7 October 2008 Gerechtshof [Appellate Court] Arnhem (Arens Sondermaschinen GmbH v. Smit Draad / Draad Nijmegent B.V.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/081007n1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20081007 (7 October 2008)

JURISDICTION: Netherlands

TRIBUNAL: Hof Arnhem [Hof = Gerechtshof = Appellate Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: LJN BG2086, zaaknummer 104.003.479

CASE NAME: Arens Sondermaschinen GmbH v. Smit Draad / Draad Nijmegen B.V.

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany

BUYER'S COUNTRY: Netherlands

GOODS INVOLVED: Wire plaiting machine


Case abstract

Reproduced with permission of European Journal of Commercial Contract Law (2009-1) 40

Gerechtshof Arnhem

7 October 2008 [LJN BG2086]

Case abstract by Sonja Kruisinga

"The Court of Appeal of Arnhem had to decide a case concerning wrongful performance by the seller. A dispute arose as to the question of whether the buyer had offered the seller an additional period of time of reasonable length within the meaning of Article 47(1) CISG for the performance of the seller's obligations and, if so, when this period would lapse. In answering these questions, the Court of Appeal applied Article 8 CISG to the interpretation of the statements made by and the other conduct of the contracting parties. This provision requires that any conduct is to be interpreted according to the subjective intention where the other party knew or could not have been unaware of what that intention was. In all other cases, the statements made by and the other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances. In doing so, due consideration is to be given to all the relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves and any subsequent conduct of the parties. The Court of Appeal held that it was the intention of the buyer to allow the seller a final opportunity to perform its obligations. Therefore, the Court held that the period of time granted was an additional period of time within the meaning of Article 47 CISG.

"The Court also held that in determining whether a breach of contract amounts to a fundamental breach within the meaning of Article 25 CISG, it is also relevant whether the breach of contract can be repaired within a reasonable time. This is because the seller may, even after the date for delivery, remedy at his own expense any failure to perform his obligations (Article 48(1) CISG)."

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 3 ; 8 ; 25 ; 26 ; 35 ; 47 ; 48 ; 49

Classification of issues using UNCITRAL classification code numbers:

3B [Goods to be manufactures, services: services [not] preponderant part of obligation];

8A ; 8B ; 8C [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct; Interpretation based on objective standards; Interpretation in light of surrounding circumstances];

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

26A1 [Effective declaration of avoidance: notice to the other party required];

35A [Conformity of goods to contract: quality, quantity and description required by contract];

47A2 [Buyer's right to fix additional period for performance: basis for avoidance for delay in delivery];

48A [Cure by seller after date for delivery: seller's right to remedy any failure to perform];

49A1 ; 49A21 [Buyer's right to avoid contract (grounds for avoidance): fundamental breach of contract; Seller does not deliver or refuses to deliver within additional period set under Art. 47]

Descriptors: Services ; Intent ; Fundamental breach ; Avoidance ; Conformity of goods ; Nachfrist ; Cure

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

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

Appellate Court (Gerechtshof) Arnhem

7 October 2008 [BG2086 / 104.003.479]

Translation [*] by Thorsten Tepasse [**]

Judgment in the dispute between:

[Seller] Arens Sondermaschinen GmbH, [*] a company under German law with its seat in Ennepetal, Germany, Claimant in the appellate proceeding,represented by attorney Mr. A.H.M. Bouwmeister

vs.

[Buyer] Smit Draad/Draad Nijmegen B.V., [*] a company under Dutch law,Defendant in the appellate proceeding, represented by attorney Mr. J.A.M.P. Keijser.

1. THE PROCEEDING BEFORE THE COURT OF FIRST INSTANCE [Rechtbank Arnhem]

Referring to the proceeding before the Court of First Instance, the Appellate Court points to the content of the judgments of 26 October 2005 (released under case no. LJN:AU8819), 21 June 2006, 27 September 2006, 13 December 2006 and the corrected version of the latter judgment of 18 January 2007 (the version the Court will apply whenever reference is made to the judgment of 13 December 2006) that the Rechtbank Arnhem handed down in the dispute between the Claimant (hereinafter referred to as [Seller]), which is Respondent in main claim and Claimant in the counterclaim and the Respondent (hereinafter referred to as [Buyer]), which is Claimant in main claim and Respondent in the counterclaim. The judgments are attached to this judgment as a copy.

