Source: http://cisgw3.law.pace.edu/cases/030430g1.html
Timestamp: 2019-04-21 04:18:33+00:00

Document:
In this case, the Federal Court of Justice had to decide whether German courts had international jurisdiction according to article 5 No. 1 EuGVÜ. Article 5 No. 1 EuGVÜ defines the international jurisdiction according to the place of performance: the question raised was thus whether the dispute was governed by CISG and therefore if the place of performance was to be determined by article 57(1)(a) CISG.
The plaintiff, a German grower of cucumbers, entered into an agreement with a Dutch cooperative for utilising its cucumbers. The contract between the parties was part of the standard selling procedure, whereas it was the function of the cooperative to sort the cucumbers by quality classes and to bring the goods to market by way of auctions, advance sale and sale.
The German cucumber grower filed an action in Germany against the cooperative for payment of the outstanding "purchase price" as well as damages for having allegedly sorted the cucumbers in the wrong way, and reimbursement for lawyer fees incurred before filing the action. The Regional Court largely granted the plaintiff's claim. The Higher Regional Court reversed the verdict for lack of the international jurisdiction of German courts. The plaintiff applied for legal aid to appeal to the Federal Court of Justice, claiming that the Higher Regional Court failed to consider the fact that the parties had agreed on predetermined prices for the forthcoming cucumber harvest.
The Federal Court of Justice upheld the lower court's decision. Denying the applicability of CISG, it found that the agreement the parties had entered into is not to classify as contract of sale, but as a contract of agency, which is outside the sphere of application of CISG. The agreement on predetermined fix prices does not necessarily mean that this agreement equals to a sales contract. Therefore the Federal Court held that the place of performance was not to be defined by article 57(1)(a) CISG but by the Dutch law, pursuant to the rules of German conflict of law provisions. As a result, the international jurisdiction of German courts was not established under article 5 No. 1 EuGVÜ.
Legal opinion on the identification and specification of the international place of jurisdiction for the place of performance under Art. 5 No. 1 HS. 1 EuGVÜ [*].
The Plaintiff's pleading for financial aid on legal fees, costs and expenditures with regard to these appellate proceedings on legal matters is dismissed.
(iii)	 Indemnification for legal fees incurred during these legal proceedings.
LG Kleve predominantly upheld Plaintiff's pleading. The Appellate Court quashed Plaintiff's legal action as inadmissible, since German courts do not have international jurisdiction to hear this legal proceeding. Plaintiff pleads for financial aid to make a further appeal on legal matters to the Supreme Court.
The Court denies Plaintiff's claim for financial aid, because it cannot establish to the Court's satisfaction that its legal action has the necessary probability to succeed (Sec. 114 ZPO [*]). The Appellate Court quashed Plaintiff's legal action as inadmissible in compliance with German law, because German courts do not have international jurisdiction to hear this legal proceeding. Though any intended legal actions may have the aforementioned necessary probability to succeed already at the moment, when the court's decision merely depends on deciding on very complex legal or factual matters (Senate's decision of 19 December 2002 � III ZB 33/02 � BGH Report 2003, p. 300). Such difficult and complex legal or factual matters are not present in the current proceeding in dispute. The parties herein involved are mainly in dispute about the application of EuGH's [*] jurisprudence upheld and confirmed on several occasions as to the interpretation of Art. 5 No. 1 EuGVÜ [*]. According to therein already restated support on the interpretation of that article, it seems neither "very complex nor difficult" to opine on the decisive legal questions of Plaintiff's legal action. The Senate in its role as appellate court on purely legal matters may also conclusively decide whether or not Plaintiff's writ does truly involve complex and difficult matters, although the Senate shall only opine on the grant of financial aid to Plaintiff for a further appeal. The Senate also has this right, notwithstanding the Appellate Court granted Plaintiff the right to make an appeal on the law against its decision due to its general impact and importance to the legal development in Germany (see BVerfG [*] in NJW [*] 1991, p. 413 (414); BGH [*], Decision of 11 September 2002 � VIII ZR 235/02 � NJW-RR [*] 2003, p. 130 et seq.).
The Senate is empowered to decide on the international jurisdiction of German courts. Sec. 545 Par. 2 ZPO [*] being applicable pursuant to Sec. 26 No. 7 S. 1 EGZPO [*] does not impede this general ability of the Senate to hand down its decision on the international jurisdiction of German courts in its function as court of appeal on purely legal matters (Senate's judgment of 28 November 2002 � III ZR 102/02 which is to be publicized in BGHZ [*]).
