Case text (English translation)
Queen Mary Case Translation Programme
Supreme Court (Corte Suprema di Cassazione)
7 August 1998
AMC di Ariotti e Giacomini S.n.c. v. Zimm & Söhne GmbH
Translation [*] by Alessia Oddone [**]
Translation edited by Angela Maria Romito [***]
I. PROCEDURAL HISTORY AND PLEADINGS OF THE PARTIES
On 29 November 1990, the plaintiff, [seller], with registered office in Rodigo (Mantova) [Italy], declared in his writ of summons that he had sold to [buyer], manufacturer of stockings and knitwear Hidenreichstein, with registered office in Vienna Salztorgasse 2 [Austria], an amount of women's stockings recognized in 71 invoices (exhibited) for the total price of [Italian Lira] It£ 3,723,491,160. [Seller] added that the buyer had paid installments for the total amount of It£ 3,110,710,080 - while all the cheques drawn to cover the unpaid balance had been dishonored, so that the buyer was still in debt of It£ 612,781,080.
[Seller's position]
[Seller] contended that the District Court of Mantova had jurisdiction to hear the case (pursuant to Article 5 n. 3 of the Convention of 16 November 1971 between Italy and Austria, ratified by Law 12 February 1974 n. 71), since the dispute concerned an obligation (payment of invoices) which was to be performed in Italy, at the creditor's domicile. [Seller] therefore sued [buyer] before the District Court of Mantova and requested that [buyer] be ordered to pay It£ 612,781,080 plus interest, currency devaluation and costs.
[Buyer's position]
[Buyer], having her registered office in Vienna, challenged the jurisdiction affirmed by the [seller], setting out that:
a) [Buyer] was an Austrian company with registered office in Vienna;
b) The contracts of sale had been concluded in Austria;
c) All the contract sums had been paid in Austria, since the cheques were payable there;
d) [Buyer] did not have an agent in Italy capable of acting in her behalf in judicial
proceedings pursuant to Article 77 of the Italian Code of Civil Procedure.
[Buyer] contended that the Convention of 1971 between Italy and Austria was not applicable to the present case, since it governed so-called international indirect jurisdiction only, i.e., it provided the criteria under which a decision made in one State could be recognized in the other State pursuant to Article 1 of the Convention; on the contrary, the jurisdiction of the Italian court was governed by the Italian procedural rules (Article 4 of the Code of Civil Procedure), and the parties did not enter into any agreement to perform the contractual obligation in dispute in Italy but, by contrast, determined Austria as the place for payment of the contract price.
As regards the merits of the case, [buyer] contended that, from 1987 onwards, she had a business relationship with the company GI & MA S.r.l. of Orsenigo (Como) [Italy], whose legal representative and director was Mr. Renato Bagnoli, and from whom [buyer] had bought significant amounts of stockings for several years, until the spring of 1989 when the company from Como, through Mr Bagnoli, had informed [buyer] that [seller] a company of Rovigo would supply [buyer] with some lots of goods, for which the [seller] would have invoiced [buyer] directly.
However, [buyer] added that a direct relationship with [seller] had never been established, since Mr. Bagnoli had declared to act on behalf of [seller], having been authorized by [seller]; and, in any case, the business relationship had always been conducted by Mr. Bagnoli and the [seller] had never objected to this practice. After March 1989, it occurred sometimes that some invoices had been issued for prices higher than agreed, but Mr. Bagnoli, informed of the circumstance, had explained that the differences in price were due to [seller]'s "business reasons" (relating to currency, taxation or other reasons) and that the only binding prices were those verbally agreed, in relation to which he had effected the necessary correction.
