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CISG CASE PRESENTATION

Austria 24 April 1997 Supreme Court (Processing plant case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970424a3.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19970424 (24 April 1997)

JURISDICTION: Austria

TRIBUNAL: Oberster Gerichtshof [Supreme Court]

JUDGE(S): Dr. Angst (presiding judge), Dr. Graf, Dr. Schinko, Dr. Tittel, Dr. Baumann

CASE NUMBER/DOCKET NUMBER: 2 Ob 109/97m

CASE NAME: Austrian case citations do not generally identify parties to proceedings

CASE HISTORY: 1st instance HG Wien (13 Cg 327/93b-44) 25 April 1996 [affirmed]; 2d instance OLG Wien 25 October 1996 [affirmed]

SELLER'S COUNTRY: Austria (defendant)

BUYER'S COUNTRY: Germany (plaintiff)

GOODS INVOLVED: Processing plant


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 4 [Also cited: Article 8(3) ]

Classification of issues using UNCITRAL classification code numbers:

4B [Issues covered and excluded: issues excluded (assumption of debts)]

Descriptors: Scope of Convention

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstracts: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=479&step=Abstract>; Forum International (3/1997) 93-94

German: Österreichisches Recht der Wirtschaft (öRdW) 1997, 531; [1997] Zeitschrift für Rechtsvergleichung, Internationales Privatrecht und Europarecht (ZfRV) 38, 156 No. 56

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-Austria website <http://www.cisg.at/2_10997m.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=479&step=FullText>; [1997] 2 Forum des Internationalen Rechts/The International Legal Forum 93-94 = [1997] 2 Forum des Internationalen Rechts/The International Legal Forum (English language edition) 93-94

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-225 [226 n.795 (scope of CISG: assumption of debts)]; Ferrari, Forum International (3/1997) 90-93 [text prepared for database presented below]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 4 para. 23 Art. 8 para. 5

German: Ferrari, Forum International (3/1997) 89-92

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Case text (English translation)

Queen Mary Case Translation Programme

Federal Supreme Court of Austria (Oberster Gerichtshof)

24 April 1997 [2 Ob 109/97m]

Translation [*] by Jan Henning Berg [**]

Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor
[***]

JUDGMENT

  1. The appeal is dismissed.
  2. The [Seller] has to bear its own costs of the appellate proceedings

FACTS

The [Buyer] sought payment of DM 160.000 as well as seizure according to 1373 ABGB [*].

The Court of First Instance dismissed the [Buyer]'s claim. The Court of Appeal dismissed the appeal but allowed further appeal (Revision) as a provision of international law (Art. 8(3) CISG) was applicable in the present case which had not been commented on by the Federal Supreme Court of Austria so far. Furthermore, the question as to whether an implied prohibition to take recourse exists in case the creditor takes recourse from the buyer on the basis of a security in case of a sale financed by a third party was regarded as a fundamental question of law.

The [Buyer] appealed against the decision of the Court of Appeal. However its appeal is inadmissible.

According to 510(3) ZPO [*], in case of a dismissal due to the lack of a fundamental question of law, the court is entitled to solely state the reasons for the dismissal.

REASONING OF THE COURTS

Reasoning of the Court of Appeal

The Appellate Court applied Art. 8(3) CISG to the issue whether there had been an a substitution on the [Buyer]'s side, to which [Seller] had allegedly impliedly agreed. In this respect, the Court took into account that [Buyer], first, did not adhere to time limits for withdrawal and presentation of a substitute contracting partner, meaning that consent to a subsequent assumption by a third party could not be expected from [Seller]. The Court stated that lack of objection in itself was insufficient to constitute such consent. In that respect, the subsequent correspondence between the parties clearly pointed out that [Seller] had still regarded [Buyer] as its contracting partner and therefore addressed the invoice of the first delivery to [Buyer]. The fact that [Buyer]'s American partnership company had also been mentioned in the invoice was insufficient to consider that it had agreed to an assumption of the contract as a whole. On the contrary, such citation bore the declaration that [Seller] would accept another contracting partner in addition to [Buyer], whereas it must not be concluded from such conduct that a privative assumption was intended.

Reasoning of the Federal Supreme Court

The CISG, according to its Art. 4, governs only the formation of the contract of sale and obligations of the seller and the buyer arising from such a contract. Art. 8 CISG provides for the interpretation of declarations and conduct for the purpose of the Convention. However, assumptions of obligations (cf. for recourse claims ZfRV [*] 1996, 76) do not fall within the material scope of application of the CISG (Karollus, UN-Kaufrecht 45; von Caemmerer/Schlechtriem/Herber, Kommentar zum Einheitlichen UN-Kaufrecht, Art. 4 para. 23; Honsell/Siehr, Kommentar zum UN-Kaufrecht, Art. 4 para. 19). Consequently, the provision of Art. 8(3) CISG as cited by the court of first Instance does not apply. There is no further need to comment on the Convention's temporal scope of application. Thus, the first issue raised by the Appellate Court as legally critical need not be dealt with. In view of 863, 914 ABGB [*], which apply according to 45 IPRG [*] in conjunction with 36 IPRG, the Appellate Court remained within its legal discretion when it interpreted [Seller]'s conduct as no implied consent to a privative assumption of obligations. Therefore, this issue is of no fundamental legal importance to the present proceedings.

The [Buyer], shareholders of a company constituted under civil law, provided security for a loan granted to the [Seller] by a bank (no assignment of the claim for the purchase price was agreed on) as no bank was willing to provide security in the present case. The security was provided by the [Buyer] on request of the bank.

The Court of Appeal did not exceed the general principles of the Federal Supreme Court insofar as it assumed an implied prohibition to take recourse between the [Buyer] -- who refused to pay, which caused the bank to claim the security as the [Seller] did not service its debts -- and the [Seller].

The Court of Appeal has not made any assessment which needs to be corrected. A fundamental question of law is not present. The appeal does not state any further questions of law which need to be resolved. Entries in the accounting of the [Seller] are irrelevant.

The fact that no assignment of the claim for the purchase price was agreed on does not hinder the assumption that the parties agreed on an implied prohibition to take recourse.

Allegations as to a lack of conformity cannot be upheld in consideration of the factual findings of the Court of First Instance. The [Seller] delivered goods as agreed on in the contract of sale, wherefore the [Buyer] would have been able to process the goods.

The Court of Appeal rightfully stated that no claims have been derived from an alleged violation of the obligation to caution. The [Buyer] has been aware that the plant was not fit for the intended purpose in any case.

A possible set-off does not have to be considered as the parties contractually agreed on a prohibition to take recourse.

The requirements of 502(1) ZPO [*] have not been fulfilled. The appeal is hence dismissed as inadmissible.

The decision on costs is based on 40, 50 ZPO. The [Seller] has not stated that the appeal was inadmissible.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of The United States of America (USA) is referred to as [Buyer] and Defendant of Austria is referred to as [Seller]. Amounts in the former German currency (Deutsche Mark) are indicated as [DM].

Translator's note on other abbreviations:

ABGB = Allgemeines Bürgerliches Gesetzbuch [Austrian Civil Code]; IPRG = Bundesgesetz über das Internationale Privatrecht [Austrian Federal Code on the Conflict of Laws]; ZfRV = Zeitschrift für Rechtsvergleichung [Austrian Journal on Comparative Law]. ZPO = Zivilprozessordnung [Austrian Code of Civil Procedure].

** Jan Henning Berg is a law student at the University of Osnabrück, Germany and participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück.

*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.

