Source: http://cisgw3.law.pace.edu/cases/910927g1.html
Timestamp: 2019-04-18 10:31:30+00:00

Document:
An Italian seller, plaintiff, delivered marble slabs to a German buyer, defendant, The buyer informed the seller that the slabs were broken and hand been stuck together. Thereafter, the buyer cut off the slabs and processed them. As the buyer refused to pay, the seller claimed payment of the purchase price.
The appellate court upheld the decision of the first instance court, which had admitted the seller's claim.
The court held that the rules of private international law of Germany led to the application of Italian law. Since the CISG was in force in Italy as of 1 January 1988, even though Germany was not a Contracting State at that time, the CISG was held to be applicable (article 1(1)(b) CISG).
The court found that it was not necessary to decide whether the marble slabs were broken and had been stuck together before delivery took place, whether the goods had been examined by the buyer in a short period of time (article 38 CISG), whether the buyer had given notice within a reasonable time after it had discovered the lack of conformity (article 39 CISG) or whether the seller had deceived the buyer with regard to the quality of the goods.
The court held that due to the processing of the marble slabs, it was impossible for the buyer to arrange for restitution of the marble slabs in the same condition in which it had received them. Therefore, the buyer had lost its right to declare the contract avoided (article 49 CISG) pursuant to article 82(1) CISG. Furthermore, the buyer had not met the requirements of article 82(2) CISG in order to exclude the application of article 82(1). The change in the slabs' condition had been caused by the buyer's own act and had not been the result of the examination of the goods under article 39 CISG.
The [Buyer]'s appeal is unjustified.
I. The Landgericht [District Court] of Koblenz, where the matter was first brought by the [Seller] and the Oberlandesgericht [Appellate Court] of Koblenz have international jurisdiction in this matter.
The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (EUGVÜ [*]) is decisive. See the new version of the Accession Treaty of 9 October 1978 regarding the accession of Denmark, Ireland and Great Britain (BGBl [*] 1983 II p. 803), which as of 1 November is also applicable to relations with Italy (BGBl 1986 II p.1020). Pursuant to the provisional regulation set forth in Art. 34(1) of the Accession Treaty, the new version (EUGVÜ 1978) is applicable to all actions filed in the original Member States after 1 November 1986, therefore, it applies to the case at hand, which was filed with the service of process on 10 May 1989.
In the present case, the international jurisdiction of the German court results from EuGVÜ (1978) Art. 2(1), as the [Buyer] has its place of business in the district of the District Court of Koblenz, and an exclusive place of jurisdiction in accordance with EuGVÜ (1978) Art. 16 is not justified.
II. The District Court was justified in awarding the [Seller] the purchase price demanded in its claim.
1. In accordance with EGBGB [*] Art. 28, the "United Nations Convention on the International Sale of Goods of 11 April 1980" (CISG [*], BGBl. 1989 II p. 588) is to be applied to the legal relationship of the parties, who indisputably concluded a contract for the sale of marble slabs in November 1988.
a) The determination of the applicable law in case of a connection to a foreign country depends on the rules of private international law of the Court before which the matter was brought (lex fori). Pursuant to German private international law, the provisions in international law treaties are primarily applicable as far as they have been directly transformed into applicable national law (EGBGB Art. 3(2) S.1 in the version applicable as of 1 September 1986, this being based on the Convention on the Law Applicable to Contractual Obligations of 19 June 1980 (Rome Convention)). However, in the present case, such applicable internationally harmonized substantive law or otherwise, a convention on the conflict of laws, is not in existence.
The Uniform Law on the International Sale of Goods [ULIS] that was based on the Hague Convention [*] of 1 July 1964 was applicable to sales contracts on movables where the parties had their places of business or habitual places of residence in different member states; in regard to a relationship between a party residing in the Federal Republic of Germany and a party residing in the Republic of Italy. However, ULIS was only applicable to contracts concluded before 31 December 1987. For Italy terminated the Convention of 1 July 1964 on 11 December 1986, to be effective by 31 December 1987 (BGBl. 1987 II p. 231), because of which, Italy has not been a member state in accordance with the [ULIS] Art. 102 since 1 January 1988.
The CISG as well is not applicable to this case as a harmonized substantive law by virtue of one standard of law application: CISG Art. 1(1)(a). Though Italy has effectively joined the United Nations Convention of 11 April 1980 as of 1 January 1988 (BGBl. 1987 II p. 231); in the Federal Republic of Germany, the Convention of 11 April 1980 - insofar as it does not concern the new states within the Federal Republic of Germany as of 3 October 1990 - the CISG only became effective on 1 January 1991 (BGBl. 1990 I p. 2894; I p. 1477). Therefore, at the time of the conclusion of the contract between the parties in November 1988, there was neither an internationally harmonized substantive law nor a conflicts-of-law treaty in effect.
b) In the absence of a choice of law by the parties regarding the applicable law, the contract is subject to the law of that state which it has the closest connection to; this is assumed to be the state where the party that has to effect the characteristic performance has, at the time of the conclusion of the contract, its habitual residence or, in the case of a body corporate or un-incorporate, its central administration. EGBGB Art. 28 (1) s.1; (2). In the present case, this is Italy, as the [Seller], whose place of business is located there, had to deliver the contractual goods, namely the marble slabs, and therefore had to render the characteristic performance of the sales contract. For this reason, the contract has a closer connection to Italy than to Germany, in which territory the [Buyer] as debtor of merely the purchase price has its place of business. This means that the substantive law effective in Italy is to be applied (Art. 35(1)).
