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CISG CASE PRESENTATION

Switzerland 19 December 1997 Commercial Court Aargau (Garments case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/971219s1.html]

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

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Case identification

DATE OF DECISIONS: 19971219 (19 December 1997)

JURISDICTION: Switzerland

TRIBUNAL: Handelsgericht [Commercial Court] des Kantons Aargau

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: OR.97.00056

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Garments


Case abstract

SWITZERLAND: Handelsgericht des Kantons Aargau 19 December 1997

Case law on UNCITRAL texts (CLOUT) abstract no. 254

Reproduced with permission from UNCITRAL

A German seller of garments, plaintiff, sued the Swiss buyer, defendant, for the purchase price, interest, and its legal costs in both Germany and Switzerland.

The court rendered a default judgment in favour of the seller, comprising the purchase price and interest (article 78 CISG). The interest rate was determined in accordance with German law, which had been chosen as applicable law by the parties. The seller was also awarded as damages the legal expenses of its lawyers in Germany and Switzerland. The court stated that all costs incurred in the reasonable pursuit of a claim are refundable, which included retaining a lawyer in the country of each party (article 74 CISG).

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 74 ; 78 [Also cited: Article 59 ]

Classification of issues using UNCITRAL classification code numbers:

74A [General rules for measuring damages: legal expenses covered];

78A [Interest on delay in receiving price]

Descriptors: Damages ; Legal costs ; Interest

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=406&step=Abstract>

German: [1999] Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER)/Revue suisse de droit international et de droit européen 192

CITATIONS TO TEXT OF DECISION

Original language (German): Click here for the original German text of this case; also presented at Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=406&step=FullText>

Translation: Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Liu Chengwei, Recovery of interest (November 2003) n.105; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 74 para. 20

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Commercial Court (Handelsgericht) Canton Aargau

19 December 1997 [OR.97.00056]

Translation [*] by André Corterier [**]

In the case of [seller] v. [buyer 1] and [buyer 2] concerning a claim arising out of an international sale of goods, the Court takes note, from the files, of the following:

A. The [seller] instigated that the following claim be brought to the Commercial Court of Aargau with notice of 12 May 1997:

      1. The [buyers] shall be held jointly and severally liable to pay the [seller] ITŁ [Italian Lira] 27,263,000 plus 8.5% interest since 4 March 1996 on ITŁ 3,416,000; since 23 March 1996 on ITŁ 14,221,000; since 30 March 1996 on ITŁ 5,358,000 and since 19 May 1996 on ITŁ 4,268,000; in addition, to pay DM [Deutsche Mark] 868.80 plus interest of 8.5% since 3 October 1996 and fS [Swiss Francs] 1,400 plus interest of 8.5% since 9 May 1997; plus fS 209.10 and fS 160, costs incurred during initial enforcement proceedings; all minus a payment of DM 2,000 made on 17 April 1997;

      2. The legal recourse of [buyer 1] concerning the enforcement proceeding No. 9291 shall be held null and void, with costs and reimbursement entered against the [buyers].

To establish the claim, the [seller] indicated that:

[Translator's note: A "Kontokorrentkredit" is a standing line of credit granted to clients of a bank; payments are made to and from the account without further discussion between the bank and the owner of the account.]

B. 1. As the Higher Court had opened insolvency proceedings against the [buyers] on 7 May 1997, the [judge in charge of the insolvency proceedings] ordered the case before the Commercial Court suspended [based on Art. 207 SchKG*] on 5 June 1997. On 15 August 1997, insolvency proceedings ceased based on a lack of substance.

      2. On 15 September 1997, the judge ordered the continuation of the suit before the Commercial Court.

      3. The formal statement of claim was handed to the [buyers] on 23 September 1997 against receipt at the then address of the [buyer 1] in Niederlenz [Switzerland].

C. 1. The [buyers] did not answer the claim within the period of time afforded them. With order of 15 October 1997, the [judge], based on § 189 Swiss Code of Civil Procedure, afforded them a last, not extendable, period of ten days to answer in connection with the stipulation that in the case of its expiration, the proceedings would continue without a hearing based on the statements contained in the [seller's] statement of claim.

      2. By letter of 25 October 1997, [buyer 2] inquired as to the nature of the proceedings. On 29 October 1997, she was sent a copy of the statement of claim of 12 May 1997 for orientation.

      3. The [buyers] have not answered within the additional period of time.

D. By order of 12 November 1997, the [judge] ordered the case be judged by the Commercial Court without a hearing. Taking the following factors into consideration, on 19 December 1997, the Commercial Court issued the following verdict:

Verdict

I. 1. The [buyers] were then the owners of the company [Kollektivgesellschaft] "Fashion House ...". This company was dissolved on 7 October 1996 and continued individually by [buyer 1] as "Fashion House ..." according to Art. 579 OR [*]. At the same time, [buyer 2] left the company "PC Business B + OP" and continued the business individually as "PC Business ..." according to Art. 579 OR.

