Switzerland 3 December 1997 Civil Court Basel (White urea case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/971203s2.html]
DATE OF DECISIONS:
CASE NUMBER/DOCKET NUMBER: P4 1996/00448
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Switzerland (plaintiff)
BUYER'S COUNTRY: Italy (defendant)
GOODS INVOLVED: White urea
SWITZERLAND: Civil Court of Basel 3 December 1997
Case law on UNCITRAL texts (CLOUT) abstract no. 221
Reproduced with permission from UNCITRAL
The court of first instance had to decide whether it had jurisdiction to adjudicate a lawsuit between a Swiss plaintiff (seller) and an Italian company (defendant-buyer), which had purchased 5,000 tons of Bulgarian white urea. The Italian buyer did not pay the purchase price, and the Swiss seller commenced the lawsuit in Basel based on article 5(1) of the Lugano Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, pursuant to which a person may be sued in the courts of the place of performance of the obligation concerned.
The court found that the purchase price of the obligation in controversy was governed by the CISG. According to article 57(1) CISG, the purchase price must be paid at the place the parties agreed upon; if no agreement was made, at the seller's place of business or, if the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place. In the present case, the parties had agreed upon payment within 30 days after delivery of a bill of lading and several other documents. As the case dealt with a purchase on credit, the rule on the handing over did not apply.
The court dismissed the [seller's] allegation that a usage existed and was known to the parties (article 9(2) CISG), pursuant to which bank transfers have to be made to the seller's account in the import trade. Therefore, the court concluded that the place of performance was in Binningen (Canton of Basel-Landschaft), and that the courts of Basel-Stadt had no jurisdiction to adjucate the matter and dismissed the lawsuit.
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APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issues:
Classification of issues using UNCITRAL classification code numbers:
57A [Place for payment: in absence of agreement payment at seller's place of business]
57A [Place for payment: in absence of agreement payment at seller's place of business]
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Excerpt from Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at 374-375
"In order to supplant the operation of Article 57, the forum selection agreement must comply with stringent requirements established by national courts. The forum selection provision should be express. Past practices between the parties in prior transactions are not sufficient to overcome this requirement. In addition, the mention of bank accounts and other commercial relationships in states other than where the delivery of the goods occurs is insufficient to constitute a forum selection agreement in the absence of an express intent by the parties. Finally, usage of the trade in question also fails to constitute a forum selection agreement in most circumstances. Such usages would only serve to select the forum if it was widely known in the trade that certain actions undertaken by the parties to the transaction had the indelible effect of selecting an exclusive forum for the resolution of disputes between the parties other than as established by Article 57."
443. See Corte di Cassazione, Sez. Un [Supreme Court], Aug. 7, 1998, n.7759 (It.), available at <http://cisgw3.law.pace.edu/cases/980807i3.html> [English translation by Alessia Oddone, translation edited by Angela Maria Romito]. See also, HG Zürich, 980280.1, Apr. 8, 1999 (Switz.), available at <http://cisgw3.law.pace.edu/cases/990408s1.html> [English translation by Martin Bürkle, translation edited by Camilla Baasch Andersen]; Zivilgericht Kanton Basel-Stadt, P4 1996/00448, Dec. 3, 1997 (Switz.), available at [this case].
444. HG Zürich, 980280.1, Apr. 8, 1999, supra note 443. See also Zivilgericht Kanton Basel-Stadt, P4 1996/00448, Dec. 3, 1997, supra note 443.
445. See Zivilgericht Kanton Basel-Stadt, P4 1996/00448, Dec. 3, 1997, supra note 443.
446. See id.
CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=372&step=Abstract>;  Transportrecht, Beilage "Internationales Handelsrecht" (TranspR-IHR) 11
German: Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER)/Revue suisse de droit international et de droit européen 190
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/346.pdf>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=372&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English:  Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 9 paras. 4, 8, 20, 21Go to Case Table of Contents
Queen Mary Case Translation Programme
3 December 1997 [P4 1996/00448]
Translation [*] by Mariel Dimsey [**]
I. The Plaintiff [Seller] is a public limited company (Aktiengesellschaft) established under Swiss law with its registered seat in Binningen (BL). The Defendant [Buyer] is a limited liability company (Gesellschaft mit beschränkter Haftung) under Italian law, which, at least at the time of the submission of the claim, had its registered seat in Polo de Piave (Treviso, Italy).
