Case text (English translation)
Queen Mary Case Translation Programme
District Court [Court of First Instance] of Kuopio 5 November 1996
Court of Appeals, Eastern Finland 23 March 1997
Translation by Jarno Vanto [*]
- Case history
- Claims
- Grounds - Ruling of Court of First Instance
- Grounds
- The contractual relationship between [buyer] and C
- Buyer's right to declare the contract avoided
- Calculation of damages
- The transfer of the advance payment to the U.S.
- Identifying liability
- Legal fees
- Judgment of District Court - Ruling of Court of Appeals [The CISG issues were not appealed; the ruling of the Court of Appeals is therefore not relevant to the interpretation of the CISG.]
CASE HISTORY
Plaintiff: A., Lithuania [Buyer]. Defendant 1: K, Kuopio, Finland; Defendant 2: S
Trading Limited, Turks and Caicos Islands. Issue: Damages, etc.
Buyer's claim
The plaintiff [buyer] claims that the defendants should be liable to pay the [buyer]
jointly and severally a total of U.S. $268,808, consisting of U.S. $45,716 restitution of
an advance payment and U.S. $223,092 for interest expenses caused to the [buyer] plus
lawful interest on arrears starting from one month after the issuance of judgment
onwards. Additionally, the defendants should be liable to pay the [buyer] damages of
U.S. $15,960 plus lawful interest on arrears from 20 March 1995 onwards and the legal
fees of the [buyer] resulting from litigation in the U.S.A. and in Finland plus interest. A
deduction of U.S. $6,905 can be made from legal fees because the defendant has
already paid this amount.
Buyer's position
On 24 February 1995 [buyer] entered into a contract with [seller] for a consignment of
100,000 kilograms of butter to be delivered to Russia. [Seller] was represented by K,
the CEO of [seller]. [Buyer] made an advance payment of U.S. $79,800 on 15 March
1995 for a consignment of 40,000 tons of butter. [Seller] transferred the money over to
the U.S. to C Trading Group Inc. that was supposed to deliver the butter consignment
to St. Petersburg, Russia. When this consignment did not arrive in St. Petersburg,
[buyer] declared the contract avoided based on delay in delivery.
[Seller] has the duty to return the advance payment of the sale price.
K and [seller] are personally liable for damage caused to the [buyer] based on their
negligent actions and breach of contract. K was negligent in transferring the prepaid
sum and the obligations of the company he represented to the U.S. to a third party. K
was negligent in handling the money given to the company led by him. K has not taken
any measures in relation to returning the money from the U.S. The gross negligence of
K amounts to personal liability for all the damage caused.
Additionally K is personally responsible for duties of [seller], because [seller] was
established in an aim to circumvent the laws concerning minimum capital of a company
and thus it cannot be regarded as a corporation. Consequently, the persons acting on
behalf of such entity are personally liable for its obligations.
Before the pre-payment, [buyer] had to take a loan worth U.S. $79,800 from a bank in
Lithuania. The interest rate for the loan was 7% per month. Due to defendants' actions
[buyer] had been unable to repay the loan on 15 April 1995; this led to [buyer] having
to pay interest on arrears at a rate of 0.5% per day.
C [Trading Group Inc.] has given [buyer] a sum total of U.S. $34,904 as a return for
the advance payment. The debt of [buyer] to the bank totaled U.S. $ 268,808,
consisting of U.S. $45,716 of capital, U.S. $5,586 of 7% interest and U.S. $217,506 of
interest in arrears.
Because this was a matter of contractual breach, the defendants have to compensate
also for [buyer's] lost profit. It amounts to 20% of the sale price, totaling U.S. $15,960.
K, together with [seller], is liable for all the sums required from [seller].
Defendants' reply
This claim has to be held inadmissible. Kuopio Court of First Instance has no
jurisdiction to hear the case, because this is a matter relating to the interpretation and
enforcement of a contract. According to the Contract of Sale, an arbitration panel set
up by the Helsinki Chamber of Commerce has the jurisdiction over disputes arising out
of the aforesaid circumstances. The arbitration clause excludes other fora.
The contract referred to in the statement of claim was intermediary and it includes the
said arbitration clause. By signing the contract, K became bound by it in a manner that a
claim against him should also be brought before an arbitration panel.
In any event, this case can be admitted only in Turks and Caicos Island, the place of
business of [seller]. This case can not be entertained in a general court in Finland
because [seller] does not do business in Finland in any locale. The signing of the
contract in Kuopio is accidental. Not even the claim directed at K can be admitted
anywhere else but in the forum where the company has its place of business.
