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CISG CASE PRESENTATION

Netherlands 21 May 1996 Appellate Court Arnhem (Maglificio Esse v. Wehkamp) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/960521n1.html]

Primary source(s) of information for case presentation: Case text

Case Table of Contents


Case identification

DATE OF DECISIONS: 19960521 (21 May 1996)

JURISDICTION: Netherlands

TRIBUNAL: Hof Arnhem [Hof = Gerechtshof = District Appeal Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 95/246 AL

CASE NAME: Maglificio Esse v. Wehkamp

CASE HISTORY: 1st instance Rb Zwolle 16 March 1994 and 1 March 1995

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Netherlands (defendant)

GOODS INVOLVED: Knitwear


Classification of issues present

APPLICATION OF CISG: Court appears to have applied both the 1964 Hague Formation Convention and the CISG

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issues: Primary provisions discussed are ULF Formation provisions [Court also cited CISG Articles 1(1)(b) ; 42 ; 45 ; 74 ] [CISG Article 4 is also relevant]

Classification of issues using UNCITRAL classification code numbers:

4A [Scope of Convention (issues covered): burden of proof];

42A1 [Seller’s obligation to deliver goods free from third-party claim based, e.g., on copyright, patent, trademark: seller’s knowledge of claim when contract was made]

Descriptors: Scope of Convention ; Burden of proof ; Third-party claims

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=335&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (Dutch): Nederlands International Privaatrecht (NIPR) 1996 No. 398 [509-512]; Unilex database [excerpt] <http://www.unilex.info/case.cfm?pid=1&do=case&id=335&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Appellate Court (Gerechtshof) Arnem 21 May 1996
Maglificio Esse v. Wehkamp

Translation [*] by Annemarie Kwaspen [**]

[KEY ISSUES ADDRESSED]

[Buyer], a Dutch firm, bought textiles from [seller], an Italian firm, and resold them to the public. A third party [Olly's] claimed copyrights on the design of the textiles and commenced an action against the Dutch [buyer] for infringement. The Court ordered the buyer to pay damages to the third party. Consequently, the buyer brought an action against the seller, primarily on the basis of its own standard terms; subsidiary based on articles 42, 45 and 74 Convention on the International Sale of Goods ("CISG"). The seller opposed buyer's action and the applicability of [buyer]'s standard terms.

With the interim decision of 16 March 1994, the Court held that the question of the applicability of [buyer]'s standard terms had to be determined by the law governing the contract, which was Italian law. However, with the final decision of the Court at First Instance, the controversy was decided in regard to the primary foundation. In accordance with the subsidiary foundation, the Court decided that CISG did apply and, therefore, the buyer has to prove that the seller knew or could not have been unaware of the intellectual property rights. Against this decision, the seller appealed.

I. PARTIES TO THE ACTION AT THE COURT OF APPEAL

On the appeal, [seller], an Italian company under Italian law, with a principal place of business in Italy, requests, reversal of the ruling rendered on 1 March 1995 by the Court (1st Civil Court) in favor of the buyer, with a principal place of business in Holland

The [seller] invokes two reasons for reversal of the ruling of the Court of Appeal. These reasons for reversal are annexed to the present ruling.

[…]

II. COURT OF APPEAL: PARTIES' COUNSEL

The Court of Appeal of 21 May 1996, for which were in attendance: Mr. Van der Grinte, Mr. Houtman and Mr. Struycken.

III. FACTS

In the main procedure, [third party] Olly's summoned the Dutch company [buyer], stating that [buyer] infringes [third party] Olly's copyrights in the designs of the sweaters. However, it was the Italian [seller], which first sold and delivered the sweaters to [buyer]. Subsequently, [buyer] put the sweaters on the market for sale, and published them in its autumn and winter catalogue of 1991/1992.

IV. CONTRACTUAL PROVISIONS

[Buyer] placed the orders for the sweaters with [seller] together with a so-called Contract of Purchase. In accordance to the judgment of the Court Zwolle of 16 March 1994, this English document states:

"IMPORTANT ! 1. All shipments/deliveries against this contract are strictly subject to our Conditions of Purchase (…)."

The Court of Appeal quotes in its judgment - besides this paragraph - also the following provisions:

"4. Contract confirmation/blue copy of this contract duly signed and chopped to be returned to our Merch. Adm. Dept. within 10 days from date of contract. (...) By means of returning the blue copy, suppliers confirm to have received our conditions of purchase and that deliveries will be arranged accordingly."

