Poland 9 October 2008 Supreme Court (Coke fuel case)
[Cite as: http://cisgw3.law.pace.edu/cases/081009p1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: V CSK 63/08
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Poland
BUYER'S COUNTRY: Germany
GOODS INVOLVED: Coke fuel
POLAND: Supreme Court 9 October 2008
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/137],
CLOUT abstract no. 1306
Reproduced with permission of UNCITRAL
Note that the dispute at hand, after being remanded to the lower courts for further consideration, later returned to the Supreme Court and was subject to its decision of 8 February 2012 (case no. V CSK 91/11; CLOUT abstract no. 1302).
The parties concluded a contract for the sale of coke fuel in December 2003. In the second quarter of 2004 the prices in the international market for coke fuel doubled, particularly as a result of high demand from China. The Polish seller, arguing that such a dramatic change of prices alters the contractual arrangement between the parties, refused to deliver the remaining part of coke fuel for the price agreed upon in the contract. The parties attempted negotiations but they did not come to an agreement. Consequently, the German buyer avoided the contract with respect to the part of the undelivered goods and later sued for the damages resulting from the breach of contract, mostly consisting of the reimbursement for the value of the undelivered coke fuel as of the day when the notice of avoidance was made.
The court of first instance dismissed the claim, pointing out that the German buyer unduly deferred the notice of contract’s avoidance while the prices for coke fuel were rapidly going up, which was speculative and in violation of the duty of good faith. The Court of Appeals, disagreeing, reversed the decision. The seller filed an appeal to the Supreme Court.
The Supreme Court had to deal with various legal issues that were contentious between the parties. First, it compared the calculation of damages under Article 75 and 76 CISG. The judges explained that while the former is based on the price of the actual substitute transaction (a “concrete” method), the latter refers to the current price of the goods that were not delivered (an “abstract” method). Since Article 76 is relevant in the case at hand, the Court underlined that it is up to the claimant to establish the current price of the goods. This requires showing a general price for the goods charged in the relevant market. Providing examples of individual transactions is not enough.
Second, the Supreme Court underlined that under Article 74 the damages for the breach of contract are to be limited in light of the foreseeability rule, whether the concrete or abstract method of calculation applies. In the present case the foreseeability referred to the changes in prices of coke fuel on the international market. In that respect, the Supreme Court reprimanded the lower court for not calling an expert opinion, who would assess the foreseeability of the price development.
Third, the Supreme Court rejected the defendant’s argument that the interest can only be counted as from the moment when the compensation is established by court decision, since before that date there is no concrete amount from which the interest could arise. The court found that according to express wording of Article 78, the party is entitled to interest on any sum that is in arrears (and not just the price). This includes damages.
Fourth, the Court discussed the issue of the law applicable to interest. It observed that although an obligation to pay the interest results from Article 78 CISG, the Convention does not set the rate of interest. Rejecting other possibilities (such as attempts to create a uniform rule) the Court invoked case law from other European countries (such as Germany, Netherlands and France) and concluded that the rate of interest should be established in conformity with the law applicable by virtue of the rules of private international law of the forum. In accordance with Article 27 § 1 of the old Polish Private International Law Act (1965) (then still in force), which determined the law applicable to the contract, Polish law, as the law of the place of business of the seller, was to be applied. This solution was contested by the defendant who argued that it was more appropriate to rely on the law that governs the currency (Euro) in which the contract payments were to be made (lex valutae). Such a proposition amounted to an effective depeçage. After careful consideration it was rejected by the Court, which observed that the differences in rates of interests between the laws in question (Polish and German) were not material and thus could not result in a significant imbalance in favour of one of the parties. Consequently, the Court ruled that the Polish Civil Code provision that governs rates of interest can be applied to both Polish and foreign currency.
Since the Court of Appeals made important errors in its decision, its judgment was reversed and the case was remanded for further consideration.Go to Case Table of Contents
APPLICATION OF CISG: [-]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Polish): Republic of Poland website <http://www.sn.pl>
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents