Reproduced with permission from 15 Journal of Law and Commerce (1995) 175-199

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[Jurisdiction and Venue]

Case law already includes numerous decisions dealing with the indirect consequences of the determination of the place of performance of contractual obligations. Witz notes, among others, that the place where the price is to be paid determines the currency to be used where the contract itself is silent as to currency (p. 80). Thus, in a case brought before a German court, where Italian wine was purchased by a German buyer, the court held that payment had to be made in Italian currency where the contract did not specify the currency, because the price had to be paid in the currency in use in the place where the money changed hands, and, pursuant to the CISG, Article 57 section 1(a), that was the seller's place of business. [Article 57 § 1(a) provides that, "[i]f the buyer is not bound to pay the price at any other particular place, he must pay it to the seller: (a) at the seller's place of business . . ."]

Where a court must determine jurisdiction, the CISG is interpreted in conjunction with the Brussels Convention of 1968 (p. 80). Article 5 section 1 of the Brussels Convention provides that the defendant can be sued where the obligation which is the basis of the claim was, or should have been, performed. In the absence of a community or contractual definition of the place of performance, the presiding judge must decide the place of the contractual obligations according to conflicts of laws rules (p. 80). If that state's laws are governed by the CISG, then the place of performance will be determined pursuant to the CISG. Thus, where the price has not been paid, since Article 57 provides that it is payable at the seller's place of business, the seller will be able to sue the buyer where the seller is located. Witz draws attention to the criticism of this result by German commentators who would prefer the forum actoris, the plaintiff's forum, especially since the failure to pay often is the response of a buyer who has been cheated by a deficient performance on the part of the seller (pp. 80-81).

In a suit involving a German and an English company, a German court reasoned that the place of performance should be dispositive of jurisdiction. The German Federal Court of Justice brought the issue to the European Court of Justice, proposing to identify the place of payment, not by where the seller's place of business was located, but where the goods were to have been delivered (p. 81).

The European Court of Justice disagreed, reasoning as follows:

"[A]rticle 5 . . . 1 of the [Brussels] Convention of 27 September 1968 . . . must be interpreted such that, where the party furnishing the product demands payment from the client pursuant to a contract, the place of performance of the obligation to pay must be determined in accordance with the law governing the obligation at issue, according to the rules of conflict of the jurisdiction in which the action was brought, even when those rules indicate the applicability to the contract of laws such as [international sales conventions]" [European Court of Justice 29 June 1994].

(p. 81). Witz signals that this reasoning is also applicable where the Brussels and Lugano Conventions do not apply, but where national rules provide for jurisdiction in the place where the contractual obligations were to be performed (p. 83).

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