2. THE APPELLATE PROCEEDINGS

2.1  By affidavit of service of 10 March 2007, [Seller] appealed against the judgments of 21 June 2006, 27 September 2006 and 13 December 2006 and requested that [Buyer] be summoned before this Court.

2.2  In a memorandum containing a provisional claim, [Seller] filed and elaborated on six challenges to the judgments, offered evidence and forwarded new submissions. [Seller] requested the Court to hand down a decision provisionally enforceable and

      a.  to bar [Buyer] from enforcing the judgment of 13 December 2006 for the duration of this proceeding by handing down a preliminary decision and to order [Buyer] to bear the costs of this preliminary decision; and furthermore

      b.  to repeal the challenged judgments and to hand down a new decision:

1.   declaring that [Buyer]'s main claim is unfounded and denying [Buyer]'s demand;
2.   granting [Seller]'s counterclaim; and
3.   ordering [Buyer] to bear the costs of the proceedings in both instances (for claim and counterclaim), plus payment of judicial interest in case the costs of the proceedings are not paid within 14 days after the date named in the judgment.

2.3  In response to [Seller]'s provisional claim, [Buyer] requested the Court to find by judgment, if possible enforceable upon providing security, that [Seller]'s provisional claim is unfounded or to deny [Seller]'s demand as legally unfounded and to order [Seller] to bear the costs for filing the provisional claim.

2.4  By memorandum, [Seller] withdrew its provisional claim concerning suspension of enforcement of the challenged decision of 13 December 2006.

2.5  In a memorandum responding to the remainder of [Seller]'s claims, [Buyer] challenged [Seller]'s arguments, held to its offer of evidence in First Instance and presented several files and facts for the proceeding. [Buyer] requested the Court to reject [Seller]'s appeal and confirm the challenged judgments and to order [Seller] to bear the costs of the appellate proceeding.

2.6  Subsequently, [Seller] requested discussion about the files forwarded.

2.7  Finally, the parties presented further facts to the Court, to enable the Court to make a decision.

3. THE ESTABLISHED FACTS OF THE CASE

3.1  The following facts either proven, conceded as true or not sufficiently challenged have been established for this dispute.

3.2  [Seller] operates a machine factory. [Buyer] produces copper cables and wires for electric and electronic purposes. On 13 January 2000, [Seller] and [Buyer] agreed on the designing, building and delivery of a Drillkopf together. A Drillkopf is a machine in which copper wire can be plaited so that a rectangular cable is produced. In this context:

   -    [Buyer] was supposed to provide [Seller] with its know-how concerning plaiting of copper wire, as far as [Seller] did not have such a know-how.
 
   -    [Buyer] furnished the know-how and should, as agreed, receive the first Drillkopf. Further, [Sellerer] should pay [Buyer] a commission on every Drillkopf [Seller] sold.

However, the parties did not reach an agreement to set out these provisions in writing.

On 1 March 2000, [Buyer] sent a purchase order (Order no. 00.1297) to [Seller] for delivery of one Drillkopf for the price of 400,000.00 DM [*]. The purchase order foresaw September 2000 as well as 5 January 2001 as delivery dates.

On 19 December 2000, [Seller] sent an invoice to [Buyer] for the sum of 80,000.00 DM for a Hand-Drillvorrichtung with the provision:

"On loan, for test purposes only. The amount due will be settled upon delivery of purchase order 00.1297."

[Buyer] paid the sum set out on the invoice of 19 December 2000. On 6 December 2001, [Seller] sent [Buyer] a note that the Drillkopf ordered should be delivered on 15 June 2002. The delivery did not take place on that date. By letter of 22 August 2002, [Buyer] wrote to [Seller] that "order 00.1297 for development and delivery of a Drillkopf" would be:

"terminated ... since [Seller] grossly exceeded the date of delivery and did not reach the technical specifications laid down in the purchase order."