K is not the CEO of [seller]. He has only acted as an intermediary. K has brought the
buyer and the seller together. Even the claim directed at K should be brought in the
forum where the company has its place of business. K has no general authority to act on
behalf of [seller]. Instead the company gives him guidelines and an authority to act for
each individual situation.
[Seller] was established according to regulations of the State where the company was
registered. K is not a shareholder of the company, nor is he is liable for its obligations in
any other manner.
[Buyer's] reply as to the statement made by the defendant concerning the forum
As far as [seller] is concerned, the [Finnish] forum is a general court [of jurisdiction]
and the arbitration clause only covers disputes particularly agreed upon or specified in
the arbitration clause. Because the current dispute does not concern interpretation or
carrying out of the contract, the case cannot be resolved by an arbitration panel.
The contract has been made by means of a fax and a phone in a situation where the
buyer was in Lithuania and the seller was in Kuopio, Finland. The contact information
of the seller referred to Kuopio, which is the only place of business of the seller known
to the buyer. Jersey (the place where [seller] allegedly does business) only has a P.O.
Box address and the allegation concerning Jersey as a place of business cannot be taken
seriously. The burden of proof over the company being administered from somewhere
else than from Finland, is on defendants.
When a company bases its operations in Kuopio, it can be called as a defendant to the
Court of First Instance in Kuopio, regardless of where its actual place of business is.
Additionally, Section 10:7 of The Law of Procedure provides that [seller] can be sued
in Kuopio, because the lawful forum according to section 10:7 of The Law of
Procedure is Kuopio.
Regardless of whether K is the CEO of [seller], by signing the contract and by acting
negligently in transferring the money, he is liable for the claims.
Judgment of Court of First Instance, 21 May 1996
The Court of First Instance denied the pleadings of the defendants concerning the
jurisdiction of the court and holds that the case can be tried in this court in its entirety.
Grounds
The statement of claim of the [buyer] is based on the circumstances, that the Sale
Contract into which the [buyer] and [seller] had entered into on 24 February1995, has
been declared avoided. The claim of the [buyer] concerns the return of the advance
payment, compensation for interest expenses and damages. The performance of the said
sale is no longer possible. Consequently, the statement of claim does not concern the
difficulty in interpreting the performance of the contract referred to in Section 8. of the
said contract, disputes arising out of which should be tried by an Arbitration Panel.
The contract referred to in the statement of claim was signed on behalf of the seller by
K, who has indicated his position to be that of the CEO. The contact information of the
seller refers to Kuopio, which is also the hometown of K. The contract has been made
using a fax and a phone in a situation, where the buyer has been in Lithuania and the
seller in Kuopio. On these grounds it is apparent, that K has been the CEO of the
company and that the company is doing business in Kuopio. Notwithstanding the
address abroad communicated by the company and the place of registration of the
company, the object of the statement of claim can be tried in this Court in its entirety.
Claims directed at different defendants can all be tried in the same Court where one of
the defendants has been sued if the claims are brought simultaneously and they are
based on essentially the same grounds. Because this court has jurisdiction over the claim
directed at the company, the claim directed at K can also be tried in this Court.
This judgment can be appealed only in connection with the main issue
Defendants' reply in the main issue
The claim must be denied in its entirety and the [buyer] has to be made to pay the legal
fees of the defendants added with interest on arrears.
The claim is directed at the wrong defendant. The contract referred to in the statement
of claim was only a temporary one, and the aim was that [buyer] and C would make the
actual contract on the delivery of the butter. Based on this, the claim should have been
directed at C.
[Seller] has no duty to return the part of the sale price paid in advance, because [buyer]
had no grounds to declare the contract avoided. After the delivery had been delayed,
[buyer] should have accepted [seller's] offer concerning the delivery of a test
consignment from the company warehouse in St. Petersburg or some other measure for
fulfilling the contractual obligations.
There are no grounds for defendants' liability for financing costs of [buyer], the amount
of which in itself is undisputed.
K is not liable for the sale price or damages in relation to [buyer].
The primary defense for K is that he was not the CEO of [seller]. K had no general
authority to act on behalf of [seller]. The company gives the authority and guidelines to
each individual case. In this case, K has just brought together the supplier of goods and
the one ordering the goods. In this position, K is not liable for the obligations of the
company. Even if it was regarded that K in fact acted as the CEO of [seller], he still is
not liable for the obligations of the company.
K has acted carefully and as a prudent businessman, obeying the usages of international
trade. Before the contract was made between the [buyer] and [seller], K, through his
attorney, conducted background research on the existence and history of C Trading
Group Inc. According to the information received, the company was reliable. K did not
receive the payment made by the buyer, instead it was transferred to the account of
[seller's] Finnish lawyer. The money has been wired to an account opened by C in the
U.S., out of which it should have been withdrawn until the necessary freight and
shipping document had been presented. For some reason, the bank in the U.S. had given
the money to C in violation of the terms of the account.
Buyer's bill of legal fees is excessive and unspecified. It has been supplemented with
expenses resulting from settling disputes between [buyer] and C in the U.S. A
reasonable amount of legal fees of the [buyer] is FIM 50,000.
[Buyer's] response to the reply of the defendants
The contract between [buyer] and C did not cover just the delivery. [Buyer] had
grounds to declare the contract avoided because the delivery was delayed. Due to the
principle of identification of liability, K is liable for the obligations of [seller]. [Seller]
can be regarded as a one-man company.
The contractual relationship between [buyer] and C
The Court of First Instance holds that [buyer] and C were not in a contractual
relationship with one another. This being so, C would not be the correct defendant in
the case, to whom demands resulting from the avoidance of the contract should be
directed at.
Evidence
[Seller] and [buyer] have signed the contract for delivery of butter referred to in the
contract. Other contracts signed by [buyer] have not been presented to the Court.
Witness A has been an intermediary in the deal in a manner that K has been informed of
the existence of the buyer, through H. After the signing of the contract, the
representative of [buyer] has inquired from H, whether the sale goes through with this
contract or whether there is a need for additional contracts. H assumed, that other
contracts were not necessary and informed [buyer's] representative of this. Usually an
intermediary does not sign contracts. H informed, that he has not made a single sale
where he would be the seller or a buyer himself and the money would go through him.
Grounds
As a matter of fact, the butter has been delivered by C. The former General Manager of
C, namely W, has presented his view on the real parties to the contract in the document
marked as Exhibit 25. W brings forth that the parties to the contract were [buyer] and
C. To prove this [seller] presents a draft contract that went to K for acceptance.
Document marked as Exhibit 26 is a document which has been annotated by hand, that
it is a draft contract. [Buyer] has not been mentioned in the text of the document, only
[seller] and C. The document has been dated 24 March 1995 and it has been signed by
W and K.
Exhibit 29 brings forth that [seller] had already on 20 March 1995 wired U.S. $7,800
(unclear) to the account of [seller]. The amount the [buyer] gave was U.S. $79, 800
according to [buyer].
The defendants have presented Exhibit 35, a document which, according to the
defendant, also is a draft contract between C and [buyer]. It has also been dated 24
March 1995 and it also bears signatures of W and K. The document does not indicate in
any way, that it was also meant to be signed by [buyer].
In Exhibit 25, W refers to a fax message of 16 March 1995, Exhibit 17, as an indication
of [buyer] and C as the parties to the contract. In the said message, P notifies about the
transfer of the money and about the delivery address for the butter. The temporary
agreement is mentioned in the text.
In a fax message of 18 April 1995, marked as Exhibit 18, W notifies, that it has never
entered into any contract with either [buyer] or [seller], but with a company named Ha.
Ha is a company of I, also examined as a witness, who has acted as an intermediary in
bringing C in as a seller to the butter sale in question.
Assessment
None of the documents presented in the case indicates, that [buyer] had entered or
would enter into a contract with C. The final nature of the contract signed on 24
February 1995 is indicated by the circumstance that, based on the contract, [buyer] has
already made a payment to [seller] and the wiring of the money was the responsibility of
[seller]. Due to the fact that [buyer] had already taken the risk involved in the sale, C,
who had delivered the butter, had no reason to enter any further contracts.
It is possible that [buyer] has needed the contract signed on 24 February 1995 to get
credit from the bank. The wording of the contract, however, indicates that it is the
actual contract on delivering the butter and the deliverer is K/[seller] and not any third
party. Exhibit A, a notification by A to the General Manager P, supports this view.
The mention of temporary contract in the fax message of 16 March 1995 may be
because P has been unsure of whether another contract has to be made to cover the
delivery, as H has told. The statement by H supports the view, that there was no
intention to make other contracts. The statement of H has not been proven as
untrustworthy.
Exhibit 5 indicates that C could not have made another contract with [buyer] and has
had a misconception of the name of the contracting party.
