Case text (English translation)
Queen Mary Case Translation Programme
Appellate Court (Tribunal Cantonal) Canton Vaud 11 March 1996
[No. 01 93 1061] [163/96/BA and 164/96/BA]
Translation [*] by Serge Lapine [**]
Translation edited by Chantal Niggemann [***]
FACTS OF THE CASE
1. [Identity of the parties and the witnesses in the case]
The Plaintiff [seller] H. is a limited liability trading company located in Budapest, Hungary. It has a very broad scope of activity, including the wholesale of all kinds of goods. Its abbreviated name is "H", accordingly "Aluker". The company name in English is "H.T.L.L.C."
The Defendant [buyer] A. SA is a joint-stock company located in L, Switzerland.
The witnesses heard include, in particular, D.S., the Defendant [buyer]'s] director until 1993 and husband of the administrator of this company, who participated in the elaboration of the proceedings, and P.R., the Defendant [buyer]'s technical director. Having regard to the close relationship between these witnesses and the parties in question, the Court will consider their testimony only if other elements of the file confirm their evidence, except where they deal with facts of a very general nature that bear no effect on the solution of the dispute.
The Court will also consider with the same caution the testimony of C.S., chief of department of one of the companies of the group H.
2. [Business activities of the parties]
When Hungary was behind the "iron curtain", i.e., before 1989, the production of aluminium in the country was controlled by the State through a State company named H. This company had several centers of production and each was used by a company controlled by H. This was the case with the company A.A.P.
For its foreign transactions, the group H. used the services of the Plaintiff [seller] or those of H.H. mbH, in V., Austria.
The Defendant [buyer] is involved in the trade of alumina products. It is also competent in the area of production of alumina products; that is the reason for which [the Defendant/ buyer] began its business relations with the group H. and its affiliated companies.
On 17 November 1989, H., i.e., H.A.C., and C. AG, which is a company located in Switzerland, signed a contract aimed at the development of a co-operation in the production and marketing of alumina products. Cerapul's obligation was to provide its know-how in this area; in particular, to increase the volume of production and to ameliorate the quality of the products. This co-operation was to benefit in particular the A.P. company.
On 21 February 1990, the Defendant [buyer] signed a cooperation agreement with C.T. AG. The activity of C.T. AG consists in the purchase of raw material and the sale of finished products, in particular products coming from the plant of A. Under the terms of this agreement, the Defendant [buyer] was committed to organize and develop the sales sector of the other party, i.e., in particular to hire and supervise the sales staff. In return, the Defendant [buyer] received a percentage of the turnover realized by C. The Defendant [buyer] alleges (without proving it since the testimonies of D.S. and P.R. are not determining for the reasons set out above) that the agreement was to enable C. to fulfil the engagements entered towards the group E [probably group "H." is meant].
The Defendant [buyer] alleges (also without any evidence) that at a later date C. assigned its rights arising out of the two agreements mentioned above to L.F.I. in N.
On 23 October 1991, L.F.I. terminated the agreement entered into with the Defendant [buyer] and two consorts [consorts] 7 January 1991 concerning the transmission of the expertise and later of the project in Hungary.
3. [The contractual relationship of the parties]
a) On 5 July 1991, the Defendant [buyer] placed an order in writing with the Plaintiff [seller] for the delivery of 110 tons of goods for the price of DM [Deutsche Mark] 626 per ton, payment due within 30 days from the date of the invoice. On 15 July 1991, the Plaintiff [seller] confirmed this order for a price of DM 704 per ton and fixed the date of delivery around 25 July 1991. This order was the object of an invoice in the amount of DM 30,634.83 dated 29 November 1991, the date of delivery.
On 15 July 1991, the Defendant [buyer] placed another written order with the Plaintiff [seller] for the delivery of 110 tons of goods for a price of DM 704 per ton, payable within 30 days from the date of the invoice. On 12 August 1991, the Plaintiff [seller] confirmed the order, asking the Defendant [buyer] to make an advance payment of DM 11,000 with the goods being ready for delivery.
