Source: http://cisgw3.law.pace.edu/cases/971010s1.html
Timestamp: 2019-04-23 14:17:12+00:00

Document:
A Swiss seller, defendant, delivered acrylic cotton to a French buyer, plaintiff, who notified the seller of the lack of conformity of the goods. The buyer commenced proceedings in Switzerland within two years but after expiry of the one-year limitation period under Swiss domestic law. The issue before the court was how to deal with the conflict between article 39(2) of the CISG, which requires the buyer to give the seller notice of the lack of conformity within two years, and the shorter limitation period under Swiss domestic law.
The court of first instance resolved the conflict by replacing article 210 of the Swiss Code of Obligations (CO) with article 127 CO, i.e. the general rule of limitation pursuant to which the period of limitation is ten years unless otherwise provided by law.
The appellate court chose a different approach. It noted that there was a distinction to be made between an action for breach of warranty under Swiss domestic law, which had to be brought within one year, and a claim for lack of conformity under the CISG, which had to be brought within two years. The court first referred to article 1(2) of the Swiss Civil Code and noted that the judge, in view of an issue not resolved by the law, has to decide according to the rules which the judge would lay down if the judge had to act as legislator. The court then searched for a solution as close as possible to article 210 CO, while respecting the CISG at the same time. It brought into line the rules of Swiss domestic law with the CISG by extending to two years the one-year period prescribed under article 210 CO.
The decision has not yet become final, as an appeal to the superior appellate court is pending.
Moulinages Poizat [Buyer] is a company under French law having its corporate domicile in Dunieres (France). Its parent company is Moulinages Schwarzenbach SA.
Filinter SA [Seller] is a company under Swiss law its corporate domicile being Meyrin (Genève).
Both are professionals in the textile industry.
In 1994 [Buyer] ordered yarn from [Seller], acrylic cotton, the order being executed satisfactorily.
The 21 February 1995, [Buyer] ordered 3,129 kilos of the same yarn from [Seller]. They were delivered on 1 March 1995 and were the object of an invoice of the same date. Moulinages Piozat was not the ultimate buyer of that yarn which it resold to a client, Schoeller, as it had done before in 1994. On 17 May 1995, client Schoeller informed [Buyer], by telephone, after that by courier on 30 May 1995, that the delivered yarn was deficient. [Seller] answered on 16 June 1995 contesting any responsibility.
Schoeller turned to [Buyer] and the parties came to an agreement with [Buyer] paying a compensation to its client.
On 29 April 1996, [Buyer], through its parent company Moulinages Schwarzenbach SA, requested from [Seller] the sum of 42,109 French francs [Ffr] plus interest at the rate of 7% from 1 March 1995 under the title of damages for deficient performance as well as 10,000 [Ffr] as compensation. The demand for payment was notified to [Seller] on 4 June 1996. It was rejected.
On 30 July 1996, [Buyer] filed a claim for payment against [Seller] at the Court of First Instance in Geneva, trying to obtain reimbursement of the sums that it had to pay to its client Schoeller, as well as the sum of 10,000 [Ffr] as compensation.
In its reply, [Seller] put forward a plea of lapse of time [statute of limitations] for the action for breach of warranty by application of Art. 210 CO [*], an objection which [Buyer] disputed.
The Court of First Instance rendered its judgment on 14 March 1997. It considered that Art. 210 CO [a section of the Swiss Code of Obligations providing for a one-year limitation period for warranty claims] cannot be applied in a case to which the Vienna Convention on Contracts for the International Sale of Goods (CISG) has to be applied and of which Art. 39 sets forth a disqualification period of two years for the notification of lack of conformity. The lower court considered that Art. 127 CO [a section of the Swiss Code of Obligations providing for a ten-year limitation for general contractual claims] is exclusively applicable, and that in consequence the action for breach of warranty filed by [Buyer] was not barred by lapse of time; on that, it ordered the commencement of the hearing of evidence.
By document deposited at the Court of Ceans on 23 April 1997, [Seller] lodged an appeal against that decision. [Seller] asserts that the first judge was wrong in denying the application of Art. 210 CO, and consequently claims the admission of its objection of lapse of time and requests the dismissal of [Buyer]'s claims.
[Buyer] demands the confirmation of the rendered decision.
