Slovak Republic 15 October 2008 Regional Court in Nitra (Potatoes case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/081015k1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 15 Cb/140/2009
CASE HISTORY: 1st instance District Court of Komarno (5 Cb/114/2006-116) 25 May 2008 [reversed and remanded]; 3rd instance District Court of Komarno 24 February 2009
SELLER'S COUNTRY: Czech Republic (plaintiff)
BUYER'S COUNTRY: Slovak Republic (defendant)
GOODS INVOLVED: Potatoes
APPLICATION OF CISG: Yes. The lower court had ruled on the case based on Slovak law. The appellate court termed this an error and reversed and remanded to have the case ruled on based on the CISG.
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
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 of case
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
15 October 2008 [15 Cob/140/2008]
Translation [*] by Juraj Kotrusz [**]
IN THE NAME OF THE SLOVAK REPUBLIC
The Regional Court in Nitra, deciding in a panel, in the case of Plaintiff T., spol. S.r.o. [Seller], with its registered office in U.K., U.B. ___, Czech Republic represented by attorney JUDr. B.B. versus Defendant T.P. - Z.S. [Buyer], with its place of business in L.R., XX/A, M. ___ [Slovak Republic] ... represented by attorney JUDr. I.M., regarding payment of 34,960.- Slovak koruna [Sk] with appurtenances, ruling on the appeal of the [Seller] against the judgment of the District Court of Komarno of 25 May 2008, rec. no. 5Cb/114/2006-116
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 of Komarno of 25 May 2008 rec. no. 5Cb/114/2006-116, is reversed and the case is remanded to the Court of First Instance for further proceedings.
In its judgment, challenged by the appeal, the District Court of Komarno dismissed the [Seller]'s action. The court also bound the [Seller] to reimburse the costs of the proceedings to the [Buyer] in the sum of 21,364.50 Sk and to pay to the court the reimbursement of costs of witness's fee in the sum of 1,378.- Sk, all within three days after the judgment comes into force.
The Court of First Instance reasoned its judgment stating that the [Seller] claimed in its action of 30 August 2005 the right to payment of 34.960- Czech koruna [Kc]. with interest of 13% for the period from 16 July 2004 until payment and to reimbursement of the costs of the proceedings. The [Seller] justified its claim on the basis of non-payment of the residual part of the purchase price for its sale to the [Buyer].
With reference to the evidence gathered, the Court of First Instance ruled that:
The [Seller] delivered to the [Buyer] goods (potatoes) in amount of 12,000 kg on 11 June 2004. When handing over the goods on late Friday evening, the [Seller]'s employee (driver) and a warehouseman performed an inspection of the goods and determined that there were defective, mechanically damaged goods in the amount of cca 40 dkg per bag. The next working day, on Monday, the [Buyer] inspected the goods in detail and found out that the bags were wet and the process of amyloid fermentation was already initiated in the potatoes. At the same day, [Buyer]'s employee. Ing. S.S., telephoned Mrs. S, an employee of the [Seller]. He notified her of the lack of conformity of the goods and informed her that he cannot take over the goods and is going to reject the goods because he considers this defect a fundamental breach of the contract. The employee of the [Seller] proposed that the [Buyer] should wash the potatoes in its premises in order to mitigate damages. The [Buyer] accepted this proposal, but warned the [Seller] that by this procedure additional costs will be incurred by the [Buyer] and damages will be incurred which can be calculated only after distribution of the goods to shops. A meeting of the parties to the contract took place on 17 June 2004 where Ing. S.S., P.G. and the [Seller] negotiated about reimbursement of additional costs and damages to the [Buyer] caused by the goods lack of conformity. The [Buyer] and Ing. S.S asked the employee of the [Seller] to also inform [Seller]'s employee, Mrs. S., about these conclusions.
The [Buyer] paid for the potatoes delivered on 11 June 2004 the purchase price amounting to 103,147.20 Kc on 11 June 2004, This amount emerged from a reduction of the price by the [Buyer] for 1,252.80 Sk for 144 kg of goods referred to in invoice no. 320651.
The [Buyer] sent by telefax the calculation of damages to the [Seller] on 29 June 2004. Meanwhile, the [Seller] made another delivery to the [Buyer] on 8 June 2004 for which the [Seller] claimed its right to the purchase price in the amount of 138,700.- Kc by invoice no. 320626. The [Buyer] paid the price for this delivery partially on 11 November 2004 in the amount of 103,740. - Kc. The [Buyer] made a unilateral set-off of damages against this price amounting to 34,960. - Kc.
The Court of First Instance determined that the [Seller]'s claim corresponding to the unpaid part of the invoiced purchase price was unjustified.
