Netherlands 15 October 2008 Rechtbank [District Court] Rotterdam (Eyroflam S.A. v. P.C.C. Rotterdam B.V.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/081015n2.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 295401 / HA ZA 07-2802
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Belgium
BUYER'S COUNTRY: Netherlands
GOODS INVOLVED: Fire resistant paint
Reproduced with permission of European Journal of Commercial Contract Law (2009-1) 41
15 October 2008 [LJN BG2022]
Case abstract by Sonja Kruisinga
"In 2005, Besix requested PCC to apply a fire-resistant coating in a number of newly built apartments. For the performance thereof, Besix requested PCC to use a particular paint and application system from the supplier Eyroflam. Besix had directly informed Eyroflam about the project. Part of this information was also the requirement of fire resistant materials. Eyroflam delivered the materials to PCC. The municipality of Rotterdam, however, withheld its consent to this Eyroflam system, amngst other things, because the thickness of the layer of paint did not comply with the Dutch requirement (the NEN (the Dutch Centre for Standardisation) standards), but instead only complied with the European requirements.
"A dispute arose between PCC and Eyroflam. The District Court held that the contracting parties had chosen, after these proceedings had been commenced, Dutch law as the applicable law. Eyroflam opted for Dutch law including the CISG, whereas PCC left the application of the Convention aside. Assuming a choice for Dutch law, the District Court found that the application of Dutch law also implies the application of the CISG. The District Court noted, in addition, that both contracting parties have their places of business in Contracting States, which means that the CISG is also applicable on the basis of Article 1(1)(a) CISG.
"PCC requested the District Court to find that there was a lack of conformity within the meaning of Article 35(1) and (2) CISG. The District Court held, first of all, that in the application of Article 35 CISG, it is the general view that any standard that is applicable in both the State of the buyer and that of the seller generally needs to be taken into account. Furthermore, if the standards in the country of the buyer are higher compared to the country of the seller, the buyer has to specifically draw this fact to the attention of the seller. The sole fact that the buyer had informed the seller about the place where the goods would be used was not sufficient to assume an obligation for the seller to take into account any public law requirements of that country. An obligation to comply with the public law requirements that are applicable in the country of the buyer may only be assumed if the seller is aware, or may be aware, of the existence of such requirements.
"It was not clear whether PCC (or Besix) had informed Eyroflam before the conclusion of the contract that the Dutch standards were higher than the European standards. It was not clear whether Eyroflam was aware, or could be assumed to be aware, of this before the conclusion of the contract. Therefore, the District Court held that Eyroflam could not be blamed for the fact that the municipality did not approve its product. There was therefore no lack of conformity within the meaning of Article 35 CISG. The claim that was based thereon was therefore dismissed.
The District Court further found that Eyroflam was entitled to interest on the purchase price - which had not yet been paid - in accordance with Article 78 CISG. The amount of interest had to be determined in accordance with the provisions of the Dutch Civil Code, as the CISG lacks any provision thereon. It follows from Article 74 that Eyroflam also had a right to have extrajudicial collection costs compensated. This concerned the costs that had been reasonably incurred."Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
6B [Agreements to apply Convention: choice of law of Contracting State equals choice of Convention]; 35A ; 35B [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law]; 74A [General rules for measuring damages (loss suffered as consequence of breach): includes extrajudicial collection costs that were reasonably incurred]; 78A [Interest on delay in receiving price or any other sum in arrears]
6B [Agreements to apply Convention: choice of law of Contracting State equals choice of Convention];
35A ; 35B [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law];
74A [General rules for measuring damages (loss suffered as consequence of breach): includes extrajudicial collection costs that were reasonably incurred];
78A [Interest on delay in receiving price or any other sum in arrears]
CITATIONS TO OTHER ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
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
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
15 October 2008 [295401 / HA ZA 07-2802]
Translation [*] by Anne Hemmink [**]
1. THE PROCEEDINGS
1.1 Development of the proceedings:
|-||Writ of summons dated November 2, 2007 and the submitted productions by [Seller];|
|-||The statement of the defense in the main claim, the statement of the defense in its counterclaim, with productions;|
|-||The interlocutory decision of this court dated March 12, 2008, at which appearance before the court is ordered;|
|-||Summons of the appearance before the court by the parties, held on June 16, 2008;|
|-||Submitted works by PCC on the occasion of the appearance before the court by the parties;|
|-||The statement of the defense in its counterclaim, with productions.|
2. THE FACTS
If statements that have been made are acknowledged or insufficiently contradicted, considering the extent of the insofar undisputed in-proceeding submitted productions, the following is established between parties - as far as it is relevant -:
2.1 [Buyer] (as the subcontractor) obtained in 2005 a contract from Besix (contractor) to apply a fire-resistant coating in the apartments which are to be realized in the project "Montevideo" in Rotterdam.
