Slovak Republic 28 October 2008 Supreme Court of the Slovak Republic (Wafers case)
[Cite as: http://cisgw3.law.pace.edu/cases/081028k1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2 Obo 250/2007
CASE HISTORY: 1st instance [-]; 2d instance Regional Court Nitra (16 Cb/30/2004-86) 17 September 2007 [reversed and remanded]
SELLER'S COUNTRY: Germany (plaintiff)
BUYER'S COUNTRY: Slovak Republic (defendant)
GOODS INVOLVED: Wafers
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
77A [Obligation to take reasonable measures to mitigate damages]
77A [Obligation to take reasonable measures to mitigate damages]
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
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
28 October 2008 [2 Obo 250/2007]
Translation [*] by Juraj Kotrusz [**]
The Supreme Court of the Slovak Republic, deciding in a panel, in the case of Plaintiff S. GmbH, [Seller], with its registered office in N.M., Federal Republic of Germany, represented by attorney JUDr. J.H., versus Defendant C., S.r.o. [Buyer], with its registered office in N., [Slovak Republic], represented by attorney JUDr. M. K., regarding payment of 6,673.21 Euro [EUR] and appurtenances, on appeal of the [Buyer] against the judgment of the Regional Court in Nitra of 17 September 2007, rec. no. 16 Cbm/30/2004-186,
h a s d e c i d e d a s f o l l o w s:
The challenged judgment of the Regional Court in Nitra of 17 September 2007, rec. 16 Cbm/30/2004-186 is cancelled and the case is returned to the court for further proceedings.
The Court of First Instance bound the [Buyer] by the challenged judgment to pay to the [Seller] a sum of 5,088.82 EUR and interest of 16.75% annually for the period from 12 March 2003 until payment and a reimbursement of costs of the proceedings in sum of 46,640.- Slovak koruna [Sk], everything within three days after the judgment comes into force. With respect to the amount exceeding this sum, i.e., the part of the principal amounting to 1,584.39 EUR, the court stayed the proceedings because of partial withdrawal of the action.
The court briefly reasoned its judgment by stating that it had already bound the [Buyer] to pay the sum of 6,673.21 EUR with appurtenances (including the afterwards withdrawn sum) by its preceding judgment. The [Buyer] filed an appeal against that judgment and the Appellate Court cancelled the judgment by its resolution of 26 May 2006, rec. no. 4 Obo/2005-128 and returned the case to the Court of First Instance for further proceedings. The Court of First Instance also stated in its reasoning that the [Seller] partially withdrew its action in the sum of 1,584.39 EUR and retained its action with respect to the sum of 5,088.82 EUR and appurtenances. The [Seller] justified its partial withdrawal by stating that it purchased the goods to be delivered to the [Buyer] from Company O. GmbH and this company drew invoice no. 20030663 on 10 March 2003 for the sum of 5,088.82 as a purchase price for the goods. If the [Seller] would not pay this price by 31 March 2003, it would have to pay the higher sum of 5,192.67 EUR. The [Seller] therefore paid the invoice on 24 March 2003 in its original amount. The [Seller] evidenced these facts by submitting the invoice no. 20030663 for the sum of 5,088.- EUR and the record from its bank account in Deutsche Bank from 24 March 2004 proving payment of the sum.
The [Buyer] recognized the claim with respect to its grounds but opposed the claimed amount of damages. The court had proposed that the parties reach a settlement, but they failed to do so in the prescribed period. The court found to be proved that the [Seller] had to pay the sum of 5,088.82 EUR to its supplier in order to deliver the goods to the [Buyer]. The court qualified the dispute with reference to sec. 369 part 1 of the Commercial Code. The court ruled on reimbursement of costs of the proceedings under sec. 142 part 2 CPC.
The [Buyer] filed an appeal against that judgment and asked the Appellate Court to cancel it and return the case for further proceedings. The [Buyer] objected to the procedural issues, since the court tried the case on 7 September 2007, without the presence of the [Buyer], despite the fact that the [Buyer] and its legal counsel duly justified their absence. The [Buyer] also argued that the hearing ordered on 2 July 2007 was adjourned in order to reach an out of court settlement. There was no declaration of recognition performed by the [Buyer] as it was only an attempt to reach a settlement, since the [Buyer] presented to the court evidence that Company O. has been producing the wafers in question for ten years and therefore its production is not a custom manufacture but a serial manufacture which could have been sold to other customers and this has also happened. The court had no information about this issue, as it gathered no evidence about it. The amount of damages has not been proved by the [Seller]. The court had no information about whether the goods in question are still in the [Seller]'s premises and are at the disposal of the [Buyer]. The court gathered no evidence about this fact and relied solely on the statement of the legal counsel of the [Seller].
In response to the appeal of the [Buyer], the [Seller] asked the Appellate Court to uphold the judgment as correct. The [Buyer] did not present in its excuse of absence at the hearing any justification why the court should adjourn the proceedings. The [Seller] regards as unjustified the arguments that the court did not investigate the real amount of loss sustained by the [Seller]. The court fulfilled its duty to gather evidence by reading the submitted documents which evidenced the loss sustained by the [Seller]. The [Buyer] did not present or propose in course of the proceedings before the Court of First Instance any evidence which should have been considered by the court. The [Buyer] referred to article 88 of the Convention on Contracts for the International Sale of Goods (Notice of Ministry of Foreign Affairs no. 160/1991 Coll.) unreasonably, since the Convention favors rather the claim of the [Seller]. The goods were made as a custom manufacture for the [Seller] and therefore they could not have been sold to another customer.