By contract dated 31 March 1995, the [Seller] sold the [Buyer] about 5,000 tons of white urea from Bulgaria as an unpackaged shipment at a price of US $223.50 C&F per ton. On 29 April 1995, a sea bill of lading was issued for 4,673,020 [kilograms] of urea, which was loaded on board the ship "Vasily Shukshin" in Varna (Bulgaria) with destination Porto Marghera harbor (Italy) for the [Buyer]. The [Seller] sent the [Buyer] an invoice dated 2 May 1995 for the amount of US $1,044,419.97, due on 29 May 1995. According to a note in this invoice, payment should be made to the account of the [Seller] at the Schweizerischen Bankverein in Basel. The amount was not paid by the [Buyer].
II. In its claim dated 21 May 1996, the [Seller] requests that the [Buyer] be judged liable, with costs, to pay the following amounts:
|-||US $1,044,419.97 plus interest at 5% since 29 May 1995;|
|-||US $17,734.40 plus interest at 5% since 11 April 1996;|
|-||Italian Lira [ITL] 209,620,882.00 plus interest at 5% since 16 January 1996;|
|-||ITL 300,000,000.00 plus interest at 5% since 1 March 1996;|
|-||ITL 110,804,864.00 plus interest at 5% since 7 March 1996.|
[Seller] retains the right to increase its claim with respect to the claims in dollars.
In addition, [Seller] applies to the court to notify the dispute to the company Bri Projecta Ltd., 2. Stephan Stambolov Str., BG-9000 Varna, Bulgaria and to summon the parties to interventionary proceedings.
III. The interventionary proceedings took place on 5 September 1996 in the presence of the legal representatives of the parties. The presiding judge decided that the proceedings would be limited to the question of the territorial jurisdiction.
IV. In its formal reasons for claim dated 20 November 1996, the [Seller] applies for the judicial determination, with costs, that the Civil Court of Basel-City has the territorial jurisdiction to judge the present claim.
V. In his submission of 17 January 1997, attorney lic. iur. George Hunziker communicated to the court that he was no longer representing the intervenor. In its submission of 25 March 1997, the intervenor allowed itself to be examined and contested the territorial jurisdiction of the court seized of the matter to judge the present claim.
VI. In its response to claim dated 6 June 1997, the [Buyer] made an application that the claim should not be decided with ordinary and/or extraordinary costs due to a lack of territorial jurisdiction.
VII. For its part, the [Seller], according to its statement of position dated 18 August 1997, is fully adhering to its formal claim application. Thereby, the legal foundation of all legal memorials can generally be taken from the following reasons for judgment.
VIII. In their submissions dated 20 November and 19 November 1997, respectively, the legal representatives of the parties submitted their fee invoices. Subsequently, in its submission dated 26 November 1997, the [Buyer] took a position as to the question of eventually passing on the value-added tax on the fees of the [Seller]īs legal representative.
IX. The main hearing took place on 3 December 1997 in the presence of Ms. lic. iur. S. Pfirter, acting for the [Seller]īs legal representatives, and the [Buyer]īs legal representatives. Both partiesī representatives were given the opportunity to discuss the question of the territorial jurisdiction in their closing remarks. For all submissions, reference is to be made to the transcript and the following reasons for judgment.
REASONS FOR JUDGMENT
1. a) The [Seller] is located in Switzerland, while the [Buyer] is domiciled in Italy. Both parties, thereby, are located in Contracting States of the so-called Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 16 September 1988 (LugConv). In any case, the basis of this legal dispute is an international commercial purchase of an unpackaged shipment of urea from Bulgaria. The question of the jurisdiction of the Civil Court of Basel-City to judge the present claim, to which the hearing has been limited due to the decision of the presiding judge dated 5 September 1996, is therefore to be determined by applying this Convention.
b) The [Buyer] is located in Italy. The jurisdiction of the Civil Court Basel-City to judge the present claim would, therefore, only be given if a particular jurisdiction was given within the meaning of Art. 5 et seq. LugConv [*].
aa) In order to establish a forum in Basel, the [Seller] is relying on the jurisdiction at the place of performance according to Art. 5(1) LugConv. Relying on Art. 57 of the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (so-called Vienna Sales Law, CISG), it is asserting that the parties had concluded an agreement as to the place of performance, which, under the provisions of both the LugConv and the CISG, can be concluded in the absence of formal requirements. Although the parties did not conclude an explicit agreement as to the place of performance, they had, however, agreed upon payment within 30 days after issuance of the sea bill of lading in their contract dated 31 March 1995. According to the partiesī agreement, this payment should have been made to the [Seller]īs account. With its invoice dated 2 May 1995, the [Seller] had communicated its bank details at the Schweizerischen Bankverein in Basel to the [Buyer], which were not contradicted by the [Buyer]. Thereby, due to the decisive practices between the parties, from which the intention of the parties can be ascertained under Art. 8(1) CISG, the trade usages and the subsequent conduct of the parties, the place of performance had been specified. In any case, the [Buyer] had already obtained goods from the [Seller] twice previously, although, back then, the purchase price had been paid by the [Buyer] at the place of payment indicated on the invoices, Basel, without objection. In addition, the [Seller] alleges that a trade usage exists, according to which, in import trade, cashless payments by way of bank transfer to the account of the seller are usual. Therefore, the parties were apparently bound by their previous practices and the trade usage.