2.2 For the realization of these coating works Besix instructed [Buyer] to use a paint system from paint supplier [Seller].
2.3 Besix had directly provided [Seller] information regarding the Montevideo project, so that they could send a quotation concerning the delivery of a paint system. Besix's request for a quotation by [Seller](or at least by her parent company Gero Paints in Roeselare, Belgium) dated January 21, 2004 states:
(..) Enclosed you will find the necessary information for making a quotation for the delivery for application of the fire-resistant coating in the Montevideo tower at " de Kop van Zuid" in Rotterdam.
|-||The fire-resistant coating concerns the following building constructions:|
|-||Steel structure on the ground floors - retail. (..)|
|-||Steel structure elevator shaft:|
|-||Several small steel parts.|
|-||The steel structure in the sky apartments (floor 27 to 42) are provided with a fire-resistant coating in sheet material.|
There is a fire-resistant requirement of 90 minutes for the entire building.
See specification requirements in the enclosure. Equivalent alternatives are allowed.
|-||The total area is approximately 4000 m2|
|-||The calculation is based on woodwork of the steel sections with a fire-resistant coating, including 4 cm extra width. So, the area does not match the area of the steal sections to be treaded.|
|-||PARKING 22, 17 m2|
|-||BASEBOARD BUILDING 272, 38 m2|
|-||CANTILEVER 1.019, 65 m2|
|-||TOWER 820, 01 m2|
|-||ELEVATOR SHAFT 2.058, 22 m2|
The indicated quantities are purely indicative. (..)
Included in your price:
|-||Delivery free work including auxiliary equipment, accessories and placing of the products, supplied by you|
|-||Delivering the necessary KOMO-product certificates in conformity with the specifications|
|-||Requirements from the specifications (see the enclosure)|
|-||Maintenance requirements, warranty provisions and suchlike.|
We like to receive from you the following:
|-||Product information (possibly sampling)|
|-||Detailed quotation per component and per system|
|-||Possibly a quotation for alternative systems|
|-||Separate quotation for the supplements like protection of the building parts not to treat etc. (..)|
In the specification is according to the fire-resistance included:
|-||(..) NEW UNDERGROUND, METAL, FIRE RETARDANT SYSTEM|
|-||FIRE RETARDANT PAINT SYSTEM|
|-||System: 1 layer of primer, 2 layers of fire-resistant paint and 1 layer of finishing paint with a fire-resistance requirement of 90 minutes. (..)|
|-||6 FIRE RETARDANT PAINT Factory:
NVM PRODCUTS-Amsterdam Type:
Multifire System basecoat S 605 (..)
Quality: in conformity with approved test report.
Fire-resistance according: the requirements.
More detailed execution on suggestion of the manufacturer and approved test report(s). (..)
2.4 Based on this information, [Seller] calculated the required layer of thickness and then released a quotation to [Buyer].
2.5 The paint system of [Seller] meets the NEN standards 6072 and contains an approval from TNO. From the TNO report from January 1997 it appears that the contribution of Aquaflam 1 (the fire-resistant paint which [Seller] had quoted) to the fire resistance according NEN 6072 amounts to 30 and 60 minutes. On the basis of this report [Seller] has calculated theoretically which layer of thickness is required for a fire-resistance of 90 minutes.
