Source: http://cisgw3.law.pace.edu/cases/070402s1.html
Timestamp: 2018-06-18 15:40:06
Document Index: 153113930

Matched Legal Cases: ['§ 75', '§ 2', 'Art. 71', '§ 288', '§ 288', 'Art. 71', 'Art. 71', '§ 133', '§ 157', '§ 183', 'Art. 71', '§ 285', 'Art. 43', 'Art. 63', 'Art. 71', '§ 133', '§ 133', 'Art. 71', 'Art. 71', 'Art. 71', '§ 157', '§ 183', '§ 133', '§ 281', 'Art. 210', 'Art. 184', '§ 285', '§ 281', '§ 50', '§ 50', 'Art. 2', 'Art. 8', '§ 281', 'Art. 55', 'Art. 63', 'Art. 55', 'Art. 63', '§ 281', '§ 281', 'Art. 1', '§ 281', '§ 281', '§ 64', '§ 68']

Switzerland 2 April 2007 Canton Supreme Court Zürich (Kickboards, scooters case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070402s1.html]
TRIBUNAL: Kassationsgericht [Canton Supreme Court] Zürich
JUDGE(S): Herbert Heeb, Robert Karrer, Bernhard Gehrig, Andreas Donatsch, Yvona Griesser
CASE NUMBER/DOCKET NUMBER: AA060032
CASE NAME: Y... GmbH v. Z... AG
CASE HISTORY: 1st instance Handelsgericht Zürich (HG 010154/U/ei) 24 January 2006; 3rd instance Bundesgericht 17 July 2007 [affirming]
71A11 [Suspension of performance (apparent that a party will not perform substantial part of obligations): grounds for suspension by other party (serious deficiency in ability to perform or creditworthiness]
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1526.pdf>
Court of Cassation (Kassationsgericht) of Zürich
2 April 2007 [AA060032]
Concerning the appeal against the Judgment of the Commercial Court of the Canton of Zürich of 24 January 2006 (HG010154/U/ei), the Court has taken into account:
1. On 24 April 2001 Plaintiff-Appellant [Seller] brought its action against Defendant-Appellee [Buyer] before the Commercial Court of the Canton of Zürich [Court of First Instance]. Originally, Plaintiff [Seller] was joined by a Co-Plaintiff, which meanwhile assigned all its claims to [Seller]. The [Seller]'s claim was for payment of about US $7.5 million for goods that had been delivered to [Buyer].
In its reply of 1 October 2001, [Buyer] demanded dismissal of the claim in its entirety.
[Buyer] contested some of the claimed delivery prices and raised counterclaims for damages and counterclaims stemming from a licensing agreement - including commissions to an amount of roughly US $59 million in total for [certain goods] that had been sold by [Seller] itself.
In its surrejoinder of 4 November 2001, [Seller] served the firm of Y Limited (Gesellschaft mit beschränkter Haftung; GmbH) with a third party notice.
2. Per order of 24 January 2006, the Commercial Court had disposed of the [Seller]'s claim to the extent of US $110,376. By judgment of the same date, the Court held [Buyer] liable to payment of US $520,951 plus interest. As for the remainder, the Commercial Court dismissed the claim.
On 1 March 2006, [Seller] lodged its appeal against the Commercial Court's judgment of 24 January 2006 in a timely manner. [Seller] sought annulment of sections VIII.3., VIII.4. and XIII of the ruling as well as admission of its claim concerning the amount of US $7,357,772 plus interest.
[Seller] paid the procedural deposit due under § 75 ZPO [*] in time. A consultation was not conducted in the previous instance. In its timely reply to the appeal, [Buyer] sought its dismissal.
In addition to this Cantonal appeal, [Seller] also filed an appeal against the Commercial Court's judgment with the Swiss Federal Supreme Court (Bundesgericht; BGer).
1. In that federal appeal, [Seller] demands annulment of the decision's sections VIII.3., VIII.4. and XIII, which constitute mere reasoning of the previous instance. However, apart from exceptions concerning alternative reasoning that are not relevant for the case at issue, only the operative provisions of a judgment may be subject to appeal (Frank/Sträuli/Messmer, Kommentar zur zürcherischen Zivilprozessordnung, 3rd ed., Zürich 1997, � 281 note 11). As a general principle, an appeal against the reasoning of a judgment is not admissible.
Hence the question arises whether the Court may consider [Seller]'s appeal.