[Buyer] also argued that:
| - | [Buyer] wrote to [seller] to confirm that she had paid GI & MA (Mr. Bagnoli) for all the goods ordered from GI & MA and that the contractual party had been GI & MA and, also in the future, would remain GI & MA, with whom [seller] had to adjust the credit and debit balances; |
| - | Mr. Bagnoli used to visit [buyer] in Vienna almost every week, to confirm the orders and collect the cheques drawn by [buyer]; |
| - | Only in one occasion, regarding a business transaction in the USSR, a direct relationship between [buyer] and [seller] had been established, but also in that occasion Austria had been identified as the place for payment of the price, by means of a cheque; |
| - | Mr. Bagnoli had often asked for and received installments, so that [buyer] could not be held liable for sums that Mr. Bagnoli, as agent, allegedly had not paid to [seller]; |
| - | As regards the invoices, some had been brought to Vienna by Mr. Bagnoli, some others had been sent by fax and, finally, a few had been sent directly to [buyer] by [seller]; |
| - | Together with Mr. Bagnoli, [buyer] had adjusted the differences in the invoices with both the contract prices and the market prices, with no objection by [seller], who never complained about the price reduction in relation to the invoices; |
| - | The sums claimed by [seller] did not match the accounts of the [buyer]; |
| - | In conclusion, [buyer] had no reason to doubt that [seller] had agreed upon the method on which the deals had been carried out: all deals were concluded in Vienna, where most of the invoices had been paid by cheques payable in local currency, so that Austria had also been the place of payment of the price agreed between the parties; |
| - | In any case, [buyer] believed that the dispute also concerned GI & MA and/or Mr. Bagnoli and thus [buyer] made an application for them to be joined in the proceedings, in order to claim an indemnity from them for any sum that [buyer] might be ordered to pay to the [seller]. |
After some procedural steps (proceedings were consolidated and struck out), irrelevant to the pending case, [seller] applied to the Supreme Court for a decision on the issue of jurisdiction ([seller] filed a "ricorso per regolamento di giurisdizione"), requiring the Supreme Court to declare the jurisdiction of the Italian courts to hear the case.
[Seller's position on the issue of jurisdiction]
[Seller] supported his request with the following arguments:
a) The documentation exhibited (invoices and copies of cheques);
b) The submission that the drawing of cheques to pay goods did not have any effect on the "forum destinatae solutionis";
c) The rules in Articles 1182 and 1498 of the Civil Code and the provision in Article 4 n. 2 of the Code of Civil Procedure;
d) The principle whereby the jurisdiction of the court seized is to be determined on the basis of the claim, irrespective of any enquiry as to the soundness of the arguments supporting the claim;
e) The applicability to the dispute of the Convention of 1971 between Italy and Austria. In its application, [seller] alleges that Mr. Bagnoli would have been prosecuted in Vienna and a warrant of arrest would have been issued against him.
[Buyer's position on the issue of jurisdiction]
[Buyer] reaffirms in her pleading the circumstances set out in her plea and requests the rejection of the application made by [seller] on the following grounds:
1) Vienna would have been, on the one hand, the place where the contract between [buyer] and Mr. Bagnoli (as agent of [seller]) was entered into and, on the other hand, "the forum destinatae solutionis" (this circumstance, after all, was "not even disputed by the opposing party", page 6 of the pleading);
2) The Convention of 16 November 1971 between Italy and Austria could be applied only if [seller] won the dispute and then wished to enforce in Austria the decision made by the District Court of Mantova;
3) The case at stake should be decided on the basis of Law 31 May 1995 n. 218, referring to the Brussels Convention and the jurisdiction rules set out in Articles 2, 3 and 4 thereof;
4) Article 1498 or, alternatively, Article 1182(3) of the Civil Code should not apply, since the dispute concerns international sale, regulated by the Vienna Convention of 11 April 1980 on Contracts for the International Sale of Goods (hereinafter CISG);
5) The parties would have established at least a practice, featuring the situation described in Article 57 CISG;
6) The issue in dispute, after all, would not be the default of payment of one invoice or another, but whether Mr. Bagnoli had power to represent [seller].
[Seller] submitted a pleading pursuant to Article 378 of the Code of Civil Procedure.
[Buyer] submitted a pleading pursuant to Article 79 of the Code of Civil Procedure.
II. SUPREME COURT'S REASONING
The Italian courts have jurisdiction.
The dispute concerns contracts of sale, i.e., supplies of women's stockings that the Italian company declares to have supplied to the Austrian company in the period between March 1989 and July 1990. More precisely, the obligation in dispute is the payment of the balance for those supplies, to which [seller] asserts he is entitled, while [buyer] denies any obligation, offering a different description of the relationship between the parties.
