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2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods

Digest of Article 10 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Overview
Application of article 10(a)
Application of article 10(b)]

Article 10

For the purposes of this Convention:
(a) if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;
(b) if a party does not have a place of business, reference is to be made to his habitual residence.

OVERVIEW

1. Article 10 provides two rules that address the location of party: if a party has multiple places of business, the rule in article 10(a) identifies which is relevant for purposes of the Convention; article 10(b), on the other hand, states that a party which does not have a place of business is deemed located at the party's habitual residence.[1] These rules are helpful, as the location of the relevant place of business is important under various provisions of the Convention, including the main provision governing the Conventions applicability (article 1).[2]

Application of article 10(a)

2. Article 10(a) has been cited in various decisions,[3] but it has actually been applied in determining the relevant place of business in only a few cases. One court used the provision to decide whether a contract concluded between a seller in France and a buyer with places of business both in the United States of America and in Belgium was governed by the Convention.[4] The court reasoned that, since the invoice was sent to the buyer's Belgian place of business and since it was in Dutch (a language known only at the buyer's Belgian offices), the Belgian place of business was most closely connected to the contract and its performance; the Convention, therefore, applied. The court also noted that, because the Convention was in force in the United States of America, the Convention would apply even if the buyer's relevant place of business was in that country.

3. Another court [5] employed article 10(a) to determine whether a sales contract was international under the Convention. The contract arose out of a purchase order sent by a buyer with its place of business in France to an individual, also located in France, that represented the seller, which had its offices in Germany. In deciding whether the contract was between parties whose places of business are in different States for purposes of article 1 of the Convention, the court noted that "the order confirmations emanating from the seller, the invoices, and the deliveries of the goods were made from the seat of the seller in Germany"; thus even assuming that the seller had a place of business in France, the court reasoned, "the place of business 'which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract' [...] is indeed the place of business whose seat is in [Germany]." Thus, the court concluded, "[t]he international character of the disputed contract is as a consequence established."

4. In another case [6] a court was called upon to decide whether the Convention applied to the claim of a German manufacturer of floor covering who demanded that the Spanish buyer pay for several deliveries. The buyer argued that it had contracted only with an independent company located in Spain, thus raising the question whether there was an international sales contract within the meaning of article 1 of the Convention. As the buyer was aware, the Spanish company with whom it allegedly dealt had links with the German plaintiff, including the fact that members of the Spanish company's board overlapped with those of the German seller. The court concluded that the contract was an international one subject to the Convention. It found that the German manufacturer rather than the Spanish company was the buyer's contracting partner and, because the Spanish company lacked legal authority to bind the German seller, the Spanish company did not constitute a separate place of business of the seller. Even if the Spanish company was such a place of business, the court reasoned, the seller's German place of business had the closest relationship to the contract and its performance given the German manufacturer's "control over the formation and performance of the contract, which the [buyer] was well aware of." Thus the court found that the seller's German place of business was the relevant one under article 10(a).

5. In another decision [7] the court invoked article 10(a) in holding that, if a party has multiple places of business, it is not always the principal one that is relevant in determining whether a contract is governed by the Convention.

Application of Article 10(b)

6. Article 10(b) has been cited in only once decision, in which the court merely described the text of the provision.[8]


NOTES

* This presentation of the UNCITRAL Digest is a slightly modified version of the original UNCITRAL text at <http://www.UNCITRAL.org/pdf/english/clout/CISG_second_edition.pdf>. The following modifications were made by the Institute of International Commercial Law of the Pace University School of Law:

   -    To enhance access to contents by computer search engines, we present in html rather than pdf;
 
   -    To facilitate direct focus on aspects of the Digests of most immediate interest, we inserted linked tables of contents at the outset of most presentations;
 
   -    To support UNCITRAL's recommendation to read more on the cases reported in the Digests, we provide mouse-click access to (i) CLOUT abstracts published by UNCITRAL (and to UNILEX case abstracts and other case abstracts); and also (ii) to full-text English translations of cases with links to original texts of cases, where available, in [bracketed citations] that we have added to UNCITRAL's footnotes; and
 
   -    To enable researchers to themselves keep the case citations provided in the Digests constantly current, we have created a series of tandem documents, UNCITRAL Digest Cases + Added Cases. The new cases and other cases that are cited in these updates are coded in accordance with UNCITRAL's Thesaurus.

In addition, this presentation introduces each section of the UNCITRAL Digest with a Google search button. This is to help you access doctrine (relevant material from the over 1,200 commentaries, monographs and books on the CISG and related subjects that we present on this database) as well as the texts of the cases that UNCITRAL cites in its Digests and that we present in our updates to UNCITRAL's Digests.

1. United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, 19.

2. For provisions referring to a party's place of business, see articles 1(1), 12, 20 (2), 24, 31(c), 42(1)(b), 57(1)(a) and (2), 69(2), 90, 93(3), 94(1) and (2), and 96.

3. See [UNITED STATES Federal Northern District Court of California 27 July 2001 (Asante Technologies v. PMC-Sierra)] (merely quoting the text of article 10(a)); [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Award 2/1995 of 11 May 1997] (citing article 10(a) in deciding that a party's relevant place of business was in Switzerland rather than in England without, however, specifying any reason for the decision).

4. [BELGIUM Rechtbank Koophandel Hasselt 2 June 1999 (Sandwich panels casse)].

5. [FRANCE Cour d'appel Colmar 24 October 2000 (Pentaphan glue case)] (see full text of the decision).

6. [GERMANY Oberlandesgericht Stuttgart 28 February 2000 (Floor tiles case)].

7. [SWITZERLAND Berzirksgericht der Sanne 20 February 1997 (Spirits case)].

8. [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)] (see full text of the decision).


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