CISG CASE PRESENTATION

Germany 24 November 1998 District Court Bielefeld (Medical equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/981124g1.html]

Case Table of Contents

• Case identification
• UNCITRAL abstract
• Classification of issues present
• Editorial remarks
• Citations to case abstracts, texts, and commentaries
• Case text (English translation)
• Guide to links contained in case presentations

Case identification

DATE OF DECISIONS: 19981124 (24 November 1998)

JURISDICTION: Germany

TRIBUNAL: OLG Bielefeld [LG = Landgericht = District Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 11 O 61/98

CASE NAME: German case citations do not identify parties to proceedings

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Netherlands (defendant)

GOODS INVOLVED: Medical equipment / sanitary / hygienic products

Case abstract

GERMANY: Landgericht Beilfield 24 November 1998

Case law on UNCITRAL texts (CLOUT) abstract no. 363

Reproduced with permission of UNCITRAL

A German seller, the plaintiff, delivered hygienic products under an exclusive sales agreement to a Dutch buyer, the defendant. It was the parties’ general practice that the seller bore the transaction costs. The buyer refused to pay the purchase price arguing that the seller violated the exclusive sales agreement. The seller sued the buyer for the purchase price. The buyer objected to the jurisdiction of the German court.

The Court held that it had no jurisdiction. Under article 5(1) of the Brussels Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters, jurisdiction is based on the place of performance of the contract. The Court found that the place of performance for payment was not the seller’s place of business in Germany.

The place of performance for payment had to be determined by having recourse to the relevant provisions of the CISG that applied in the case at hand. Pursuant to article 57 CISG the place of performance for payment is the seller’s place of business but only if the buyer is not bound to pay at any other particular place. Thus, priority has to be given to the place of payment agreed upon by the parties under article 6 CISG or the place of payment in conformity with the practices which the parties have established between themselves by virtue of article 9 CISG. According to the practices established between the parties, the seller had borne the transaction costs. Under CISG the law of the place of payment determines the bearing of costs. The Court concluded that if the seller usually had to bear the transaction costs, then the place of payment had to be the buyer’s place of business.

Go to Case Table of Contents

Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 8 ; 9 ; 57(1)

Classification of issues using UNCITRAL classification code numbers:

6A [Convention yields to contract];

8B [Interpretation of party's statements or other conduct: interpretation based on objective standards];

9C [Practices established by the parties];

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

Descriptors: Autonomy of parties ; Intent ; Usages and practices ; Payment, place of ; Jurisdiction

Go to Case Table of Contents

Editorial remarks

• Unavailable

Go to Case Table of Contents

Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/697.htm>

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. 57 para. 2

Case text (English translation)

Queen Mary Case Translation Programme

FACTS OF THE CASE

By a representation contract of 9 July / 1 October 1987, the [seller] conferred to the [buyer] the sole right of sale for all of [seller]'s sanitary products in the territory of the Netherlands. The last paragraph of the contract, clause 9.4, reads: "Should a dispute arise between the parties which cannot be settled amicably, the place of jurisdiction is Gütersloh."

The [seller] terminated the contract effective 30 June 1995. In the present dispute, the [seller] demands payment of the purchase price for several deliveries in the year 1996 that come to a total of 31,447.20 DM [Deutsche Mark].

The [seller] requests the Court to order the [buyer] to pay [seller] 31,447.20 DM with interest of 5.7% from 29 November 1996. The [buyer] requests the Court to dismiss the claim.

The [buyer] objects to the international jurisdiction of the Court. [Buyer] submits that the Court does not possess international jurisdiction under Art. 17 of the Brussels Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (hereinafter: Brussels Convention). According to [buyer], the forum selection clause contained in paragraph 9.4 of the framework contract only applies to the framework contract, not to the individual sales contracts. [Buyer] also submits that the Court's jurisdiction does not derive from Art. 5 no. 1 of the Brussels Convention in connection with the United Nations Convention on Contracts for the International Sale of Goods (CISG). Art. 57(1) CISG shows that the place of performance is to be determined primarily according to the parties' agreement and the applicable usage and practice established between them. For years, it was agreed and established practice between the parties that the [buyer] was to pay the purchase price at its place of business.

It is undisputed that from the beginning of the parties' business relationship in the year 1985 the payment procedure was as follows: The [buyer] would direct its bank to transfer the invoiced price to the [seller]. All transfer charges were born by the [seller], so that its account was credited the invoiced amount minus the bank charges, whereas the [buyer]'s account was debited solely with the amount to be paid to the [seller]. It is further undisputed that the parties agreed that the [seller] would make all deliveries to the place of the [buyer] at no extra charge.

