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CISG CASE PRESENTATION

Italy 24 March 1995 Appellate Court Genova (Marc Rich v. Iritecna) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950324i3.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19950324 (24 March 1995)

JURISDICTION: Italy

TRIBUNAL: Corte di Appello [Appellate Court] di Genova

JUDGE(S): Mario Piccardo, presidente; Gio Batta Copello, consigliere; Alberto Zingale, consigliere relatore

CASE NUMBER/DOCKET NUMBER: 211

CASE NAME: Marc Rich & Co. A.G. v. Iritecna S.p.A.

CASE HISTORY: 1st instance Trib. Genova (No. 1912) 12 July 1993 [CISG not mentioned]

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Petroleum


Case abstract

The court pointed out that "according to the accepted scheme of the international sale FOB - Free on Board - port of loading agreed, which is binding inter partes as an international trade usage under Article 9 CISG as well as under the standard terms of the National Iranian Oil Commission referred to in the contract, the seller performed its obligation of delivery when the oil entered the tanks of the ship. Therefore, the seller had to bear the risk of any loss or damage to the goods that may have occurred before that moment."

This is the only reference to the CISG in this opinion.

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Classification of issues present

APPLICATION OF CISG: No [CISG cited to support reference to international usages]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 9

Classification of issues using UNCITRAL classification code numbers:

9B [Implied agreement on international usages: risk of loss under FOB clause regarded as international usage]

Descriptors: Usages and practices

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=198&step=Abstract>; see also <http://soi.cnr.it/~crdcs/crdcs/it240395a.htm>

Italian: Diritto del Commercio Internazionale (1997) 734 No. 146

CITATIONS TO TEXT OF DECISION

Original language Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=198&step=FullText>; see also <http://soi.cnr.it/~crdcs/crdcs/it240395f.htm>; 11 Diritto Marittimo (1995) 1054-1059

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Flambouras, Transfer of risk (1999) n.270; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 9 para. 26

Italian: Lopez De Gonzalo, 11 Diritto Marittimo (1995) 1055-1058

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Case text (English translation)

Queen Mary Case Translation Programme

Court of Appeals of Genova (Corte di Appello di Genova)
Marc Rich & Co. A.G. v. Iritechna S.p.A.
24 March 1995

Translation [*] by Irina Dukic [**]

Translation edited by Angela Maria Romito [***]

COURT COMPOSITION: The Court of Appeals of Genova, composed of its judges Dott. Mario Piccardo, President, Dott. Gio Batta Copello, Counsellor, Dott. Alberto Zingale, Counsellor Relater, has rendered the following

JUDGMENT

[...]

Development of the proceedings

Established [by the Court of Appeals]. Italimpianti S.p.A., seller - FOB m/n Atlantic Emperor on the terminal of Valfair - of a cargo of 250,000 tons of Iranian petroleum, with a citation action in renewal, notified the Swiss company Marc Rich & Co. A.G. [buyer] on 9 April 1991, according to the preliminary ruling of the Court of Cassazione - which at the end of a proceeding to determine jurisdiction, pronounced the judicial authority (jurisdiction) of the judge. The proceedings had begun before the Trib. Genova [Court of First Instance], but were later suspended on the basis of wider demand - that was withdrawn before the final briefs - for a negative finding of [seller's] liabilility for the the delivery of the cargo that was contaminated with sea water, for having loaded 58,000 tons of sea water mixed with the oil).

In renewal, the [seller] summoned the [buyer] before the Trib Genova to have the [buyer] ordered "to deliver documents, that match the consent of the contracting party to conform punctually and that also conform with obligations imposed by the NIOC" (documents required by the National Iranian Oil Commission - supplier of the oil - demonstrating that the cargo was not destined for forbidden States: USA, Republic of South Africa, Israel, Egypt);

The defendant [buyer], in the renewal, asked for the rejection of [seller's] demands (for a negative finding of liability for the damages caused by lesser cargo and water contamination of the oil sold and loaded onto the s/t Atlantic Emperor), "without prejudice to [buyer's] right to have the damages it suffered and its expences compensated, with a reimbursement claim that will be presented in ways and times more opportune"; therefore, [buyer] asked for the rejection of the claim [seller] proposed with the citation act notified on 29 February 1988, having won the expenses;