On 23 September 1991, the Defendant [buyer] ordered another 154 tons of products for DM 704 per ton and payment due within 30 days from the date of the invoice. On 11 October 1991, the Plaintiff [seller] confirmed the order asking for an advance payment in the amount of DM 15,400.
On 28 November 1991, and on 4, 5 and 18 December 1991, the Plaintiff [seller] delivered the products to the Defendant [buyer] with the invoices dated according to the dates of delivery in the amounts of DM 15,302.08, DM 15,375.32, DM 15,375.32 and DM 14,606.55.
These deliveries were correct as to the quantity, the quality, the terms of delivery and the price and the Defendant [buyer] did not make any reclamation in this regard.
b) On 17 February 1991, the Defendant [buyer] sent a fax to the Plaintiff [seller], the contents of which are as follows (translation from German made by the Plaintiff [seller]):
"We tried to reach you to ask you for assistance. We are a little late in respect of our latest payments, especially due to the uncertainty concerning the continuation of different projects and mainly since we invested a lot of money in the development of crushing bodies (corps broyeurs) and the sale of alumina. We requested explanations from H. and A. but have not received a satisfactory answer as yet. We offer you an immediate transfer in the amount of DM 50,000- and of the balance at the beginning of March. We hope that you will agree to our proposal and that the production of the next 200 tons can continue. For your knowledge we attach a copy of the correspondence exchanged with H. and A."
In return, the Plaintiff [seller] sent a fax to the Defendant [buyer] dated 2 June 1992, the contents of which are as follows (translation from German made by the Plaintiff [seller]):
"We were surprised to find out that to date you still have not paid our invoices no. 0082/ 009, 010, 011, 012 in spite of your written acceptance dated 17 February 1992. It was you personally who proposed in that fax to pay immediately DM 50,000 - and the balance at the beginning of March. In March, you have transferred DM 48,383.25 following our invoices 0082/ 007 and 008, but the other invoices pre-mentioned are still unpaid. We hope that you will inform us precisely when you will pay the sum of DM 61,010.31. We also hope that the relation between your company and our company will remain without inconveniences and that we will not be constrained to take other measures."
On 22 June 1992, the Plaintiff [seller] sent the following fax to the Defendant [buyer] (translation from German made by the Plaintiff [seller]):
"Our letter of 2 June 1992 remained unanswered. In spite of our reminder, you have not paid the invoices no. 0082/ 009, 010, 011 and 012. Consider this message as a second reminder. We give you one more term until 15 July 1992 to pay us the amount of DM 1,010.31 (correction: DM 61,010.31). Unless you comply, we will be constrained to use judicial means to arrange the matter."
On 2 September 1992, the Hungarian counsel of the Plaintiff [seller] sent another reminder to the Defendant [buyer] threatening to bring the action to court if the latter does not pay.
By fax dated 8 September 1992, the Defendant [buyer] replied to the Hungarian counsel mentioned above in the following terms (translation from German made by the Plaintiff [seller]):
"In answer to your letter, you will find attached a copy of our registered letter sent to A., affiliated company of H. as well as of our invoice no. 00188 constituting our claim against H. After payment of our invoice, we will immediately transfer to you the sums mentioned in your letter."
On 15 October 1992, the Hungarian counsel of the Plaintiff [seller] addressed the Defendant [buyer] in the following terms:
"Object: the debt of DM 61,010.31 to H.
"Dear Mr. S."In regard to your fax of 8 September of 1992, I inform you about the following: On 15 July 1991, you ordered from H. 154 tons of aluminium granules (order no. 910705 and 910715). H. confirmed these orders and delivered you the product. Consequently, the sales contract was concluded between A. and H. (English: H. T. Co. Ltd). To date you have not paid the purchase price of DM 61,010.31.
" In your fax you refer to your receivable against H, whereas it follows from the attached letter that said receivable concerns A. I draw your attention to the fact that A. and H. are two independent legal entities that are not responsible for the debts of each other.
"Therefore, we cannot accept your referral to the refusal to pay your alleged receivable against A., of which we acknowledge neither the legitimacy nor the contents since this claim is against a company which is, from a legal perspective, totally distinct from H. If you intend to claim a sum from A. you must address A. directly and H. has nothing to do with it.