bb) In contrast, the [Buyer] contests the existence of a place of performance for the purchase price in Basel. Explicit agreement as to a place of performance never took place and, due to a lack of an ongoing business relationship, no practices between the parties ever arose. Stating bank details on the invoice is, the [Buyer] alleges, to be understood as an alternative authorization to pay to that account. In any case, the trade usage claimed by the [Seller] never existed either. As the place of performance, Basel, did not have anything to do with the execution of the contractual business, it could also be regarded as an abstract agreement as to the place of performance, which would be subject to the formal requirements of Art. 17 LugConv.
c) According to Art. 5 No. 1 LugConv, claims arising from a contract can be brought before a court at the place of performance. In the case of two-sided contracts, this jurisdiction is to be separately determined for each obligation according to the lex causae, namely the law applicable to the contract.
aa) The disputed contract in this case is about an international trade purchase between two contractual parties located in different Contracting States of the Vienna Sales Convention (CISG). Therefore, this Convention is applicable to the present case under Art. 1(2) IPRG [*] and decisive for the determination of the place of performance.
bb) According to the case law of the ECJ [*] on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels Convention), which is, according to the 2nd protocol on the uniform interpretation of the LugConv, to be observed in its interpretation before domestic courts, the requirements set out in Art. 17 Brussels Convention and LugConv, respectively, are to be "interpreted restrictively, as this provision excludes not only the jurisdiction established according to the general principle of jurisdiction at the place of residence of the [Buyer] under Art. 2, but also the special jurisdiction under Arts. 5 and 6" (ECJ Judgment dated 20 February 1997 Rs. C-106/95 (MSG Mainschiffahrts-Genossenschaft eG/Les Gravières Rhénanes SARL) para. 14, OJ 1997, I-932; also in EuZW [*] 1997, 209 et seq.). The same must also apply for the evaluation of agreements as to place of performance. Under Art. 5 No. 1 LugConv, the jurisdiction at the place of performance is neither exclusive nor mandatory. On the other hand, the agreement on a place of performance opens up the possibility of a new jurisdiction to the claiming party, the accessory establishment of which is often not known to the parties at the time of concluding their agreement. Therefore, in order to find an agreement as to place of performance, a clear and unambiguous meeting of the minds to that effect is required to be proven.
cc) With its claim, the [Seller] primarily asserts its claim for the purchase price from the contract dated 31 March 1995 for an unpackaged shipment of 5,000 tons of urea. According to Art. 57(1) CISG, the place of performance for the claim for the purchase price is primarily determined by the agreement of the parties. To the extent that such an agreement is lacking, in the case of simultaneous performance of the transaction (Zug-um-Zug), the buyer is liable to pay at the place where the goods or documents are handed over (subsection b) and, otherwise, at the place of business of the seller (subsection a). In the case at hand, the parties agreed on payment within 30 days after the issuance of the sea bill of lading and the presentation of diverse documents. This was, thereby, a credit purchase (BGE [*] 122 III 43 reason 3c p. 46), in which case, the rule concerning the place of performance in transactions where simultaneous performance is made does not apply. Thereby, the buyer generally has to satisfy the claim for the purchase price at the sellerīs location. However, the seller is located in Binningen (BL) and not in Basel.
d) However, the [Seller] now claims that there was an implicit agreement between the parties, according to which the purchase price was supposed to have been paid to its account at the Schweizerischen Bankverein in Basel, and thereby, Basel was agreed upon as the place of performance for the payment of the purchase price.
aa) The [Seller] derives this agreement, initially, from the clause in the sales contract dated 31 March 1995, according to which the purchase price is payable 30 days after the issuance of the sea bill of lading (KB No. 30 et seq.). However, an agreement as to a payment deadline obviously cannot, of itself, imply agreement on a yet-to-be-determined place of performance at the local bank in question of the seller.
bb) Furthermore, the [Seller] derives the implicit agreement as to the place of performance from the fact that it had communicated its bank details at the Schweizerischen Bankverein in Basel in its invoice dated 2 May 1995 for the transfer of the purchase price, which the [Buyer] never contradicted (KB No. 34 et seq.). Thereby, the [Seller] is applying the rules on the effects of a letter of confirmation to a clause in an invoice.
