Australia 13 August 2010 Federal Court of Australia (Cortem SpA v. Controlmatic Pty Ltd)
[Cite as: http://cisgw3.law.pace.edu/cases/100813a2.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: VID 414 of 2008
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Italy (Plaintiff)
BUYER'S COUNTRY: Australia (Defendant)
GOODS INVOLVED: Explosion-proof junction boxes (or “enclosures”)
AUSTRALIA: Federal Court of Australia (Cortem Case) 13 August 2010
( Cortem SpA v Controlmatic Pty Ltd  FCA 852)
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/116],
CLOUT abstract no. 1133
Reproduced with permission of UNCITRAL
The parties, of Italian and Australian nationality, concluded contracts for the distribution and sale of explosion-proof junction boxes. The Australian distributor would also assist the Italian manufacturer in obtaining the required certification for the products to be sold in Australia.
After several years, the manufacturer (i.e. the claimant) terminated the distributorship and sued the distributor (2nd respondent) and an Australian company (1st respondent) for injunctions, damages and declarations because, unbeknown to the claimant, the 2nd respondent had commenced to manufacture its own junction boxes in cooperation with such a company and to supply them to customers in Australia bearing the claimant’s logo.
By cross-claim the 2nd respondent (hereinafter the respondent) claimed payments, in the nature of remuneration and compensation, for expenses incurred, and for the time spent in securing the safety certification of the claimant’s products with the relevant Australian regulatory authority, because the products in question did not comply with Australian requirements. The respondent claimed that much work was done to secure such certification, and that expenses were outlaid, so that it was entitled to compensation on the ground that, otherwise, the claimant would be unjustly enriched. The respondent also claimed that the products were defective, not merchantable and unfit for “their intended purpose”.
The claimant objected that the Federal Court of Australia had no jurisdiction on the matter and that, as agreed in the contracts, the court of Gorizia (Italy) had jurisdiction over any question of law or fact arising thereunder. The Federal Court distinguished between the distribution contract the parties agreed on and the following sales contracts for the Australian market. The first agreement solely established and regulated the relationship of manufacturer and distributor and “was not a contract under which any particular goods were bought and sold. Each such contract was constituted by the orders presumptively placed by [the respondent], and accepted by [the claimant], from time to time”. Contrary to the distribution contract, the parties agreed that the “international purchase orders” would be referred to arbitration under the UNCITRAL Arbitration Rules. Since the claimant had not filed for arbitration, the Federal Court had jurisdiction over the case and would apply the CISG, as both parties had their place of business in States parties to the Convention.
The Court granted the Italian manufacturer damages for the lost profit due to the distributor’s breaching of its obligations under the agency agreement.
As to the respondent cross-claims, the Court dismissed the request for compensation for the time spent in obtaining the certification to the products, as the respondent failed to prove how much time it had actually spent on this and the relevant expenses.
With regard to the applicability of article 35(2)(a) CISG, the Federal Court stated the respondent only established that the products did not pass the tests administered by the Australian authority. This mere fact was not the same thing as proving they were not fit for the purpose referred to in the said article. The products were in the same condition as the claimant would have supplied to any other wholesaler everywhere in the world, “the problem being that, in Australia, the products encountered a regime of testing to which they might not previously have been subjected”.
As to article 35(2)(b), the Court noted that for some of the products, the respondent’s purpose was not their submission for certification, but their resale in the Australian market. As a matter of fact, the relevant contract was concluded after the products had received the required certification. That purpose, if not expressly “made known” to the claimant, was at least implicit. Furthermore, despite the respondent’s claim that the products were not fit, the respondent disposed of them.
Therefore, it could not be said that the respondent had suffered loss or damage within the meaning of article 35(2)(b). The Court well noted the claimant’s argument that the respondent had never made a complaint about the goods’ defects until the commencement of the proceeding.
With this regard, the Court looked into the applicability of article 39 CISG and considered that the respondent’s claim for some of the products should be dismissed, since it had not given notice of the non-conformity of the goods within a reasonable time after the alleged discovery of the defects (article 39(1) CISG). This was also applicable, by virtue of article 39(2) CISG, to those products delivered over two years before the proceeding. However, the Court upheld the respondent’s claim for another part of the products, as it found they were lacking conformity as per article 35(2)(b) and the respondent had given notice in conformity with the purpose of article 39 CISG.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:
25A ; 25B [Effect of a fundamental breach ; Definition: Substantial deprivation of expectation, etc.]; 35A [Conformity of goods to contract: quality, quantity and description required by contract ; Requirements implied by law ; Exception to seller’s liability]; 38A ; 38B ; 38C [Buyer’s obligation to examine goods ; When contract involves carriage of goods, postponement until after arrival at destination ; Deferral of examination in case of redirection or redispatch]; 39A ; 39B [Buyer must notify seller within reasonable time ; Cut-off period of two years]; 40B [Sanction: seller loses right to rely on articles 38 and 39]
25A ; 25B [Effect of a fundamental breach ; Definition: Substantial deprivation of expectation, etc.];
35A [Conformity of goods to contract: quality, quantity and description required by contract ; Requirements implied by law ; Exception to seller’s liability];
38A ; 38B ; 38C [Buyer’s obligation to examine goods ; When contract involves carriage of goods, postponement until after arrival at destination ; Deferral of examination in case of redirection or redispatch];
39A ; 39B [Buyer must notify seller within reasonable time ; Cut-off period of two years];
40B [Sanction: seller loses right to rely on articles 38 and 39]
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (English): Australasian Legal Information Institute website: <http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2010/852.html>
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents