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CISG CASE PRESENTATION

Switzerland 8 April 1999 Commercial Court Zürich (Windmill drives case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990408s1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19990408 (8 April 1999)

JURISDICTION: Switzerland

TRIBUNAL: HG Zürich [HG = Handelsgericht = Commercial Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: HG 980280.1

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Windmill drives


Case abstract

SWITZERLAND: Handelsgericht des Kantons Zürich 8 April 1999

Case law on UNCITRAL texts (CLOUT) abstract no. 325

Reproduced with permission from UNCITRAL

A Swiss buyer, defendant, bought windmill drives from a German seller, plaintiff, for exclusive distribution. When the buyer failed to pay the outstanding purchase price, the seller sued it. The buyer challenged the jurisdiction of the court.

The court found that under article 5(1) of the European Communities Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters, jurisdiction is based on the place of performance of the obligation at issue, which, in this case, had to be established by applying the CISG. The court held that distributorship agreements are framework agreements, and that the individual sales agreements entered into under the umbrella of the distributorship agreement, fall within the scope of the CISG.

The court rejected the buyer's argument that the CISG was not applicable in the present case because the main contractual obligation of the seller had been the provision of services. The court noted that neither the parties' agreement nor the seller's invoices for the individual deliveries contained stipulations regarding the supply of services. The court noted that the sales agreements could not be classified as service agreements solely because the engineering costs for the development of the drives were higher than the value of the raw and semi-manufactured materials used. Consequently, the fact that the value of the drives was much higher than the price of the materials used for their production, did not preclude the application of the CISG. The court determined that only in the event that the buyer supplies materials necessary for the manufacture of goods which are higher in value than the materials supplied by the seller, would the CISG not be applicable (article 3(1) 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 3 ; 4 ; 9 ; 57(1)(a) [Also cited: Article 31 ]

Classification of issues using UNCITRAL classification code numbers:

3B [Exclusions from Convention: services preponderant part of obligation (Court held fact that engineering costs for development of the goods were higher than the materials used did not preclude application of the Convention];

4A ; 4B [Scope of Convention: issues covered; Issues excluded (Court held that individual sales agreements entered under the umbrella of distributorship agreement fall within scope of Convention.)];

9C [Practices established by the parties];

57A [Place for payment: in absence of agreement, payment at seller's place of business]

Descriptors: Scope of Convention ; Distributorship agreements ; Services ; Payment, place of ; Usages and practices

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Editorial remarks

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.[442] Past practices between the parties in prior transactions are not sufficient to overcome this requirement.[443] 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 [page 374] absence of an express intent by the parties.[444] Finally, usage of the trade in question also fails to constitute a forum selection agreement in most circumstances.[445] 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.[446]"

442. See Silver Int'l v. Pochon Tissage, S.A., Rechtbank van Koophandel, Kortrjik, A.R 651/97, Jun. 27, 1997, supra note 344; See also, OLG München 7 U 2246/97, July 9, 1997 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/970709g2.html>.

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.)[this case]; Zivilgericht Kanton Basel-Stadt, P4 1996/00448, Dec. 3, 1997 (Switz.), available at <http://cisgw3.law.pace.edu/cases/971203s2.html>.

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.

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Citations to other abstracts, texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=410&step=Abstract>

German: [2000] Schweizerische Zeitschrift für internationales und europäisches Recht 113-114

CITATIONS TO TEXT OF DECISION

Original language (German): Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=410&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 2 para. 3

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Case text (English translation)

Queen Mary case translation programme

Commercial Court (Handelsgericht) Zürich
8 April 1999 [HG 980280.1]

Translation [*] by Martin Bürkle [**]

Translation edited by Camilla Baasch Andersen [***]

The court considers:

I. [Background]

By notice of 23 June 1998 the [seller] initiated legal proceedings. Upon receipt of the Statement of Claim of 31 August 1998, the [buyer] only addressed certain aspects in its Defense of 25 January 1999 and requested to dismiss the claim due to lack of territorial jurisdiction of the court, with costs and reimbursement entered against the [seller]. The [seller] replied to the defense of lack of jurisdiction of the court on 10 March 1999 and filed the following applications:

     1.    The action shall be examined and the [buyer] shall be given a time limit to file a Statement of Defense.
 
     2.    The present proceedings shall be joined with the proceedings HG990021 between IDW Ltd as Plaintiff and Inte PLC and Dr Alexander ... as Defendants.

