Source: http://cisgw3.law.pace.edu/cases/010716g1.html
Timestamp: 2019-04-19 22:48:18+00:00

Document:
A Belgian seller and a German buyer concluded an oral contract for the sale of animals. The animals were to be delivered 'free farm'. When a dispute arose, the buyer brought suit in Germany. The court of first instance, applying the Brussels Convention (i.e. the Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters, 27 September 1968) to which both Germany and Belgium were parties, concluded that it had no jurisdiction over the claim.
The court of appeal upheld the decision of the lower court. The court analysed the concept of international jurisdiction and the relevance of article 5 (1) of the Brussels Convention to the case. The article states that, in matters relating to a contract, the place of performance of the obligation in question is relevant to determine the jurisdiction of the court. In the case examined by the court, the obligation "in question" was the seller's obligation to deliver the goods and the place of performance was to be determined by the law governing the contract. In order to ascertain the law of the contract the rules of private international law of the forum were to be applied: i.e. German private international law. Since in the specific case both Germany and Belgium were parties to the CISG, this latter would prevail over the German Code of Private International Law.
The CISG, however, leaves the determination of the place of performance primarily to the parties: article 31 of the Convention, which determines the place of "delivery", in fact applies only if the parties have not stipulated otherwise. In the case examined, the court of appeal held that there was no evidence of an agreement of the parties as to the place of delivery.
As a matter of fact, though the parties had agreed on a delivery "free farm", the court considered that there were insufficient grounds to infer the parties' subjective intent, according to the criteria set forth in article 8 (1) CISG. The court resorted then to the objective criteria provided for in article 8 (2) CISG according to which "statements and other conducts of a party are to be interpreted according to the understanding that a reasonable person would have under the same circumstances". In this regard, the court noted that in the prevailing opinion the similar clause "free house" does not have an unequivocal meaning in trade, but is to be interpreted following the circumstances of each case. However, in the case at hand the court found that no objective criteria could help determining the place of delivery.
Thus the court reverted to the general principles of article 31 CISG. Though this provision addresses three different cases for which different rules apply, the general rule appears to be that the seller's place of business is preferred as the regular place of performance. Consequently, the court concluded that the clause "free farm" included in the agreement was not meant to determine the place of delivery, but merely to allocate the cost of transportation to the seller. Accordingly, the requirements of article 5 (1) Brussels Convention were not met and the court of first instance had correctly declared its lack of jurisdiction over the case.
While the [buyer]'s appeal meets all the formal requirements, it is not successful. The Court of First Instance correctly held that under the applicable law it does not possess international jurisdiction over the dispute. Thus, it is irrelevant whether the [seller]'s General Conditions - which contained a forum selection clause in favour of Belgium courts - were validly incorporated into the contract.
The international jurisdiction results from Arts. 2, 3 and 5 no. 1 of the Brussels Convention [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters], which is applicable because both Germany and Belgium are Contracting States. The [buyer] did not choose to sue the [seller] in the State of [seller]'s domicile, which is Belgium, as would have been possible under Art. 2(1) Brussels Convention. According to Art. 3(1) Brussels Convention, a person domiciled in a Contracting State may be sued in the courts of another Contracting State only by virtue of the rules set out in Sections 2 to 6 of the Brussels Convention. Only one of these provisions - Art. 5 no. 1, the possibility to sue in the courts of the place of performance of an obligation under a contract - is relevant in the present circumstances and its requirements are not met. The place of performance needs to be determined according to the law which governs the contract. The relevant law is to be determined following the rules of private international law in force in the country of the Court that is being called upon (cf. Zöller/Geimer, ZPO [Zivilprozessordnung, German Civil Procedure Code], 22nd ed., Art. 5 Brussels Convention n. 1; Geimer/Schütze, Europäisches Zivliverfahrensrecht, Art. 5 n. 65; Thomas/Putzo, ZPO, 22nd ed., Art. 5 n. 3). Consequently, German private international law is to be consulted. The starting point is the obligation that forms the basis of the claim. According to Art. 5(1) Brussels Convention, a claim for remedy of a breach of contract - as the claim in the present case - is dependant on the primary obligation that has allegedly been breached which, in this case, would be the [seller]'s obligation to deliver (cf. Zöller/Geimer, ZPO, Art. 5 n. 2; Geimer/Schütze, Art. 5 n. 59).
