Source: http://cisgw3.law.pace.edu/cases/040920i3.html
Timestamp: 2019-04-22 10:16:37+00:00

Document:
CASE NAME: Kling & Freitag GmbH v. Societá Reference Laboratory S.r.l.
A buyer from Italy and a seller from Germany entered into a framework distribution contract. Applying the 1968 Brussels Jurisdiction and Enforcement Convention (Brussels Convention) the court addressed whether the place of performance was in seller's country, or buyer's country for purposes of determining whether the Italian court had proper jurisdiction over the dispute. The Court applied Art. 5 of the Brussels Convention, indicating that the place of performance was the place where seller was required to deliver the goods. Applying CISG Art. 31 the court concluded the place of delivery was in seller's country and the Italian court therefore lacked jurisdiction over the dispute.
"In case of an action for damages by an authorized dealer against his supplier due to non-performance of the framework distribution contract (non-delivery of goods) the place of performance for the determination of international jurisdiction (art. 5(1) of the European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters) is to be ascertained on the basis of the CISG."
Following a distributorship agreement between an Italian distributor and a German manufacturer, the distributor would purchase and distribute in Italy the products of the manufacturer over a period of three years. The manufacturer initiated performance of its obligations, however it refused to recognise the distributor the contractual right to act as a sole distributor. In a short time, the manufacturer refused any further performance. The distributor brought action for breach of contract before an Italian court of First Instance. The manufacturer objected to the jurisdiction of the Italian Court and brought the case before Italy's Supreme Court.
The Supreme Court concluded for the lack of jurisdiction of the Italian judge and in favour of the jurisdiction of the German court. The distributorship agreement was considered a framework agreement, whose essence was the obligation of the parties to order and deliver a certain quantity of specific goods over a certain period of time, executed through separate "deeds of sale".
Therefore, the claim of the distributor against the manufacturer was a claim for breach of individual sale contracts. The Supreme Court thus made straightforward reference to the CISG in order to determine the place of performance of the obligation. Since, according to art. 5(1) of the 1968 Brussels Jurisdiction and Enforcement Convention, applicable to the case, the place of performance is the place where the manufacturer has to deliver the goods, the Court applied art. 31 CISG. Germany was thus considered the place of delivery and the lack of jurisdiction of the Italian Court over the case was declared.
Kling & Freitag GmbH v. Reference Laboratory S.r.l.
f) All [contractual] relationships with [Supplier] were de facto interrupted as of June 2000.
In light of the above [Distributor], deeming [Supplier] to be in breach of its contractual obligations, submitted a claim to the Italian tribunal, seeking (i) a declaration that the agreement was terminated due to [Supplier]'s breach of contract and (ii) compensation for damages.
[Supplier], appearing before the Italian court, filed a plea to the jurisdiction. During the procedings, the [Supplier] commenced a proceeding to determine jurisdiction (Regolamento preventivo di giurisdizione) challenging the jurisdiction of the Tribunale. [Distributor] replied with a counterclaim. The General Attorney, who received the petition under Article 375 of the Italian Code of Civil Procedure, pleaded for the Italian judge's jurisdiction. [Supplier] filed a defense statement.
As a preliminary remark, it should be noted that, taking into consideration the acknowledgement of receipt of the initial writ (atto di citazione) (21 June 2000), Council Regulation (EC) no. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, that entered into force on 1 March 2002, does not apply to the present proceedings.
a) Article 5 of the Brussels Convention does not apply since, in light of the statements provided by [Distributor] to uphold its claim, the dispute in the present matter does not concern, rationae materiae, the existence of the agreement between the parties, due to clear absence of a contractual deed, furthermore, a pre-contractual liability is not even at issue in the present dispute, whereas [Distributor] has itself admitted to have interrupted the bargaining process; [Distributor]'s claim, represents a claim for damages, which should have been submitted before the judge of the place where Respondent has its registered office.
(iii) Whereas the contractual obligation to grant exclusive rights cannot be determined with regard to a specific place of business, the breach of such contractual obligation, should be consistently regarded as being regulated by Article 2 rather than Article 5 of the Brussels Convention.
[Distributor] challenges [Supplier]'s defense as to the failed execution of the agreement, claiming that the parties have undertaken and agreed upon a supply agreement with exclusive rights; subsequently, considering that the contractual obligation had to be carried out in Italy, which is the place where [Distributor] has its registered office. [Distributor] seeks an order to declare the Italian judge's jurisdiction.
The absence of jurisdiction of the Italian court over this dispute must be declared.
[Distributor] has filed a claim seeking for (i) a declaration that the agreement -- purportedly entered into with [Supplier] -- is terminated and (ii) an award of damages.
[Distributor] (at pages 2 and 3 of its writ) alleges to have undertaken, by means of the agreement, the obligation "to purchase a minimum amount of goods equal to Deutsche Mark [DM] 250,000, for the first three years"; [Distributor], moreover, states that the performance of the agreement was commenced, since [Supplier] had delivered goods for an amount of Euro 13,402, as evidenced by invoices no. 206375 and no. 206376 of 24 March 2000.
It is undisputed that, as argued by [Distributor] in its counterclaim, the supply agreement granting exclusive rights to [Distributor], is a framework agreement; it is also undispued that such agreement can be performed in accordance with different contractual schemes, the regulation of which reference must be made in order to determine (i) the jurisdiction, (ii) the national court's competence, and (iii) the substantive provisions to be applied to the contractual relationship at issue.