In this respect, however, the Supreme Court does not agree with [buyer]'s submission according to which the real issue in dispute would not be the default of payment of one invoice or another, but whether Mr. Bagnoli had power to represent [seller]. This is, of course, an important issue of this dispute but it pertains to its merits, since it concerns the determination of the precise course of the contractual relationships, and has consequences on whether or not the claim has grounds. However, for the purposes of the investigation on the jurisdiction, what is relevant is that the action aims at obtaining the performance of an obligation (or, better, of several obligations) of payment, deriving from a contract, as it unequivocally emerges from the grounds and the claim set forth in the writ of summons.
Setting aside the aforementioned - and being understood that it is not discussed now whether or not the claim has grounds, and also that the decision made by the Supreme Court in these proceedings concerning jurisdiction is capable of producing res judicata effect only in respect of the jurisdiction issue, to the exclusion of any aspect relating to the merits of the claim (Cass. [*] 6 March 1998, n. 2526) - the question, which concerns the subject of international sale, is whether there is a connecting criterion capable of establishing the jurisdiction of the seized court (District Court of Mantova).
For this purpose, it is advisable to start by saying that, in the absence of undisputed facts emerging from the pleadings, the jurisdiction must be established with reference to the facts as described by the Plaintiff-[seller], while the objections put forward by the Defendant-[buyer] in respect of such facts might determine the rejection of the claim, if such objections have grounds, but do not have any influence on the determination of the jurisdiction of the seized court (see, in this respect, Cass. [*] 29 November 1996, n. 10698; Sez. Un., 13 June 1996, n. 5440; 11 February 1982, n. 837; 16 March 1978, n. 1323).
Setting aside the aforementioned, this Court does not agree with [seller] as to the applicability of the Italy-Austria Bilateral Convention of 16 November 1971, ratified in Italy by Law 12 February 1974, n. 71. This Convention concerns the recognition and enforcement of judgments in civil and commercial matters, judicial settlements and documents issued by public notaries, and, for the purpose of the recognition of such judgments, provides a number of jurisdiction criteria, among them Article 5 n. 3. The norm expressly states that if the dispute concerns a contractual obligation, such obligation, by virtue of the express or implied agreement of the parties, has to be performed in the territory of the country where the decision is made. This provision, therefore, concerns the exequatur of the decision, while in the case at issue this Court is required to ascertain the existence of a criterion capable of conferring on the seized court the power to decide the dispute.
On the other hand, Law 31 May 1995 n. 218 is not applicable either, because such law - pursuant to Article 72(1) thereof - applies only to proceedings commenced after the date of its entry into force (1 September 1995: see Article 74 of the same Law), while these pending proceedings started in November 1990. The proceedings mentioned in Article 72(1) of Law n. 218 of 1995, indeed are the proceedings commenced with the writ of summons and not with the application concerning the jurisdiction ("regolamento di giurisdizione"), the latter being a procedure (not amounting to an appeal) which requires for its existence that other proceedings are already pending; it has the sole purpose of determining a decision by this Court on any of the jurisdiction issues set out in Article 37 of the Code of Civil Procedure.
In any case, Article 8 of Law n. 218 of 1995 provides that, in order to determine the jurisdiction of the Italian courts, Article 5 of the Code of Civil Procedure is applicable; pursuant to it (according to the text replaced by Article 2 of Law 26 November 1990, n. 353, applicable to the proceedings pending as at 1 January 1993, pursuant to Article 90 thereof), jurisdiction and competence are to be determined with reference to the law in force and to the facts existing when the claim is brought and any subsequent change of the law or the facts is irrelevant.
Since the dispute concerns international sales, the connecting factor, instead, is to be found in the United Nations Convention on Contracts for the International Sale of Goods, adopted in Vienna on 11 April 1980, ratified and executed in Italy by Law 11 December 1985 n. 765, ratified in Austria on 29 December 1987, in force as from 1 January 1988 and therefore in force at the time when the obligations in dispute took place (1989-1990). Moreover, the CISG is mentioned by [buyer] herself (see page 10 of the pleading and, in more detail, the submission pursuant to Article 379 of the Code of Civil Procedure).
