Reproduced with permisssion from 16 Journal of Law and Commerce (1997) 265-290

In Nuova Fucinati S.P.A. v. Fondmetall Int'l A.B.,[104]an Italian seller of metal (Nuova Fucinati) sought to be excused from its sales contract with a Swedish buyer (Fondmetall Int'l). Under the terms of the February 3, 1988 contract, the seller was to deliver 1,000 tons of ironchrome "Lumpy" in exchange for payment of Lira 545 per kilogram. The contract permitted the buyer to choose a delivery date between March 20, 1988 and April 10, 1988.

Between the date of contract formation and the date selected by Buyer for delivery, the price of ironchrome "Lumpy" increased 43.71% on the international market. Apparently, the contract did not contain a clause expressly providing for excuse of performance obligations in cases of force majeure.

At the March 1, 1990 hearing before the court, Seller argued [105] that the injunctive order compelling delivery should be repealed, and further, that the contract should be avoided [106] because of "supervening excessive onerousness" ("excessive onerosità sopravvenuta") caused by the market price increase. Buyer responded by requesting avoidance of the contract along with damages for non-performance.[107] Buyer argued in the alternative that either Article 79 of the Sales Convention had preempted the assertion of supervening excessive onerousness, or that there was no supervening excessive onerousness as a factual matter in this case.

The court explained its holding in three parts. First, it lifted the July 20, 1988 injunction against Seller. Second, it avoided the contract for sale due to non-performance by the Seller. Finally, it rejected the request of Seller for dissolution based on supervening excessive onerousness and non-performance.[108]

In deciding to avoid the contract in favor of the Buyer, the court concluded that the Seller was not entitled to be excused from its obligations under the contract.[109] More specifically, the court found that Article 79 of the Convention would not excuse a party from its obligations unless performance had become "impossible."[110] The court was not convinced that Seller's documentation of the price increase of ironchrome on the international market established the legal conclusion that Seller's obligations should be excused.[111] This brief characterization of the court's holding, however, obscures the most significant analytical moves in the decision.

Although the court was faced with the threshold issue of the applicability of the Sales Convention, it chose initially to address the issues raised by the parties as though the Convention applied. Only at the end of the opinion did the court decide that the Convention did not apply and, instead, Italian law should serve as the rule of decision.[112] Nevertheless, the court did examine the Convention issues in detail, and it concluded that even if Article 79 had applied, it only provided for "release from a duty made impossible by a supervening impediment,"[113] and thus did "not seem to contemplate the remedy of dissolution of contract for supervening excessive onerousness."[114]

This distinction between "impossible" and "excessively onerous" performance is a crucial one in the court's reasoning because it highlights the important role of the structure of the Italian Civil Code in the outcome of the case. Under the Civil Code, a contract can be dissolved where performance that is made "impossible by a supervening impediment not ascribable to the party."[115] Civil Code Article 1467, by contrast, provides for dissolution in cases of "supervening excessive onerousness" of performance, at least with respect to contracts involving "continuous or periodic or deferred performance."[116]

The court superimposed this dichotomy within the Italian Civil Code onto the Convention. From the court's first mention of CISG Article 79, Italian domestic law seemed to have intruded upon the court's analysis, at least as a frame of reference for deciding the meaning of an "impediment" to performance.

By imbuing the Sales Convention with meaning by virtue of a reference to the court's own domestic laws, the court seemed to pre-determine the outcome of the case.[117] In other words, even if the court had found that the Convention did apply to the dispute at hand, it would have read the "impediment" term in Article 79 as meaning "impossible," the meaning that is suggested by the Civil Code. On the other hand, because the court found that Italian law applied to the case, it was able to decide the case under the "supervening excessive onerousness" standard -- a lower standard than impossibility. The significant point here is not that the court ended up using a more lenient standard. Instead, it is important to notice that the court's initial reference to its domestic law confined its interpretation of the Sales Convention to a standard that may have been more restrictive than intended by the drafters.

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FOOTNOTES

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104. 15 J.L. & Com. 153 (Alessandra Michelini trans. 1995) (judgment of the Tribunale di Monza (ordinary court of first instance) on Jan. 14, 1993) [hereinafter Nuova Fucinati].

105. In its original pleadings, seller's principal argument was "that it was impossible to deliver the goods within the agreed delivery dates . . .because [the buyer] was late in taking delivery of another load of goods (700 cubic tons of ironchrome "Fine") ordered at the same time." Id. at 154. Seller chose to relegate this argument to subordinate status at the hearing before the court, and the court did not address it. See id. at 154-55.

106. With respect to legal terminology, the court's opinion apparently uses several different terms interchangeably. For example, the court notes specifically that Article 61 of the Convention provides for "the remedy of avoidance ('dissolution' in the terminology of our Civil Code)." Id. at 156. In other sections of the opinion, the court (and the translator) refers to "excuse," "release," and "dissolve." Id. at 155.

107. Buyer availed itself of Article 1453(2) of the Italian Civil Code which permits a claim for dissolution even when an action previously has been brought for specific performance. See id. at 155 n.1.

108. The court noted that it was submitting the suit to the examining judge for further judicial inquiry into the buyer's request for compensatory damages. Id. at 158.

109. See Nuova Fucinati, supra note 104, at 158.

110. Id. at 155.

111. See id. at 158.

112. The court concluded that the Convention did not apply because Sweden ratified the Convention after the date of contract formation and therefore was not a Contracting State under Article 1(1)(a). See id. at 157.

113. Id. at 155.

114. Nuova Fucinati, supra note 104, at 155.

115. See id.

116. See id.

117. Professor Honnold writes at length about the "danger that local tribunals may unconsciously read the patterns of their domestic law into the general language of the Convention -- an approach that would be inconsistent with the Convention's basic goal of international unification (Art. 7(1))." See Honnold, supra note 62, § 429.

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