[Ruling and reasoning of the court]
The Supreme Court of the Slovak Republic as an Appellate Court (sec. 10 part 2 CPC) tried the case in the scope determined by the appeal (sec. 212 part 1, sec. 214 part 2 e) CPC) and concluded that the [Buyer]'s appeal is justified. The court therefore cancelled the preceding judgment and returned the case to the Court of First Instance for further proceedings (sec. 221 part 1 h) CPC).
The challenged judgment is ambiguous and does not contain sufficient reasoning for the decision and is in contrary to the provisions of the CPC. The court had to refer to these faults as they caused incorrectness of the judgment. The court referred to these faults ex offo. The [Buyer] explained in detail its objections to the action already in its appeal (rec. no. 92-99) against the preceding judgment of the Court of First Instance (16 Cbm/30/2004-88).
The Appellate Court stated in its proceding (4 Obo/40/2005-128) that the purchase order confirmed by the [Seller] which specified the goods - 392 packages each including 1950 wafers to be delivered on 11 March 2000 - constituted a proposal under article 14 of the Convention and the [Seller] accepted this purchase order in accordance with article 18 of the Convention. The Court of First Instance therefore correctly concluded that the parties to the contract concluded a contract of sale in accordance with articles 18 and 23 of the Convention and that the [Seller] fulfilled its contractual obligation to deliver goods. There was no doubt in the proceedings about the fact that the [Buyer] failed to take possession the goods and that the goods were placed at the disposal of the [Buyer]. It has also been determined that the [Seller] sustained damage because of the [Buyer]'s non-performance of its obligation and the Court of First Instance correctly concluded that the [Seller] is entitled to damages under article 74 of the Convention. It is clear from the action as well as from the reasoning of the judgment that the [Seller] claimed its right to damages in amount corresponding to the sum invoiced by its supplier for delivery of the goods for the [Buyer] and such sum corresponds to the lost profit caused by the fact that the [Seller] invested finances into material and manufacture of the goods but was not able to sell them, i.e., did not gain finances corresponding to the agreed purchase price for the goods. The legal counsel of the [Seller] explained that the [Seller] did not manufacture the goods ordered by the [Buyer] but it purchased them from a third party. Therefore, the legal grounds of the claim of the [Seller] are not a matter of dispute but its amount as it was calculated is disputable.
In its proceeding, the Appellate Court ordered the Court of First Instance to determine from the evidence gathered the amount of damages caused by non-performance of the [Buyer]. The preceding resolution of the Appellate Court of 26 May 2006 was delivered to the Regional Court in Nitra on 15 June 2006 and the [Seller] submitted to the Supreme Court on 13 June 2006 its motion titled "Presentation of documents - partial withdrawal of the action" which was subsequently sent to the Court of First Instance. The court based its second (challenged) judgment on the evidence: action and the interrogation of the legal counsel of the [Seller]. The arguments of the [Buyer] were presented in its first appeal and the Appellate Court also did not find it necessary to interrogate the [Buyer].
The Supreme Court of the Slovak Republic as an Appellate Court (sec. 10 part 2 CPC) tried the case in the scope determined by the appeal (sec. 212 part 1, sec. 214 part 2 e) CPC) and concluded that the appeal is justified, since the Court of First Instance did not decide correctly with respect to the substance of the case and therefore cancelled the judgment and returned the case to the Court of First Instance for further proceedings.
The Appellate Court determined from the proceedings so far performed, including its preceding cancelling resolution, that the Court of First Instance did not observe the directives imposed by the Appellate Court in its preceding resolution. This preceding resolution stated that the claim is justified in its grounds and the court has to investigate its amount. It should emerge from the other loss sustained from a breach of contract by the [Buyer]. It is well-known that German merchants are precise in claiming their rights but these claims have to be objectively proved.
The Court of First Instance was referring to the arguments presented in the action and decided in accordance with how the [Seller] corrected its action. The court upheld the claim of the [Seller] as initially asserted and lowered the sum after the [Seller] asked to lower it by its partial withdrawal. The [Seller] bears the burden of proof to evidence the amount of damages. It was not yet proved in the proceedings under which particular contract the [Seller] purchased the goods for the [Buyer], whether they were made as a custom manufacture and not as a serial manufacture, and whether the [Seller] actually manufactured the goods or (as marked in the records) purchased them from the supplier. It was also not evidenced what constituted a uniqueness of these goods, since similar goods were present at the market. If it is true that the [Seller] acted as a broker of the sale of goods to the [Buyer], in this case, the [Seller] was obliged to prevent the damage by selling the goods to another customer. The [Buyer] is undoubtedly liable for damages but only to the extent proved by the [Seller]. If the [Seller] argued that the goods are still at the disposal of the [Buyer], it was only its statement and was not evidenced objectively.
The Appellate Court therefore cancelled the judgment again and returned the case to the Court of First Instance for further proceedings (sec. 221 part 1 h), part 3 CPC). The Court of First Instance is bound by its legal reasoning and shall decide in the upcoming proceedings also about the reimbursement of costs of the appellate proceedings. (sec. 224 part 3, sec. 226 CPC).
Instruction: An appeal against this judgment is not admissible.
Bratislava, 28 October 2008.
JUDr. Jozef Stefanko
Chairman of the Panel
*All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the Federal Republic of Germany 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 European Union (Euro) are indicated as [EUR].
** 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