Austria 10 March 1998 Supreme Court [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980310a3.html]
DATE OF DECISIONS:
CASE NUMBER/DOCKET NUMBER: 7 Ob 336/97f
CASE HISTORY: 1st instance LG Wels 13 May 1997 [reversed]; 2d instance OLG Linz 8 September 1997 [reversal affirmed]
SELLER'S COUNTRY: Switzerland (defendant)
BUYER'S COUNTRY: Austria (plaintiff)
GOODS INVOLVED: Unavailable
Case law on UNCITRAL texts (CLOUT) abstract no. 421
Reproduced with permission from UNCITRAL
The plaintiff (seller) has its place of business in Switzerland, the defendant in Austria. In their contract the parties designated Amsterdam as place of payment but later they agreed to terminate the contract. The buyer asserted a claim for reimbursement of payments made in advance.
The main issue before the Supreme Court was jurisdiction. The trial court applied article 57 CISG to determine the place of performance of the obligation (restitution of advance payments) for purposes of asserting jurisdiction under Art. 5(1) of the Lugano Convention. The Supreme Court reversed, concluding that article 57 CISG applies to the purchase price only, and that the relevant place for other payments, such as the return of advance payments is a matter of domestic law.
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APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue: Articles
Classification of issues using UNCITRAL classification code numbers:
4B [Scope of Convention (issues excluded): court held restitution of deposit an obligation arising from an unjust enrichment, a matter not covered by the Convention];
9C [Practices established by the parties]; 57A [Place for payment (seller's place of business in absence of agreement): court held this rule applicable to payment of purchase price, not restitution of deposit]
4B [Scope of Convention (issues excluded): court held restitution of deposit an obligation arising from an unjust enrichment, a matter not covered by the Convention];
9C [Practices established by the parties];
57A [Place for payment (seller's place of business in absence of agreement): court held this rule applicable to payment of purchase price, not restitution of deposit]
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CITATIONS TO OTHER ABSTRACTS OF DECISION
English:  3 Forum des Internationalen Rechts/The International Legal Forum (English language edition) 22; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=373&step=Abstract>; CISG-Austria website (headnote) <http://www.cisg.at/7_33697fa.htm>
German:  Zeitschrift für Rechtsvergleichung, Internationales Privatrecht und Europarecht (ZfRV) 161-162 No. 43;  3 Forum des Internationalen Rechts/The International Legal Forum 22; CISG-Austria website (headnote) <http://www.cisg.at/7_33697fa.htm>
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-Austria website <http://www.cisg.at/7_33697f.htm>;  3 Forum des Internationalen Rechts/The International Legal Forum 22-25 =  3 Forum des Internationalen Rechts/The International Legal Forum (English language edition) 22-24; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=373&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
French: Niessen, Dalloz (1999) n.40, 357-359Go to Case Table of Contents
Queen Mary Case Translation Programme
10 March 1998 [7 Ob 336/97f]
Translation [*] by Veit Konrad [**]
Edited by Jan Henning Berg [***]
The appeal (Revision) is unjustified.
Defendant is liable to reimburse Plaintiff in the amount of ATS (Austrian Schilling) 21,375.00 (including ATS 3,562.50 tax) as costs for the appellate proceedings within 14 days.
In December 1995 Plaintiff-Appellee [Buyer], seated in Wels, Austria, and the Swiss Defendant-Appellant [Seller] entered into a contract for the sale of goods of Croatian origin for the purchase price of $ (US-Dollar) 312,500.00. The goods were to be delivered "free van carriage from Zagreb" and under provision of "1 Euro" certificates. Payment was to be due in Amsterdam. The goods were destined for locations in Western Europe unknown to [Seller]. Due to problems concerning the provision of the certificates and the taxation of the goods, [Buyer] held back $62,500.00 of the agreed purchase price. [Seller] did not sue for this amount before the Court. In the aftermath, the parties entered into agreements about three similar transactions in which payment had always been executed by [Buyer] in compliance with the contract.
In April 1996, [Buyer] ordered goods for DM (Deutsche Mark) 631,800.00. Here again "free van carriage from Zagreb" and payment in Amsterdam was stipulated. [Buyer] paid DM 69,147.00 of the purchase price in advance. As thereafter the parties agreed to revoke that agreement, [Seller] declared to set-off the advance payment of DM 69,147.00 against the amount of $62,500.00 [Buyer] had been holding back on the earlier contract since December the year before. [Buyer] objected to this set-off.
In the beginning of their business relations, [Buyer] had notified [Seller] of [Buyer]'s standard purchase conditions:
"As regards the execution of concluded contracts, payment is due in Wels [Austria]. If the other party is considered a tradesman (Vollkaufmann) in the sense of the Austrian Commercial Code (Handelsgesetzbuch; HGB) or, if no Austrian Court would have jurisdiction otherwise, the proper venue for all issues related to contracts with [Buyer] and its customers - respectively, for issues related to the termination of these agreements - is Wels, [Austria].
"Contracts between [Buyer] and its customers subject to these provisions are governed by Austrian law. The Hague Convention of 1 July 1964, respectively, the adopting acts of national Austrian law are excluded." (translation of the German original)
It could not be clarified within these proceedings whether [Seller] in turn had sent its own standard terms to [Buyer], nor has the Court been able to find out what those regulations would have provided for.
[Buyer] claimed for the amount of ATS 490,944.00 (69,147.00 DM) [Buyer] had paid in advance of delivery of the goods ordered in April 1996. As regarded jurisdiction over the case, [Buyer] submitted that the District Court (Landesgericht) of Wels (see ruling (Beschluss) GZ 3 Cg 3/97v-8 of 13 May 1997) was the proper venue to try this case according to [Buyer]'s jurisdiction clause and the agreed standard terms as well as because Wels had to be considered as the place of performance under Art. 5 of the applicable Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, of 16 September 1988 (Übereinkommen über die gerichtliche Zuständigkeit und die Vollstreckung gerichtlicher Entscheidungen in Zivil- und Handelssachen, 16. September 1988, BGBl 1996/448; hereafter referred to as LGVÜ).
[POSITION OF THE PARTIES]
[Seller] denied the District Court of Wels's jurisdiction on the case, questioning the applicability of [Buyer]'s standard terms. [Seller] alleged that, contrary to [Buyer]'s submission, [Seller]'s own standards terms had been agreed to govern their contract, according to which jurisdiction on issues related to the contract had to be conferred either on an arbitrational tribunal as acknowledged by the International Chamber of Commerce (Internationale Handelskammer) or at the venue of [Seller]'s domicile.
[Seller] alleged that as the application of its standard terms had become an established practice between the parties, the jurisdictional clause of these conditions has been validly incorporated in the contract as provided for in Art. 17 LGVÜ. But even on the assumption that [Seller]'s standard terms were not applicable, the Austrian District Court lacked jurisdiction: In that event, the LGVÜ provisions governing the question of international jurisdiction in Art. 5 No. 1 determine the place of performance of the obligation to be the proper venue for issues related to the contract. And Art. 5 No. 1 LGVÜ defines as place of performance the place where the performance of the primary obligation, i.e., the delivery of goods, their acceptance or payment of the purchase price had been due (Ort der Primärleistung).
According to [Seller], the cited provision would not refer to the place of performance of secondary obligations, such as damages due for breach of contract due to deficient delivery or default. Consequently, for the case at issue, jurisdiction was conferred at the place were payment of the purchase price had been due. As the contract between the parties was governed by the CISG, Art. 57(1)(a) of the Convention defines as place of performance of payment of the purchase price the seller's place of business, i.e., Lausanne, Switzerland. [Seller] argued that, in eventu the CISG was not applicable to the case, then § 36 of the Austrian Statute regulating the Conflict of Private Laws (Gesetz über das internationale Privatrecht; IPRG) would point to Swiss law as the national law to determine the place of performance as referred to under the LGVÜ. According to Swiss law, the payment of the purchase price was due at the place of the creditor's - here the seller's - place of business in Lausanne, Switzerland. If, in turn, [Buyer]'s obligation to delivery of goods had to be seen as the relevant primary obligation to define the venue under the provisions of the LGVÜ, then jurisdiction would have to be conferred on Zagreb, as the agreement "free van carriage from Zagreb" pointed to Croatia as the place of performance.