Initially, it needs to be determined that the sending of invoice does not count as part of the process of concluding a contract, but rather as part of its performance. Thereby, invoices do not form part of the contractual documents, but are rather records to regulate the performance of contracts already concluded. Consequently, they cannot generally be used to construct or adhere to an agreement of the parties, but rather serve the execution of such agreement within the scope of performance. From this alone, it can be seen that an indiscriminate transfer of the rules concerning the obligation of the parties to be bound to a commercial letter of confirmation that remained uncontradicted to the present case is inadmissible. Furthermore, it must be observed that the [Buyer] actually did not accept the invoice sent. On the contrary, it had refused to pay it. How an acceptance of the invoice and the place of performance apparently contained therein can be seen from this conduct is incomprehensible. It would be obvious over-formality if one were to require from a party that had refused to pay an invoice sent to it an express declaration, that it not only disputes the claim raised in the invoice, but also the place of payment described therein.
In any case, the mere nomination of bank details cannot be attributed the significance that the [Seller] would like to give it, either. It cannot be understood as an offer to conclude an agreement as to the place of performance, which can be implicitly accepted by the opposing party. Rather, stating a post account or bank account on an invoice formula is to be understood as a unilateral authorization of the creditor in favor of the debtor to satisfy its contractual obligation by undertaking performance to a third party. However, the debtor does not thereby become liable, but rather merely authorized, to diverge from the contractual or statutory rule as to performance. Consequently, the establishment of a so-called place of payment exists here, both under the rules of the Swiss Code of Obligations and on the basis of the CISG (Gauch/Schluep, Schweiz. Obligationenrecht, Allg. Teil, 6th ed. 1995, para. 2086 et seq., 2357; BGE [*] 55 II 201), which cannot act as an agreement of the parties on the place of performance. In addition, it can hardly be disputed that the [Seller] would have accepted payment at its location as valid performance that conformed to the contract, even after stating its bank details. The assumption that the parties subsequently agreed on the right to choose regarding the place of performance, cannot be accepted, not in the least due to the far-reaching procedural effects of an agreement as to the place of performance. In addition, in such a case, according to the rule in Art. 72 OR [*], which must apply even within the sphere of application of the CISG as it is not regulated therein, the choice of the place of performance would have been the [Buyer]īs as debtor. However, as it is generally known, the [Buyer] did not actually make a choice in favor of performance in Basel.
cc) The [Seller] cannot not derive anything in support of its legal position from the previous practices between the parties, either. It is indisputed between the parties that the [Seller] had already sent the [Buyer] two invoices before the conclusion of the sales contract in dispute, which had contained a reference to its bank account at the Schweizerischen Bankverein in Basel (KBB 3 and 5). However as stated by the [Buyer], it can be seen from the rubricated invoice numbers that both of the invoices, which were sent on the same day, obviously referred to one single transaction concerning two shipments. However, even if these could be regarded as two separate contracts, reference cannot be made to a "practice" within the meaning of Art. 9(1) CISG, to which the parties would have been bound. A binding individual practice between two parties requires an ongoing business relationship with several sales contracts (Jung in v.Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2nd ed., 1995, Art. 9 CISG para. 7). A previous relationship between two parties that is limited to two simultaneously-executed contracts does not fulfil this requirement. Reliance on Art. 9(1) CISG by the [Seller] to establish an agreement on the place of performance based on an individual practice between the parties is obviously flawed.
However, even if both reference to the [Seller]īs bank account in the invoices dated 21 January 1994 and the corresponding payment of the purchase price by the [Buyer] could be understood as an expression of a practice between the parties, this would, in accordance with the quality of the reference in the [Seller]īs invoice dated 2 May 1995 (cf. above subsections 1 d./bb.), solely authorize, but not oblige, the [Buyer] to make payments of the purchase price to the account of the [Seller] as the place of payment.
dd) Finally, the [Seller] alleges the existence of the binding trade usage under Art. 9(2) CISG, according to which, in import trade, the cashless payment by way of bank transfer to the account of the seller is usual and the parties would have been aware of this practice. That nowadays, financial transactions are generally executed without the use of cash by means of bank transfer is general knowledge. However, this does not suffice to establish a place of performance in deviation from the uniform sales law rules in Art. 57(1)(a) CISG. To do this, the existence of a trade usage would be necessary, according to which payments of the purchase price in import trade would have to be made exclusively to the sellerīs bank account, at least upon an appropriate notice from the seller itself. At the very least, it would have to correspond to a trade usage that, upon a creditor naming bank details, not only a place of payment, but also a new place of performance would be established. However, such a usage has never been alleged by the [Seller]. It is therefore superfluous to obtain the expertīs report applied for by the [Seller] on the question of the existence of an actual trade usage, according to which purchase price payments are made by cashless means (KB section 40).