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Case commentary

Reproduced with the permission of the author

Assumption of Debts as a Subject Matter Excluded from the UN Sales Convention
(Commentary on OGH, April 24, 1997)

Franco Ferrari [*]

It is common knowledge that international uniform law conventions (independently from whether they cover substantive or conflicts of law issues) do not exhaustively deal with all the issues they relate to.[1] Thus, some questions concerning these matters will always be left open. That this is true in respect of the Vienna Convention on Contracts for the International Sale of Goods of 11 April 1980,[2] hereinafter CISG,[3] as well [4] can easily be derived from some of its provisions, above all Article 4 which, on the one hand, identifies the exclusive areas (formation of contracts and rights and obligations of the parties) governed by the CISG [5] and, on the other, lists the issues excluded from the CISG's sphere of application.[6] In this respect, Article 4 provides that "in particular, except as otherwise expressly provided in this Convention, it is not concerned with: a) the validity of the contract or of any of its provisions or of any usage; b) the effect which the contract may have on the property in the goods sold."

At first sight, this part of the provision does not seem to pose any problems. One author [7] even considers this provision to be superfluous since it only states the obvious. However, quite the contrary is true. The insertion of the expression "in particular" and of the phrase "except as otherwise expressly provided in this Convention" leads to the delimitation between the matters governed by the Convention and those excluded from its sphere of application not being very clear.

The insertion of the aforementioned phrase, for instance, leads to the conclusion that, even when a litigation concerns a dispute which is apparently excluded from the CISG's sphere of application, the Convention's applicability should not be excluded a priori.[8] Rather, one has to examine whether the CISG (expressly) provides for a solution.

With reference, for example, to the validity of contracts,[9] it can be said that although this subject matter is in principle excluded from the CISG's sphere of application (as has been emphasised not only in legal writing [10] but, as of recently, also by court decisions [11]), there is at least one aspect of it which is not excluded from the Sales Convention's sphere of application, namely the issue of the formal validity of contracts.[12] This may easily be derived from Article 11 CISG which lays down the principle of informality.[13]

The insertion of the expression "in particular" also leads to the conclusion that "an accurate delimitation between included and excluded matters is always [required]",[14] since it only serves to emphasise that, apart from the matters listed in Article 4(a) and (b), there are other matters not governed by the CISG. In this respect it may suffice to mention product liability which, pursuant to Article 5, is excluded from the CISG's sphere of application, at least as far as personal injury caused by products is concerned.[15]

At this point, it must be pointed out that there are a lot of matters which, even though they are not explicitly excluded, are not governed by the CISG. This also causes questions concerning the delimitation of the Convention's sphere of application.

For this reason, it is not very surprising that the question as to the exact determination of the CISG's material sphere of application (i.e.. the question of the identification of the issues governed by the Sales Convention) has already led to litigation. Indeed, this is a question the most recent decision of the Austrian Supreme Court relating to the CISG [16] dealt with too.[17]

In the case at hand, the OGH had to investigate whether the Court of Appeal correctly applied Article 8 CISG in interpreting a party's conduct. The OGH denied that Article 8 was applicable on the basis that "[. . .] pursuant to Article 4 CISG, the Convention exclusively [governs] the formation of sales contracts and the rights and obligations of the seller and the buyer deriving from the contract" and that "Article 8 [. . .] [relates to] the interpretation of declarations and conduct as governed by the Convention", which is why it could not be applied in relation to an assumption of debts, since the assumption of debts is excluded from the CISG's sphere of application.

With this decision, which confirms the views of some scholars, explicitly referred to in said decision,[18] the OGH identified the assumption of debt as being yet another subject matter which the CISG does not dealt with, thus adding it to the list of previously identified issues which include: retention of title, [19] statute of limitations,[20] set-off,[21] validity of penal clauses,[22] agency,[23] legal capacity of private parties or the legal personality of companies,[24] assignment of receivables,[25] validity of settlements,[26] and others.[27]

How should these "external gaps"[28] be filled? Generally speaking, this question can be answered, at least as far as the "questions left open"[29] by the CISG are concerned, the same, however, cannot be said in relation to the 1964 Uniform Sales Laws,[30] by referring to the principle (laid down in Article 7(2)) according to which "questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law." Accordingly, all "questions which are not governed" by the CISG, such as assumption of debts or the other aforementioned issues, are to be settled by applying the law designated by the private international law [31] of the forum State.[32]

Unfortunately, this is not very helpful in identifying the "questions which are not governed" by the CISG either. This task is left to the courts. However, case law can be useful in achieving the unificatory goal of the CISG only where the court decisions of the various countries lead to the same result. This requires, however, that the court decisions of foreign countries be taken into consideration when applying the CISG.[33] With reference to the aforementioned OGH decision, this should lead to its result (exclusion of the assumption of debts from the substantive sphere of application of the CISG) being adopted by non-Austrian judges as well, since it is undoubtedly correct.