Provisions (1) and (2) of Art. 28 EGBGB [Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche, German Code on Private International Law], which usually determine the law governing the contract, are superseded in the present instance by the provisions of the CISG. The latter applies because both Germany and Belgium are Contracting States to the United Nations Convention on Contracts for the International Sale of Goods (cf. Jayme/Hausmann, CISG n. 1; the Convention applies to transactions with Belgium starting from 1 November 1997). The CISG does not explicitly determine the place of performance, but leaves this matter to the agreement of the parties. Art. 31(a) CISG, which determines the place of "delivery", applies only if the parties have not stipulated otherwise (cf. Schlechtriem/Huber, Kommentar zum Einheitlichen UN-Kaufrecht, 3rd ed., Art. 31 n. 5).
The contract between [seller] and [buyer] was concluded orally and does not explicitly determine the place of performance. The parties undisputedly agreed on a delivery "free farm", but this simply means that the [seller] was to bear the costs of transport. Under Art. 8(1) and (2) CISG, a contractual clause is to be interpreted according to the parties' hypothetical intent or, in case that intent cannot be determined, according to the understanding that a reasonable person of the same kind would have had in the circumstances. As there are insufficient grounds to determine the hypothetical intentions of the parties, the clause "free farm" needs to be interpreted under objective criteria. Following the prevailing opinion, the similar clause "free house" does not possess an unambiguous meaning in trade; rather, the clause is to be interpreted following the circumstances of each individual case (cf. BGH [*] NJW [*] 1984, 567; BGH NJW 1997, 871; OLG [*] Karlsruhe NJW-RR [*] 1993, 1371). However, there are no objective criteria which could decide the place of delivery in the present case. Thus, the Court falls back on the general principles of Art. 31 CISG. Art. 31(b) and (c) regulate the buyer's duty to collect the goods, whereas Art. 31(a) specifies the seller's obligation to deliver, if the contract involves the carriage of the goods, as complied with when handing the goods over to the first carrier for transmission. Thus, the provisions of the CISG set the general principle that the place of performance for the obligation to deliver is the seller's place of business (cf. Schlechtriem/Huber, Art. 31 n. 32a; Honsell/Karollus, UN-Kaufrecht, Art. 31 n. 31 and 44). The parties to the dispute did not complement their understanding that delivery of the animals was to be made "free farm" with additional agreements. Therefore, this orally agreed clause cannot lead to a place of performance that deviates from the general principle with the further consequence of a different international jurisdiction. The Court of First Instance was therefore correct in deciding that the clause solely stipulates that the [seller] was to bear the costs of transmission. This result can be distinguished from the decision by the OLG Karlsruhe of 20 November 1992 (NJW-RR 1993, 1316), which held that a similar clause put the risk of transport on the seller, but did not draw any conclusions for the place of performance.
Moreover, the [buyer]'s place of business cannot be regarded as a "factual place of performance", as the [buyer] alleges, solely because the animals were handed over to it at that place. The wording of Art. 5 no. 1 Brussels Convention can be interpreted to the effect that a "factual place of performance" exists. However, it is unclear where such a place of performance should have existed as intended by both [seller] and [buyer], as they concluded a contract involving the carriage of goods. In this case, the place of performance would remain at the [seller]'s place of business; the transport of the goods does not change that fact. It is furthermore necessary to interpret Art. 5 no. 1 Brussels Convention with care. The alternative of a "factual place of performance" is provided to accommodate the parties' interests when changes occur after the formation of contract. The parties can determine a factual place of performance if one party's place of business changes after the contract was concluded, i.e., if the seller delivers from a different location after changing its domicile (cf. Bülow/Böckstiegel, Internationaler Rechtsverkehr, Art. 5 Brussels Convention n. 52). This is not the case in the present dispute.
As the applicable law does not lead to the international jurisdiction of the Court of First Instance, it is of no importance whether the [seller]'s General Conditions - which included a forum selection clause in favour of Leuven [Belgium] - were validly incorporated into the contract.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellee of Germany is referred to as [seller]; the Defendant-Appellant of Belgium is referred to as [buyer].
Translator's note on abbreviations: BGH = Bundesgerichtshof [Federal Supreme Court of Germany]; EGBG = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; OLG = Oberlandesgericht [Regional Court of Appeal]; NJW = Neue Juristische Wochenschrift [German law journal]; NJW-RR = NJW-Rechtsprechungs-Report Zivilrecht [German law journal]; ZPO = Zivilprozessordnung [German Civil Procedure Code].
** Ruth M. Janal, LL.M. (UNSW), a PhD candidate at Albert-Ludwigs-Universität Freiburg, has been an active participant in the CISG online database of the University of Freiburg.
*** Camilla Baasch Andersen is 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 PhD thesis on uniformity of the CISG at the University of Copenhagen.

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