To these submissions, [Buyer] replied that even if the place of jurisdiction was not defined by [Buyer]'s applicable standard terms, Art. 5 No.1 LGVÜ referred to the obligation which was subject to the claim at issue, i.e., the claimed obligation of [Seller] for restitution of [Buyer]'s delivered payments. As far as a contractual obligation to performance concerned payment of any kind, according to [Buyer] it was always due at the place of the creditor's - here [Buyer]'s - place of domicile. As the CISG had been validly excluded by [Buyer]'s standard terms, Art. 74(2) No. 1 of the applicable Swiss Law of Obligations (Schweizer Obligationenrecht) holding the obligation to payment to be due at the place of the creditor's domicile, would also confer jurisdiction on the case to the District Court of Wels, Austria, as the venue of [Buyer]'s place of business.
[JUDGMENT OF FIRST INSTANCE]
The District Court (Landesgericht) of Wels as the Court of First Instance (see decision (Beschluss) GZ 3 Cg 3/97v-8 of 13 May 1997) found that [Buyer]'s claim was not admissible because the Court lacked international jurisdiction on the case. A valid incorporation of [Buyer]'s standard terms could not be substantiated. Hence, the proper place where performance of the obligation to payment and acceptance of delivery was due had to be derived from interpretation of the contract itself. Following Art. 57 -- the CISG being applicable to the contract between [Seller] in Switzerland and [Buyer] in Austria -- the payment was due at the seller's place of business. The CISG had not been excluded by [Buyer]'s standard terms, because by their wording these conditions only referred to the Hague Convention. Hence, due to Art. 5 LGVÜ Austria was not the venue for the trial of this case.
[JUDGMENT IN SECOND INSTANCE]
The Court of First Appeal (see Court of Appeal (Oberlandesgericht) Linz, decision (Beschluss) GZ 2 R 178/97b-13, of 8 September 1997) changed the decision of the Court of First Instance as far as it denied jurisdiction on the case. The Court did not allow an ordinary appeal against this decision.
According to the Appellate Court, [Buyer] did not submit anything indicating an agreement conferring jurisdiction concluded in writing or evidenced in writing as demanded by Art. 17(1)(a) LGVÜ. Neither did [Buyer] submit evidence sustaining that such an agreement had been made in a form which accords with a usage of which the parties were or ought to have been aware and which in such trade or commerce was widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned (Art. 17(1)(c) LGVÜ). The posting of [Buyer]'s standard terms at the beginning of their business relation - before the parties had entered in negotiations on a particular transaction - could not establish a practice in the sense as mentioned in Art. 17(1)(b) LGVÜ as this would have required a regularly repeated habit which was connected with and referring to a particular agreement between the parties. It was up to the party whose claim relied on the assumption of such an established practice to provide sustaining evidence. Yet, according to the Court of First Appeal, [Buyer] did not even allege that the other party had considered [Buyer]'s standard terms as binding and had complied with them after they had been posted. Hence, an established practice in the sense of Art. 17 LGVÜ could not be assumed.