The [buyer] further declares set-off with a claim for damages based on the [seller]'s breach of the framework contract. The [buyer] sees a violation of its sole right of sale firstly in the [seller]'s letter of 30 June 1995 which the [seller] undisputedly sent to the [buyer]'s customers in the Netherlands, secondly in the [seller]'s exhibition at the sanitary trade show in Utrecht from 5 February to 11 February 1996, and finally in the price list for mirrors which was sent by the [seller] to numerous customers of the [buyer] in March 1996. The [seller]'s presentation of its own products in the Dutch market led to a loss of turnover and a resulting loss of profit in the amount of 126,105.09 on the part of the [buyer]. Furthermore, [buyer]'s own advertising costs in the amount of 9,421.85 and the cost of its stand at the fair (13,121.06 DM) had been paid in vain.

The [seller] submits that the Court possesses jurisdiction under Art. 17 of the Brussels Convention. Clause 9.4 of the framework contract clearly also applied to disputes arising out of the individual sales contracts.

The [seller] further submits that the [buyer] does not possess a claim for damages. [Seller] holds that it did not breach the framework contract, as not [seller], but Company F. had exhibited its products at the trade fair in Utrecht. It was also this company that was responsible for the sending of the price list in March 1996. The [seller] also disputes that the [buyer] suffered the damages sought. In particular, [seller] notes that the declining turnover was partly due to slow business, which the entire industry had felt in the relevant time period, and had to be partly attributed to the fact that it, the [seller], had repeatedly frozen or held back deliveries destined for the [buyer] because of default of payment. Finally, the [seller] submits that any claim for damages the [buyer] could possibly possess is time-barred.

REASONING OF THE COURT

The claim is not admissible, as the Court does not possess international jurisdiction over the dispute.

The international jurisdiction is to be determined according to the Brussels Convention. According to Art. 2(1) in conjunction with Art. 53(1) and subject to other provisions of the Convention, a corporation is to be sued at its place of business. The Convention's other provisions do not lead to the Court's jurisdiction.

Art. 17(1) of the Brussels Convention does not apply as the Court remains in doubt whether the parties intended to apply the forum selection clause in paragraph 9.4 of the framework contract not only to disputes arising out of this contract, but also to disputes arising out of the individual sales contracts that would be entered into. According to the wording of clause 9.4, the forum clause is to be applied whenever "a dispute arise[s] between the parties which cannot be settled amicably." Under a literal interpretation, the clause would apply to all future legal disputes between the parties. Such an agreement would be invalid, as Art. 17 of the Brussels Convention requires that a forum clause apply to a particular legal relationship. While it is sufficient -- as with § 40(1) ZPO [*] -- that the legal relationship is determinable, it is inadmissible to agree on a forum for all imaginable disputes arising out of a current or future legal relationship.

It is therefore necessary to interpret the forum selection clause restrictively in order to retain its validity. It seems reasonable to base such an interpretation on the clause's systematic position under the heading "further conditions" which are gathered beneath no. 9 of the contract. All other clauses contained under no. 9, that is, the requirement of written form (clause 9.1), the assignment of rights (clause 9.2) and the validity clause (clause 9.3) clearly apply to the framework contract only. Following the need for a restrictive interpretation, the Court therefore also applies the forum selection clause only to the framework contract at hand, not to the individual contracts.

The Court does also not possess jurisdiction under Art. 5(1) of the Brussels Convention, as the place of performance for the obligation to pay the price is the [buyer]'s place of business. According to Art. 57 CISG, which governs the contract between the parties, the place of performance is the [seller]'s place of business -- however, only if the [buyer] is not bound to pay the purchase price at any other particular place. The place of performance is primarily to be determined by the agreement between the parties (Art. 6 CISG), respectively by any usage to which they have agreed to and any practices, which they have established between themselves. According to the payment procedure established between the parties during many years, the place of performance for the payment of the price is the [buyer]'s place of business. From the start of their business relations, it was the [seller] who bore the cost of the money transfer. Under the CISG, the issue of which party bears the cost of the money transfer is determined by the place of performance for the payment obligation (cf. Staudinger-Magnus, Wiener UN-Kaufrecht, 13th ed., Art. 57 n. 19; v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2nd ed., Art. 57 n. 4; Piltz, Internationales Kaufrecht, n. 141). It follows vice versa that the place of performance is the [buyer]'s place of business if the parties established the practice that the [seller] was to bear the cost of the money transfer.

FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Germany is referred to as [seller]; the Defendant of Netherlands is referred to as [buyer]. Amounts in German currency (Deutsche Mark) are indicated as [DM]. Translator's note on other abbreviations: ZPO = Zivilprozeßordnung [German Civil Procedure Code].

** Ruth M. Janal, LL.M (UNSW) is a Ph.D candidate at Albert-Ludwigs-Universität Freiburg.

*** 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 Ph.D. thesis on uniformity of the CISG at the University of Copenhagen.