The international jurisdiction of German courts to hear Plaintiff's legal action cannot be justified by virtue of the common place of jurisdiction of Defendant's establishment or seat (see Art. 2 Par. 1, Art. 53 Par. 1 S. 1 EuGVÜ [*]). Defendant does have its permanent residence, seat and establishment in V. in the Netherlands. Further, the Appellate Court did not restate any agreement by the parties on the choice of a place of jurisdiction that might have established the competence of German courts to hear this legal proceeding.
The place of performance granting the parties the opportunity to choose the international place of jurisdiction cannot be established at any German court (Art. 5 No. 1 and Art. 3 Par. 1 EuGVÜ [*]). According to Art. 5 No. 1 HS. 1 EuGVÜ [*], any natural person who has its permanent residence within the territory of a Contracting State may be sued in another Contracting State, provided that such relevant legal action deals with an agreement or any claims arisen under such an agreement. If so, then the relevant plaintiff may file a writ with the competent court at the place where any obligation under such an agreement has already been performed or should have been performed. The same principle applies vice versa to any body corporate and judicial persons (see Art. 53 Par. 1 S. 1 EuGVÜ [*]).
Main issue of Plaintiff's legal action is undisputedly concerned with "certain claims under a contract" pursuant to an autonomous interpretation of the EuGVÜ [*] by the EuGH [*] under Art. Art. 5 No. 1 EuGVÜ [*] (see EuGH [*], Judgments of 1 October 2002 � Rs. C-167/00, Association for consumer information � NJW [*] 2002, p. 3617 et seq., Note 35 and of 17 September 2002 � Rs. C-334/00, Tacconi � Slg. 2002, I p. 7357, Note 19 and 22).
The place of performance where claims under an agreement pursuant to Art. 5 No. 1 HS. 1 EuGVÜ [*] may be filed with a court, shall be identified according to the law that is applicable to such an obligation in dispute. This identification process shall be carried out by the relevant court where the relevant legal action has been commenced (lex fori) pursuant to its conflicts of laws rules (see EuGH [*], Judgments of 6 October 1976 � Rs. 12/76, Tessili � Slg. 1976, p. 1473, Note 13 et seq.; of 15 January 1987 � Rs. 266/85, Shenavai � Slg. 1987, p. 239, Note 7; of 29 June 1994 � Rs. C-288/92, Custom � Slg. 1994, I p. 2913, Note 26 and of 28 September 1999 � Rs. C-440/97, Concorde � Slg. 1999, I p. 6307, Note 13; Senate's Judgment of 31 January 1991 � III ZR 150/88 � BGHR [*] EuGVÜ [*] Art. 5 No. 1 Attorney's honorarium 1; Kropholler [*], p. 131). In this case, German conflicts of laws rules, i.e., German Private International Law, shall apply.
Such an aforementioned disputed obligation � for which one has to define the place of performance in compliance with the legal principles as mentioned above � is not just any obligation under the relevant contract but the equivalent obligation shadowing the contractual claim that is the basis for the plaintiff's legal action (EuGH [*], Judgments of 15 January 1987, Shenavai, l.c. Note 9; of 29 June 1994, Custom, l.c. Note 23 et seq.; see also BGHZ [*] 74, p. 136 and 139; BGHZ [*] 134, p. 201, 205; BGH [*], Judgment of 16 January 1981 � I ZR 84/78 � VersR [*] 1981, p. 630). In the event that several obligations and duties under a contract are in dispute, the tenet is any ancillary obligations and disputes shall follow the predominant obligation and dispute arisen under that contract. Therefore, the predominant and fundamental obligation under such a contract is the decisive factor to identify the jurisdiction of a court (EuGH [*], Judgment of 15 January 1987, Shenavai, l.c. Note 19); with regard to any secondary claims thus mainly claims for damages, the decisive factor is then the relevant primary (main) obligation (see EuGH [*], Judgments of 6 October 1976 � Rs. 14/76, de Bloos � Slg. 1976, p. 1497, Note 13/14 and of 15 January 1987, Shenavai, l.c. Note 9; BGHZ [*] l.c.; MüKo ZPO [*], Art. 5 EuGVÜ [*], Note 9 and 11; Schlosser [*], art. 5 EuGVVO [*], Note 7). If the relevant legal action refers to several distinguished fundamental and predominant obligations, then the place of performance is to be clarified for each claim separately (see EuGH [*] Judgment of 5 October 1999 � Rs. C-420/97, Leathertex � Slg. 1999, I p. 6747, Note 38 et seq., MüKo ZPO [*], Note 9; Musielak [*], Art. 5 EuGVÜ [*] Note 2; Kropholler [*], l.c., p. 134 et seq.).