[Seller]'s statement of appeal and its plea for admission of its claim by way of a new Court ruling indicate that in fact [Seller] appeals against the operative part of the previous instance's decision as far as that entailed the dismissal of its claim -- and not merely against its reasoning.
The Court interprets [Seller]'s appeal as seeking annulment of section 1 § 2 of the ruling's operative part. Therefore, this aspect will not bar the appeal from being considered.
2. Section VIII of the previous instance's reasoning concerns [Seller]'s claims for overall US $536,640. The Court found that [Seller] had stopped delivery of the goods, for which it demanded payment, relying on a right to retention under the provisions of the United Nations Convention on Contracts for the International Sale of Goods (hereafter referred to as CISG).
Under Art. 71(1) CISG, a party might suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party may not perform a substantial part of his obligations as a result of a serious deficiency in his ability to perform payment or because the party is unable to fulfill its part of the contract. Lack of creditworthiness might only be assumed in case of a serious defect accrued with respect to what the particular contract financially demanded from [Buyer].
From [Seller]'s scarce submissions on this point, the Court of First Instance was not able to decide whether a serious deficiency to perform payment had affected one of the sales contracts at issue. For this, a deterioration of [Seller]'s financial capacity in comparison to its situation at the time of the conclusion of the contract had to be established. However, [Seller] had not submitted relevant details as to when the parties had manifested their mutual intentions to bindingly enter into the said contracts. Neither had it been specified, when and where delivered goods had been detained in certain ports. Due to [Seller]'s insufficient submissions - according to the Court of First Instance - it could not be established whether after the conclusion of the particular contract it had materialized that [Buyer] did not perform a substantial part of its obligations due to a serious deficiency as towards its creditworthiness. Therefore, the Court of First Instance dismissed the claim to the amount of US $536,640.
2.1. [Seller] argues that the Court of the previous instance violated fundamental principles of procedure in the sense of � 281 No. 1 ZPO [*]. It failed to properly consider the submissions [Seller] made, and did not take any account of [Seller]'s allegations, respectively, the evidence [Seller] supplied on points that were disputed between the parties, thus violating [Seller]'s right to be heard in court.
At this early stage, the Court holds it necessary to make clear to [Seller] the requirements as to how to substantiate a nullity appeal:
2.2. From the nature of these appellate proceedings, which do not constitute a reopening of previous first instance proceedings, it follows that an appellant has to specify its objections to the first instance's decision; in its notice of appeal, the reason why it deems the decision to be void must be sustained by the appellant (§ 288 No. 3 ZPO [*]). In particular, the sections of the previous instance's judgment which the appeal contests, as well as those parts of the case record, which according to the appellant might constitute the nullity of the decision, must be quoted in the notice of appeal.
It is not to the Appellate Court to search through case files in order to find arguments for a judgment's nullity. An appellant that contests a court's taking and evaluation of evidence as being arbitrary is required to substantiate in its appeal specifically on which factual propositions the Court arbitrarily based its decision and from which particular exhibits it had drawn these conclusions.
In case it is claimed that parts of the case files contradict the conclusions the Court drew, those sections of the case record, which presumably were not considered, or were not properly considered for the decision must be quoted in detail.
An appellant who argues that its offered evidence has not been taken into account, must specify where and on what particular presumptions its argument relies on this evidence (ZR 81 No. 88 Erw. 6; Frank / Sträuli / Messmer, ibidem, § 288 note 4; Spühler / Vock, Rechtsmittel in Zivilsachen im Kanton Zürich und im Bund, Zürich 1999, p. 72/3; von Rechenberg, Die Nichtigkeitsbeschwerde im Zvil- und Strafverfahren nach zürcherischem Recht, 2nd ed., Zürich, 1986, p. 16 et seq).
2.3. [Seller]'s nullity appeal can only be considered as far as its submissions meet these criteria.