"This is why we summon you to transfer the aforesaid sum to H. within 8 days from the receipt of our letter. Failing that, we will file a suit for H.'s receivable against you."
Final calculation between the parties is made as follows:
[…]
4. During the years 1990 and 1991 at least, the Defendant [buyer] offered consultation services to the plant of A. in the form of written communications, discussions and on-site visits which in sum amounted to regular, detailed and constant advice. Thereby the Defendant [buyer] transmitted its know-how in the area of tabular alumina, reactive alumina, alumina of polishing, balls of crushing and of products designed for the production of aluminium concretes. The Defendant's [buyer's] claims in regard to the group H. for advice and assistance provided during the years 1990 and 1991 are much higher than the receivable claimed by Plaintiff [seller] in the present proceedings.
That being so, the registered letter sent by the Defendant [buyer] to A. on 14 July 1992 with the invoice of the same day does not formally address the Plaintiff [seller] who has a distinct legal personality, different to that of the entity A. even though the latter is a part of the group H.
The Defendant [buyer] alleges, without proof, that the Plaintiff [seller] is in the entire or, at least, the majority control of the group H. and that the Plaintiff [seller] never paid the Defendant [buyer] for the provision of its experience. For the reasons set forth under point 1 above, the Court will not take into account the testimony given by the witnesses P.R. and D.S., whose statements are not corroborated by any element of the file.
The same can be said in respect of the Defendant [buyer]'s allegation that H. is also entirely or mainly controlled by the group H. It should also be noted in this regard that the German designation of "H., Joint-stock company of Hungarian Industry of Aluminium" is "H.A.A." and not, as the Defendant [buyer] alleges, "U.A." (the testimony of D.S. and P.R. cannot be accepted on this point as it is in part contradictory to one of the elements of the file). It was G.M. who signed the record of the General Meeting of H.H. mbH on 2 July 1990, being a proxy of "U.A." (neither the testimonies of the persons cited above can be accepted on this point for the aforesaid reasons, nor the allegation according to which the same M. is presently General Director of H.H. mbH.)
The Plaintiff [seller] in Budapest, H.H. mbH in V., H. Joint-stock company of Hungarian Industry of Aluminium, also in Budapest, and A.A.P., or, as abridged, A.in A., are legally distinct companies.
The dispute between the parties in the proceedings relates to the delivery of products and it is not established either that the Plaintiff [seller] would be concerned by other disputes which the Defendant [buyer] would have with the three other companies mentioned above, or that the Plaintiff [seller] is the effective owner of these three other companies.
The Plaintiff [seller] deals with the commercialization of the products and it is not established either that this activity implies knowledge in the area of producing this kind of goods or that the Plaintiff [seller] was provided know-how, assistance or advice for the production of certain products of aluminium.
5. With its claim dated 23 September 1993, H., a limited liability trading company, requested, assuming necessary expenses, that the Civil Court of the Cantonal Court holds Defendant [buyer] A. SA liable to pay immediately the sum of DM 61,010.31 plus a yearly interest of 11 per cent since 18 January 1992.
In its answer dated 7 December 1993, the Defendant [buyer] requested, assuming necessary expenses, the rejection of the Plaintiff [seller]'s claim. The Defendant [buyer] expressly invokes the set-off.
THE LAW
I. [The Plaintiff [seller]'s claim]
a) [Applicability of the CISG]
The United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (Vienna Convention, RS 0.221.211.1) entered into force in Switzerland on 1 January 1991 and in Hungary on 1 January 1988.
The Vienna Convention (hereinafter CISG) applies to the contracts of sale of goods between parties whose places of business are in different States, namely, when the States are Contracting Parties (Art. 1(1) CISG).
The Plaintiff [seller], whose place of business is in Hungary, claims the payment of the price for the goods that the Defendant [buyer], whose place of business is in Switzerland, took delivery of and which it did not pay. Thus, this is an international sale of goods governed by the Vienna Convention.