Further, [Buyer] wrote in this letter:

"So far, you have received a prepayment in the amount of 40,903.35 EURO (i.e., 80,000.00 DM -- translator) from us.

50% was foreseen as a payment on the development costs and the other 50% was intended to be an ordinary deposit as agreed upon orally between you and us. The down payment should have been settled upon delivery of the Drillkopf. As delivery will not take place anymore, we request reimbursement of the deposit from you.

Please transfer the sum for our account within 30 days.

[...]

If you have a new concept for a Drillkopf within 8 - 12 weeks, we are always looking forward to make a new appointment with you."

On 27 September 2002 [Buyer] wrote to [Seller]:

"As already discussed on the phone, our personnel have foreseen three days in calendar week 41 (6 - 12 October -- translator) to check your Drillkopf. We need two days for assembling and disassembling and one day for testing the Drillkopf. We assume that you will attend those tests. [Buyer]'s employees have more than 20 years of experience and will give you a definite decision then. Further, we will supply you with a written report also containing photos."

By letter of 2 October 2002, [Buyer] sent to [Seller] a "measuring program for your Drillkopf", asking [Seller] to agree to that program within two weeks and to let [Buyer] know when the test should take place.

On 13 October 2002 [Seller] sent to [Buyer] an invoice for the Drillkopf in the amount of 137,963.25 EURO. [Buyer] did not pay this sum. On 2 and 3 December 2002, the Drillkopf was tested in [Buyer]'s facilities. On 14 February 2003, [Buyer] declared in a conversation with [Seller] that it would refrain from further cooperation.

4. THE REASONS FOR THE DECISION IN APPELLATE PROCEEDING

The [Buyer]'s claim and decision in first instance

4.1  In first instance [Buyer] requested the Court to:

1.   Find that the contract between the parties had been terminated, in any case to declare termination of contract;
2.   Order [Seller] to pay 40,903.35 EURO to [Buyer], plus legitimate interest; and
3.   Order [Seller] to pay the costs of the proceeding and extrajudicial costs in the amount of 9,372.06 EURO.

In a (conditional) counterclaim, [Seller] requested the Court to order [Buyer] to pay a sum of 184,065.07 EURO to [Seller], plus contractual interest -- in any case, legitimate interest -- and to also have [Buyer] bear the costs of the proceeding in the main claim and the (conditional) counterclaim.

4.2  On the [Buyer]'s main claim, the Rechtbank declared in the challenged judgment that the contract between [Seller] and [Buyer] of 13 January 2000 was terminated. Thus, it awarded to [Buyer] the requests named under 4.1. sub 2 and 3 of this judgment and declared this judgment enforceable upon providing security. The Rechtbank rejected [Seller]'s (conditional) counterclaim and ordered [Seller] (enforceable upon providing security) to bear the costs of the proceeding.

The essence of the dispute in appellate proceedings

4.3  The Court deduces from the memorandum that [Seller] seeks a decision on the whole dispute, apart from the Rechtbank's judgment of 26 October 2005, as it did not file any reasons against that judgment.

The legal nature of the agreement concluded by the parties

a) Sales contract and contract for work and services

4.4  The Court treats the agreement between the parties as a mixed contract. The contract is to be seen as a mixture of a sales contract and a contract for work and services. The parties did not challenge the decision of the Rechtbank (judgment of 21 June 2006, para. 2.2) that the dispute has to be decided pursuant to the provisions of the United Nations Convention on Contracts for the International Sale of Goods (11 April 1980, hereinafter referred to as CISG). Thus, this Court will also decide on that basis. To the extent that the agreement calls for performance of work and services, the CISG can also be applied pursuant to Art. 3(1) CISG. Consequently, the Court will decide on the merits of the case in the first place by applying the CISG in paras. 4.7 through 4.15.