As both [buyers] are therefore, then and now, registered merchants, at the time the claim was filed, both as individual businesspeople, and as the case concerns the then company "Fashion House ..." and the amount in dispute exceeds the amount of fS. 8,000 (Art. 46 OG [*]), the Commercial Court has substantive jurisdiction. As the [buyers] also have their places of residence in [Switzerland], in Nierderlenz and Birr, respectively, the Court also has local jurisdiction (§§ 24 and 404(1) lit. a ZPO [*]).

      2. a) The [buyers], according to § 189 ZPO, were given a last period in which to effect an answer. As they did not answer within this period, the proceeding can, according to the respective stipulation, continue based on the statement of claim, and a verdict be reached without a hearing (§ 189(1) ZPO). A hearing is normally not required, because the right to offer proof now resides solely with the plaintiff [seller], as only the statements made by the plaintiff [seller] still require proof. This effects a substantial simplification of the establishment of proof. If the statements of fact of the claimant [seller] have remained undisputed, because the defendant [buyers] have not participated in the statement proceedings, proof must be sought only if the judge doubts the statements of the claimant [seller] (§ 200 ZPO). Such doubts are not to be held lightly. On the one hand the claimant [seller], in spite of the aforementioned procedural simplifications, is not freed of the full burden of proof according to Art. 8 ZGB [*]. On the other hand, the refusal of the defendant [buyers] to cooperate in the proceedings of statement and proof, must be accounted for in the claimant [seller's] favor (§ 204 ZPO). As will be shown, the legal and factual situation in the present case does not require the furnishing of additional proof, so that the verdict can be rendered without a hearing.

b) The statement of claim and the subsequent order to answer was sent to the [buyers] at their common address in Birr: The statement of claim was forwarded by the post office to [buyer 1] in Niederlenz, while the subsequent order was handed to [buyer 2] in Birr. As the [buyers] are still married to each other and no change of address was furnished to the Commercial Court, the notice to the common address of the [buyers] cannot be faulted. Rather, the [buyers] were required to notify each other concerning the arrival of the Court documents.

      3. Due to the opening of insolvency proceedings against [buyer 1], the [judge] had suspended these proceedings according to Art. 207 SchKG [*] by order of 5 June 1997. After the end of the insolvency proceedings due to lack of substance, the present proceeding must be continued as [buyer 1] is a natural person who remains responsible for the debt even after the end of insolvency proceedings. The end of insolvency proceedings due to lack of substance also do not constitute a recognition of the debt. The insolvency effects only that [buyer 1], in case of a new enforcement proceeding, can raise the defense of lack of new property (Art. 265 (2) SchKG; SJZ [*] 1984, S. 132 et seq.).

II. 1. Substantively, the first question which poses itself is whether the correct defendants were sued. The [buyers] were partners of the company "Fashion House ..." until 11 October 1996. Then the dissolution of the company was publicized in the Swiss official commerce publication. [Buyer 1] continued the business according to Art. 579 OR [*] as an individual business.

According to Art. 591(1) OR, the partners are liable for obligations of the company for five years after the publication of their exit or the dissolution of the company.

As the five year period according to Art. 591(1) OR has not run out, the correct defendants were sued. The [buyers], as former partners, are jointly and severally liable with their entire property (Art. 568(1) OR).

      2. a) From the statement of claim and the accompanying papers, especially the four invoices, it follows that the [seller] had delivered various items of clothing to the [buyers] in January and March 1996 and made out invoices to a total of ITŁ 27,263,000. The [seller] did not provide bills of receipt. It follows from the letter of 22 May 1996, however, in which [buyer 1] apologizes in the name of the company for the delay in payment, that the [seller] had amounts due and that the deliveries had apparently not been found deficient. The reason for non-payment apparently lies in the fact that the company "Fashion House ..." was already insolvent, which later led to the opening of insolvency proceedings against [buyer 1].