(iii) Indemnification for any legal fees occurred before these court proceedings due to Defendant's default as to its payment obligation.
If the agreement between the parties involved in this legal action could be classified as a "sales contract" as the seller does, then the international place of jurisdiction might be in Germany at least in respect of the claimed payment of the purchase price. Hence, the relevant place of performance for this disputed Defendant's (predominant) obligation to pay the purchase price were the permanent place of Plaintiff's residence in G. This would ensue from the CISG applying without the previous application of the German conflicts of laws rules (BGHZ [*] 134, p. 201, 206; Staudinger/Magnus [*], Art. 1 CISG, Note 85). This would ensue if this were a contract concerning the acquisition and sale of goods between parties who had their establishments in different Contracting States of the CISG, namely in the Federal Republic of Germany and in the Netherlands. Further, the present parties did not explicitly exclude the application of the CISG in their agreement (see Art. 1(a) CISG). In the light of such a sales contract, Art. 57(1)(a) CISG rules that the relevant purchaser shall pay the purchase price at the place where the relevant seller has its establishment. And in the case of payment obligations of the relevant buyer, the CISG would lead to the jurisdiction of courts situated at the Plaintiff's permanent residence or establishment (see EuGH [*], Judgment of 29 June 1994, Custom l.c. Note 27 et seq. concerning Art. 59 Par. 1 HS. 1 EKG [*]; see BGH's [*] decision to submit a query to the EuGH [*] of 26 March 1992 � VII ZR 258/91 � WM [*] 1992, p. 1715, 1717: Kropholler [*], l.c. p. 131, 140; Staudinger/Magnus [*], l.c. Art. 57, Note 20).
According to the Appellate Court's opinion, the parties did not conclude a sales contract but rather an agency agreement for the provision of services (Geschäftsbesorgungsvertrag). The parties' contractual relationship may be mainly classified by the fact that Defendant was supposed to provide for the re-sale and marketing of the cucumbers vis-�-vis any end-customers. This service under an agency agreement was the Defendant's main obligation for which Plaintiff has to pay a commission fee.
The Senate comes to the conclusion that the previous Appellate Court's opinion withstands the Senate's legal review and has thus to be upheld.
The Appellate Court based its restatement of the law on the undisputed facts and the conclusive Plaintiff's submissions. This conduct and restatement cannot be criticized. The Appellate Court was obliged to opine on the question which court may have jurisdiction to hear this legal proceeding. However, it had also to decide on that question without an in-depth review of the material legal situation. (see EuGH [*], Judgments of 29 June 1994, Custom l.c. Note 19 et seq. and of 4 March 1982 � Rs. 38/81, Effer � Slg. 1982, p. 825 Note 7; Kropholler [*], l.c., p. 128 et seq.).
The Appellant, i.e., Plaintiff, reprimands that the Appellate Court did elide some of its submissions. Therein it argues that Defendant offered the cucumber growers the acquisition of their cucumber harvest at predetermined prices staggered on its quality. Plaintiff might have demonstrated that the parties agreed to fix purchase prices on 11 March 1999; this price list was confirmed by Defendant via the transfer of the "Bijlage price list".
However, the Plaintiff's reprimand is unjustified.
The Appellate Court appreciated the aforementioned agreement on fixed prices as asserted by Plaintiff. Nevertheless, it did not recognize this contractual statement as an agreement on the purchase price for goods but rather as a guarantee to sell the goods granted by Defendant in its capacity as service provider under their agency agreement. The Senate cannot object to and has to appreciate such an appraisal by the Appellate Court under German law. Any agreement on a fixed price does not necessarily and mandatory lead to the assumption of a sales contract rather than of an agency agreement to provide services (see BGH [*], Judgment of 27 February 1991 � VIII ZR 106/90 � NJW-RR [*] 1991, p. 994, 995 as to distinction between acquisition and commission services).
In other respects, quite a few clues give also support to the Appellate Court's presumption that the parties entered into an agency agreement to provide services: the parties' contractual relationship was part of a cooperative organization to sell and distribute their products. At the time in question, Plaintiff as many other cucumber growers was an indirect member of the sued Dutch cooperation through a cooperation that organised auctions to sell the goods. This Dutch cooperation was founded to further the resale and distribution of every goods produced by its indirect German and Dutch members. This support was effected in that Defendant (i) sorted all of the delivered cucumbers as to their quality classes, (ii) weighed these cucumbers and (iii) played the role as a market maker and marketing agent via the holding of auctions, pre-emption of the goods and re-sale of those goods. All of the financial returns were distributed and allocated to the German cucumber growers through Z Export GmbH, which is incorporated and situated in Germany due to sales tax reasons. Defendant received as remuneration from those German cucumber growers a commission fee and indemnification against any costs and expenses occurred while carrying out its agency services.