b) Partnership

4.5  It stands firm that the parties intended to develop, produce and deliver the Drillkopf together and that [Buyer] was obliged to forward (and forwarded) its know-how especially concerning plaiting copper wire and copper wire in general, to the extent not available for [Seller]. It is further a fact that [Buyer] paid [Seller] a sum of 20,000.00 DM as a contribution for development costs and that [Buyer] and [Seller] tested the Drillkopf on 2 and 3 December 2002 together. Pursuant to the provisional decision of the Court, in the second place, the parties have concluded a partnership agreement. Following Art. 2 of the Wet Conflictenrecht Corporaties [*] (as far as decisive in the present case), a corporation (as well as partnership), which has its center of appearance to the public at the time of foundation in the same State pursuant to whose law the corporation was founded, has to be judged by the the law of that State. As there are not yet enough facts for a definite point of contact regarding this criterion, the Court cannot decide which law is applicable to the partnership agreement between the parties. The parties are invited to discuss that point during the negotiations arranged by the Court after this proceeding. The parties should especially elaborate on the point which law (Dutch or German) has to be applied on the termination of the agreement (s.a. para. 3.2 at the end - declaration of [Buyer] of 14 February 2003), as far as the agreement has to be judged as a partnership agreement (termination of contract as well as a possible claim for damages).

This question has also to be answered for the case that application of the CISG leads to the result that [Buyer] avoided the contract (as far as it has to be treated as a sales and services contract) lawfully, due to (in short) a breach of contract by [Seller] as well as for the opposite conclusion, the case that the avoidance took place without reason, as there was no breach of contract by [Seller].

4.6  In context to the aforesaid, during upcoming summons reference has to be made to reason VI, subsidiarily filed by [Seller], in which it challenged the judgment of 13 December 2006. There, in para. 2.8, the Rechtbank did not take any notice of [Seller]'s assertion (see responding memorandum in main claim, para. 33) that in case of termination of the contract of 13 January 2000, [Buyer] could only demand refund of half of its payment of 80,000.00 DM (i.e., down payment for the purchase price) and thus not [Buyer]'s payment of 40,000.00 DM for development costs.

For that reason reference has to be made to

   -    [Seller]'s invoice of 19 December 2000;
 
   -    [Buyer]'s letter of 22 August 2002 (both cited in this text under para. 3.2);
 
   -    [Seller]'s opinion (memorandum, paras. 45, 46) that it should reimburse only the down payment of 40,000.00 DM if the project should fail, for which it refers to Art. 2.2 of a concept-agreement which [Seller] alleges was drafted by [Buyer] (forwarded as appendix 3c of the responding memorandum on the main claim);
 
   -    [Buyer]'s objection on that point with reference to an explanation of its former executive (appendix 3 of the responding memorandum); and
 
   -    [Seller]'s response to the objection (see file, appendices 6-8).

The Court holds that without further determination, which is missing at the moment, it is not certain if [Buyer] can successfully be reimbursed the development costs of 40,000.00 DM it paid to [Seller]. The Court bases this provisional decision, on the one hand, on [Buyer]'s letter of 22 August 2002 and, on the other hand, on Art. 2.2 of the concept-agreement (appendix 3c of the responding memorandum in the main claim). The argument that [Buyer] submits under para. 36 of its responding memorandum (that the concept-agreement was not signed by [Buyer] cannot be taken as a proof for the accord of the parties that half of the sum was supposed to be a contribution to the development costs) does not bear in mind that it was [Buyer], which drafted the text of the concept-agreement. Insofar, the concept-agreement can at least be used to discover [Buyer]'s intent.

Decision on issues as far the agreement between the parties
has to be seen as a sales and work and services contract

4.7  The Court is at one with the Rechtbank (judgment of 21 June 2006, para. 2.8) that [Buyer] rescinded its notice of avoidance of 22 August 2002 by giving [Seller] the possibility to test the Drillkopf in its facilities on 2 and 3 December 2002. Hence, it is not relevant if a fundamental breach of the seller's obligations, as required by Art. 49(1)(a) CISG (in connection with Art. 25 CISG) was at hand on 22 August 2002.

