Germany 14 January 2009 Appellate Court München (Metal ceiling materials case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/090114g1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 20 U 3863/08
CASE HISTORY: 1st instance LG Landshut (43 O 1748/07) 12 June 2008 [reversed]
SELLER'S COUNTRY: Germany (plaintiff)
BUYER'S COUNTRY: Italy (defendant)
GOODS INVOLVED: Metal ceiling materials
Reproduced from Internationales Handelsrecht (5/2009) 201
"1. Under the CISG general terms and conditions are to be transmitted to the other contracting party or to be made accessible in another way to make them part of the contact. The possibility of a reasonable means of taking notice of them -- for example by requesting them from the other party -- is insufficient.
"2. The formal requirements to be met are lower for an agreement on the place of performance than for a jurisdiction agreement. In international trade an agreement on the place of performance may be concluded, in case of an oral contract, if the other party does not react to a written confirmation containing a printed reference to the place of performance or pays invoices which contain such a reference without objection."
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
7A33 [Application of good faith standards]; 8B1 [Interpretation of party's statements or other conduct (interpretation based on objective
standards): understanding of reasonable person of same kind as other party];
7A33 [Application of good faith standards];
8B1 [Interpretation of party's statements or other conduct (interpretation based on objective standards): understanding of reasonable person of same kind as other party];
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (German): Click here for German text of case; see also Juris GmbH; Internationales Handelsrecht [IHR] (5/2009) 201-204; <http://www.beck-online.beck.de>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
German: Philipp Grosskopf, IHR (5/2009) 204-295Go to Case Table of Contents
Queen Mary Case Translation Programme
14 January 2009 [20 U 3863/08]
Translation [*] by Andrea Vincze [**]
Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
I. In the claim and the counterclaim, the parties are asserting claims regarding deliveries of metal ceiling materials. Plaintiff [of Germany] (hereinafter "[Seller]") manufactures ceiling, flooring and partitioning wall systems. Defendant (hereinafter ["Buyer]) is an interior decorating company in Italy.
In 2005, [Buyer] was looking for an appropriate manufacturer to purchase ceilings needed for a project. Witness N. represented manufacturers in Italy, including [Seller]; [Buyer] knew him from previous business dealings. Therefore, [Buyer] contacted Witness N. In June 2005, Witness N. and [Buyer] signed an agreement.
Based on individual oral orders, [Seller] repeatedly delivered metallic slabs needed by [Buyer] in 2006. [Seller] sent written order confirmations to [Buyer]. The orders in dispute were confirmed on 14 July 2006, 31 May 2006 and 22 August 2006. None of these order confirmations were signed by [Seller]. [Buyer] countersigned some of these [order confirmations], for example, on 14 July 2006. The current dispute deals with the mutual claims arising out of the latter orders and deliveries and the issue whether the Court of First Instance had jurisdiction.
[Seller] argues that the District Court of Landshut, where [Seller] filed its claim, is the appropriate venue having subject matter jurisdiction. [According to Seller], the order confirmations for the transactions in the dispute included a valid agreement on jurisdiction and the place of performance, based upon which the District Court of Landshut had jurisdiction. The agreement of 14 June 2005 does not contradict this position, as this neither contained a binding agreement on the place of performance, nor would [Seller] be bound as Witness N. was not authorized to validly represent [Seller].
[Buyer] objected to the jurisdiction of the District Court of Landshut. [Buyer argues that] Witness N. had validly concluded the contract of 14 June 2005 for [Seller], as Witness N. had been authorized by [Seller] and acted as its agent. [The contract] specified Turin as the place of performance, consequently, Italian courts had jurisdiction pursuant to Art. 5 (1)(a)-(b) of the Brussels I Regulation [Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters]. Any agreement to the contrary in the general terms and conditions contained in [Seller]'s order confirmations was ineffective.
For the remainder, reference is made to the facts established by the Court of First Instance (Art. 540(1), sentence 1, no. 1 ZPO).
In the final judgment of 12 June 2008, the District Court dismissed the [Seller]'s claim, ruling that German courts had no jurisdiction. Pursuant to the applicable Council Regulation 44/2001[Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters], [Buyer]'s place of general jurisdiction was Italy (Art. 2 of the Brussels I Regulation).
There was no valid agreement on jurisdiction that deviated from the latter provision (Art. 23 of the Brussels I Regulation).
In addition, [Seller] had failed to effectively include the choice of jurisdiction and the place of performance via general terms and conditions printed on its order confirmation into the legal relationship between the parties. These provisions were contrary to the specific agreement of the parties, validly concluded through Agent N. on 14 June 2005, and, therefore, they were surprising and ineffective.
In addition, reference is made to the judgment of the District Court.