1. Lodged in the form and within the period of time required by the law, the appeal is admissible. The Court decides on it with the right of full reconsideration. The tribunal having decided on an objection to the merits of the case, it is possible to appeal immediately.
a) The CISG is applicable.
b) Art. 39 of that Convention sets forth a disqualification period for the notification of lack of conformity, but that the CISG does not regulate the limitation of an action for breach of warranty, which is confirmed by legal writers (cf. namely Honsell, Vogt & Wiegand, Commentary to Art. 211 CO [*], 1996, p. 1171, Honsell, Schw. Obl. besonderer Teil, 1997, p. 141 ch. VI).
c) The United Nations Limitation Convention of 14 June 1974 is not applicable as it was not ratified by Switzerland.
d) Consequently it is the LDIP [*], particularly its Art. 118 al.1, that is applicable.
e) By renvoi of Art. 118 al. 1 LDIP to the Convention of The Hague of 15 June 1955 the applicable law is the domestic law of the country where the seller has its domicile at the time it receives the order, in this case, Swiss law.
f) According to Art. 210 al. 1 CO, an action for breach of warranty concerning movable goods is barred by lapse of time one year after the delivery was made to the buyer, even if the latter has only discovered the deficiency later.
g) In this case, the delivery has taken place on 1 March 1995 and the first act interrupting the limitation period took place on 29 April 1996.
h) [Buyer] notified the deficiency on time with regard to the disqualification period of Art. 39 of the Convention of Vienna (appeal of [Seller] p. 5 par.1 and note to the Court of First Instance by [Buyer] of 5 December 1996 p. 6 ch. 17), at the latest in June 1995.
3. It only remains the problem raised by legal writers (Honsell, Vogt & Wiegand and Honsell op. cit.), that the limitation period of the action for breach of warranty under Swiss law, as the notification of deficiencies is always possible under the Convention of Vienna.
The difficulty results out of the fact that, contrary to the CISG, Swiss domestic law (Art. 201 al. 1 CO [*]) does not set forth a maximum period for the notification of deficiencies (two years), but provides that, in all cases, an action for breach of warranty is barred by lapse of time one year after the delivery was made to the buyer (Art. 210 al. 1 CO).
That conflict is also known to foreign laws, namely German law, which found a solution in the sense that its limitation period does not begin to run before the notification under Art. 39 of the Convention of Vienna (Honsell, op. cit.). In Switzerland, not only the legal writers, but also the Conseil Federal on the occasion of the declaration of the ratification of the Convention of Vienna (FF 1989 p. 755), was conscious of the problem. Several solutions have been proposed, namely the application of the regular limitation period in contractual matters (Art. 127 CO [*]).
Concerned with a question not resolved by the law -- and discussed by legal writers -- the judge has to decide according to the rules which the judge would lay down if the judge had to act as legislator (Art. 1 al. 2 CC [*]).
In that view, a solution as close as possible to Swiss legislation (meaning the Code of Obligations) has to be found, while respecting the CISG at the same time, as in the context of international sales contracts, Art. 210 al. 1 CO is in conflict with a provision that has been later introduced in an international convention (Art. 39 CISG).
The Court considers it to be more suitable to adapt Art. 210 al. 1 CO [*] to the CISG instead of applying another provision of Swiss law concerning the limitation period (Convention of Vienna from 1980, colloquium of Lausanne from November 1984, in the Publications of the Swiss Institute of Comparative Law no. 3, p. 102, FF 1989 p. 755). For this reason, the Court considers that it is convenient to bring the two periods (Art. 210 al. 1 CO and Art. 39 CISG) into line by extending the limitation period of Art. 210 al.1 CO to the maximum delay for notification of deficiencies of Art. 39 CISG (two years). That solution is convincing as it does not fundamentally modify Art. 210 al. 1 CO (the limitation period corresponds to the maximum disqualification period), but harmonizes it with the new legislation.
Consequently, the claim of [Buyer] is not barred by lapse of time, as it was filed at the court within the period of two years.
The decision of the lower court is therefore confirmed, with the grounds therefor substituted.
4. Considering the agreement of the parties and the legal uncertainty that existed in this case, the court expenses are cancelled out against each other.
The Court declares admissable the appeal lodged by [Seller] against judgment no. 3900/1997 of the Tribunal of First Instance of 14 March 1997 in case no. C/21501/96-10.
The Court confirms the judgment of the lower court, cancels out the court expenses of the appeal, and refuses all other conclusions of the parties.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellee of France is referred to as [Buyer]; Defendant-Appellant of Switzerland is referred to as [Seller]. Amounts in the currency of France [French francs] are indicated as [Ffr].
Translator's note on other abbreviations: CC = ; CO = Swiss Code of Obligations; LDIP = .
** Kirsten Stadtländer is a student of law at Humboldt University Berlin. She was a member of the team of Humboldt University at the 9th Willem C. Vis International Commercial Arbitration Moot 2001/02 and a coach of the team at the 10th Willem C. Vis International Commercial Arbitration Moot 2002/03.

References: Art. 210
 Art. 210
 Art. 39
 Art. 127
 Art. 210
 Art. 39
 Art. 211
 Art. 118
 Art. 118
 Art. 210
 Art. 39
 Art. 39
 Art. 210
 Art. 210
 Art. 39
 Art. 210
 Art. 39
 Art. 210