2.4. [Seller] objects to the previous instance's conclusion that, from its scarcely made submissions, the Court was not able to follow that there had indeed been a serious deficiency in [Buyer]'s ability to perform payment as concerns any of the contracts in dispute. [Seller] argues the submissions it made by no means were (too) scarce, referring to Art. 71 CISG and to submitted excerpts of several legal commentaries. Also, [Seller] quotes sections of its rejoinders (resp. attachments) submitted in the first instance. From all this [Seller] -- contrary to the Court of First Instance -- draws that its thus established conduct gave it the right to retention under Art. 71 CISG. Not recognizing its submitted facts and the offered evidence, [Seller] claims, the Court of First Instance violated essential Cantonal rules of procedure, i.e., the provisions for the taking and evaluation of evidence under § 133 et seq. ZPO [*], and particularly § 157 et seq. ZPO and § 183 et seq. ZPO.
a) The question whether [Seller]'s previously alleged conduct constituted "a right to retention under Art. 71" CISG, i.e., whether a serious deficiency in [Buyer]'s ability to perform payment had affected any of the sales contracts in dispute, is indeed a question for the applicability and interpretation of the CISG.
b) Those decisions, that are to be referred to the Swiss Federal Supreme Court (Bundesgericht; BGer), may not be subject to a nullity appeal. This is the case, when the Federal Supreme Court may freely decide whether an alleged defect had indeed existed (§ 285(1) and (2) ZPO [*]).
c) Against the ruling of the Court of First Instance, an appeal to the Federal Supreme Court was possible. The Court of First Instance had correctly given notice to the parties on that point. Consequently, [Seller] additionally raised such an appeal, claiming also the violation of Swiss federal law including international treaties that had been validly adopted into Swiss national law (Art. 43(1) aOG [*]). The latter's application is subject to the Swiss Federal Court's free judicial review (Art. 63(3) aOG). The CISG is such an adopted international treaty; hence its application may be subject to the Federal Supreme Court's free review (see BGE [*] 130 III 258). Therefore, the complaints [Seller] has raised on this point may not be heard within the current Cantonal appellate proceedings.
d) In particular, this Court will not consider [Seller]'s claim that the previous instance mistakenly found the [Seller]'s submissions too scarce to conclude that [Seller] had been entitled to retention under Art. 71 CISG due to a presumed serious deficiency in [Buyer]'s ability to pay for the goods ordered under one of the sales contracts. The same applies for [Seller]'s argument that, in violation of § 133 et seq. ZPO, [*] the previous instance did not take proper account of the allegations made by the [Seller] and the evidence offered by the [Seller]. The Court of First Instance, applying the relevant law, found [Seller]'s submissions insufficient for legal reasons (see below under e) and Rechenberg, ibidem, p. 41). According to § 133 ZPO, [*] evidence is admissible only on facts relevant for the outcome of the case. As the Court of First Instance held [Seller]'s submissions irrelevant for legal reasons, it did not violate Cantonal rules of procedure when it refused to allow evidence on these points. Within the federal appeal it has raised, [Seller] may well rely on these submissions and argue that, contrary to the findings of the Court of First Instance, it had indeed been entitled to retention under Art. 71 CISG, as its submitted facts allow the conclusion that there had been a serious defect in [Buyer]'s ability to perform payment for the contracts in question. If the Swiss Federal Supreme Court follows this argument, it may refer the case back to the Court of First Instance for additional taking of relevant evidence. Therefore, this Cantonal Court will not consider these points within the current nullity appeal.
e) [Seller]'s appeal is unfounded as far as it claimed a violation of [Seller]'s right to be heard in court by the Court of First Instance's entire neglecting of facts [Seller] had submitted in its rejoinders. In its judgment, the previous instance explicitly referred to these allegations, respectively, to summaries of them, thus taking account of them indeed. The fact that the Court did not interpret these facts in the way suggested by [Seller], i.e., as being essential to the outcome of the case, cannot amount to a violation of [Seller]'s right to be heard.
2.5. The previous instance held that [Seller] did not sufficiently specify when and how the parties expressed their mutual intent to contract. [Seller] objects referring to rejoinder HG act. 1 pp. 4/5 et seq with attachments HG act. 4 and 6 to 9, to the reply in HG act. 17 pp. 26 et seq, in particular p. 33, with attachments HG act. 16 to 19 and the surrejoinder HG act. 28 pp. 39 to 41.
a) The mere reference to attachments 4 and 6 to 9 of [Seller]'s complaint does not satisfy the standards of substantiation that apply within the proceedings of [Seller]'s appeal (for these standards, see under 2.2. above). The named attachment No. 19 to [Seller]'s reply in fact consists of 69 documents, all of which are written in English. It does not fall in the responsibility of the Court to search all these documents for exhibits that might possibly help [Seller] to specify when and how [Buyer] had placed its orders, and when and how [Seller] then executed these orders.