4.8  In its judgment of 21 June 2006, the Rechtbank asked for an expert's opinion. The questions phrased by the Rechtbank (see para. 2.16 of the judgment of 21 June 2006) deal with the Drillkopf as it was tested on 2 and 3 December. [Seller] argues as the second reason (in its memorandum) that the Rechtbank was (also) obliged to order the expert to determine the condition of the Drillkopf at the time after modification by [Seller] (which was pursuant to [Seller] initiated by [Buyer], which [Buyer] rejects), i.e., between the tests of 2 and 3 December 2002 and the (admitted by Art. 26 CISG) oral declaration of avoidance of [Buyer] on 14 February 2003.

4.9  To rule on the second reason (para. 4.8), the question has to be answered if [Buyer] was on entitled to avoid the contract on 3 December 2002:

   -    Whether based on a fundamental breach as foreseen in Arts. 25, 49(1)(a) CISG; or
 
   -    Whether (given the case the non-delivery does not constitute a fundamental breach) based on the fact that the seller did not provide the goods sold within the period of grace granted by the buyer in accordance with Art. 47(1) CISG in connection with Art. 49(1)(b) CISG.

The rule following from Art. 49(2) CISG does not apply in the instant case, as the delivery of the Drillkopf to [Buyer] as required by this article never took place. However, [Seller] submits in its responding memorandum on the main claim (para. 19) that it delivered a Drillkopf to [Buyer] on 2 December 2002 and the Rechtbank took that delivery as a fact in its judgment of 26 October 2005 (para 2.7). Still, [Witness B], working for [Buyer], declared later and undisputed during summons of parties on 13 March 2006 that [Seller] appeared with two Drillkopfs in December 2002. One of these was modified with a "backing ridge" which was new for [Buyer] (see also the responding memorandum in the counterclaim, para. 11) and [Buyer] asked [Seller] to test this type for it. In its judgment of 27 September 2006, the Rechtbank refers (thus) to the Drillkopf in the condition as it was offered to [Buyer] on 2 and 3 December 2002 (and not delivered to [Buyer] on 2 and 3 December 2002).

4.10  First, the Court will seek to determine which point in time is decisive for the non-delivery to be regarded as a fundamental breach (Art. 49(1)(a) CISG): The date of the test (2 and 3 December 2002) or the date of declaration of avoidance (14 February 2003). In cases in which non-delivery amounts to a fundamental breach, the buyer is not required to grant the seller an additional period of time as foreseen in Art. 47 CISG. Pursuant to [Buyer]'s allegations, the avoidance is based on the results of the tests of 2 and 3 December 2002. In the introductory summons (paras. 8, 9 and in the same meaning para. 17 of the responding memorandum in appeal) it held that the tests revealed that the wire produced by the Drillkopf was not fit for the expected purposes and that, as the test definitely did not show an acceptable result, [Buyer] told [Seller] (as far as necessary) on its last visit on 14 February 2003 that it did not want any (further) cooperation. Accordingly, [Witness C] (one of [Buyer]'s heads of department) declared during the first court hearing:

"After we decided to stop cooperation with [Seller] on the basis of the test results in December 2002, we visited [Seller] to tell him our decision."

As [Buyer] based its avoidance of 14 February 2003 on the test results of 2 and 3 December 2002, to answer the question whether avoidance was lawful or not, it has to be determined if at that point in time a fundamental breach was at hand in the sense of Art. 25 CISG. Consequently the expert's report has to focus on the Drillkopf as it was provided by [Seller] on 2 and 3 December 2002.

4.11  Moreover, the Court will also deal with the case that non-delivery does not amount to a fundamental breach (Art. 49(1)(b) CISG) and with the question which point in time is decisive: the date of the test (2 and 3 December 2002) or the date of declaration of avoidance (14 February 2003). For that purpose, it has to be considered whether [Buyer] granted [Seller] an additional period of time of reasonable length to fulfill its contractual obligations (cf. Art. 47(1) CISG) and, if it did so, when this period of time expired.

On 22 August 2002, [Buyer] told [Seller] that they were willing to "fix a new date" if [Seller] presented a new "concept for the Drillkopf" within 8 to 12 weeks. Afterwards, [Buyer] told [Seller] that it would give a "definite decision" (letter of 27 September 2002, cited above in para. 3.2) after the test in calendar week 41 of 2002 (the Court understands: a "definite decision" on the question whether the Drillkopf fulfills the specifications as laid down in the "purchase order" agreed upon).