The Appellate Court further contended that contractual obligations as required by Art. 5 No. 1 LGVÜ comprised not only obligations to primary performances such as delivery of the goods, acceptance or payment but also secondary obligations, i.e., damages arising from culpa in contrahendo, breach of contract, or obligations to restitute unjust enrichment after a contract had been avoided (bereicherungsrechtliche Ansprüche). [Buyer]'s claim for restitution of its advance payment due to avoidance of the contract brought under § 1435 of the Austrian Code of Civil Law (Allgemeines Bürgerliches Gesetzbuch; ABGB), according to the Court of First Appeal, would not fall under the provision defining the place of performance in [Buyer]'s standard terms. Hence, the place of performance was governed by Art. 5 No.1 LGVÜ. This provision, according to the Court, refers to the performance which is the actual object of [Buyer]'s claim, i.e., the claimed restitution of the advance payment. The place for this performance was then to be defined by the applicable national law, as selected by the conflict of law rules of the forum. § 36 of the Austrian Statute regulating the Conflict of Private Laws (Gesetz über das internationale Privatrecht; IPRG) pointed to the Swiss Law of Obligations (Schweizer Obligationenrecht) as the law to define the place of performance regarding obligations stemming from the contract between the parties. Under Art. 74(2) of the Swiss Law of Obligations (Schweizer Obligationenrecht) payment was due at the place of the creditor's - i.e. [Buyer]'s - domicile at the time when performance had been due. Hence, the Appellate Court concluded that the District Court (Landesgericht) of Wels as the venue of [Buyer]'s domicile had jurisdiction on the case. As [Buyer]'s standard terms had not been validly incorporated, § 905 of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch; ABGB), determining the place of performance as regards payments to be the place of the debtor's domicile if not agreed otherwise, was not applicable.
The Court of First Appeal did not allow further appeal against its decision, as the case did not touch upon legal issues of fundamental significance that would go beyond the particular claim at issue.
[JUDGMENT BY THE AUSTRIAN FEDERAL SUPREME COURT]
[Seller]'s appeal (Revision) is admissible. The definition of the place of performance by Art. 5(1) LGVÜ for restitution as concerns restitution of payments due to avoidance of the contract constitutes a legal point of fundamental significance which has not yet been subject to Supreme Court jurisdiction. However, the appeal is not justified.
The Court of First Instance correctly found that the LGVÜ is applicable to the case. It rightfully concluded that the mere posting of [Buyer]'s standard terms could not be regarded as a binding agreement prorogating jurisdiction under Art. 17(1) LGVÜ. Consequently, the provisions stipulating that the contract was to be governed by Austrian law and defining the place of performance to be Wels, are not applicable either. Within the current proceedings, [Buyer] itself is not insisting on the hitherto presumed incorporation of its standard terms any more. Contrary to all of these presuppositions, it must be inferred that in the actual contract between the parties, Amsterdam had been agreed to be the place of performance.
According to Art. 5 No.1 LGVÜ, a person domiciled in a Member State of this convention may be sued in matters relating to a contract in the courts for the place of performance of the obligation in question. In an earlier decision, this Court reasoned that this provision also embraced claims for restitution due to avoidance of contract:
"Art. 5 No. 1 LGVÜ aims to establish one single venue of jurisdiction - the venue of the place of performance - to deal with all closely related issues that may occur from a contract (see Kropholler, Europäisches Zivilprozeßrecht, Art. 5 note 5). This provision applies in cases when the place of performance has been stipulated by agreement of the parties or when it is defined by the substantive law governing the contract (see ruling 4 Ob 212/97a). Art. 5 No.1 LGVÜ not only refers to primary obligations, such as delivery of goods, acceptance or payment, but also to secondary obligations that may arise from breach of contract or its avoidance, irrespective of whether the latter have been constituted by agreement or by the applicable substantive law (Kropholler, ibidem, Art. 5 note 9 with further reference to jurisdiction of the European Court of Justice (Europäischer Gerichtshof; EuGH) on the LGVÜ).
"The relevant obligation, Art. 5 No.1 LGVÜ refers to, is the one which is the object of the actual claim brought before the court (Kropholler, ibidem, Art. 5 note 12 with further references). If the claimant sues for damages or avoidance of the contract due to presupposed shortcomings by the other party, Art. 5 No.1 LGVÜ refers to that obligation whose presumed non-compliance on side of defendant gives reason for the claim (Kropholler, ibidem). As regards declaratory or injunctive claims, one must distinguish between claims that are based on the obligation of a distinctive performance, respectively, the mal-compliance or non-compliance of one party with such an obligation, and those claims that presuppose the existence or non-existence of the contract as a whole. In the first case, Art. 5 No. 1 LGVÜ refers to that particular obligation at issue to define the place of performance, in the latter case, every place where performance of a primary obligation arising from the contract is due constitutes a venue of jurisdiction under Art. 5 No.1 LGVÜ (Kropholler, ibidem, Art. 5 note15).