b) Those references which have been sufficiently specified by [Seller], on the other hand, are unsuitable to sustain the nearer settings under which the parties had entered into their contracts. [Seller] refers to a "complete list of all open account deliveries" dated 28 February 2000, to bills and payment dates, deliveries for Switzerland and Germany, shipping dates, one remainder and an unpaid position over about US $7.5 million. However, all this does not indicate anything as towards the conclusion of any of the sales contracts in dispute. In particular, the material is of no importance for the question about the exact time of the conclusion of a particular contract, as this has been of vital importance to the Court of First Instance. [Seller]'s reference to pages 39 to 41 of its surrejoinder may serve as an example. In the entire cited passage, there is only this one presumption about [|Buyer]'s financial situation that, though having become manifest "before the actual conclusion of contract about the delivery of eight containers", took on alarming dimensions "in the relevant period of time". Yet, it was not mentioned when "the actual conclusion of the contract for the delivery of eight containers" took place, and what particular content had been stipulated in the agreement. Thus, [Seller]'s references do not serve to substantiate what relevant point in the reasoning of the previous instance would have been unduly neglected. Therefore, [Seller]'s appeal - as far as it was to be considered by the Court - is unfounded on this point.
2.6. [Seller] also contests the Court of First Instance's finding that [Seller] had not submitted when, where and what particular goods had been retained in ports. [Seller] argues that it had indeed sufficiently sustained this allegation by submitting details about the delivery date, the delivery, the content and the price of the eight, respectively, five containers at issue. Where, i.e., in what particular ports, the goods had been retained, according to [Seller], is irrelevant.
The Court in the previous instance first maintained that [Seller] had stopped the delivery of those goods listed in lines 50 to 53 of the aforementioned comprehensive list, thus taking due account of the allegations [Seller] made. If, subsequently, the Court reasoned that [Seller] failed to submit when, where and what kind of goods had been stopped at ports, the Court apparently did not refer to the retention itself (which had indeed been established before), but to the exact point of time when and the exact place where (i.e., in what ports) the goods had been stopped. Thus, [Seller]'s appeal on this point misunderstands the Court of First Instance's decision and therefore is unjustified. The question if it had been of relevance for the "assessment of the legal situation" (as [Seller] has explicitly argued), or not, when and where the goods had been retained, is a material question of law, which may not be considered within the current appellate proceedings. [Seller] is free to bring forth its objections on this point within its appeal before the Federal Supreme Court.
[Seller] may well argue that it did indeed sufficiently sustain what goods had been stopped, as established in the previous instance, and also that the questions when and where this retention in fact took place, contrary to the opinion of the Court of First Instance, were of no importance to the case. However, [Seller] does not substantiate that - contrary to the reasoning in the first instance - it had indeed sufficiently submitted as to when the goods had been retained. The passage in page 33 of its rejoinder does not indicate this. The Court cannot follow that the submitted facts on delivery dates, deliveries, contents and prices would imply when and where certain goods had been stopped. Thus the broad reference to attachments 16 to 19 is insufficient. In this respect, the appeal is unfounded as well.
2.7. [Seller] further claims that, contrary to the finding of the Court of First Instance, attachments 6, 8 and 9 do indeed indicate, that "all eight containers" had been stopped in Hamburg. [Buyer] had never disputed this allegation. However, from the numerous submitted bills, the Court cannot follow where which containers had been retained. [Seller] does not even claim that it had either alleged or even substantiated these facts in the first instance. Hence, there was no need for [Buyer] to object. [Seller]'s claim is therefore unjustified.
2.8. Finally, [Seller] in this context challenges the first instance's reasoning that it could not be established whether due to a serious deficiency in its creditworthiness [Buyer] had not been able to perform under the contract at the time after conclusion.
This part of [Seller]'s appeal concerns a legal conclusion that the Court of First Instance drew from the aforementioned findings, namely, that [Seller] had not submitted when, how and where the conclusion of any of the contracts in dispute actually took place, what exactly had become the content of the sales agreement, or when and where certain goods had been retained. Whether these facts are as relevant for the correct application of Art. 71 CISG as the Court of First Instance deemed, or whether, on the other hand, the allegations that [Seller] brought forward in its appeal were sufficient, is a question of law concerning the proper interpretation of Art. 71 CISG, and will not be considered in the current appellate proceedings. The presumption, raised within the appeal, that [Buyer]'s incapability to perform its contractual obligations at the time when the contract for the delivery of the containers had been agreed had not become as manifest as it became later in November 2000, is not sufficiently established. [Seller] does not indicate that it had submitted anything towards this, respectively, [Buyer]'s presumed lack of creditworthiness at the time of the agreement. Hence, the Court does not need to concern itself with that question.