4.12  To answer the question under para 4.11, the Court consults Art. 8 CISG, which deals with the interpretation of statements and other conduct of the parties. This provision states that interpretation has to be performed by determining the mutual intent of the parties. Given the case of lack of mutual intent, statements and other conduct have to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances. Further, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties The Court holds that [Buyer]'s declaration to give a "definite decision" after the test (which finally took place on 2 and 3 December 2002) as described under para 4.11 constituted the setting of an additional period of time pursuant to Art. 47(1) CISG which expired on the date of the test. This intention was also noticeable for [Seller]. The Court has found that decision, since [Buyer] changed its mind since its declaration of avoidance of 22 August 2002, although the date of delivery (15 June 2002) self set by [Seller] meanwhile substantially elapsed. Hence it was clear for [Seller] that [Buyer] intended to give [Seller] a last chance to fulfill its obligations.

4.13  Based on the findings in paras. 4.11 and 4.12, the Court holds (given the case non-delivery does not constitute a fundamental breach) that [Buyer] granted [Seller] an additional period of time (in the sense of Art. 47(1) CISG) to perform its obligations, which expired on 2/3 December 2002. Hence, it follows that it is necessary that the expert's report elaborate on the point whether the Drillkopf as provided by the [Seller] on 2 and 3 December 2002 was in conformity with the contract (cf. Art. 35 CISG).

4.14  The Court also rules pursuant to explanation of reason II, aside from what was said under paras. 4.9 to 4.13, that the Rechtbank was not only authorized to entrust the appraiser with the question, whether the Drillkopf, as it was tested at [Buyer]'s facilities on 2 and 3 December 2002, did not meet the specifications as agreed upon by the parties or as they could have been deduced from the designated purpose in a way, that the Drillkopf was unfit for use in [Buyer]'s facilities, but also if the requirements of the contract could have been met in a reasonable time by enhancing the Drillkopf. The Court holds that, when determining whether the breach of contract was fundamental in the sense of Art. 25 CISG in connection with (the reason for avoidance) Art. 49(1)(a) CISG or not, it is also relevant, if the non-performance could have been remedied within a reasonable period of time. Following Art. 48(1) CISG, the seller is entitled to remedy at his own expense any failure to perform his obligations even after the date for delivery.

4.15  As a result of the considerations under paras. 4.9 to 4.14, reason II of the memorandum is rejected. On the one hand, the Rechtbank lawfully ordered the expert to examine the Drillkopf in the State on 2 and 3 December 2002. On the other hand, it also rightly ordered the expert to find out whether the Drillkopf could have been put into a condition in conformity with the contract in a reasonable time.

4.16  Since the Court, as it seems as a result of what was said above, has to request a new expert's report and the parties have the possibility to forward their questions to the appraiser, [Seller] does not have any interest in a decision on reason I at this point in time (dealing with the complaint, that the Rechtbank unlawfully barred the parties from forwarding questions to the appraiser).

No appeal against appointment of expert

4.17  Reason IV fails pursuant to Art. 194(2) last sentence Rv.[*], as there is no further appeal available against the nomination of the expert by the judge. Further, no reason was forwarded nor is obvious, why prohibition of appeal should be overcome in the instant case.

Expert's report

4.18  [Seller] argued in its explanation on reasons III and IV (memorandum paras. 26, 28, 29, 34) that the modifications made on the Drillkopf (allocated for inspection by the expert on 22 August 2006) between 2/3 December 2002 and 14 February 2003 were either of such minor relevance that they did not influence its function or could have easily and entirely been undone (particularly to fix the feather applied to the mechanical bar by two pins). To substantiate this argument, it filed a report by Prof. Dr. O. Oldewurtel (appendix 3 of memorandum). [Seller] offered further evidence on this point.

4.19  The Rechtbank in its judgment of 13 December 2006, para. 2.5: 

"found with letter of 19 October 2006, that facing the postponement already granted to [Seller] and the extra work [Buyer] had due to that postponement, any further postponement is unacceptable. The decision implied that [...] expert's inspection would come to an end."

Further, the Rechtsbank did not give an opportunity to the parties to react to the appraiser's report of 22 August 2006. These decisions were challenged by [Seller] with reasons V respectively III. The Court will not rule on these reasons yet. Pursuant to the judgment of the Rechtbank (para. 2.7), [Seller] did not offer adequate cooperation during execution of the appraiser's inspection. Hence, it follows that the appellate proceeding also aims at correcting self-made mistakes of one of the participating parties, leading to the result that another appraisal by an expert (upon installment to be paid by [Seller]) has to be conducted. In this regard, it is relevant that [Seller] submits in its responding memorandum, para. 50, that it is still able and ready to deliver the Drillkopf in the configuration supplied on 22 August 2002 with further construction drawings and other relevant data.

4.20  The Court will arrange negotiations between the parties to debate appointment of (an) appraiser(s) and which questions should be forwarded to the appraiser(s) (in this context the Court keeps the questions phrased by the Rechtbank and the additional question, if the Drillkopf delivered on 22 August 2002 had the same range of functions as the one delivered on 2 and 3 December 2002 in mind. Further, the questions formulated under paras. 4.5. and 4.6 should appear in the agenda. At the same time, the Court will sound out chances for an amicable settlement between the parties.

It is probably needless to say, but the Court advises the parties of the fact that given the case that the upcoming expert's report leads to the result that [Buyer] was entitled to avoid the contract on 2/3 December 2002 as far as it has to be treated as a sales and services contract, this does not automatically mean that the partnership agreement could be terminated for the same reason at the same time by [Buyer].

Any party wishing to carry out a new step in the proceedings or to introduce new evidence has to make sure that a copy of the step in proceedings or the evidence is forwarded to the Court and the opponent at least four days before the hearing.

The decision

The Court, deciding in the appellate proceeding:

   -    Rules that the parties (represented by anyone feeling fit in this case, able to give information and explanation needed and authorized or accredited in written form to bargain for a settlement) should appear together with their advisors before the member of the Court Mr. H.L. van der Beek for negotiations in [address] on a date to be announced, to elaborate on the issues raised in paras. 4.5, 4.6. and 4.2; and they should forward the facts and information needed to determine, if the parties can find a friendly agreement on one or more points;
 
   -    Rules that the parties shall forward a list for November 2008, December 2008 and January 2009 with dates on which the parties and/or their attorneys are prevented from appearing before Court. The list is to be referred to case schedule date 21 October 2008. Afterwards, a member of the Court will set day and time for further negotiations between the parties (independent of the fact, if any of the parties does not hand in such a list);
 
   -    Rules that for these negotiations in the beginning half a business day (at most 2.5 hrs.) is available;
 
   -    Rules that if any party wishes to carry out a new step in the proceedings or to introduce new evidence, the party has to make sure that a copy of the step in proceedings or the evidence is forwarded to the Court and the opponent at least four days before the hearing; and
 
   -    Sets any further decision on hold.

This decision was handed down by Mr. A.W. Steeg, Mr. H.L. van der Beek and Mr. J.K.B. van Daalen in a public proceeding on 7 October 2008.


FOOTNOTES

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

Translator's note on other abbreviations: B.V. = Besloten Vennootschap [Limited liability company under Dutch Law]; GmbH = Gesellschaft mit beschränkter Haftung [Limited liability company under German Law]; Rv. = Wetboek van Burgerlijke Rechtsvordering [Dutch Civil Prodecure Code]; Wet Conflictenrecht Corporaties = Wet van 17 december 1997, houdende regels van internationaal privaatrecht met betrekking tot corporaties [Dutch conflict of laws rules on international company law]

** Thorsten Tepasse is a Ph.D. Student at the University of Osnabrück. He participated in the 12th Willem C. Vis Moot with the team of the University of Osnabrück.

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Pace Law School Institute of International Commercial Law - Last updated September 3, 2009
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