The Court of First Instance held that the [Buyer] notified the [Seller] of the lack of conformity duly and on time. This fact was evidenced also by interrogation of the witness (business representative of the [Buyer], Ing. S.S.), who notified the [Seller] of the lack of conformity by phone on the first working day after the delivery, i.e., on Monday 14 June 2004. This notification was provided to the [Seller]'s employee, Mrs. S. The witness described in detail the notice he made to the [Seller] and his declaration of avoidance of the contract. Only after the [Seller]'s urging and in order to mitigate the damages, did he agree to wash the potatoes. At the same time, he asked the [Seller] to let him calculate the damages after the distribution of the goods to shops. The interrogated witness Mrs. S did not deny this fact, but did not remember the exact content of the call, since it took place a long time ago. The witness P.G. affirmed that in case of ordinary delivery, the notice can be performed by a phone call. The witness P.G. also affirmed the negotiations between the [Buyer] and the witness S. which took place in L. The witnesses related to the [Seller] therefore did not oppose the information provided by Mr. S.S., the witness related to the [Buyer]. The calculation of damages was delivered to the [Seller] by telefax on 29 April 2004. The witness Mr. S.S. affirmed that the [Buyer] preserved the goods in its warehouse in B. I. from the moment of their delivery, i.e., from 11 June 2004. The warehouse is equipped with refrigeration which permits preservation of goods in ideal climate conditions. Since the [Buyer] duly notified the [Seller] of the lack of conformity on time and this fact was evidenced by the witness' testimony, the court determined that all requirements were met to perform a unilateral set-off under sec. 580 of the Slovak Civil Code. The claim of the [Seller] thereby expired. Therefore, the Court of First Instance considered the claim asserted by the [Seller] in this proceedings as unjustified.
From the legal point of view, the court applied sections 409, 428, 437 of the Slovak Commercial Code and section 580 of the Slovak Civil Code.
The Court of First Instance ruled on the reimbursement of costs of the proceedings with reference to sec. 142 part 1 of the Slovak Civil Procedure Code hereinafter referred to as "CPC") and granted to the successful [Buyer] reimbursement of the court fee paid and costs of attorneys' fees amounting to 21,364.50 Sk. The court ruled on the reimbursement of costs of the State with reference to sec. 148 part 1 CPC.
The [Seller] filed an appeal against the judgment and argued that it claimed by the action its right to payment of the purchase price referred to om invoice no. 320626 amounting to 138,700.- Kc for the goods (14,600 kg of potatoes). The [Seller] handed over these goods and the delivery was confirmed on international bill of lading no. SK 1844170. The [Buyer] did not notify the [Seller] of a lack of conformity of these goods and partially paid the purchase price on 1 November 2004 in the amount of 34,960.- Kc. The evidence gathered by the Court of First Instance referred to the previous delivery made on 11 June 2004, as referred to in invoice no. 320651. The [Buyer] notified the [Seller] of a lack of conformity only with regards to 144 kg of potatoes and this amount was deducted from the goods delivered and the purchase price for this amount was not invoiced by the [Seller]. Since the [Buyer] did not prove in the proceedings that it notified the [Seller] of a lack of conformity other than the previous one, which had already been taken into account when referencing the purchase price in invoice no. 320651, the [Seller] asked the Appellate Court to change the challenged judgment and uphold the [Seller]'s action.
The [Buyer] did not react to the appeal.
The Regional court in Nitra, sitting as an Appellate Court, tried the case with reference to sec. 212 part 1 CPC and at the hearing cancelled the judgment under sec. 221 part 1 h) CPC (as amended in force from 15 October 2008) and remanded the case to the Court of First Instance for further proceedings.
Under the cited provision, the Appellate Court will cancel a judgment only if the Court of first instance incorrectly judged the case from a legal point of view, because it used the wrong legal instrument and did not investigate factual circumstances sufficiently.
In this case, it is clear from the challenged judgment that the Court of First Instance wrongly judged factual circumstances under provisions of the Slovak Commercial Code, when it ought to have used the provisions of the UN Convention on Contracts for the International Sale of Goods published in the Collection of Acts as no. 160/1991 Coll.
This Convention was ratified with reservation that CSFR will not be bound by article 1(1)(b) of the Convention (because of the succession to the rights and duties of CSFR, this Convention is in force in the Czech Republic and the Slovak Republic from 1 January 1993). The Appellate Court therefore cancelled the judgment and remanded the case to the Court of First Instance for further proceedings.
In the new judgment, the Court of First Instance shall decide also about the reimbursement of costs of proceedings at the first instance and appellate proceedings (sec. 224 part 3 CPC).
Instruction: An appeal against this judgment is not permissible.
Regional Court in Nitra, 15 October 2008.
JUDr. Jan Bzdusek Chairman of the Panel
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the Czech Republic 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]; amounts in currency of the Czech Republic (Czech koruna) are indicated as [Kc].
** 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