II. [Facts and positions of the parties]

      1. On 20 February 1997 the [seller] reached an agreement with "ho" for a cooperation and the formation of a company. Therein, on the one hand, the parties to the contract agreed to found a company (the [buyer]) in Germany on 1 March 1997. On the other hand, the parties made certain arrangements in the range of sales promotion and distribution.

Integral drive division:
IDW Ltd buys from ID Switzerland the ... drives for the manufacturing costs incurred in the plant. The sales price conforms to the German price list for wholesalers of 23 December 1996 and the valid price list at each time. The difference between manufacturing costs and sales price would be divided at a ratio of 60 to 40 (i.e., 60% to A. ..., 40% to F. ho).

Windmill division
1) Pitch drives:
IDW Ltd exclusively distributes pitch drives for the windmill manufacturer market (except TACKE and ENERCON). ID Switzerland delivers the pitch drives to IDW Ltd for manufacturing costs. The allocation of the realised profit occurs at a ratio of 70% to A. ..., 30% to F. ho.

2) Main drives for windmills:
The same conditions are valid as for pitch drives but the allocation of profits is 60% to A. ..., 40% to F. ho.

      2. [Seller's position]

With the present claim, the [seller] requests the purchase price for the prototypes and the integral drives ordered but only partially paid by the [buyer]. In addition, it requests the declaration by judgment that, according to the agreement of 20 February 1997, the [buyer] has no exclusive right to distribution and that the agreement of 20 February 1997 was annulled at the latest on 31 July 1998. With regard to the action to enforce the claim, the territorial jurisdiction of the Commercial Court of the Canton Zürich results from article 13 of the general conditions of delivery. The [seller] claims that the parties several times orally referred to the general conditions of delivery during the negotiations of the contract. Apart from that, the acknowledgements of order signed by both parties contain an explicit reference to the general conditions of delivery. Consequently, the jurisdictional clause contained in the general conditions of delivery corresponds to the form requirements laid down in article 17 of the Lugano Convention [*]. Furthermore - especially in terms of the declaratory action - the [seller] appeals, according to article 5(1) Lugano Convention, to the jurisdiction at the place of performance. Thereby, it acts on the assumption that the CISG [*] is applicable which provides the [seller]'s place of business as the place of performance for the [buyer]'s obligation to pay. The declaration of a simple address to pay on invoices does not lead to an alteration of the legal place of performance.

     3. [Buyer's position]

a) The [buyer] denies the existence of a of choice-of-forum agreement. The agreement of 20 February 1997 obviously does not contain such a clause. A jurisdictional clause comes into question only on one of four deliveries. From the acknowledgement of order of 28 November 1997, signed by the [buyer], the [seller] could not claim that the [buyer] had automatically accepted the legal status and the jurisdictional clause contained in the general conditions of delivery. Neither were the general conditions of delivery under consideration in the forefront of the delivery according to the acknowledgement of order of 28 November 1997, nor were they added to this acknowledgement of order so that the [buyer] had effectively received them. Apart from that, the hint to the [seller]'s general conditions of delivery on the second page of the acknowledgement of order was inserted in fine print and below the signatures of both the [seller] and the [buyer]. Additionally, the jurisdictional clause in the general conditions of delivery was not optically accentuated.

b) Furthermore, the [buyer] acts on the assumption that the parties agreed on a place of performance in Germany because in the invoices of 12 November 1997 and 16 February 1998, the [seller] listed a bank account in Germany as the address to pay and the [buyer] subsequently transferred payments to this account in Germany. If there is no agreed place of performance, the legal place of performance must be determined according to German law because the individual deliveries must not be treated different from the agreement of 20 February 1997. The predominant part of the [seller]'s duties was not the delivery of objects but the provision of services and accordingly, the BGB [*] and not the CISG is applicable. The former considers pecuniary debts as consignment debts. Due to the [buyer]'s German place of business, this leads to a place of performance in Germany. Additionally, there were no places of performance in Switzerland concerning the agreement of 20 February 1997 itself. Therefore, the Commercial Court of the Canton Zürich has no jurisdiction for the judgment of the declaratory actions as well.