Though the cucumbers delivered by the respective producers were sorted by Defendant and thus they were also mixed up. But this is not any proof for the assumption that the producers gave the cucumbers into Defendant's possession and transferred to its good title in performing their ostensible obligation to do so pursuant to Sec. 433 Par. 1 S. 1 BGB [*]. Due to the producers' assent (Sec. 185 par. 1 BGB), Defendant was legally in the position to sell and transfer good title on the cucumbers to any third party albeit it has never become owner of these products (see Baumbach/Hopt [*], Sec. 383 Note 17 HGB [*] as to sales commission).
In consideration of the Appellate Court's appraisal and conclusion which cannot be objected to under any legal reasons, the Senate is to form its decision on that legal opinion. Therefore, the Senate assumes as well that it is in dispute whether or not any obligations have arisen for the Defendant under the aforementioned agency agreement to provide services (Sec. 675 Par. BGB [*]). Particularly, the parties disagree about Defendant's obligation to pay the fixed, still outstanding and remaining "purchase price" in respect of the cucumbers delivered by Plaintiff, so that Defendant could carry out its marketing services as agreed to in their contract. Hereby it may remain undecided whether or not Defendant carried out its agency services in form of a "sales commission" (Sec. 383 Par. HGB [*]) [see Baumbach/Hopt [*], l.c. Note 6: agreement on commission services as mutual agreement on the provision of services). One might reject this conclusion, because the parties agreed to a fixed price for the cucumbers. In fact, Defendant might have acted on behalf of the Plaintiff but on its own account (see Staub/Koller [*], Sec. 383 HGB, Note 14). In this case, however, the decision upon the parties' dispute does not hinge on the discrimination between agency services and commission services.
The German conflicts of laws rules assign to the law of Defendant's seat, i.e., Dutch law, the role as the governing law for each of the respective contractual relationships (lex causae). The lex causae is also the decisive factor for the determination of the place of performance for the obligation in dispute (Art. 5 No. 1 HS. 1 EuGVÜ [*]).
Since the parties have not chosen the governing law for their agreement (Art. 27 EGBGB [*]), this agreement was governed by the law of the State with which it is most closely connected (Art. 28 Par. 1 S. 1 EGBGB [*]), viz generally with regard to all parts of the respective agreement (Art. 28 Par. 1 S. 2 EGBGB [*]). According to Art. 28 Par. 2 S. 1 and 2 EGBGB [*], one may assume that an agreement does have its closest link to that State, in which the party (i) conducting the characteristic performance of such an agreement and (ii) being to effect that performance has its place of permanent residence, administrative office, main establishment or any other establishment at the time of entering into the agreement.
In the light of an agency agreement for the provision of services, the main principle is that in general the law at the seat of the party being to perform the relevant agency services shall be the governing law for that contract. Hence, this party carries out the characteristic performance (see BGH [*], Judgment of 25 October 1995 � IV ZR 83/95 � ZIP [*] 1996, p. 158 � consultancy agreement -; Staudinger/Magnus [*], Art. 28 EGBGB [*], Note 339). The same applies to an agreement for the provision of commission services. Such an agreement is predominantly classified by the performance effected by the commission provider, so that the law at its seat shall apply and be of significance (see BGH [*], Judgment of 23 November 1964 � II ZR 200/62 � WM [*] 1965, p. 126, 127; RGZ [*] 112, p. 81, 82; Baumbach/Hopt [*], l.c. Note 20; Staudinger/Magnus [*], l.c. Note 270). In this case, service provider, i.e., the commission servicer, and henceforth the conductor of the characteristic performance was the Defendant incorporated and situated in the Netherlands. Furthermore, the Appellate Court restated undisputedly that the main focus of all obligations and duties under the agency agreement for the provision of services was to provide for the resale and distribution of the cucumbers to the respective end-customers. In particular, this main focus of the parties' agreement was the factor mainly classifying the Defendant's obligation.