In the present matter, as made clear by [Distributor]'s statements, the supply of goods by [Supplier] to [Distributor], had to be carried out (and was partially carried out) by means of deeds of sale, with reference to which the related invoices were issued.
The agreement, in the broad context of the contractual framework agreed by the parties, was hence executed through separate deeds of sale, according to which exclusive rights were assigned to [Distributor] to resell goods in Italy.
In such a matter, total breach thereof, it is worthwhile to emphasize the essence of the agreement, which consists of mutual obligations of the parties. Particularly, the obligations, in supplying goods by means of different deeds of sale, and, on the other hand, in purchasing a certain amounts of goods (the latter condition foreseen in order to enable the renewal of the agreement, originally for a three-years term).
The exclusive rights were intended to serve a merely ancillary role and, in any case, they should not be taken into consideration in the present dispute, since, according to [Distributor]'s claim, [Supplier], refusing to perform the agreement, alleging that it was not executed, has breached the contractual obligation to sell the goods agreed to be supplied thereunder.
"A person domiciled in a Contracting State may be sued in another Contracting State in matters relating to a contract, in the courts for the place of performance of the obligation in question."
In this regard, [Supplier]'s argument, according to which Article 5 of the Brussels Convention does not apply due to the absence of a contractual deed, is overruled. Indeed, in order to rule on jurisdiction, it is not necessary to assess whether or not the contractual deed, which constitutes the grounds on which the claim is submitted, did exist. In fact, notwithstanding that [Supplier], who has been sued either for the enforcement or the termination of an agreement, challenges the existence of the agreement, it is undisputed that the matter is related to a "contractual subject" (European Court of Justice, 4 March 1982, case Effer vs. Kanter).
The assessment of the circumstances which may lead to a favorable rule, is thus related to the merits of the dispute, being the points at issue (i) whether an agreement was effectively executed by the parties; and, eventually, (ii) whether the alleged breach of contract in light of which the termination of the agreement was claimed, occurred; such assessment, however, is not affected by the final judgment as to jurisdiction, considering that such judgment shall acquire the force of res judicata only on jurisdiction, but not on the merits of the dispute.
Having said that, as above remarked, the claim in the present matter relates to the termination of an agreement, in which a (purported) breach of contract in supplying goods, undertaken by [Supplier], a company with its registered office in Germany, in favor of [Distributor], a company with its registered office in Italy, Accordingly, the breach of contract at issue arises out of a sales agreement.
Whereas an international agreement for the sale of goods was entered into by the parties, it is not therefore necessary, in order to determine the place of the performance thereof, to determine the law applicable to the relationship in compliance with the rules of private international law (norme di conflitto) of the relevant judge. It is straightforward, conversely, to make reference to the Vienna Convention on the International Sales of Goods dated 11 April 1980, ratified with Law 11 December 1985 no. 765, whose provisions, setting forth a uniform regulation on sales of goods, applying irrespective of the international private set of rules of the two Contracting States (Arts. 1 and Art. 7(2) of the Vienna Convention) and thereto are not useful to determine the applicable law in this matter (Cass., Plenary Session, no. 14837/2002; Cass., Plenary Session, no. 7503/2003).
(c) in other cases -- in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract".
In view of the aforementioned criteria, in the absence of derogation thereon -- which is not present in this matter -- it can be inferred that Germany was the place of the delivery of the goods sold by means of each sale and purchase deed.
According to the criterion set forth in Article 5(1) of the Brussels Convention, Germany was the place of performance of the obligation in dispute (supply of goods); this Court therefore holds that the Italian court lacks jurisdiction over the present case. Equitable reasons exist to set-off trial costs between the parties.
This Court declares that the Italian court does not have jurisdiction over the present case. The Court also decide to set-off legal costs and expenses. So decided in Rome on 1 July 2004. Deposited on 20 September 2004 in the Chancery Court.
* All translations should be verified by cross-checking against the original text. For purpose of this translation, Reference Laboratory S.r.l, Claimant before the Court of First Instance (Tribunale) and Defendant before the Supreme Court, is referred to as [Distributor]; and Kling & Freitag GmbH, of Germany, Respondent before the Court of First Instance (Tribunale) and Plaintiff before the Supreme Court, is referred to as [Supplier].
Translator's note on abbreviations: Cass. = Corte di Cassazione [Italian Supreme Court]; C.p.c. = Codice di procedura civil [Italian Civil Procedure Code of 1984]; DM = Deutsche Mark [German former currency]; GmbH = Gesellschaft mit beschränkter Haftung [Limited liability company incorporated under German law] L. = Italian ordinary law, enacted by the Italian Parliament; S.r.l. = Societá a responsabilitá limitata [Limited liability company incorporated under Italian law].
Translator's note on dates of the case: There are two dates to take into consideration: the date on which the decision is rendered (1 July 2004) and the date on which the decision is deposited, meaning before which it cannot have effect (20 September 2004). When citing a case, the latter date is generally used.
** Danielle Ferretti [add bio data].
*** Michele Zamboni, LL.M. Freshfields Bruckhous Deringer, Milan, Specializing in Italian Civil Procedural Law, University of Urbino (Italy).

References: v. 
 Art. 5
 Art. 31
 art. 5
 art. 31
 v. 
 Art. 7