"As the claim at issue seeks restitution for avoidance of the contract due to lack of consent, the validity of the contract as a whole is only relevant as a preliminary matter to this claim. Hence, Art. 5 No.1 LGVÜ resorts to the place where performance of the restitution is due as the venue for the case." (translation of the German original.)
As in the cited ruling, the claim brought before the Court aims for restitution of payments made due to avoidance of the contract. The object of the claim at issue is not the validity of the contract as a whole, but rather the specific obligation to restitute payments. Consequently, it is this obligation to effect performance that Art. 5 No. 1 LGVÜ resorts to. The place of performance of primary obligations, such as payment of the purchase price which had presumably been agreed to be due in Amsterdam, respectively, the handing over of the goods to be carried "free from Zagreb", is therefore irrelevant. The fact that in the case at issue the avoidance of contract did not result from lack of consent but was freely agreed by both parties has no effect on this conclusion.
The place where the thus identified specific performance of restitution is due, as defined by the substantive law to govern the contract, has been selected by the Conflict of Laws rules of the forum (Kropholler, ibidem, Art. 5 note 16, with further references; also ruling 7 Ob 375/97s).
[Seller] in its appeal correctly argues that the CISG has been adopted by both Austrian and Swiss law. However, the relevant provision in Art. 57 CISG in its natural wording only refers to the performance to pay the purchase price, but not to the restitution for already made payments, which is at issue here. Hence, the definition of the place of performance given in Art. 57 CISG does not apply. The place of performance as regards the obligation relevant to the claim at issue is determined by the provision of national law, constituting the obligation to restitution (Honsell, Commentary on the CISG (Kommentar zum UN-Kaufrecht), Art. 57 note 30).
The claim at issue concerns restitution of payments made due to avoidance of the contract. According to § 46(2) of the Austrian Statute regulating the Conflict of Private Laws (Gesetz über das internationale Privatrecht; IPRG) as the Conflict of law provision of the forum, claims for restitution due to avoidance of contract are governed by the national law, which is applicable to the contract itself (see Schwimann, in: Rummel II, § 46 note 2b). As the applicable CISG does not provide for restitutionary matters of the kind at issue, the claim is governed by Swiss law, which - as the Court of First Appeal correctly drew from § 36 of the Austrian Statute regulating the Conflict of Private Laws (Gesetz über das internationale Privatrecht; IPRG) - is the law that governs the contract as a whole (JBl 1989, page 519; EvBl 1991 page 57). Hence the place of performance is defined by the Swiss law of Obligations (Schweizer Obligationenrecht). According to Art. 74 of the Swiss Law of Obligations (Schweizer Obligationenrecht), obligations to make payment of any kind are due at the place of the creditor's domicile, respectively, place of business, if not agreed otherwise. The provision diverges from Austrian law, which states performance to be due at the place of the debtor's domicile (see Koziol-Welser I page 227 et seq.). As [Buyer]'s place of business is Wels, Austria, the District Court of Wels is the proper venue to try the case. [Seller]'s appeal against this conclusion of the Appellate Court therefore is unjustified.
As regards the costs for the second appeal (Revision) the decision relies on § 41 and § 50 of the Austrian Code of Civil Procedure (Zivilprozeßordnung; ZPO).
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellee, seated in Austria, is referred to as [Buyer], the Swiss Defendant-Appellant is referred to as [Seller].
** Veit Konrad has studied law at Humboldt University, Berlin since 1999. During 2001-2002 he spent a year at Queen Mary College, University of London, as an Erasmus student.
*** Jan Henning Berg is a law student at the University of Osnabrück, Germany, who participated in the 13th Willem C. Vis Moot with the Osnabrück team. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis and the 4th Willem Vis (East) Moot.Go to Case Table of Contents