Accordingly, the [Seller] was unable to prove that an agreement of the parties as to the place of performance arises from their obligation, under Art. 9(2) CISG, to abide by the international trade usages.
ee) Examination of the judgment of the ECJ [*] dated 20 February 1997 in the matter of MSG Mainschiffahrts-Genossenschaft eG/Les Gravières Rhénanes SARL (ibid) cited by the [Seller] results in the same conclusion. In that case, the ECJ was required to evaluate fundamentally different facts. In contrast to the case at hand, in that case, the [Seller] initially sent the [Buyer] a commercial letter of confirmation after the conclusion of contractual negotiations containing not only an agreement on jurisdiction, but also an agreement on the place of performance. The [Seller] subsequently referred to this agreement on jurisdiction in its invoices. In this regard, the ECJ determined that, in international trade according to Art. 17(1)(2)(c) Brussels Convention, "an agreement on jurisdiction can also be made in such a way that the contractual party does not react to a commercial letter of confirmation set to it by the other party, which contains a pre-printed reference to the jurisdiction, or repeatedly pays invoices containing such a reference without objection" (ibid, para. 25). However, in the present case, on the one hand, there is no jurisdictional agreement to be assessed and, on the other hand, neither one nor the other requirement for a valid agreement of the parties is satisfied. Neither did the [Seller] send a commercial letter of confirmation naming a place of performance, nor did the [Buyer] repeatedly pay invoices containing such a reference without objection.
e) The [Seller]īs legal representative ultimately asserted in the main hearing that the [Buyer] did not generally dispute jurisdiction at the place of performance in Switzerland and that it, therefore, did not come down to the question of whether such place be in the district of Arlesheim in the Canton of Basel-Landschaft or in the neighboring Canton of Basel-City. Basically, what the [Seller] thereby appears to be doing is asserting reliance by the [Buyer], in abuse of the law, on the territorial lack of jurisdiction of the present court. This assertion of the [Seller] cannot be upheld. A certain degree of strictness is necessarily inherent in the territorial jurisdictional regulations. The right to rely on such strictness must be maintained for the responding party, to the extent that it has not consented to be part of legal proceedings.
f) With the result that, thereby, the place of performance for the claim for the purchase price is not in Basel, the question of whether jurisdiction could exist at the place of performance of the claim for the purchase price regarding the assertion of the further claims for damages brought by the [Seller] does not need to be answered.
2. In accordance with the outcome of the proceedings, the [Seller] bears all costs of the proceedings. The fees, that were clearly detailed and submitted in good time by the legal representative of the [Buyer], would appear to be in conformity with general market rates.
Therefore, the Civil Court held:
The [Seller]'s claim is dismissed. The [Seller] bears the ordinary costs, comprising procedural fees of Swiss Francs [CHF] 15,000.00, the fee for the determinatory proceedings of CHF 800.00 and the expenses of CHF 300.00, as well as the extraordinary costs with party compensation of CHF 29,505.00
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Switzerland is referred to as [Seller] and the Defendant of Italy is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the former currency of Italy (Italian Lira) are indicated as [ITL]; amounts in currency of Switzerland (Swiss Francs) are indicated as [CHF].
Translator's note on other abbreviations: BGE = Entscheidungen des Schweizer Bundesgerichts [Official Reporter of Cases of the Swiss Supreme Court]; ECJ = European Court of Justice; EuZW = Europäische Zeitschrift für Wirtschaftsrecht [European Journal of Commercial Law]; IPRG = Bundesgesetz über das internationale Privatrecht [Swiss Federal Code on Private International Law]; LugConv = Lugano Convention on Jurisdiction and Engorcement of Judgments in Civil and Commercial Matters of 16 September 1988; OJ = Official Journal of the European Union; OR = Obligationenrecht [Swiss Code of Obligations].
** Mariel Dimsey, LL.M., is a Research Assistant and Teaching Assistant at the University of Basel.Go to Case Table of Contents