2.6 [Seller] has delivered the quoted paint system to [Buyer]. The paint system of [Seller]did not obtain approval from the Building and Housing Inspection Department of the municipality of Rotterdam (hereinafter: "BHID"). In this context Besix informs [Seller] by fax:
(..) In an attachment by e-mail from ABT. It appears that the BHID still does not approve the calculation and/or the material proposition of the fire resistant paint.
We likely heard from you how an independent third party can test the calculations in view of the Dutch standard within short notice. (..)
In the e-mail in question it is stated:
(..) The main comment of the BHID, as already declared, is that the determination of the layer of thickness of the paint was not conducted based on the Dutch requirements, but based on European (pre)standards. This is not acceptable.
In the Dutch NEN 6070 a different formula is used under 10.3 to determine the critical temperature, in contrast to the formula which is used in the European standard. Particularly the correction factor kappa causes the dissimilarity. From this it stands that the critical steel temperature is lower then so far is held in calculation, according the European standard.
The entire calculation has to be made in accordance with the Dutch standard, in order to check whether the used coating thickness meets this standard. The Dutch standard fire curve must be used as a starting point. The BHID prefers a review of the calculation made on the Dutch standards by an independent third party. This third party can be a recognized institute such as TNO. Without this review approval will not be given on the fire resistant paint. (..)
2.7 Thereafter [Seller] has checked the calculated layer of thicknesses by an independent testing center: SGS Nederland. The BHID has demanded that the review on the calculations would be carried out by consulting Mr. Hamerlinck. This last check has shown that the required fire resistance of 90 minutes can be achieved if anextra layer of paint would be applied. This extra layer of paint has been applied.
2.8 Besix sent an e-mail to [Seller] on January 10, 2007:
(..) Towards the end of last year we finally obtained the approval from the building and housing inspection department. In addition to the test report we have made additional calculations by ABT to reduce the critical taxation (tax rate) in order to approach the 90 minutes. Hamerlinck has written an additional report, which ultimately led to approval.
In the meantime I have sent a final bill to [Buyer], but I have not received response to that. (..)
2.9 [Seller] has charged the delivered paint system estimated at €10.475,- , in accordance to the invoices that were sent to [Buyer] from September, 11, and November 9, 20 and 27, 2005. [Buyer] has - even after notice - not paid these invoices.
2.10 [Seller] did not charge the costs for the fire tests estimated at €12.500.
3. THE CLAIM
The claim is - shortly viewed - to immediately order [Buyer] to pay [Seller] €11.954,-, plus interest and costs. Against the background of the established facts [Seller] based the claim on the following arguments:
3.1 In consideration of the invoices sent by [Seller] [Buyer] owes [Seller] the amount of € 10.745, -
3.2 [Buyer] imputably failed it's obligation to pay and is in default.
[Seller] claims reimbursement of the legal trade interest under article 6:199a Dutch Civil Code (hereafter: DCC) from the due dates of the respective invoices.
3.3 Furthermore, [Seller] claims the non-legal expenses estimated at € 1.209,33 until the moment of the summons.
4. DEFENSE IN CLAIM
The defense seeks to dismiss the claim, and to immediately order [Seller] to pay the costs of the proceedings.
[Buyer] pleaded as defense the following:
4.1 [Seller] has failed to provide a paint system that meets the Dutch requirements made by the relevant Dutch authorities to such a system. Therefore [Seller] imputably failed in the fulfillment of its obligations from the contract between the parties.
4.2 As a result of this [Buyer] has suffered damages. Besix could not deliver the apartments on time and had to make additional costs to make its delivery obligations. Besix has passed the damages on to [Buyer]. The damage of [Buyer] is estimated at € 54.373,-
4.3 [Buyer] has suspended the payment of [Seller]'s outstanding invoices. [Buyer] wants to settle its claim with the outstanding invoices.
4.4 Therefore [Buyer] should not be held to reimburse the claimed legal and non-legal expenses to [Seller]. [Buyer] disputes that the non-legal expenses are made more than in preparation for this proceeding.