III. [Reasoning of the court]

     1. If a contract or claims under a contract are the object of the procedure, a person, domiciled in the sovereign territory of a Contracting State, can be sued at the court where the obligation was fulfilled or has to be fulfilled (article 5(1) Lugano Convention [*]). According to article 17 of the Lugano Convention, the parties can make an agreement about the jurisdiction with the effect that the agreed court has exclusive jurisdiction. In accordance therewith, the Commercial Court of the Canton Zürich has to declare its territorial jurisdiction concerning the action to enforce a claim if the claim itself occurs in Switzerland or the parties have made a prorogation of jurisdiction in favor of the Zürich courts.

      2. a) Sales promotion contracts, sole distributors contracts, trader contracts and contracts similar thereto must be qualified as framework agreements. The individual deliveries, concluded in the fulfillment of the framework agreement, are contracts of sale. In case of delivery from the current production there are contracts for work done and materials supplied (Honsell, OR [*]/BT, 4th ed., p. 368 et seq., OR-Schluep/Amstutz, n.135 and n. 140 et seq. of the introduction of article 184 et seq. OR). As such contracts they fall within the scope of application of the CISG (Honsell/Siehr, Kommentar zum UN-Kaufrecht, 1997, article 2 n. 7 and article 3 n. 3.)

b) The [buyer]'s defense that in the delivery of the prototypes and the integral drives the predominant part of the [seller]'s duties is the provision of services and therefore the CISG is not applicable is not correct. The contracts for delivery between the parties are neither contracts for delivery with the duty of installation nor contracts for delivery of plants. According to the agreement of 20 February 1997, the [buyer] purchases from the [seller] integral drives and the [buyer] exclusively distributes pitch drives and main drives for windmills.

Neither in the agreement of 20 February 1997 nor in the acknowledgements of order and in the [seller]'s invoices for the individual deliveries the manufacture of a plant and the obligation to the performance or the provision of work or other services were mentioned.

Therefore, the [seller] has not substantiated wherein its other services consisted of or to what extent the delivery of the prototypes and the integral drives can be considered as a delivery of a plant (concerning the burden of proof, cf. von Caemmerer/Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht, 2nd ed., Munich 1995, article 3 CISG n. 10).

The [buyer]'s allegation that the value of the engineer's performances and the conducting of the work for the development of the prototypes and the integral drives is higher than the value of the raw and semi manufactured materials used, is not contrary to the application of the CISG.

The CISG is also applicable if the materials to be delivered are a good deal less in proportion to the price of the goods and therefore the manufacture is the crucial factor herein. It only would be different if the purchaser delivers more on a value basis than the enterpriser (Honsell/Siehr, l.c., article 3 CISG n. 3). Thus, in the way of an objective point of contact to the delivery contracts, which must be judged in this case, the CISG is generally applicable (article 1(1)(a) CISG).

      3. [Ruling of the court]

a) According to article 57(1)(a) CISG, the [buyer] must pay at the [seller]'s place of business. Hence, the courts of the [seller]'s State have jurisdiction concerning the obligations to pay (ECJ, sig. 1994 I 2913). The OR [*] codifies the jurisdiction of the State of the [seller] as well (article 74(2)(1) OR). Therefore, it does not make any difference whether the parties made according to article 116 IPRG [*] a valid choice of jurisdiction in article 13 of the general conditions of delivery in favor of the OR (cf. Walter, Internationals Zivilprozessrecht der Schweiz, 2nd ed., Berne 1998, p. 179) as the [seller] argues and the [buyer] denies.

b) The [buyer] argues that the parties agreed on a place of performance in Germany because several of the [seller]'s invoices listed a bank account in Germany as the address to pay and the [buyer] subsequently paid on this account. Both article 74(1) OR [*] and article 57(1) CISG allow agreements about the place of performance which are binding for both parties and do not require any special formalities. A belated mentioned notation on a [seller]'s invoice does not amount to a contractual agreement even if the partner to a contract keeps silent thereabout (BK-Weber, article 74 OR n. 65; ZK-Schraner, article 74 OR n. 42; Soerge/Wolf, 269 BGB n. 21).