Article 4b of the Conditions of Purchase provides that the seller must indemnify the buyer of all possible liabilities, fines, damages and costs, which are the result of a civil or criminal action of a third party against the seller, because of the infringement of a property right, a trademark right, a copyright, right on a design, patent, or any other real right of a third party. Furthermore, article 11 provides that the Contract of Purchase is subject to Dutch law, and that the judge of Zwolle/the Netherlands will have jurisdiction in any dispute, which may arise in relation to this contract.

V. CLAIMS

In the present third-party action, [buyer] holds [seller] liable for the damages, brought by a legal action of [third party] Olly's, primarily on the basis of the applicable Conditions of Purchase, and subsidiary on the basis of articles 42, 45 and 74 CISG.

VI. RULING BY THE COURT AT FIRST INSTANCE

In this context, [seller] denied that [buyer]'s Conditions of Purchase were part of the contract. At the time of the conclusion of the contract, [seller] alleged that it had no knowledge of the Conditions of Purchase. Moreover, [seller] states that it has never signed the Conditions of Purchase. Nevertheless, the Court Zwolle judged at first instance that the Conditions of Purchase were applicable. From this perspective, the Court ordered [seller] to pay all the claims to which [buyer] had been ordered to pay as the result of the action brought against [buyer] by [third party] Olly's. [Seller] appeals against this judgment; [buyer] claims an incident action.

VII. REASONING BY THE COURT OF APPEAL

     9. Although, the EEC Convention on the law applicable to contractual obligations ('Rome Convention') had not yet entered into force at the time of conclusion of the contract, in this case both parties rely on article of the 8 Rome Convention in order to convince the Court about the applicability of [buyer]'s Conditions of Purchase. The Rome Convention was promulgated in 1980, and entered into force in Italy and the Netherlands on, respectively 1 April and 1 September 1991. However, considering that both parties wish to invoke article 8 of the Rome Convention, the Court decides that this Treaty should be deemed to apply. In particular, the Court keeps in mind that the Rome Convention is a codification of already existing unwritten rules of international private law.

      10. Furthermore, the court considers that article 8 sub 2 of the Rome Convention is an exception to sub 1, and therefore, [seller]'s reference to this article should be regarded as if it has invoked article 8 sub 2 Rome Convention. In order to support the view that [seller] did not accept [buyer]'s conditions of purchase of [buyer], it relies on the law of the country in which [seller] has its common domicile (in fact, this is Italian law). In this context, [seller] states that it would not be reasonable to judge its conduct on the basis of article 8 sub 1 Rome Convention. Pursuant to article 1341, second part of the Italian Civil Code, [seller] would only be bound to the warranty clause, if [seller] had accepted the conditions of purchase in writing, and this is not the case.

      11. The Court does not support this statement. The issue in dispute is whether [seller] agreed to accept [buyer]'s Conditions of Purchase. To answer this question, it is necessary to find out what both parties agreed to in relation to the applicable law in case of a dispute. Pursuant to article 3, sub 4 Rome Convention, the former question should be answered in the light of the provisions which are set out in article 8 Rome Convention. Article 8 sub 1 Rome Convention provides that the law which applies to the applicability of Conditions of Purchase should be answered in accordance with the law that would apply in case the conditions of purchase would apply. Therefore, in order to answer the question whether or not [seller] did or did not accept the conditions of purchase of [buyer], one should consider Dutch law.

The Court does not find any terms or definitions in the Conditions of Purchase, which would make it possible to deviate from the provisions set out in article 8 sub 1 Rome Convention and to comply with the appeal of [seller], which restrains that article 8 sub 2 Rome Convention should be applied. The mere fact that the choice of law would have adverse consequences to [seller], is not sufficient for the applicability of article 8 sub 2 Rome Convention. In this context, the Court considers that the stipulation of the choice of law is a common phenomenon in international trade, and the validity of such stipulation has been recognized for many years, in Holland as well in Italy.