As the CISG was transformed into national Italian law, the provisions of this Convention on the sale of goods between parties with places of business in different states are to be applied, if the provisions of private international law lead to the application of the law of a member state which has acceded to the Convention (CISG Art. 1(1)(b)). As Italy has not availed itself of the reservation allowed in CISG Art. 95 (BGBl 1990 II p. 1479) and CISG Art. 1(1)(b) applies, the CISG provisions take precedence over those of the Italian sales law in the Codice civile. Therefore, because of the application of Italian law to the present case, as designated by German private international law, the CISG is applicable. It is not required that the state whose private international law refers to the law of a state that has acceded to the CISG itself be a Contracting State of the CISG (Herber/Czerwenka, Internationales Kaufrecht, pre. CISG Art. 1, para. 4; LG Hamburg, EuZW 1991, 188,190= RIW 1990, 1015, 1016 incl. further references).
- Finally, if the reproof is true, that the [Seller] - which according to its uncontested submission deals solely with marble - itself arranged for the patchwork on the slabs or alternatively at least knew about the work and therefore fraudulently deceived the [Buyer] about the compliance of the material.
In any event, the [Buyer] has lost the right to declare the contract avoided because of the defects (CISG Art. 49) and has lost the right to refuse to pay the purchase price as [Buyer] is unable to make restitution of the goods substantially in the condition in which it received them (CISG Art. 82).
This is, namely, because the [Buyer] insufficiently countered the allegation by the [Seller], which the [Seller] gave proof to, that the [Buyer] had processed the slabs in the meantime (answer to appeal of 14 September 1990, p. 14). The [Buyer] itself submitted in the first proceedings that it had started to customize the materials delivered by the [Seller] on 7 December 1988.
The declaration of the [Buyer]'s authorized representative in the proceedings at the hearing of 6 September 1991, that he contested the [Seller]'s submission in the answer to the appeal "in accordance with the previous submissions of the [Buyer]", does not meet the requirements of ZPO [*] � 138(2), according to which each party has to elucidate its position regarding the alleged facts brought forth by its opponent.
With the [Buyer] having started to process the slabs as early as December 1988 and since that time not has not requested the [Seller] to pick up the slabs, the [Buyer] would have needed to comment in detail on the present condition of the slabs. A mere denial of the [Seller]'s allegation that the [Buyer] had processed the slabs in the meantime is insufficient and therefore cannot be taken into account, ZPO � 138(3), albeit the contrary (the processing having taken place) cannot be concluded from the [Buyer]'s submissions so far either. Hence, it may be left open if the denial as well was late and therefore, for that reason, would have had to be disregarded pursuant to ZPO �� 523, 296(2).
As, because of that conclusion, it is indisputably appropriate to proceed on the assumption that the [Buyer] has cut and processed the marble slabs delivered by the [Seller]; the [Buyer] is thus not able to make restitution of the goods in their original condition. In accordance with CISG Art. 82(1), this leads to the loss of [Buyer]'s possible rights based on the defectiveness of the goods. The factors that would preclude such a loss are not given in the present case, as the transformation of the slabs resulted from an action by the [Buyer] and not from the required examinations provided for in CISG Art. 38, and, furthermore, as the [Buyer], according to its own submission, discovered the lack of conformity before the start of processing.
The decision on costs is based on ZPO � 97(1). The order for provisional enforceability is based on ZPO �� 708 No.10, 713.
The value of the [Buyer]'s claim, like the value of the appeals procedure, amounts to 11,026 DM [*] (equal to Lit [*] 8,228,990).
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Italy is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer]. Amounts in the former currency of Germany (Deutsche Mark) are indicated as [DM], amounts in the former currency of Italy (Lira) are indicated as [Lit].
Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGB1 = Bundesgesetzblatt [German Law Gazette]; Cc = Codice civile [Italian Civil Code]; CISG = United Nations Convention on Contracts for the International Sale of Goods; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuch [Introductory Statute to the German Civil Code]; EuZW = Europäische Zeitschrift für Wirtschaftsrecht [Euroean Commercial Law Journal]; EuGVÜ = Europäisches Gerichtsstands- und Vollstreckungsübereinkommen, 1968 [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters]; Hague Convention = Haager Übereinkommen betreffend das auf internationale Kaufverträge über bewegliche körperliche Sachen anzuwendende Recht, 15. Juni 1955 [Hague Convention on the Applicable Law with regard to International Sale Contracts for Movable Goods of 15 June 1955]; LG = Landgericht [District Court]; RIW = Recht der Internationalen Wirtschaft [The law of International Commerce -German law journal]; ZPO = Zivilprozessordnung [German Civil Procedure Code].

References: Art. 34
 Art. 2
 Art. 16
 Art. 28
 Art. 3
 Art. 102
 Art. 1
 Art. 28
 Art. 1
 Art. 95
 Art. 1
 Art. 1
 Art. 49
 Art. 82
 Art. 82
 Art. 38