Thus, the [buyer] had not argued that it was bound (cf. the wording of article 57(1) CISG) to transfer the outstanding purchase price on the [seller]'s account in Germany. Furthermore, a contractually agreed place of performance in Germany for the sued amounts cannot be derived from the usages established between the parties (article 9 CISG) and the circumstances of the case (article 74 OR): indeed, the [seller]'s invoices of 12 November 1997 and 16 February refer to the [seller]'s bank details at Deutsche Bank, branch office in Bad Säckingen, with account number and the [buyer] subsequently transferred the invoiced amounts to the stated account of the Deutsche Bank in favor of the [seller].

However, the effective place of performance of already paid invoices is not the crucial factor at this juncture. The crucial issue is the legal place of performance of the invoices that remained outstanding (for the terminology cf. Kropholler, EuZPR, article 5 n. 23). Nevertheless, the said outstanding invoices refer only in four cases to [seller]'s bank account at the Deutsche Bank in Bad Säckingen. In four further invoices the [seller]'s bank account at the UBS (former Schweizerische Bankgesellschaft) in Zürich is referred to as the bank details. Hence, concerning the outstanding invoices, a certain place of performance arises neither from an express party agreement nor from the usages established between the parties.

c) For the above-mentioned reasons, the legal place of performance is Switzerland. According to this, the jurisdiction of the Commercial Court of the Canton Zürich for the judgment of the action to enforce a claim must be recognized even if the parties had not agreed to a place of jurisdiction in favor of Zürich courts. Consequently, it can be left open if the [seller]'s general conditions of delivery became part of the contract.

      4. For (negative) declaratory actions which concern the entire contractual relationship, article 5 No. 1 of the Lugano Conventionm [*] establishes a jurisdiction wherever a place of performance for a main obligation is given (Geimer/Schütze, EuZVR, article 5 n. 61 with further references) about which the parties agree.

A main obligation of the [seller] constitutes the delivery of the contract goods according to the agreed business conditions (cf. Schluep/Amstutz, n. 137 of the initiation before article 184 et seq. OR [*]). These obligations to deliver do not constitute ( neither according to the OR nor the BGB [*]) an obligation which has to be discharged at the creditor's domicile (BK-Weber, article 74 OR n. 142 et seq.; 269(1) BGB) even if the objects of performance had to be sent in care of the [buyer] according to article 8 of the general conditions of delivery (ZK-Schraner, article 74 OR n. 37; Soergel/Wolf, 269 BGB n. 5 and 7).

The situation under the CISG is not different (article 31 CISG). In the case of handing the goods over to the carrier (article 31(a) CISG) the jurisdiction of the place of performance coincide with the general place of jurisdiction of the contractor (cf. Caemmeri/Schlechtriem, article 31 CISG n. 32a; Honsell/Karollus, article 31 CISG n.49). Similarly, a place of performance in Switzerland is achieved if article 31(b) or (c) is applied to the [seller]'s obligation to deliver. According to this, the jurisdiction of the Commercial Court of the Canton Zürich is to affirm for the declaratory actions as well.

IV. [Decision]

Accordingly, the court decides:

     1. The defense of the territorial lack of jurisdiction of the Commercial Court of the Canton Zurich is rejected.

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this presentation, the Plaintiff of Germany is referred to as [seller]; the Defendant of Switzerland is referred to as [buyer].

Translator's note on abbreviations: Lugano Convention = EC EFTA Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters; CISG = United Nations Convention on Contracts for the International Sale of Goods; BGB = Bürgerliches Gesetzbuch [German Civil Code]; OR = Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht) [Swiss Civil Code]; IPRG = Bundesgesetz über das Internationale Privatrecht [Swiss Code on the Conflict of Laws].

** Martin Bürkle is a LL.M. candidate at Queen Mary, University of London.

*** Camilla Baasch Andersen is a Lecturer in International Commercial Law at the Centre for Commercial Law Studies, Queen Mary, University of London, and a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She is currently finishing her PhD thesis on uniformity of the CISG at the University of Copenhagen.

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Pace Law School Institute of International Commercial Law - Last updated December 6, 2006
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