No significance can be given to W's statement, considering that it contravenes with
Exhibit 5. His statement is unreliable due to reasons mentioned below in this judgment.
Statements by K and other witnesses do not depart from one another concerning the
coming about of the contract. Considering K's position in the case, his conception on
the parties to the case can not be assigned with significance.
Through Exhibits 16, 33, 34 and 36 the defendants have wanted to show, that H and K
have been in a similar intermediary position considering the butter consignment. K can
be regarded as an intermediary, considering the statements made by K and witnesses. K,
however, has made a contract concerning the delivery of butter, unlike, for example, H.
K/[seller] has been marked as the seller in the contract and have received the sale price
from the buyer. This has altered the position of the defendants into parties to the sale.
Buyer's right to declare the contract avoided
[Buyer] is entitled to declare the contract avoided based on delay on the seller's side.
CISG must be applied in the case.
[Buyer] is entitled to recover the rest of the sale price he has paid and damages,
including loss of profit.
Evidence
Exhibit 4 indicates that [buyer] has, on 11 April 1995, made a statement to K, saying
that the seller has not fulfilled his duties. The documents involved in the sale had been
late for 20 days at the time and the delivery of the goods from the factory had been late
for 13 days in relation to what had been agreed.
Exhibit 19 indicates that W has refused to declare the contract avoided. According to
him the delay was not unreasonable and the contract does not include the right to
declare it avoided. The fax message has been directed at P and K and it was meant to be
a reply to [buyer's] statement. On the other hand, Exhibit 5 indicates that W denies
being in a contractual relationship with [buyer].
Exhibit 20 indicates that not even during the following day has P received the
documents involved in the sale or information concerning transportation trucks. P notes
that, without analysis of the quality of the butter, the freight will not be unloaded and
additionally, P has to accept the butter together with the final buyer.
Exhibit 22 indicates that the butter has not been delivered on 20 April 1995. In the fax
message the delivery address has been marked as a monastery in Kiev. That is not
mentioned in any other documents.
The fax message marked as Exhibit 6 indicates that [buyer] declared the contract
avoided for the second time because the goods had not been delivered as agreed.
The fax message marked as Exhibit 23 indicates that the Secretary of C has made an
inquiry on 16 May 1995 to P concerning the address of P.
K has told that, first P gave just the delivery address, even if he had declared the
contract avoided. Then, on the next day he placed additional conditions concerning
inspection of the goods. C refused the inspection of the goods. The butter was already
in St. Petersburg then.
Grounds
The evidence indicates that due to reasons on the seller's side the delivery has been late
for several weeks in relation to what had been agreed on. The buyer has not received
any documents concerning the goods to be delivered. The buyer has properly declared
the contract avoided.
[Buyer] can be regarded as having given up his right to declare the contract avoided
when he gave the delivery address to the seller. However, not even then did the goods
get delivered. The fax message from [buyer], dated 13 April 1995, does not indicate
that [buyer] would have placed any additional conditions, instead the fax mentions the
right to check the goods, a right normally granted to the buyer. However, despite P's
fax, C seems to be presenting a delivery on 20 April 1995, to a strange address. [Buyer]
has declared the contract avoided for the second time due to negligence on the seller's
side.
K's statement, that C would not have been willing to allow the inspection suggested by
P and thus given up on making the delivery, is untrue. Based on the evidence presented,
the real reason is that C was unable to deliver the butter altogether.
According to law applicable to international sale of goods, Section 4, if the parties have
not agreed on the applicable law, the law applicable to the sale is the law of that
country, where the seller had its place of business when he accepted the order. The true
identity of [seller] and the relationship of K to the company have remained unclarified in
the case. In this situation, the Court holds that K has been the seller in the sale, K's
place of business has been Kuopio in this case, so Finnish law is applicable in this case.
According to CISG Article 1, the Convention is applicable in sale contracts between
parties whose places of business are in different States and when the rules of private
international law lead to the application of the law of a Contracting State. On these
grounds, CISG is applicable.
[Buyer] has declared the contract avoided with a notification delivered to the opposing
party. The goods have remained undelivered and the seller has not delivered the goods
within the additional period set by the buyer.
[Buyer] is entitled to recover the paid sale price.
The interest loss and damages
The amount of interest loss is U.S. $8,000.
The amount of lost profit is U.S. $15,960.