The claimed obligation therefore seems present, according to

- Invoice No. 60001 of 4 January 1996    ITŁ   3,416,000
- Invoice No. 60041 of 23 January 1996 ITŁ 14,221,000
- Invoice No. 60054 of 30 January 1996    ITŁ   5,358,000
- Invoice No. 60157 of 19 March 1996    ITŁ   4,268,000

b) As the company "Fashion House ..." did not pay, demands for payment were made several times: by the [seller] on 13 June 1996, through attorney Dr. Lambert Brockmann on 30 July 1996 and through the representative of the [seller] in the present proceedings on 17 September 1996. On 3 October 1996, enforcement proceedings were initiated against [buyer 1] for a sum of fS 24,528.75 plus 8.5% interest, whereupon [buyer 1] moved the issue to the Court. As the [seller] correctly states, a demand was not necessary to consider the payment to be in arrears. The contract between the parties is subject to the Uniform UN Sales Law, also called Vienna Sales Convention. According to Art. 59 [CISG], the payment price becomes due at the time agreed upon in the contract. According to Condition V.3 of the general conditions of sale of the [seller], the payment price becomes due in full 60 days after the date of the invoice. The conditions of sale of the [seller] had been made known to the [buyers] with the order confirmation. As neither the [buyers] nor their company have objected, these conditions of sale have become elements of the contract.

c) If a debtor does not pay an amount due, he, without a further demand being necessary, becomes obligated to pay interest according to Art. 78 CISG in connection with Art. 59 CISG (v.Caemmerer/Schlechtriem, "Kommentar zum Einheitlichen UN-Kaufrecht" [Commentary on the Uniform UN Sales Law], Munich 1990, Art. 59 at 2; Reinhart, "Einheitliches UN-Kaufrecht" [UN Sales Law], Heidelberg 1991, Art. 59 at 2). Thus, the "Fashion House ..." company was in arrears as regards the sales price 60 days after the dates of the invoices.

d) The [CISG] stipulates in Art. 78, that a buyer, who is in arrears in payment of the purchase price, must pay interest, but without stating the interest rate.

According to Condition V.4 of the [seller's] sales conditions, [seller] is entitled to demand interest of 5% above the discount interest rate determined by the Deutsche Bundesbank [German Federal Reserve]. The seller has reserved the right to offer proof for the interest rate, but has not furnished it. Under these circumstances, the interest rate must be determined according to the German law applicable to the contract by the parties (choice of law in Condition XI.2 of the general conditions of sale of the [seller] according to Art. 116(1) IPRG [German Code of Private International Law]. According to § 352 of the German HGB [Commercial Code] the legal interest rate among merchants is 5%.

e) The [buyers], who are the legal successors, of the "Fashion House ...", thus owe 5% interest on each of the payments beginning 60 days after the dates of the invoices. For the periods in the statement of claim on page 5 under no. 12, this amounts to ITŁ 628,222.

      3. a) Further, the [seller] demands pre-procedural costs of their German attorney. After the [buyers], did not pay the sales price due, in spite of having given assurance, [seller] called upon attorney Dr. Lambert Brockmann of Düsseldorf. He demanded payment from "Fashion House ..." by letter of 30 July 1996. When payment was not forthcoming, he instructed the current Swiss attorney of the [seller] in writing.

b) In addition to the right to interest, a seller is also entitled to further damages according to Art. 74 CISG (Art. 78 [CISG]). Pre-procedural legal costs are part of recoverable damages as long as the breach of contract gave sufficient rise for such (Schlechtriem/Stoll, id., Art. 74 at 14).

As the [seller] with place of business in Germany had to collect a debt from a debtor in Switzerland, hiring an attorney in Germany was justified.

Attorney Dr. Brockmann demands a fee of DM 868.80. Considering an amount in dispute of about DM 27,000.-, such a fee for pre-procedural services rendered seems in every way appropriate. This amount is to be awarded to the [seller]. It is to be converted into Swiss franks, however.

c) The [seller] demands interest of 8.5% on this sum since 3 October 1996, the date of enforcement proceedings against [buyer 1]. According to Art. 136(1) OR [*], enforcement proceedings against one debtor has effect also against the other debtors joined in joint and several liability. According to Art. 593 OR, this rule does not apply to the relation of a partner who has left the company and the company or another partner. The enforcement proceeding against [buyer 1] therefore has no effect on [buyer 2], i.e., [buyer 2] is in arrears as regards the [seller]'s pre-procedural legal costs only since the lawsuit was brought on 12 May 1997.

d) As has been discussed under II.2.d), only 5% of interest can be awarded.

      4. a) The [seller] finally also demands pre-procedural costs of its current Swiss attorney in the amount of fS 1,400.- plus costs for the letter of instruction and the payment order.

b) The costs of the current Swiss attorney of the [seller] are neither specified in detail nor unusually high. They are therefore, according to general practice, to be considered in the final award regarding the parties' costs (Section 6(1) AnwT [*]).

c) The costs of the letter of instruction of fS 150.- are to be awarded to the [seller] according to Section 156 ZPO [*].

d) The costs of the payment order cannot be awarded separately. They will be added to the obligation ex officio during the continuation of enforcement proceedings against [buyer 1] (Art. 68(2), 144(3) and 262(1) SchKG [*]).

