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CISG CASE PRESENTATION

Slovenia 8 April 1998 Supreme Court (Caprolactum case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980408sv.html]

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

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Case identification

DATE OF DECISION: 19980408 (8 April 1998)

JURISDICTION: Slovenia

TRIBUNAL: Supreme Court of the Republic of Slovenia

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: III Ips 60/96

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Liechtenstein (plaintiff)

BUYER'S COUNTRY: Slovenia (defendant)

GOODS INVOLVED: Caprolactum


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 4

Classification of issues using UNCITRAL classification code numbers:

4B [Scope of Convention (issues excluded): usury]

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 abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Slovene): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Supreme Court of the Republic of Slovenia

8 April 1998 [III Ips 60/96]

Translation [*] by Sandra Kajtazovi [**]

OPERATIVE PART OF THE JUDGMENT

The [Buyer]'s appeal is rejected as unfounded.

REASONING OF THE SUPREME COURT

The Court of Second Instance (hereinafter "CSI") rejected the [Buyer]'s appeal and confirmed the judgment of the Court of First Instance (hereinafter "CFI"), according to which the [Buyer] is liable to pay the [Seller] 439,200.00 DM with 6% default interest (point 1 of the operative part of the judgment) and has to reimburse the [Seller] 910,400.00 SIT for the costs of litigation with legal default interest (point 3 of the operative part of the judgment).

The [Buyer] lodged an appeal against the judgment of the CSI on the basis of grounds for appeal recited in Article 385, paragraph 1 of the Slovenian Civil Procedure Act (hereinafter "ZPP"). [Buyer] proposes that the Supreme Court repeal the decisions of the CSI and the CFI, to return the matter to the CFI for a new trial and to recover all the costs of litigation.

The public prosecutor of the Republic of Slovenia did not make a declaration as to the appeal and the [Seller] did not answer it.

The appeal is unfounded.

This case concerns a sales contract dated October 1991, according to which the [Seller] supplied the [Buyer] with 1,500 tons of caprolactam at a price of 3.05 DM per kilogram. The [Buyer]'s challenges of the ruling of the CSI and the CFI according to which the [Buyer] owes the [Seller] the amount the [Seller] claimed. [Buyer] alleges that:

   -    The [Buyer]'s offer -- its fax from 11 October 1991, on which the judgment against [Buyer] is primarily based -- is not a credible document; and
 
   -    "The court should have conducted a hearing by proposed witnesses."

The court held that a review of this issue would fall beyond the permissible limits set forth in Article 385 ZPP, since an appellate court may not review the determined facts of the case.

The appeal alleges a significant violation of the provisions of the ZPP in the fact that both courts, the CSI and the CFI, failed to state in their judgments, which substantive law they applied when ruling on the present dispute with an international element.

It is true that the CSI and the CFI failed to state which substantive law should be used, however, the CFI did state [in its judgment] that it had "followed the position of the [Buyer] to the application of foreign law" and the CSI reaffirmed the standing of the CFI as to the application of a foreign substantive law, although it rejected the [Buyer]'s claims of usury with regard to the abovementioned sails contract by relying on Article 141 of the Slovenian Obligations Act (hereinafter "ZOR").

Notwithstanding the fact that the courts failed to specifically state the foreign law that should have been applied in the case, this does not amount to a substantial violation of the provisions of the procedure in terms of Article 354 of the ZPP. According to Article 338, paragraph 4 of the ZPP, the court states in its judgment the provisions on which it bases its decision. Regardless of that, the courts did not substantially violate the formal law, namely, Article 354, paragraph 1 of the ZPP, which is the only potentially applicable provision in this case, as the failure to state the substantive rule on which the courts based their decisions did not have an effect on the accuracy of both decisions.

The relationship is one with an international element, since the [Seller] is a foreign artificial person. It is therefore necessary to establish the applicable law by using the provisions of the Law on the Organization of Conflict of Laws with the Regulations of other countries in certain relations (Official Gazette of SFRY, no. 43/82). In accordance with Article 3 of this Act the United Nations Convention on Contracts for the International Sale of Goods would be applicable (published in the International Treaties No. 10 / 1, 31 December 1984, hereinafter "CISG"). However, according to Article 4(a) of the CISG, the CISG does not deal with the validity of contracts. The parties themselves failed to determine the law applicable to the contract, thus Article 20, point 1 of the above stated Law must be applied. According to that provision, the law applicable to the contracts of movables is that of the seat or residence of a seller in time of its receipt of an offer. In the case at hand, that is the law of the [Seller], namely the Commercial law of the Principality of Liechtenstein (which according to Article 25 also applies to accessory obligations of the main agreement).

In accordance with Article 13, paragraph 2 in respect to Article 13, paragraph 1 of the cited Law, the court acquired the law of the Principality of Liechtenstein it required. According to Article 1 of the General Commercial Code of Germany (hereinafter "ODZ") of 1861, which is used in Liechtenstein as their commercial statute, in commercial matters civil law provisions are used unless this law provides differently. Thus, in relation to usury paragraph 879, point 4 of the ODZ must be used according to which the contract is null and void if "a person exploits frivolity, distress, weak-mindedness or inexperience of another by having himself or a third person promised or given a duty of a substantially higher value than that of their own consideration".

It is clear from the above stated definition of usury in the ODZ that the defining essential elements (subjective and objective) are the same as those in Article 141 of the ZOR. In view of that conclusion, the CSI was correct in ruling that the conditions for usury are not met in the present case.

Regarding the rate of interest, the CSI and the CFI were correct in awarding the [Seller] 6% interest on the capital, as according to paragraph 292 of the cited commercial law the common interest rate in commercial transactions is 6% (in case of an agreement between parties an interest rate may be higher).

With regard to the state of things, the CSI and the CFI did not violate any formal or material law. The court also checked ex officio if there were any violations of Article 386 of the ZPP and found that no such violations occurred, therefore the appeal of the [Buyer] had to be rejected as unfounded.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation Plaintiff-Appellee of Liechtenstein is referred to as [Seller] and Defendant-Appellant of Slovenia is referred to as [Buyer]. The former German currency (Deutsche Mark) is indicated as [DM]; the former currency of Slovenia (tolar) is indicated as [SIT].

** Sandra Kajtazovi, B.A. in Law.

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