Calculation of damages
According to CISG Article 74, [buyer] is entitled to damages for breach of contract
consisting of a sum equal to the loss, including loss of profit suffered by [buyer] as a
consequence of the breach. Such damages may not exceed the loss which the party in
breach foresaw or ought to have foreseen at the time of the conclusion of the contract,
in the light of facts and matters of which he then knew or ought to have known, as a
possible consequence of the breach of contract.
The defendants have denied their duty to pay damages for interest loss caused to
[buyer]. According to his own statement, K has known that [buyer] will take credit to
finance the advance payment. Consequently, K may have anticipated that interest loss
might be caused to [buyer] if, for some reason, the sale would not go through. On these
grounds, damages include compensation of interest loss.
It has not been shown that K knew the interest rates in Lithuania, namely 7% per month
and 0.5% per day interest on arrears, which essentially differs from interest rates in
Western Europe. One could not even assume that he should have known it.
It is the estimate of the Court, that K should have pre-estimated that the interest loss
resulting from not fulfilling the contractual obligations could be about 10% of the sale
price, meaning U.S. $8,000.
The amount of lost profit announced by the seller, namely 20%, the Court sees as
reasonable. The butter consignment bought by the buyer has had a buyer.
The transfer of the advance payment to the U.S.
The way K acted in transferring the money is grossly negligent.
Evidence
The evidence presented by the buyer clarifies that matters decreasing the
trustworthiness of the company and its general manager are connected to C and W.
K has managed to get through to C through the company of Witness I. The contact
information of C's company has been solved by a translator R, who has testified as a
witness in the case. Based on R's statement, the Court has found out, that the company
was investigated on by calling there. R has talked with W, who has given a good and
reliable picture of the company. W has told the company is financially sound and that it
delivers goods to 35 countries and employs many lawyers. Based on this, they decided
to ask an offer from C. R has told that he has had other foreign contacts too.
Exhibit 29 indicates that K, under the name of [seller], transferred a part of the advance
payment to C's account, which was not a blocked account but a regular checking
account.
Exhibit 2 indicates that the advance payment was supposed to go to seller's blocked
account.
Exhibit 32 indicates that when negotiating over the declaration of avoidance, C has held
the view that the advance payment had been paid by Ha.
Witness H told that advance payment is a standard procedure in sales like this. A
blocked account is rarely used. About 80% of the sales take place without a guarantee.
Letters of credit would be safe for both parties, but it are rarely used.
Exhibit 30 indicates that an effort has been made to obtain a power of attorney from K
on behalf of [buyer] for collecting the advance payment from C. K has not signed the
power of attorney.
Grounds
The buyer has presented documentary evidence concerning C, based on which making a
contract with the company can be seen as questionable. The accuracy of the evidence
has not been denied.
Identifying liability
K is personally responsible for the liabilities of [seller].
Evidence
Exhibit 28 indicates that the capital of the [seller] company is U.S. $5,000 split into one
share worth U.S. $5,000 and the company is registered. Exhibit 27 indicates that the
one share of the company is owned by a company registered in the Jersey Islands.
The defendant has denied owning the company or its shares.
K has signed the contract made with [buyer] as the CEO of his company, the position
which witness H regarded him as being in. Also, during the preparations for this case K
has represented himself as the CEO. Not earlier than during the oral preparations did he
notify that he handled the butter sale based on an assignment.
When hearing K as a witness he himself has told about the history of the butter sale,
saying that H contacted him while looking for a supplier for a 100 ton butter
consignment. K was informed of the supplier by Ha and notified it to H. H, as a witness,
has told a similar story.
Grounds
The defendants have alleged, that a prerequisite for a registration in Turks and Caicos
Islands is paying of the share capita. No evidence has been presented to support this.
K's own story of the coming about of the butter sale indicates that throughout the
course of the events he has acted as an independent businessman. K does not mention
anything that would support his statement as to having acted on commission from
[seller].
Because [seller] has been registered on a Caribbean Island and does business from an
address located on Jersey Island, there is no documentary evidence of formal authority
to act on behalf of the company. K has not wanted to give clarification as to the
ownership of the company. Based on the evidence presented in the case, the actual
authority to act on behalf of [seller] has been in the hands of K.
[Seller] can be regarded as a company established through a formal capital investment,
which can be identified with the business name used by K in his business. K is liable for
its obligations at least to the extent of the sale at dispute here.
Legal fees
The Court estimates the legal fees of the [buyer] as being FIM 70,000 added with the
fee of the U.S. law firm, being FIM 11,403.28.
