Excerpt from case text (English translation) [applicable law issue only]
Yearbook Comm. Arb'n XXII, Albert Jan van den Berg ed. (Kluwer 1997). Copyright owner: The International Council of Commercial Arbitration. Reprinted with permission of ICCA
Hamburg Arbitration proceeding 4 September 1996
| Subject matter: | - Closest connection determines applicable law
- German law includes UN Sales Convention 1980 |
Facts
On 6 February 1995, the claimant bought foodstuffs from the German seller through its office in Prague. The goods were to be delivered directly to claimant's buyer in Moscow.
The claimant commenced arbitration proceedings at the Hamburg Chamber of Commerce against the seller, alleging inferior quality and seeking a price reduction and damages. The published part of the award concerns the law applicable to the merits of the dispute.
Excerpt
[1] "The [United Nations Convention on Contracts for the International Sale of Goods] of 11 April 1980 (CISG - BGB1 1989 II p. 588, entered into force on 1 January 1991, BGBl 1990 II p. 586, Art. 7(2)) applies to the claim filed in arbitration, Art. 1(1)(b) CISG.[1] The parties have concluded a sales [page 51] contract concerning goods and have their seat in different countries. Further, according to the applicable private international law, the case is to be decided under the law of a Contracting State which has made no reservation ex Art. 95 CISG.[2]
[2] "German private international law, which applies here as lex fori, leads to the application of German substantive law, Arts. 27(1) and 28(1) and (2) of the Introductory Law to the Civil Code (EGBGB). The parties did not choose the applicable law and the contract has its closest connection with German law. The closest connection with German law is given in this case by the presumption of Art. 28(2) EGBGB, second sentence, according to which the contract has its closest connection with the law of the State in which the debtor of the most characteristic contractual performance has the main seat of the professional activities, in which context the contract was concluded. In the case of a contract for the sale of goods, the party owing the most characteristic performance is the seller. He does not contribute money; his obligation characterizes the contract. The main seat of his professional activities is in Germany. All circumstances considered, there is no reason to find a closest connection with another State (Art. 28(5) EGBGB). Hence, German law applies in this case, including the CISG, as the Federal Republic of Germany is a Contracting State to this Convention." [page 52]
FOOTNOTES
1. Art. 1(1)(b) CISG reads: "1. This Convention applies to contracts of sale of goods between parties whose places of business are in different States: … (b) when the rules of private international law lead to the application of the law of a Contracting State." Go to Case Table of Contents
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Institute of International Commercial Law - Last updated January 25, 2002
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