5. THE CLAIM IN COUNTERCLAIM
The claim is - abbreviated - to order [Seller] to pay [Buyer] € 50.103,-, or in case [Seller]'s claim in convention is allowed, to order [Seller] to pay [Buyer] € 39.358, - after settlement of [Seller]'s claims, this and that with interest and costs.
[Buyer] based this claim on the following arguments in addition to what is argued in convention as defense:
5.1 Prior the delivery of the paint system to [Buyer], [Seller] did not have the correct empirical tests reports and in line of that the approval of the BHID. Therefore the progress in work was enormously delayed. [Buyer] failed to conduct proper performance in its contract between [Buyer] and Besix. This delay is entirely the responsibility and risk of [Seller].
5.2 The damages [Buyer] has suffered consist of the following components:
5.3 [Buyer] is entitled to and has interest in the ordering of [Seller] to pay the damages amounting € 50.103, - increased with interest and costs.
[Buyer] is also entitled to and has interest in permission of settlement of the amount of the loss with the outstanding claim of [Seller] of €10.745,-. After this settlement an amount of €39.358,- remains that [Seller] must pay to [Buyer], increased with legal interest.
6. THE DEFENSE IN COUNTERCLAIM
The defense seeks to dismiss the claim, with ordering [Buyer] to pay the costs of the proceedings.
[Seller] has argued the following, in addition to what she has argued in claim;
6.1 At the start of the project [Seller] did not know that the BHID had to give permission for various calculations.
[Buyer] nor Besix had notified this to [Seller]. Furthermore it is never mentioned that [Seller] should have had official test reports. [Seller] has calculated theoretically the appropriate layer thicknesses according to information provided by Besix's.
6.2 [Buyer] started the paintwork in April 2005 and completed it in mid 2006. In July 2005 it became clear for the first time that the BHID wanted the first calculation to be approved by an independent inspection agency.
6.3 On October 21,2005 [Seller] received the comments of Mr. Hamerlinck. Then it became clear for the first time which tax rate was required. During the project the BHID required the tax rate as an additional condition. None of the parties had foreseen that the BHID would make this additional requirement. There is no imputable shortcoming of [Seller].
6.4 On the basis of the new layer of thicknesses, a new quotation had to be made by [Buyer]. The fact that as a result of new information, additional paint and man-hours were needed is nothing more than work that is not included in the original request of Besix and the quotation of [Seller], and so that this is not reflected in the agreement.
6.5 Besix has given [Buyer] the opportunity to draft this quotation. [Seller] has helped [Buyer] with this. [Buyer] has probably received the full amount in accordance with the new quotation. [Seller] therefore denies that [Buyer] has suffered loss. Considering this, [Buyer] had to substantiate it's loss. [Buyer] failed to do so.
6.6 [Buyer] has never declared [Seller] to be in default or never held [Seller] liable. In case there is a shortcoming at all on the side of [Seller] [Buyer] had to notify [Seller] in time. [Buyer] did not notify [Seller] of anything. [Buyer]therefore lost it's defenses and it's rights by passage of time.
6.7 The validity of [Buyer]'s claim is not easy to determine. Therefore, there is no room for settlement.
7. THE JUDGMENT
In claim and counterclaim.
7.1 In view of article 2 of the regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, the Dutch court has jurisdiction because [Buyer] is domiciled in the Netherlands.
7.2 Parties have chosen Dutch law (during the proceeding). Thereby [Seller] has opted for the Dutch law including the convention of International Sale of Goods (hereafter: "CISG") while [Buyer] left the applicability of this convention open.
7.3 Based on Dutch law the district court decides that the applicability of Dutch law and the applicability of the CISG implies. Besides both the Netherlands and Belgium are Contracting States, so Article 1 paragraph a CISG of this Convention applies.
7.4 The district court understands that [Buyer] appeals to non-compliance in her claim. [Buyer] underlies it's claim with the fact that [Buyer] - forced by Besix - had to buy extra paint (2.946 kg) and had to make extra man-hours (20%), due to the fact that the paint system supplied by [Seller] did not meet the requirements which are required by the competent authorities in the Netherlands to such a system.