FOOTNOTES

* Tilburg University, the Netherlands.

1. In this respect, see also Annibale, Il diritto uniforme: problematiche e limitazioni (dalla giurisprudenza allart. 2 della legge di riforma del sistema di diritto internazionale privato italiano), Arch. Civ. (Archivio civile, I) 1996 pp. 158-159.

2.The English version of the United Nations Convention on Contracts for the International Sale of Goods can be found in I.L.M. (International Legal Material, USA) 1980 pp. 668 et seq.

3. For a discussion of the various abbreviations used so far, see Flessner/Kadner, CISG? Zur Suche nach einer Abkürzung für das Wiener Übereinkommen über Verträge über den internationalen Warenkauf, ZEuP 347 et seq. (1995).

4. See in this respect also Benedetti, commento allart. 4, Nuove Leggi civ. commentate 9 (1989); Stauddinger-Magnus, Kommentar zum Wiener-Kaufrecht, Berlin 1994, Article 4 CISG note 1.

5. See OGH Vienna, 24 April 1997.

6. For a general discussion of the CISGs substantive sphere of application, see, e.g., De Nova, Lambito di applicazione "ratione materiae" della convenzione di Vienna, Riv. Trim. Dir. Proc. Civ. 749 et seq. (1990); Ferrari, The Sphere of Application of the Vienna Sales Convention, The Hague, 1995; Höß, Der gegenständliche Anwendungsbereich des UN-Kaufrechts, Diss. Augsburg, 1995.

7. See Bianca/Bonell-Khoo, Comment on Article 4, in Bianca/Bonell (editors), Commentary on the International Sales Law, Milan, 1987 p. 45.

8. This has been pointed out in the Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March 11 April 1980, New York, 1981, p. 17.

9. See generally Hartnell, Rousing the Sleeping Dog: the Validity Exception to the Convention on Contracts for the International Sale of Goods, Yale L.J. 1 et seq. (1993); Heitz, Validity of Contracts under the United Nations Convention on Contracts for the International Sale of Goods, April 11, 1980, and Swiss Law, Vanderbilt J. Transnatl L. 639 et seq. (1987).

10. See Ferrari, Vendita internazionale di beni mobile. Articles 1-13, Bologna, 1994 pp. 95 et seq.

11. See only HG St. Gallen, 24 August 1995, Unilex.

12. Also Enderlein/Maskow, International Sales Law, New York/London/Rome, 1992 p. 71; Patti, Commento allart. 11, Nuove Leggi civ. commentate 45 (1989).

13. At this point it must be pointed out that the CISGs providing for a rule on the statute of frauds also leads to the conclusion that the list of subject matters governed by the CISG contained in Article 4 (formation of contracts, rights and obligations of both the seller and the buyer) which was intended to be exhaustive, is indeed not exhaustive; see Ferrari (see fn. 10) 101 et seq.

14. Staudinger-Magnus Art. 4 CISG note 3.

15. For a discussion of the relationship between the CISG and product liability, see most recently Kuhlen, Produkthaftung im internationalen Kaufrecht, Augsburg, 1997; Schneider, UN-Kaufrecht und Produkthaftpflicht, Basle, 1995.

16. See OGH, 24 April 1997.

17. The OGH has already had to deal with the CISG on several occasions; see OGH, 2 July 1993, Jbl. 119 et seq. (1994), with comment. Rummel; OGH, 27 October 1994, ZfRV 159 et seq (1995).; OGH, 10 November 1994, IPRax 137 (1996); OGH, 6 February 1996, RIW 203 et seq. (1996).

