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.
APPLICATION OF CISG: No [CISG cited to support reference to
international usages]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue: Article
Classification of issues using UNCITRAL classification code
numbers:
Descriptors:
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
Classification of issues present
Editorial remarks
Citations to other abstracts, case texts and commentaries
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:
- The [buyer] having manifested the intention, due to the declarations made by [buyer's] counsel in the appearance at the renewal, as well as in the transcripts from 12 November 1991, not to present the [buyer's] counterclaim for damages in the proceedings before the Trib. Genova [Court of First Instance], in the expectation of developments in the case before an Arbitral Tribunal in London concerning the practicability of the arbitral award - [buyer] reserving its own decision until the conclusion of those proceedings - the [buyer] had, thus, expressly renounced and abandoned the claim that had been made in time, during the procedural stage prior to the suspension of proceedings;
- For that reason, the [buyer] was not allowed to re-introduce a counterclaim outside the appearance of a response.
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:
That, with the same means the [buyer], was contesting that:
- The [seller] is bound by a functional connection between the standard terms of the NIOC supply of oil to the [seller] and the FOB sale of the same oil to the [buyer] - especially by the terms that prescribe the final obligations in the performance of the contract - and, finally, the ex adverso sustained assertion from the side of [buyer] on the liability of the [seller] for the operations of loading the oil with the method of transhipment (from the mother ship s/t Sasangird, through the intermediate s/t White Rose, to s/t Atlantic Emperor);
- Since the timely and orderly manner of first taking samples from both fractions of the cargo were accepted by the NIOC inspectors, as also was the release of certificates proving presence of water and sediment at the bottom of the cargo, and the exclusive reference to the Iranian oil company for release of Bills of Lading for 230,727 tons of oil (following the deduction of free water pumped from the s/t Atlantic Emperor); and also
- In respect of the dispute about the method of examination of oil samples (conducted by
Minton, Treharne & Davis, in London) that produced results of water contamination to the
cargo, 32.3% and 12.41% respectively, the [buyer] protected itself from acquiring any
liability for aggravation of damages (for not having allowed the expansion of the analysis of
the effective contamination made by saline water to the whole cargo, at the terminal as
place of loading - instead, [buyer] giving assurances that the same examinations were
completed in another port (Arab Emirates)), [buyer] insisted in its demand for a finding of
sole liability on the part of the [seller] as FOB seller and for an order for the payment of the
sum of US $5,800,000 - insisting, however, in the completion of the CTU for the
determination of the just reduction of price due to the non-conformity of the goods;
- Concluding, that the [seller] was surrendering focusing the defense almost exclusively on the preliminary question concerning the inadmissibility of the [buyer's] counterclaim for damages following the proposed suspension of the proceedings during the appearance at the renewal.
[...]
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:
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:
- Declares admissible the counterclaim for damages presented by the [buyer], and
- Denies the claim of the [seller].
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.
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