The place of performance is thus to define pursuant to Dutch law which is the applicable governing law for the parties' contract according to Art. 28 Par. 1 and 2 EGBGB [*]. Under Dutch law, place of performance for the obligation to pay the fixed remuneration under the re-sale contracts with the end-customers was in the Netherlands. The same applies vice versa for the duty to sort the cucumbers delivered by the producers in compliance with their contract and to weigh them afterwards. The Appellate Court restated all of those aforementioned issues. The Appellant does neither reprimand this restatement nor the application of Dutch law in general by the Appellate Court. Plaintiff as Appellant does only argue that the parties might have agreed to another place of performance at the seat of the Z Export GmbH which had to perform all payments under their agency agreement. However, this reprimand has not been given in sufficient details. The parties should have concluded such an agreement under the governing law of their agency agreement, i.e., Dutch law (see Kropholler [*], l.c. p. 135 et seq.). The Appellant refers to its previous particulars and submissions with the Appellate Court. However, the Senate cannot appreciate such an agreement or assertion therein. In other respects, the Appellant is further not in the position to diminish the Appellate Court's restatement that the parties might have agreed to the paying services through Z Export GmbH merely due to sales tax reasons. Hence, they might have relocated merely the place of payment but not the place of performance. Insofar as the Appellant takes another view on this point, it cannot establish a mistake of law in the Appellate Court's decision.
With regard to the filed secondary claim for damages due to Defendant's default, Dutch courts do have international place of jurisdiction as well (Art. 5 No. 1 HS. 1 EuGVÜ [*]). This is thus the same place of jurisdiction as for Defendant's disputed main obligations to pay (i) the still remaining and fixed remuneration under the resale of the products and (ii) damages for defective sorting and classification of the cucumbers. Insofar, the main principle that any ancillary disputes shall follow the predominant dispute applies too.
The judge Dr. Kapsa cannot sign this decision because he is currently attending an external conference.
* All translations should be verified by cross-checking against the original text. Translator's note on abbreviations: Baumbach/Hopt = Kommentar zum Handelsgesetzbuch [Commentary on the German Commercial Code, 30th Edition, 2000]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [German Supreme Court in Civil Law]; BGHR = Rechtsprechung des Bundesgerichtshofs in Zivilsachen [Compendium of Jurisprudence of the Federal Supreme Court in Civil Law]; BGHZ = Entscheidungen des Bundesgerichtshofes in Zivilsachen [Official Reporter of Decisions of the German Federal Supreme Court on Civil Matters]; BVerfG = Bundesverfassungsgericht (German Federal Constitutional Court); EuGH = Europäischer Gerichtshof [European Court of Justice]; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; EKG = Einheitliches Gesetz über den internationalen Kauf beweglicher Sachen [German Uniformed Code on the International Sale of Movables, 17 July 1973, Federal Law Gazette 1973 I, p. 358]; EuGVÜ = Europäisches Gerichtsstands- und Vollstreckungsübereinkommen, 1968 [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters]; EuGVVO = Verordnung über die gerichtliche Zuständigkeit und die Anerkennung und Vollstreckung von Entscheidungen in Zivil- und Handelssachen [Council Regulation on Jurisdiction and the Recognition of Judgements in Civil and Commercial Matters, 44/2001/EC]; HGB = Handelsgesetzbuch [German Commercial Code]; Kropholler = Europäisches Zivilprozessrecht [European Civil Procedure Law, 8th Edition 2002]; Musielak = Kommentar zur Zivilproze�ordnung [Commentary on the German Code on Civil Procedures]; MüKo ZPO = Münchener Kommentar zur Zivilprozessordnung [Munich Commentary on the German Code on Civil Procedures]; NJW = Neue Juristische Wochenschrift [a well-known German Law Journal]; NJW-RR = Neue Juristische Wochenschrift - Rechtsprechungs-Report [Report on important and recent decisions by German courts]; RGZ = Rechtsprechung des Reichsgerichts in Zivilsachen [Jurisprudence of the Supreme Court of the German Reich in Civil Law Matters]; Schlosser = EU-Zivilproze�recht [European Civil Procedure Law, 2nd Edition, 2003]; Staub/Koller = Gro�kommentar zum HGB [Multi Volumes Commentary on the German Commercial Code, 4th Edition, 1986]; Staudinger/Magnus = Kommentar zum Bürgerlichen Gesetzbuch [Commentary on the German Civil Code]; VersR = Zeitschrift für Versicherungsrecht [Journal on Insurance Law]; WM = Zeitschrift für Wirtschafts- und Bankrecht [Legal Journal on Commerce and Banking]; ZIP = Zeitschrift für Wirtschaftsrecht [Legal Journal on Commercial Law]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Stefan Kuhm is a Member of the Bar Association, Frankfurt a.M., and a Ph.D. candidate at Eberhard-Karls-Universität Tübingen.

References: Art. 5
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 Art. 2
 Art. 53
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 Art. 3
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 Art. 1
 Art. 1
 Art. 57
 Art. 59
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 Art. 28
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