18 See von Caemmerer/Schlechtriem-Herber, Kommentar zum Einheitlichen UN-Kaufrecht, 2nd ed., Munich, 1995, Article 4 note 23; Karollus, UN-Kaufrecht, New York/Berlin, 1991 p. 45; Honsell-Siehr, Kommentar zum UN-Kaufrecht, Zurich, 1996, Article 4 note 19.

19. See most recent Federal Court of the South Australia District of Adelaide, 28 April 1995, 57 Federal Court Reports 216 et seq. (1995); OLG Koblenz, 16 January 1992, IPRax 46 (1994).

20. See OLG Hamm, 9 June 1995, NJW-RR 179 (1996); Arbitral Award no. 7660 of the ICC Paris, ICC Bulletin 69 et seq. (November 1995).

21. See OLG Düsseldorf, 11 July 1996, RIW 958 et seq. (1996); OLG Stuttgart, 21 August 1995, IPRax 139(1996); AG Munich, 23 June 1995, Unilex; OLG Hamm, 9 June 1995 (see fn. 19); Rb Middelburg, 25 January 1995, NIPR no. 127 (1996); OLG Koblenz, 17 September 1993, RIW 934 et seq. (1993); Rb Roermond, 6 May 1993, Unilex.

22. Cf. Hof Arnhem, 22 August 1995, NIPR no. 514 (1995); Arbitral Award no. 7197 of the ICC Paris, 23 August 1994, J.D.I. 1028 et seq. (1993).

23. As in AG Alsfeld, 12 May 1995, NJW-RR 120 et seq. (1996); KG Berlin, 24 January 1994, RIW 683 (1994); LG Hamburg, 26 September 1990, EuZW 188 (1991).

24. See LG Hamburg 26 September 1990 (previous fn.).

25. See OLG Hamm, 8 Feb. 1995, IPRax 197 (1996); BG Arbon, 9 December 1994, Unilex.

26. See LG Aachen, 14 May 1993, RIW 760 et seq. (1993).

27. Compare, e.g., Rb Amsterdam, 5 October 1994, NIPR no. 231 (1995), with comm. Ferrari, which excludes estoppel from the sphere of application of the CISG. This opinion cannot be shared. Estoppel should be derived from the CISGs general principle of good faith. Pursuant to Article 7(2), this principle, as all general principles of the CISG, are to be referred to when a matter, although not explicitly settled in the CISG, is not excluded from its sphere of application; see Staudinger-Magnus Article 4 CISG note 53.

28. This term is used for instance by Frigge, Externe Lücken und internationales Privatrecht im UN-Kaufrecht (Article 7(2)), Frankfurt, 1994; note, however, that labelling non-regulated questions as "gaps" at all was last criticised by Kramer, Uniforme Interpretation von Einheitsprivatrecht CISG Table of Contents mit besonderer Berücksichtigung von Art. 7 UNKR, JB1. 137 et seq. (1996).

29. See for a discussion the CISG "open questions" Neumayer, Offene Fragen zur Anwendung des Abkommens der Vereinten Nationen über den internationalen Warenkauf, RIW 99 et seq. (1994).

30. See Ferrari (see fn. 10) 154 et seq.

31. For a discussion of the notion of private international law according to the CISG, see Ferrari, Der Begriff des IPR nach UN-Kaufrecht, ZeuP (in print).

32. See for a general discussion of how to fill the gaps of the CISG, Volken, The Vienna Convention: Scope, Interpretation and Gap-Filling, in Sarcevic/Volken (Editor), International Sale of Goods. Dubrovnik Lectures, New York, 1986 pp. 19 et seq.

33. Predominate opinion; see, e.g., Ferrari, Interprétation uniforme de la Convention de Vienne de 1980 sur la vente internationale, Rev. Int. Dr. 830 et seq. (1996).

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