Grounds
The expenses caused to the [buyer] in clarifying the matter over in the U.S. have been
necessary in handling this case. As these measures taken have led to partial return of the
advance payment, they have been for the benefit of the defendants.
The specification of the legal fee of the [buyer] is in English. It does not clarify, as
required by the Law of Procedure Section 21, of what the fee consists of. Based on this,
the court has estimated the amount of legal expenses.
The Court has reduced the amount of legal fees the [buyer] has the ability to recover
also on grounds, that the claim for interest expenses has been only partially accepted.
In addition to assisting K, who was granted a free trial, L has also represented [seller],
excluding the preparations and the main proceedings that took place on 22 October
1996. The Court has taken this into considerations in estimating the amount L will
receive from the State as compensation for handling the case.
The judgment
K and [seller] are obligated, jointly and severally, to pay a total of U.S. $69,676,
consisting of U.S. $45,716 as a restitution of the advance payment, U.S. $8,000 as
damages for interest expenses caused to the [buyer] and U.S. $15,960 for lost profit.
The interest on arrears is the currently enforced interest rate of the Bank of Finland
added with 7% for U.S. $53,716, beginning from one month after the issuance of
judgment onwards and 16% for U.S. $15,960 beginning from 20 March 1995. The said
amounts can be paid either with U.S. dollars or Finnish Marks according to the
exchange rate of the date of payment.
The defendants are jointly and severally made to pay the [buyer] his legal fees of FIM
81,403.28, out of which the amount of U.S. $6,905 is reduced according to the
exchange rate of the date of payment.
The legal fees are subject to an interest on arrears beginning from one month after the
issuance of judgment onwards. The interest rate is the currently enforced interest rate of
the Bank of Finland, added with 7%.
APPEAL
This judgment may be appealed to the Court of Appeals of Eastern Finland.
The judgment appealed: Kuopio Court of First Instance 5 November 1996, No. 5477
[The Court of First Instance held seller and K, seller's CEO, jointly and severally liable.
This was only an appeal by K, CEO of seller; the judgment against seller was not
appealed.]
Appellant: CEO K, Kuopio [CEO of seller]; Defendant: A, Lithuania [buyer]
The demands presented in the Court of Appeals
In his appeal, K has renewed his statements appearing from the judgment of the Court
of First Instance and has requested that the original claim of the [buyer] should be
dismissed.
[Buyer] has replied and requested for the dismissal of K's appeal and compensation for
his legal fees.
The judgment of the Court of Appeals
The contract in question is drafted in English. The content of the contract is as follows:
"8. Force majeure, arbitration and rules
"8.1. This contract is governed by the rules of the Authorities of the International Chamber of Commerce. Both parties are relieved from liability of carrying out the duties under the Contract, if the said non-performance results from force majeure impediments, such as strikes, riots, decisions of governments or other authorities etc.
"If difficulties appear in interpreting the carrying out of the contract, all parties are bound to obey the decision, which has been arrived at by using the rules of the Authorities of the International Chamber of Commerce.
"If common ground is not reached, the Dispute shall be resolved under the Arbitration of the Helsinki Chamber of Commerce."
The Court of Appeals holds that the part of the contract referred to reveals that the
disputes arising out of the contract are resolved through arbitration. The wording of the
contract does not indicate that only some of the disputes are handled through arbitration
and some in a general court.
The statement of claim places a demand of returning the advance payment, damages for
financing expenses resulting from the advance payment, and damages for the breach of
contract. The claim has been objected on grounds, among others, that the defendants
have not breached the contract in a manner which would have justified the avoidance of
the contract.
The issue in dispute is a matter which, according to Section 8 of the contract, is to be
resolved through arbitration. K has referred to this circumstance before replying to the
main claim. Consequently, the Court of First Instance should have dismissed the claims
in relation to K.
Judgment of the Court of Appeals
The judgment of the Court of First Instance is repealed as to K's joint and several
liability with [seller] for returning the advance payment, damages and legal fees. Based
on the Law governing Arbitration, the statement of claim directed at K is dismissed and
K is relieved of all payment obligations. The amounts K was made to pay, added with
interest, now remain to be paid by [seller] in their totality.
This judgment is final.
FOOTNOTE
* Jarno Vanto is an LL.M. student at the University of Turku, Finland. He is currently working on his thesis on Damages under the CISG. All translations should be verified by cross-checking against the original text.
Court of Appeals of Eastern Finland
Judgment No. 336, 27 March 1997
Pace Law School
Institute of International Commercial Law - Last updated November 22, 2004
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