[Seller]'s appeal is directed against the judgment of the District Court, and it encompasses [Seller]'s entire claim arguing that the District Court of Landshut is the court having jurisdiction over the subject matter of the dispute. [Seller] argues that the parties did not conclude a pure sales contract but a contract of works, labour and material, wherefore based on the specific legal provision on jurisdiction in Art. 5(1)b, phrase 2 of the Brussels I Regulation, the District Court of Landshut had jurisdiction.
In addition, [Seller argues that] the District Court misjudged the formal requirements of an intended agreement on jurisdiction under Art. 23 of the Brussels I Regulation, which had been met in the present case through [Seller]'s general terms and conditions that had to be taken into consideration. The general terms and conditions had become part of the contract by way of the order confirmations subject to the dispute. The parties had never agreed upon the place of performance being Turin. In case that the agreement of 14 June 2005 had been validly concluded between the parties, it did not contain an agreement on the place of performance, instead it would merely be an agreement on costs and risk. [...]
Hence, [Seller] claims that the judgment of the District Court Landshut, case docket no. 43 O 1748/07 be changed as follows:
1. [Buyer] is obliged to pay EUR 30,642,64 plus interest in the amount of 8% above the base interest rate in respect to the amount of EUR 10,403,60 since 11 December 2006 and in respect to the amount of 12,692,96 since 19 February 2007.
2. a) [Buyer] is not entitled to invoke any rights based on defects, in particular, the right to withdraw or avoid the contract, to reduce the price or to claim damages regarding the delivery of metallic slabs.
b) [Buyer] is not entitled to claim damages or futile expenses on the basis of a breach of contract or delay based on an alleged contractual relationship concerning the delivery of further metallic slabs.
4. In the alternative, to refer the case back to the District Court.
[Buyer] requests the dismissal of the appeal or, in the alternative, to forward the case to the European Court of Justice.
[Buyer] agrees with the reasoning of the District Court and argues that it is correct in its entirety. The District Court had correctly held that the contract of 14 June 2005 was binding between the parties. The deliveries had been based on this contract and not on independent, single orders. [Seller]'s general terms and conditions had not become part of the contract.
Reference is made to the submissions of the parties and the protocol of the hearings.
II. [Seller]'s appeal is admissible and it is successful. The appealed judgment and the underlying proceedings must be annulled and the case must be referred back to the District Court to conduct new proceedings and to make a new decision, because the appealed judgment only included a decision on the admissibility of the claim (Art. 538(2), para. 3 ZPO), and the District Court rulings on the lack of international jurisdiction of German courts cannot be accepted.
In that respect, the District Court held that international jurisdiction is governed by the provisions of the Brussels I Regulation in the present case, and that, under Art. 2 of the Brussels I Regulation, [Buyer] had its place of jurisdiction in Italy. Reference is made to the judgment of the District Court.
The question subject to the most dispute (cf. Supreme Court decision on 9 July 2008 -- VIII ZR 184/07 [= IHR 2008, 189]), i.e., whether and under what conditions a sales contract containing specific service obligations, as in the present case, qualifies as a sale of goods or provision of services under the specific provision on jurisdiction in Art. 5(1) para. (b) of the Brussels I Regulation for the purposes of determining jurisdiction based on the place of performance does not have to be assessed. The parties validly agreed on the place of performance being Amstorf in Germany, wherefore jurisdiction of the German courts under Art. 5(1)(a) of the Brussels I Regulation is established. That agreement on the place of performance have been included into the contract via [Seller]'s standard terms and conditions printed on the order confirmations.
[Seller]'s standard terms and conditions printed on the order confirmation have effectively been included into the contract.
The contractual relationship between the parties is governed by the CISG. The dispute is subject to Arts. 1 and 3 CISG regarding the scope of application. The exception in Art. 2 CISG is not applicable here and the parties did not make a different choice of law.
According to the leading doctrine, inclusion of the standard terms and conditions into a contract governed by the CISG is governed by the applicable provisions on contract formation (Arts. 14, 18 CISG); an application of national law applicable by way of private international law is generally rejected (Supreme Court, NJW 2002, 370 [ = IHR 2002, 14] with further references). However, the CISG does not contain specific provisions regarding the inclusion of standard terms into the contract. Therefore, it must be determined through the interpretation of Art. 8 CISG whether the standard terms form part of the contract, which may be established on the basis of the negotiations between the parties, practices between them, or international usages (Art. 8(3) CISG). Otherwise, the decisive factor is how a reasonable person of the same kind as the other party would have understood the offer (Art. 8(2) CISG). Accordingly, the recipient of a contractual offer or an order confirmation must be provided with the standard terms, or it must be given the opportunity to reasonably get to know them (Supreme Court, NJW 2002, 370 [ = IHR 2002, 14], with reference to Staudinger/Magnus, Art. 14 no. 41; Schlechtriem-Schlechtriem, op. cit.; Soergel-Lderitz-Fenge, op. cit.; Reithmann-Martiny, Internationales Vertragsrecht, 5th ed., no. 651). Therefore, an effective inclusion of standard terms into the contract requires, firstly, that the addressee of the offer must be able to identify the offeror's intent to include the standard terms into the contract. Therefore, in uniform sales law, the party relying on standard terms must send the text of the standard terms or make it available to the other party (Supreme Court, loco cit.). To that extent, under non-uniform German law, in commercial relations and in transactions between businesses, the standard terms referred to become part of the contract even if the client does not know them but had the opportunity to reasonably get to know them, for example, by requesting them from the other party. However, this does not apply in international commerce because due to the duty to act in good faith, a duty to inquire cannot be placed on the other party (Supreme Court, loco. cit.).