Allowing the postponement of producing the expert's report on the damage caused to the oil by dilution, and a further postponement in the expected completion of the proceedings (to establish the validity of the arbitration clause and for the appointment of an arbiter), at the hearing for determination of conclusions [in the Court of First Instance] the [buyer's] case was presented in this way to establish and declare the liability of [seller] for the delivery of the cargo of contaminated oil of lesser quantity than stated in the invoice and the corresponding right of the [buyer] for reimbursement, disposing the prosecution of judgment for the liquidation of the same to the extent shown in the amount of US $5,800,000 - excluding re-valuation and interest, disposing finally the report of the CTU [*] expert appointed by the judge. On the same grounds, the [seller] objected that [buyer's] claim for reimbursement was a new claim and was not submitted in a timely manner - according to the Italian civil procedural rules, that it is irregular - and concluded by asking that the [buyer] be made to hand over the documents concerning the final destination of the oil cargo.

[Court of First Instance]. The [Court of First Instance], sustained the [seller's] objection that [buyer] had not filed a regular demand of damages in the [buyer's] reimbursement claim (intended in terms of "novity" ex adverso contested) on the following grounds:

Therefore, the [Court of First Instance] declared the inadmissibility of the reimbursement claim made by the [buyer] considering the fact, that the [seller] by not re-introducing its own demand, had also renounced the principal demand for a negative finding of liability, relative to the same situation ex adverso initiated as causa petendi;

The [Court of First Instance], on the other hand, sustained the merit of the [seller's] remaining demand (to order the delivery of documents by [buyer]) on the viewed agreements for the formation of the contract and the responsible contractual will of the parties (definite acceptance of the [seller's] offer by the [buyer's] side with telex on 26 January 1979, not contradicted by the insert - "with the exclusion of point no. 7" - contained in the following clause, no. 8, concerning the acceptance of all other terms and conditions known to the parties); thus, [the Court of First Instance] ordered the [buyer] to deliver to the [seller] the documents proving the unloading of the sold cargo of oil in the harbor of destination, and to bear entirely the expenses of the proceedings between the parties.

[Buyer's pleadings on appeal]. The [buyer] appealed against that judgment of the [Court of First Instance], as stated at the beginning of this judgment, complaining:

(1) About the error of the [Court of First Instance] which intended a will of "non-acceptance of dispute" and the the expression "nullity of countercharge" in the technical meaning used by the [seller's] counsel at the hearing for determination of conclusions, and for not having expressed clearly an exception to inadmissibility and/or delay of the [buyer's] reimbursement claim;

(2) About the error made by the [Court of First Instance] in finding in the exposition of the [buyer's] defense an "expressed„ renunciation of [buyer's] own counterclaim, since from the [buyer's] actions there does not appear any expression of renunciation, but only the intention of applying for a postponement of its trial by the Italian courts until the conclusion of the decision of the European Court of Justice and the Arbitral Tribunal in London, in order to avoid a conflict of international opinions;

(3) About the error of the [Court of First Instance] - also considering the behaviour of the [buyer's] counsel as absurd because of the renouncement of the claim for facta concludentia - in not having considered (dutifully ex officio) as null and inefficient that renunciation for absence of expressed power of attorney;

(4) About the error of the [Court of First Instance] in considering renounced, as it was not re-introduced at the hearing for determination of conclusions, the [seller's] demand for a negative finding of liability, since the [buyer's] side had not made a renouncement of the claim to establish [seller's] liability and a subsequent claim for reimbursement, and, in any event, not accepted the opponent's renouncement;

(5) About the error of the [Court of First Instance] in having judged the basis of the [seller's] request to order the [buyer] to deliver the documents of destination, because the [buyer] legitimately abstained from doing such, for the purpose of defending itself under article1460 (it was by necessity that the cargo, following the contamination attributable to [seller] as the FOB-seller party, endured a necessary change of destination); as the [seller's] side has not proved (as it was its obligation) the effective request of those papers from the side of NIOC [*];

That, with the same means the [buyer], was contesting that:

[...]

Considered (Omissis) that, conclusively, the first part of the judgment on appeal, concerning the pronouncement of inadmissability of the countercharge of the [buyer], must be amended. The [buyer], not mentioning any legal reason for delaying the proceedings, pleaded the necessity of commencing activities of trial and inquiry at this stage of the proceedings, including the debeatur and the quantum debeatur, on account of the difficulty to obtain judgment in quanti minoris for the contamination of the sold oil with water without seeking the assistance of a CTU - appreciated on these grounds the results of the out-of-court stipulations that, incidentally, seem to rely on a rational basis (the impartiality of the analysis of the NIOC), and provide a valid ground to establish the liability of the [seller] as an FOB seller of 250,000 tons of Iranian oil to the [buyer] (accepted trade usage according to Incoterms - but also according to the NIOC standard terms - that impose on the seller the risk of any loss or damage to the goods until the entrance of the product in that tanks of the s/t that the buyer had chartered);