The parties did not exclude the application of the Vienna Convention (see Art. 6 CISG).
b) [The contract of sale at issue]
The Vienna Convention gives no definition of the sales contract which must be understood in its classic sense, namely, that one party undertakes an obligation to deliver goods and transfer the property in the goods to the other party for a certain price (cf. Arts. 30 and 53 CISG). Article 62 CISG provides, in particular, that the seller may require the buyer to pay the price (Neumayer/ Ming, Convention de Vienne sur les contrats de vente internationale de marchandises, Commentaire, CEDIDAC 24, Lausanne 1993, p. 395).
In the present case, the Plaintiff [seller] performed its obligation to deliver the goods and the Defendant [buyer] did not formulate any complaint as to the quality or the price of the delivered goods. Thus, the Defendant [buyer] must pay to the Plaintiff [seller] the purchase price due at delivery (Arts. 53, 58 and 59 CISG).
The Plaintiff [seller] claims payment of DM 61,010.31 corresponding to the invoices no. 0082/ 009, 0082/ 010, 0082/ 011, 0082/ 012 as well as to the balance of the invoice no. 0082/ 008. In regard to the last invoice, it is established that the Defendant [buyer] paid DM 48,383.25 for the aforesaid invoice as well as for a previous invoice with the no. 0082/ 007, the amount of which is unknown. Hence, it is not established that there is an unpaid balance on the invoice no. 0082/ 008 or at least that this balance amounts to DM 351.04. It is necessary from this point to reject any claim related to the invoice in question and to reduce the Plaintiff's [seller's] claim to the other invoices in the total amount of DM 60,659.27.
This amount must be awarded. There is no obstacle for the adjudication of a claim formulated in a foreign currency (JT 1993 III 79; JT 1979 III 75, with the note of J.-F. Poudret; JT 1974 III 128).
c) [Interest rate]
On the sum of DM 60,659.27, the Plaintiff [seller] claims interest of 11 percent per annum since 18 January 1992.
Article 78 CISG provides the principle for the payment of interest on any sums that are in arrears if the buyer delays the payment of the purchase price. The Convention, however, provides neither the rate nor the date for calculation of the interest, their determination being left to the applicable national law (Stoffel, Le droit applicable aux contrats de vente internationale de marchandises, in Les contrats de vente internationale de marchandises, CEDIDAC 20, Lausanne 1991, pp. 39-40; Neumayer/ Ming, op cit., pp. 511 et seq.).
The only disputable obligation in the present case is that of the buyer which is established in Switzerland. It is appropriate to refer to the rate applied in the place of establishment of the debtor (Neumayer / Ming, op. cit., p. 514). In these conditions and without Hungarian law being invoked, there are grounds to apply Swiss law. Interest rate, thus, must be fixed according to the Swiss legal rate of 5 percent per annum (Art. 104 para. 1 of the CO [*]).
d) [Date when interest accrues]
Regarding the date for the calculation of interest in arrears, the Plaintiff [seller] fixes it thirty days after the date of the last invoice which, like the previous ones, is payable within thirty days.
The Vienna Convention contains a rule concerning the principle of interest and damages in case of breach of contract (artS. 74 and 78). Pursuant to this rule, compensation is due as from the moment of occurrence of the damage or of the breach of contract. Therefore, the obligation to pay the interest does not depend on the fact that the defaulting party was put into arrears; it is sufficient that the sum due was not paid within the term of payment (Weber, Vertragsverletzungsfolgen, in Wiener Kaufrecht, Berne 1991, p. 208). Other scholars are of the same opinion (Wiegand, Die Pflichten des Käufers und die Folgen ihrer Verletzung, in Wiener Kaufrecht, op. cit., p. 156; Tercier, Les contrats spéciaux, 2ème éd., 1995, p. 161, n. 1286).
In the present case, the interest should be awarded to the Plaintiff [seller] from the day after the date of payment of the last invoice, i.e., 18 January 1992.
II. [The Defendant's [buyer's] counterclaim for set-off]
The Defendant [buyer] alleges that it was transmitting its know-how to the group H. from September 1989 to February 1992 and that it was never reimbursed for it. It submits this counterclaim for a set-off.
a) If the Vienna Convention does not exclude a set-off (Neumayer / Ming, op. cit., p. 38), it remains silent regarding this mode of discharge of the buyer's indebtedness. The Defendant [buyer] invokes Swiss law that is applicable in the present case for the reasons stated above.