7.5 In accordance with article 35 paragraph 1 CISG, the seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract. Paragraph 2 of this article prescribes that - as far as relevant- unless the parties have agreed otherwise, the goods do not conform with the contract unless they are fit for the purposes for which goods of the same description would ordinarily be used, or unless they are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgment.
7.6 The district court held, first and foremost, that in the application of article 35 of the CISG, it is the general view that any standard that is applicable in both the State of the buyer and that of the seller generally needs to be taken into account. Furthermore, if the standards in the country of the buyer are higher compared to standards in the country of the seller, the buyer has to specifically draw this fact to the attention of the seller. The sole fact that the buyer had informed the seller about the place where the goods would be used was not sufficient to assume an obligation to comply with the public law requirements that are applicable in that country. An obligation to comply with the public law requirements that are applicable in the country of the buyer may only be assumed if the seller is aware, or may be aware, of the existence of such requirements.
7.7 Between parties it is established that the problem with [Seller]'s product was due to the fact that the BHID refused her approval, because the calculation of the required thickness of fire retardant of 90 minutes was not based on the Dutch NEN 6072 standard, but on the (general) European NEN 6072 standard. Furthermore it is not in dispute that the Dutch standard is stricter then the European standard and that the product supplied by [Seller] meets the latter standard.
7.8 It was not clear whether [Buyer] (or Besix) had informed [Seller] before the conclusion of the contract that the Dutch standards were higher than the European standards. Furthermore it was not clear whether [Seller] was aware, or could be assumed to be aware, of this before the conclusion of the contract. Considering the assumptions formulated under 7.6. the district court held - unlike [Buyer] - that [Seller] could not be blamed that the municipality did not approve its product. There is therefore no lack of conformity within the meaning of Article 35 CISG. The claim that was based thereon in the counterclaim should therefore be dismissed.
7.9 [Buyer] will be ordered to compensate any legal costs.
7.10 [Buyer] did not dispute the indebtedness of the claimed amount in sum total, but has made an appeal on postponement and settlement with its counterclaim. In counterclaim is held that [Buyer] has no due (counter)claim for damages. The sum total at €10.745, 00 claimed in claim should be awarded.
7.11 The additional claim for payment of the legal commercial interest as provided in Article 6:119a DCC will also be awarded. In accordance with Article 78 CISG [Seller] is entitled to interest on the purchase price. The amount of interest has to be determined in accordance with the provisions of the DCC, as the CISG lacks any provision thereon.
7.12 According to Article 74 [Seller] also has a right to have non legal expenses compensated. This concerns the costs that have been reasonably incurred, taking into account that this is a different review standard than the review standard of the corresponding Article 96, second paragraph, sub c DCC. Unlike the DCC, the CISG does not contain a rule that exclude the reimbursement of particular work, because this reimbursement should be considered to fall within the system of the legal costs. On the other hand however, it is contrary to the using measure of reasonableness, which also applies to the CISG that an allowance is granted as far as this allowance is already implicit in the ordering of the legal costs. Considering this, the district court will award ex aequo et bono an amount of €904, 00 for non legal costs.
7.13 [Buyer] will be ordered to compensate any legal costs.
8. THE DECISION
The district court,
Orders [Buyer] to pay [Seller] the amount of € 11.649, 00 ( in words: eleven thousand six hundred forty-nine euro), plus legal interest as provided in Article 6:190 paragraph 2 DCC from the various maturity dates of the various invoices until the day of payment.
Orders [Buyer] to compensate any costs, until this decision on the side of [Seller] estimated on €300, 00 legal charges, on €97,40 on other advances and on €904, 00 for attorney's fee;
Declares this judgment immediately enforceable;
Rejects the more or else claimed;
Rejects the claim of [Buyer];
Orders [Buyer] to compensate any costs, on the side of [Seller] estimated until now on nil on advances and on €452, 00 for attorney's fee.
This decision was given by Judge S.C.C. Hes-Bakkeren in a public proceeding.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Netherlands is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer].
** Anne Hemmink is finishing her Masters in Private Law at the University of Utrecht and is specializing in International Commercial Law and Corporate Law.Go to Case Table of Contents