(Omissis)

Assumed that, examining the [buyer's] claim against the [seller] for reimbursement of damages suffered (with an eventually limited pronounciation to a debeatur, which above is considered as legitimate and valid, that - as anticipated above - was deduced properly, as the documentary evidence tendered by [buyer] at the [Court of First Instance] is able to demonstrate) with juridicial relevance to the present judgment, the following:

(1) The conclusion of a contract for international sale FOB (v.p. 4 agreement, authorized with telex on 26 January 1987 in acts ) of 250,000 tons of Iranian oil, between [seller] and [buyer], with the role of the seller confirmed in the entire commercial documentation;

(2) The [seller] (seller-loader), enjoyed access to the credit opened by the buyer for banking payment not on release of a full set of clear Bills of Lading, but on the basis of a single letter of indemnity (letter of guarantee of the quantity and quality of goods received for loading, often disposed for facilitating the release of clean Bills of Lading from the side of the sender, fraudulent to good faith possessors): from that derives, on one side, the proof of performance of the [buyer's] principal obligation in the payment of FOB price, and on the other side, the side of the [seller], the uselessness of [seller's] arguments opposing the [buyer's] reimbursement claim, based on the the annotation of the Bill "clear on board";

(3) The certification made by NIOC inspectors (intervened as agents "on the account of the [seller]" in the proceedings, in the name and the account of the Italian company), of loading on the tanker ship chartered by the [buyer], a considerable quantity of "free water" (namely, not mixed with oil; approximately 20,000 tons water contained in the 250,000 tons of sold oil);

(4) The recognition, in annotations of the Bills of Lading, of the corresponding lesser quantity of the oil delivered, but also in invoices (N. Oil, February 1987 and 23 March 1987, prod. no.12 and 51/12, and no.13-51/13) released directly by the [seller], with evident value, acknowledging not only one sale in lesser quantity to what was contracted, but also ways of reduction of cargo for entrance of saline water in the tanks of s/t Atlantic Emperor: this implies knowledge of a more or less extended contamination (due to the technique of loading the oil by re-loading through a mother ship and an auxiliary, and not with direct loading from coastal depots) of the entire quantity of oil; contamination which was already pre-calculated on the basis of samples first taken at the port of loading and during the operations of pumping, by the [seller];

(5) The out-of-court establishment by impartial examiners (Minton Treharne & Davis, in London) and in the dispute of parties (for the [seller], Ralph Andrews s. telex 20 November 1987 in acts) of the percentage of contamination made by water, to be greater than the one present in the samples analysed by NIOC inspectors on the occasion of full tank inspection;

Observed that according to accepted scheme of the international sale FOB - Free on board - port of loading agreed, which is binding inter partes as an international trade usage under CISG Article 9 (the CISG was ratified in Italy by law 765/85, and in Switzerland on 11 March 1991) as well as under the standard terms of the NIOC referred to in the contract (similar to what was earlier agreed between the parties), the [seller] performed its obligation of delivery when the goods passed the side of the ship (i.e., when the oil passed the rivet at the juncture with the tubing on the s/t Atlantic Emperor). Therefore, the seller had to bear the risk of any loss or damage to the goods before that moment;

(Omissis)

For these reasons:

The Court of Appeals of Genova not definitively pronouncing on the [buyer's] appeal against the judgment of the Trib. Genova [Court of First Instance] of 12 July 1993, in amendment of this judgment:


FOOTNOTES

* For purposes of this translation, the Plaintiff-Respondent Iritechna S.p.A. of Italy is referred to as [seller]; the Defendant-Appellant Marc Rich & Co. A.G. of Switzerland is referred to as [buyer]. Translator's note on other abbreviations: CTU = Consulenza Tecnica di Ufficio; NIOC = National Iranian Oil Commission.

** Irina Dukic's bio info to be inserted here. The second-iteration redaction of this translation was by Dr. John Felemegas.

*** Angela Maria Romito, Associate of the Institute of International Commercial Law, Pace University School of Law. Law degree (cum laude) 1994, University of Bari, Bari, Italy. Admitted to the Bar 1997. LL.M. University of Pittsburgh School of Law 2000-2001. CWES Scholarship. Researcher of European Union Law at the University of Bari. Lawyer at Studio Legale Romito.

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