Article 120, para. 1 of the CO [*] provides that in case two persons are mutual debtors of sums of money or of services of the same nature, each of these parties can set-off its debt with its receivable if these two debts are recoverable.
The set-off, thus, presupposes, in particular, the identity and reciprocity of the obligations; the identity must be legal, not only economic (Engel, Traité des obligations en droit suisse, 1973, p. 453). Therefore, there is no possibility of set-off for the debtor of a joint-stock company with its claim against the single shareholder, except in case of an abuse of law (see also Gauch/ Schluep/ Tercier, Partie générale du droit des obligations, II, 2ème éd., 1982, p. 136; ATE 85 II 111, JT 1960 I 19).
In the present case, it is clear that the Plaintiff [seller] H., a trade limited liability company, is not identical to the group H., against which the Defendant [buyer] alleges to have receivables.
The assimilation of two legally distinct entities because of their economic ties so as to consider them as identical in order to apply Article 120 of the CO [*] in the interest of a "Durchgriff" must satisfy very strict criteria (Peter, in Honsell/ Vogt/ Wiegand, Obligationenrecht I, Kommentar, ad art. 120, n. 16, p. 699).
Legal independence of a company from its single shareholder is exceptionally not taken into account in case the referral to the difference between the legal entities constitutes an abuse of law, is contrary to the rules of good faith in business or leads to a clear adverse effect upon legitimate interests (Article 2 of the CC [*]). "Transparency" (piercing of the corporate veil) can be applied only in case of absolute control by the predominant shareholder and an abuse of law (Hovagemyan, Transparence et réalité économique des sociétés, CEDIDAC 30, Lausanne, 1994, p. 25, ch. 8 et p. 26, ch. 11).
Efficiency of this notion of transparency based on rules of good faith and the prohibition of abuse of law was particularly elaborated in regard to joint-stock companies so as to use a claim against the company also against the main or the single shareholder (Forstmoser / Meier-Hayoz / Nobel, Schweizerisches Aktienrecht, 1996, pp. 964 et seq., spéc., p. 968, n. 76). However, this notion has no general scope under Swiss law (Böckli, Schweizer Aktienrecht, 2ème éd., 1996, p. 579, n. 1181a et seq.).
The Federal Court recognized that the fact that a company is affiliated with a group controlled by another company does not alone lead to the responsibility of the parent company for the acts of the subsidiary. To apply Articles 55 and 101 of the CO [*], simple dependence does not suffice; in addition, it is necessary that by virtue of a contract the subsidiary must follow the orders and instructions of the parent company. Even if it is a member of a group, an independent company remains governed by its own administration, which has the exclusive responsibility for the making of business. The theory of transparency ("Durchgriff") is with no effect in this regard (TF, 11 juin 1992, Revue suisse du droit des affaires, 1993, p. 308, r137; SJ 1992, p. 627).
In a neighboring area, the advertisements of a parent company addressed to clients of the subsidiary can oblige the parent company towards those clients by virtue of an analogy to the principle of culpa in contrahendo (ATF 120 II 331, JT 1995 I 359).
Ultimately, it can be recalled that in the sphere of groups of companies it is usual to fix "set-off clauses" in the contracts in order to permit a member of a group committed under the contract to claim a set-off despite the absence of the reciprocity. (Gauch / Schluep / Tercier, op. cit., p. 137, n. 1990).
The fact that this clause is used in contracts emphasizes that in case it is missing, there is no identity and reciprocity of the legal entities.
For the reasons mentioned above, there are no grounds to examine whether the theory of transparency is also applicable in case one of the entities is, as in the present case, a limited liability company and by that a company containing characteristics of both a partnership and a corporation.
b) In the present case, the Plaintiff [seller] H. and the group H. are two distinct legal entities with different bodies. It is not established that the group H. has had majority participation in the Plaintiff [seller] since its creation in 1991. The same is true for H. H. mbH. and for A.
