Netherlands 22 August 1995 Appellate Court Arnhem (Diepeveen-Dirkson v. Nieuwenhoven Veehandel)
[Cite as: http://cisgw3.law.pace.edu/cases/950822n1.html]
Primary source(s) for case presentation: Unilex abstract; case comment
DATE OF DECISION:
JURISDICTION:
TRIBUNAL:
JUDGE(S):
CASE NUMBER/DOCKET NUMBER: 94/305
CASE NAME:
CASE HISTORY: 1st instance Rb Arnhem 30 December 1993 [affirmed]; see also Rb Arnhem 3 February 1991
SELLER'S COUNTRY: Germany (plaintiff)
BUYER'S COUNTRY: Netherlands (defendant)
GOODS INVOLVED: Live lambs
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue: Articles
Classification of issues using UNCITRAL classification code
numbers:
8C [Interpretation of party's statements or other conduct:
interpretation in light of surrounding
circumstances];
77A [Obligation to take reasonable measures to mitigate damages];
78B [Interest on delay in receiving price or any other sum in arrears:
rate of interest]
EDITORS: Franco Ferrari and Albert H. Kritzer
Buyer (Netherlands) contracted for the purchase of live lambs from seller (Germany) at a time
when the CISG was in effect in both countries. The contract did not
specify the governing law. The court held
that the contract is governed by German law and that the CISG applies
pursuant to Article 1(1).
Issues ruled upon:
Penalty clauses/Scope of CISG/Good faith/Gap-filling/Mitigation of
damages.
The contract contained a
penalty clause in the event of late payment. Seller delivered the
lambs to
buyer on 18 May 1992. Buyer
resisted payment on the grounds that "the agreed weight was
insufficient".
Without further discussion of the
facts and issues, the District Court had ruled that buyer is obligated
to pay the contract price and the fixed
penalty.
The District Court's ruling on the penalty clause was based on German domestic
law. On appeal, buyer
contended that the penalty was disproportionate to the harm suffered by
the
late payment and should be
decreased on grounds of fairness. Citing Articles 7 (good faith), 8(3)
and
77, buyer stated that the penalty
should be moderated. The court stated: "Article 8 . . . is about the
interpretation of the intent of a party. That
is no basis for moderation. Article 77 determines that a party who
relies
on a breach of contract must take such
measures as are reasonable in the circumstances to mitigate the loss. This
provision is also no basis for
moderating the penalty. Neither this provision nor other provisions of the
CISG regulate the question whether
the penalty the parties agreed upon is confiscatory or can be
moderated. Therefore, this question must be
answered according to German law." Applying German law, the court
upheld the penalty.
Interest (rate of). The Appellate Court upheld the following ruling of the
District Court. "[Seller] also claimed
interest is due according to CISG Article 78. Because the rate of
interest
has not been arranged in the CISG, a
rate of interest should be paid in a reasonable amount according to
German
law, Section 288 BGB (4%)". The
basis of this conclusion is said to be "because the payment has been
agreed
in Germany currency and moreover,
besides the CISG, German law is applicable."
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=156&step=Abstract>; [1996] The International Legal Forum (München), English language edition 1 [210]
CITATIONS TO TEXT OF DECISION
Original language (Dutch): Nederlands Internationaal Privaatrecht (NIPR) 1995 No. 514 [683-685]; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=156&step=FullText>
Translation: Unavailable
CITATIONS TO COMMENTS ON DECISION
English: Papandréou-Deterville, English translation of Dalloz case comment cited below [text presented below]; Ferrari, International Legal Forum (4/1998) 138-255 [194 n.484 (definition of "goods"), 226 n.797 (scope of CISG: penalty clause)]; Gillette/Walt, Sales Law Domestic and International (Foundation Press 1999) 354 n.95 [scope of CISG: penalty clause]; Zeller, Leap forward towards unified international sales (May 2000) [Good faith: n.86]; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 2-6 n.68 [cited as 24 August 1995]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 para. 30 Art. 74 para. 49
French: Papandréou-Deterville, Dalloz Sirey (1997)
223-224
Classification of issues present
Editorial remarks
Citations to case abstracts, texts, and commentaries
CITATIONS TO ABSTRACTS OF DECISION
Translation of comment published in Dalloz Sirey (1997) 223-224
Case comment by Marie-France Papandréou-Deterrville
Maître de conferences, Université de Strasbourg
Translation by Annabel V. Teiling
[…]
In the case submitted to the Court of Appeals of Arnhem, a contract for the sale of live lambs was concluded in 1992 between a Company established in Germany and a buyer established in the Netherlands. The seller brought an action demanding the payment of the price and damages in fulfillment of a penalty clause contained in the contract. The Tribunal of First Instance held that the buyer had to pay the price, as well as the amount anticipated by the penalty clause. In the appeal, the buyer alleged that the penalty should be diminished in accordance with articles 7, 8(3), and 77 of the CISG. The penalty was inequitable, for it was not proportional to the loss incurred. The Court of Appeals held that neither article 8(3) concerning the interpretation of the declarations of the parties, nor article 77 relative to the obligation to mitigate losses resulting from the infraction of the contract, nor any other clause of the Convention can serve as a foundation for the reduction of the penalty amount. This question must therefore be settled according to the applicable law of the contract, in this case German law for which the reduction is not possible in commercial matters (§ 348, c. com. German).
We approve the Court of Appeals of Arnhem for having justified the recourse to the German applicable law and the reject of the buyer's arguments, who invoked articles 8(3), and 77: according to the judges of Arnhem, none of these provisions provides a solution that can be linked back to the Convention. The Court thus followed an appropriate reasoning in presence of a internal gap arising from article 7(2). It is well known that, during the drafting of the Convention, no agreement was reached on the highly controversial question of penalty clauses (see C. Witz, op. cit., no. 79 and the ICC arbitral ruling cited). Incontestably, the question is a concern for national laws.
We can regret, however, that the judges did not elaborate on their consideration of the live lambs as goods. The Court of Appeals should have done so though, since the Convention does not include any definition for the term "goods," but restricts itself to exclude from its field of application certain goods without specifically mentioning live animals. In spite of the tendency that we observe in numerous laws that do not consider animals as "things" anymore, there is no doubt however that the Vienna Convention applies to the sale of animals.
[…]
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