Based on these principles, [Seller]'s general terms and conditions printed on the order confirmations have effectively become part of the contract.
Based on the negotiations performed by Witness N., that had been laid down in writing on 14 June 2005, [Buyer] at least knew [Seller]'s intention to include its standard terms of May 2004 into potential contracts wherefore the document dated 14 June 2005 is irrelevant. Extracts from these standard terms were included in the order confirmations whereby [Buyer] had the opportunity to get to know them.
This was sufficient for a valid agreement between the parties on the place of performance that was not subject to the strict requirements regarding agreements on jurisdiction under Art. 23 of the Brussels I Regulation. In international commerce, in case of an oral contract or an oral order, an agreement on the place of performance can also be concluded if one of the parties does not respond to a written confirmation containing a pre-printed reference to the place of performance that was sent by the other party or if the party repeatedly pays invoices containing such reference without making any objection (Supreme Court, NJW-RR 2005, 1518 et seq.; European Court of Justice NJW 1997, 1431).
The latter requirements are met in the present case.
In that respect, the determining factor is that, as stated above, [Buyer] knew due to the negotiations in 2005 that [Seller] relied on the applicability of its standard terms and intended to include them into the contract with [Buyer] as well. Although [Buyer] did not have a duty to inquire about the contents of the standard terms in international commerce, [Buyer] was still expected to check the written communications comprehensively and to take notice of standard terms included therein. In any event, [Seller] may have assumed from the previous business transactions that [Buyer] took notice of the reference to the place of performance included in the footer of its order confirmations, especially because the first order confirmation subject to the dispute was countersigned and returned by [Buyer]. It is undisputed that [Buyer] never raised any objections to the standard terms of [Seller], despite the fact that [Buyer] basically knew that [Seller] only wanted to perform deliveries on the basis of its standard terms. When, under these circumstances and being aware of [Seller]'s express intent, [Buyer] not only failed to object to an inclusion of the standard terms into the contract but also continued the contractual relationship, [Buyer] expressed its own implied consent that at least the standard terms communicated by [Seller] should apply (Supreme Court, op. cit.). Standard terms do not have to be translated into the language used in the contract. Validity of the agreement is not frustrated by the fact that the standard terms were written in English rather than the language of the negotiations; it is irrelevant in this respect whether the other party is capable of understanding the language used in the standard terms. (OLG Hamm dated 10 October 1988 -- 2 U 196/87, and Supreme Court judgment of 31 October 1989 -- VIII ZR 330/88 in IPRax 91, 326).
It is not apparent that the agreement on the place of performance served the sole purpose of determining the place of jurisdiction in an implied manner and thereby led to the application of Art. 23 of the Brussels I Regulation, as [Seller] had expressly stated its choice of jurisdiction in the text of the standard terms anyway.
Adjudication of the issue whether the agreement of 14 June 2005 was binding between the parties can remain open because, in any case, there would have been no agreement that would have conflicted with the acceptance of a valid agreement on the place of performance by means of the standard terms. In particular, there is no differing agreement on the place of performance. This cannot be inferred from the agreement referred to by [Buyer] that determines the price with the phrase "franco [free of charge] to the building site in Turin." If, based on a contract for the international sale of goods, the seller must transport the goods to the buyer and the delivery conditions include the phrase "franco to the building site," this does not constitute an agreement on a different place of performance; it is merely a provision regarding the allocation of transportation costs and assumption of the risk. (cf. judgment of OLG Koblenz dated 4 October 2002, 8 U 1909/01 [= IHR 2003, 66]). Otherwise, such an agreement would be meaningless because if the "building site" was the place of performance, the transportation costs would have to be borne by the seller anyway.
As international jurisdiction of the German courts was adequately established upon determining that the place of performance was Amstorf on the basis of Art. 5(1)(a) and (b) of the Brussels I Regulation, it does not have to be assessed whether an agreement on the place of jurisdiction was also concluded by way of the [Seller]'s standard terms in the present case. [...]
* All translations should be cross-checked against the original text. For purposes of this translation, Plaintiff-Appellant of Germany is referred to as [Seller] and Defendant-Appellee is referred to as [Buyer].
** Andrea Vincze is a Fellow of the Institute of International Commercial Law of Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, and her LL.M. at Pace Law School. She is working on her Ph.D. on ICSID arbitration, and is researching international commercial law and ADR.
*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.Go to Case Table of Contents