     12. In accordance with Dutch law, the conclusion of the present contract -- in particular whether or not consent has been established in relation to the applicability of [buyer]'s Conditions of Purchase -- should not be judged in the light of the provisions of the old Civil Code, but in light of the provisions of the Uniform Sale Laws of 15 December 1971, Stb. 780-781, which are provided in conformity with the Hague Conventions 1964 [Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) and Uniform Law on the International Sale of Goods (ULIS)]. The applicability results from article 2 sub 1 of the Uniform Law of the International Sale of Goods [ULIS] and article 1 of the Uniform Law on the Formation of Contracts for the International Sale of Goods [ULF], which have been added voluntarily by the Dutch Government. These Laws were first withdrawn on 1 January 1992, which means that they apply in the present case.

     13. Pursuant to article 6 sub 2 of the Uniform Law on the Formation of Contracts for the International Sale of Goods [ULF], the acceptance of an offer could also exist in the dispatch of the goods. Although, this is exactly what happened in the present case, the Court decides that it is not decisive in the concrete dispute. There is an exception in the situation in which [buyer] explicitly requires a confirmation of the Contract of Purchase by signing the blue copy of the contract and sending it back within 10 days. Furthermore, [buyer] gives notice of the fact that by means of returning the blue copy, suppliers confirm that they have received its conditions of purchase and that deliveries will be arranged accordingly. By doing so, [seller] was in good faith that the purchase conditions would be applicable first after signing and returning the blue copy.

      14. The above-mentioned considerations lead to the conclusion that the appeal of [buyer] concerning the applicability of [buyer]'s conditions of purchase should be dismissed. Therefore, the first basis of [buyer]'s claim is faulty.

      15. Alternatively, [buyer] based its claim on the fact that [seller] committed a breach of contract. In this context, [buyer] states that [seller] failed in its duty to deliver the sweaters, because they could not be used for [buyer]'s trading goals, which already has been decided by prior judgment in the case of [third party] Olly's suit against [buyer]. [Buyer], especially, relies in its claim on articles 33, 82, and 86 LUVI.

     16. As there is no choice of law between the parties, the law applicable law to the contract of sale should be determined pursuant to the Rome Convention.

Pursuant to article 4 subs 1 and 2 Rome Convention, the contract will be governed by the law of the country, in which the party who has to perform has his domicile at the time of conclusion of the contract. It is provided that in a contract of sale, the seller will usually perform. As [seller] has its domicile in Italy, Italian law will apply. The Court refuses to accept the statement of [buyer], containing that the decisive factor should be the law of the country in which the delivery took place. In this context, the Court considers that [buyer]'s references to articles 4 sub 5 Rome Convention are not further explained.

      17. The applicability of the Italian law results in the applicability of the Vienna Convention on the International Sale of Goods. Now that this Convention entered into force on 1 January 1998, article 1 sub (1)(b) applies. The appeal of [buyer] to the applicability of LUF and LUVI should, therefore, be dismissed.

      18. In this context, article 42 of the Vienna Convention on the International Sale of Goods is important, stating that:

" The seller must deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware (…).

      19. As a result of the interlocutory judgment of 16 March 1994 containing that [buyer] should prove that at the time of conclusion of the contract, [seller] should have known or should not have been unaware of the copyright claim of [third party] Olly's, [buyer] stated that it would like to make use of the possibility of offering evidence (after exploration of relevant Italian Law). However, the Court decided that, on the basis of Italian law, the Conditions of Purchase were applicable in this case. Therefore, producing evidence was no longer necessary. Now that the Court of Appeal does not adopt this view, producing evidence is subject to the reasoning of this Court. Although, [buyer] offered to produce evidence before, it did not make any comments on this subject in appeal. Therefore, the Court decides to offer [buyer] the opportunity to give notice whether it would like to produce evidence and if so, how it would like to produce this evidence.

     20. In accordance to [seller]'s statement that there is no breach of [third party] Olly's copyrights, the Court decides that [seller] is bound to the decision of the main case between [third party] Olly's and [buyer]. After all, [seller] does not plead any arguments, which are not already considered before.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this case translation, Plaintiff-Appellee of Italy is referred to as [seller] and Defendant-Appellant of Netherlands is referred to as [buyer].

** Annemarie Kwaspen graduated from the Faculty of Law, University of Utrecht (The Netherlands), in January 2000 and she is due to complete the LL.M. programme at the University of London, Queen Mary College, in October 2003. She works as an attorney at law with Arnold & Siedsma, a law firm & patent agency specializing in intellectual property with several offices in the Netherlands, Germany, Belgium and Spain.

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Pace Law School Institute of International Commercial Law - Last updated June 29, 2004
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