      5. a) As the seller, with its statement of claim, demands payments in three different currencies and wishes to have a payment of DM 2,000 subtracted therefrom, it is necessary to convert all obligations into a single currency. As [buyer 1] lives in Switzerland and enforcement proceedings against him were begun in Swiss franks (Art. 67(1) No. 3 SchKG), further the relevant conversion rates into Swiss franks at the time of the verdict are known - as undisputed - , the [seller] is to be awarded a sum in Swiss franks (Guldener, "Schweizerisches Zivilprozessrecht" [Swiss Code of Civil Procedure], 3rd ed. Zürich 1979, p. 149; ZR [*] 1991 No. 37, p. 16; Weber, "Berner Kommentar" [Bern Commentary], Bern 1983, Art. 84 OR [*] at 367).

b) On the basis of the four invoices, the [seller] is thus entitled to ITŁ 27,263,000 plus 5% interest for the period until 28 September 1996. This results in an interest sum of ITŁ 628,222. The [seller] can therefore demand a total of ITŁ 27,891,222. At a conversion rate of: ITŁ 1,000 = fS 0.812, this corresponds to a sum of fS 22,647.65. From this sum, the DM 2,000 paid by Selection Inc. must be deducted. This amount must be converted into Swiss francs; according to the conversion rate DM 100.- = fS 81.55, this results in a sum of fS 1,631. The [seller] thus has an outstanding amount of fS 21,016.65 from the four invoices plus interest until 28 September 1996.

Because of the provision against interest on interest, interest can be granted for the time until 28 September 1996 only on the capital basis of fS 20,506.55, i.e., on the sum of the four invoices minus the payment received.

c) The legal fee of attorney Dr. Brockmann in the amount of DM 868.80. At the conversion rate (DM 100 = fS 81.55), this results in a sum of fS 708.50.

As the enforcement proceeding No. 9291of 3 October 1996 was directed only against the [buyer 1], he owes interest on this sum since 3 October 1996. [Buyer 2] owes interest since the suit was brought on 12 May 1997.

III. 1. The costs of the proceedings are to be paid by the parties according to the relation in which they prevail or are defeated (Section 112(1) and (2) ZPO [*]). The [seller] prevails on all counts except the interest rate. It is therefore justified, to burden the [buyers] with the entire costs.

      2. The amount of the Court costs is to be measured by the amount in dispute, which is calculated according to the claims advanced before the Court (Section 100(2)(a) ZPO in connection with section 4 VKD [*]). The amount in dispute is about fS 23,495.-. The Court costs are to be reduced according to section 13(1) VKD, as the proceeding before the Commercial Court did not have to be conducted in full.

      3. The parties' costs are to be determined according to the attorneys' tariff of the Canton Aargau. In addition, the [buyers] must also reimburse the [seller] for the proceeding before the justice of the peace in the amount of fS 150.- (Section 156 ZPO).

Thus:

1. In partial approval of the suit, the [buyers] are, in joint and several liability, obligated to pay to the [seller]:

      a) fS 21,016.65 plus 5% interest since 29 September 1996 on a sum of fS 20,506.55; and

      b) fS 708.50. [Buyer 1] owes the [seller] 5% interest on this amount since 3 October 1996, [buyer 2] since 12 May 1997.

2. [Buyer 1's] motion to the Court in enforcement proceeding No. 9291 of 3 October 1996 is vacated and the [seller] is given definitive leave by the law.

3. The costs of the Court, consisting of a Court fee of fS 1,200.- plus secretarial fees and costs of fS 290.-, together fS 1,490.-, are to be paid by the [buyers] in joint and several liability.

4. The [buyers] have to reimburse the [seller] for its party's costs deemed by the judge to be fS 4,696.40 (incl. fS 277.50 VAT [*] and fS 150.- for the letter of instruction) in joint and several liability.

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Germany is referred to as [seller] and the Defendants of Switzerland are referred to as [buyers] or [buyer 1] and [buyer 2]. Also, the abbreviations [DM] is used for Deutsche Mark, [ITŁ] for Italian Lira, and [fS] for Swiss franks.

Translator's note on other abbreviations: AnwT = ; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuch [German Code on the Conflict of Laws]; HGB = Handelgesetzbuch [German Commercial Code]; IPRG = German Code of Private International Law = EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuch [German Code on the Conflict of Laws]; OR = ; SchKG = ; SJZ = ; VAT = Value Added Tax; VKD = ; ZPO = (Schweizerisches) Zivilprozessrecht [(Swiss) Code of Civil Procedure]; ZR = Blätter für Zürcherische Rechtsprechung [Swiss law periodical].

** André Corterier received his Master of Laws (LL.M.) in Comparative Legal Studies from the Pace University School of Law.

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Pace Law School Institute of International Commercial Law - Last updated August 15, 2005
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