Thus, the registered letter, which the Defendant [buyer] sent on 14 July 1992 to A., with the invoice of the same day, does not concern the Plaintiff [seller].
Finally, in case the existence of the ties between the Plaintiff [seller], the group H. and the other two companies is established, the nature of these ties is not clear. Even if the Defendant [buyer]'s allegations could have been accepted, these facts do not make possible the assimilation of H., Ltd. to the group H. or to A. by imputing the latters' debt to the former.
c) Besides, there is no element of the case file that leads to the consideration that the conclusion of the contract with the Plaintiff [seller] had been induced fraudulently and, moreover, that the allegation of independence of the companies in question would arise from an abuse of law. It is neither established nor even alleged that the Plaintiff [seller] company had been created as a fictitious company to fraudulently cover the group H. and other corporations in Hungary.
Thus, the concept of transparency does not permit the Defendant [buyer] to assert a set-off against the Plaintiff [seller]'s claim.
In addition, there is no element indicating that the debt of the group H. towards the Defendant [buyer] has been taken over by the Plaintiff [seller].
From this point of view, the counterclaim brought by the Defendant [buyer] is not founded either.
III. [Defendant [buyer]'s action for restitution of benefit]
As a subsidiary argument, the Defendant [buyer] invokes Article 423 of the CO [*], i.e. an action for the restitution of the benefit in the context of improper business administration. In case the Plaintiff's [seller's] activity consisted in selling aluminium products made by the group H. using know-how transmitted by the Defendant [buyer], the latter as master (maître) would be entitled to claim the restitution of the benefit realized by the Plaintiff [seller] as business manager.
The action for the restitution of benefit presupposes the existence of direct ties between the parties (cf. Weniger, La protection des secrets économiques et du savoir-faire, thèse Lausanne, 1994, pp. 271-272). However, for the reasons stated above, benefits received by the group H. cannot be attributed to the Plaintiff [seller] as the transmission of these benefits from the former to the latter is not proved.
Therefore, the Defendant [buyer]'s counterclaim is not founded in this regard either.
IV. [Defendant [buyer]'s argument on unfair competition]
Finally, the Defendant [buyer] invokes the Law Against Unfair Competition (hereinafter LCD).
According to Article 5(b) of the LCD, a party who exploits the work of a third party knowing that this result was transferred or made accessible to it under no corresponding obligation, acts in an unfair way.
Again, the Defendant [buyer] refers to the fact that benefits received by the group H. are attributable to the Plaintiff [seller]. However, as already discussed, the group H. must be considered as a third party. Moreover, there are no facts permitting to state that the Plaintiff [seller] itself benefits from said enrichment.
Therefore, this argument is not founded either.
V. [Ruling of the Court]
The Plaintiff [seller] who has won on the merits has a claim for the costs of litigation (Article 92 para.1 of the Code of Civil Procedure) which must be fixed at the sum of Sf 8,830 including: Sf 6,000 for the honorarium paid to its counsel; Sf 200 for the expenses of the latter; and Sf 2,630 in compensation of litigation fees.
For these reasons, the Civil Court deciding in closed session in conformity with Article 318(a) of the Code of Civil Procedure, declares:
The Defendant [buyer] A. SA must pay to the Plaintiff [seller] H., limited liability trading company, the sum of DM 60,659.27 plus interest of 5 percent per annum from 18 January 1992.
[…]
FOOTNOTES
* All translations should be verified by cross-checking against the original text. Monetary amounts in Swiss Francs are indicated by [Sf]; amounts in German currency
(Deutsche Mark) are indicted by [DM]. Translator's note on other abbreviations: CC = Code
Civil; CO = Code des Obligations; LCD = Loi contre la concurrence déloyale [Law Against
Unfair Competition].
** Serge Lapine is a 5th year student at the Law Faculty of University of Nizhny Novgorod and
at the same time at the Interpreters' Faculty of Nizhny Novgorod Linguistic University. The
second-iteration redaction of this translation was by Dr. John Felemegas.
Go to Case Table of Contents
Pace Law School
Institute of International Commercial Law - Last updated October 12, 2004
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents
|| Go to Case Search Form || Go to Bibliography