Pursuant to Article 57(1) (a) and (b) CISG, if the buyer is not bound to pay the price at any other particular place, she must pay it to the other party at the seller's place of business or, if the payment is to be made against the handing over of the goods or of the documents, he must pay at the place where the handing over takes place.
The meaning of this provision is clear enough: it sets out a general rule whereby the buyer has to pay the seller at the place of business of the latter; the buyer, however, may be obliged to pay the price "at any other particular place", but the existence of such an obligation must obviously descend from a certain source; if, finally, payment is to be made against the handing over of the goods or the documents, the place of payment coincides with the place where the handing over takes place.
In the light of this provision, [buyer]'s argument is that the payment for the supplies, and therefore the performance of the related obligations, should have taken place in Austria; and effectively (the payment) did take place there, through Mr. Bagnoli, acting as agent in the name of and on behalf of the company from Mantova, with no objection by [seller], so that an agreement in this sense would have been concluded or, at least, a practice, divergent in respect of the place of payment, would have been established, featuring the case described in Article 57 CISG.
The Supreme Court does not agree with this argument.
As already recalled, Article 57(1) CISG indicates as place of performance of the obligation to pay the price the seller's place of business (in this case, AMC). This principle is applicable "if the buyer is not bound to pay the price at any other particular place". The wording of the provision clearly indicates that the buyer must be "bound" to pay at a different place, which is to say, obliged (the word is repeated in the subsequent Article 58 CISG), by virtue of a title that may be legal or contractual but cannot consist of a mere practice; the practice may simply be the consequence of a mere tolerance by the seller and, as such, incapable of establishing a place of performance different from the legal one.
In the case at stake, however, contrary to [buyer]'s assertion, the existence of an agreement regarding the payment to be performed in Austria, the role of Mr. Bagnoli, the modes of payment, are all disputed circumstances. In this respect, it is sufficient to note that, according to [seller], the payment of the supplies should not have been made against the handing over of the goods, but rather by remittances within the terms fixed in each invoice, and therefore at the creditor's domicile; the existence of the agreement is still disputed by [seller] in his pleading pursuant to Article 378, in which it is asserted that Mr. Bagnoli would have acted as agent of [buyer] rather than [seller].
Therefore, in the absence of undisputed facts capable of justifying a derogation from the legal rule regarding the place of performance, such place (for the purpose of jurisdiction and by virtue of the principles recalled above) must be determined on the ground of the general rule set out in Article 57(1) CISG, namely at the seller's place of business which, in the case at issue, is Italy.
It follows that in respect of this dispute the jurisdiction of the Italian courts to hear the claim against the [buyer], a foreign defendant company, exists, pursuant to Article 4, n. 2, of the Italian Code of Civil Procedure, in force at the time when the action was commenced (and applicable to this dispute pursuant to Article 5 of the Italian Code of Civil Procedure), whereby a foreign defendant can be sued before an Italian court if the claim concerns, inter alia, obligations to be performed in Italy. The Supreme Court holds that it is fair and equitable that each party bears its own costs in the proceedings before the Supreme Court.
III. SUPREME COURT'S DECISION
For these reasons, the Supreme Court, at "sezioni unite" (judging in its plenary composition), declares the jurisdiction of the Italian courts and holds that each party should bear its own costs.
Decision made in Rome, on 30 April 1998, in the "camera di consiglio" of the "sezioni unite civili" of the Supreme Court.
FOOTNOTES
* All translations should be verified by cross-checking against the original text. For purposes of this translation, AMC di Ariotti e Giacomini S.n.c., Plaintiff of Italy, is
referred to as [seller]; Zimm & Söhne GmbH, Defendant of Austria, is referred to as
[buyer]. Amounts in the currency of Italy (Italian Lira) are indicated as [It£].
Note on abbreviations: CASS. = Corte Suprema di Cassazione [Supreme Court of Italy].
** Alessia Oddone, LL.M. (University of London), Lawyer (Genova Bar) currently working in the UK. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.
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