2.9. [Seller]'s reference to § 157 et seq. and § 183 et seq. ZPO [*] is unjustified. These provisions concern the taking and evaluation of evidence, and would only apply if [Seller] had indeed made sufficiently sustained allegations (see the subheading before § 133 ZPO [*]). But this, according to the Court of First Instance, [Seller] failed to do. Hence, [Seller]'s resort to the named provisions will not be considered.
3. Under Section VIII of its reasoning, the Court of First Instance was concerned with [Seller]'s claim for US $2,218,601 that, according to the ruling, concerned goods being delivered to the firm Y Limited (Gesellschaft mit beschränkter Haftung; GmbH) in Germany. [Seller] concludes from an e-mail of A, sent on 25 September 2000, that [Buyer] had to vouch for Y Limited's liabilities. However, in the first instance it was held that, under the principle of good faith, A's words could not be interpreted as having impliedly taken on such a guaranty for the German company. As the firm Y Limited of Germany had ordered the goods, there had been no reason for [Buyer] to stand behind someone else's debt. Moreover, it could not be found out what particular deliveries and what amounts would have been covered by such a guaranty. [Seller]'s claim thus was unfounded and dismissed.
3.1. [Seller] contests these findings of the Court of First Instance, arguing they violate Cantonal principles of procedure as laid down in § 281 ZPO [*]. [Seller] alleges that the Court of First Instance, in abuse of its judicial discretion, neglected all other submissions made by [Seller] and evidence offered by [Seller]. [Seller] claims that the Court of First Instance infringed essential principles of Cantonal law concerning the taking and evaluation of evidence. This unsubstantiated argument can only be considered as far as [Seller] manages to provide sustainable facts, and as far as it does not concern Swiss federal law including the CISG.
3.2. As far as the appeal concerns the interpretation of A's e-mail of 25 September 2000, it may not be considered because the Court of First Instance -- rightly -- had already engaged in interpreting the text normatively under the principle of good faith (Honsell in Basler Kommentar zum Schweizerischen Privatrecht, Obligationenrecht I, 3rd ed., Basel / Genf / München 2003, Art. 210 note 10; Giger in: Berner Kommentar zum schweizerischen Privatrecht, Obligationenrecht Band VI/2/1/1, Art. 184 to 215 OR, Bern 1979, note 61; von Thur / Peter, Allgemeiner Teil des schweizerischen Obligationenrechts, Band I, 3rd ed. Zürich 1979, page 176 fn. 25, page 177 fn. 30, page 287, fn. 12). To find out the right interpretation according to the principle of good faith constitutes a question of Swiss federal law (BGE [*] 126 III 29, 125 III 308, 124 III 368; Messmer / Iboden, Die eidgenössischen Rechtsmittel in Zivilsachen, Zürich 1992, No. 96), which cannot be adjudicated within this Cantonal nullity appeal's proceedings (§ 285 ZPO [*], see above under 2.4. b) and 2.4. c); see reasoning of Kass.-No. AA0400014 of 14 July 2004 under III.2.b/aa). This also applies to the previous instance's reasoning that in order to find out the meaning of A's expressions it would be necessary to take into account various further facts. The method of interpretation as well as the rendering of new evidence on relevant facts, all this is governed by Swiss federal law (reasoning of Kass.-No. AA040090 of 23 August 2004 under III.1.b with further reference).
3.3. [Seller] alleges that [Buyer] objected to having assumed liability to pay Y Limited's outstanding debts for the first time in its rejoinder. Thus, [Buyer] had acted inconsistently, and in abuse of its rights. In order to sustain this claim, [Seller] again plainly resorts to pages 11 to 18 of its surrejoinder, in particular to pages 16 and 17.
a) [Seller] does not mention whether and how these alleged facts would possibly amount to the annulment of the appealed judgment.
b) In any event, [Seller]'s too broad reference to pages 11 to 18, is not sufficient to substantiate its claim - if ever its allegations where meant as such (see under 2.2. above).
c) Due to this lack of substance, [Seller]'s submissions may not be considered. Further, neither [Seller]'s submission in the appellate proceedings, nor its cited surrejoinder in the first instance indicate how the claimed abuse of rights on [Buyer]'s side could amount to a violation of a principle of procedure in the sense of § 281 No. 1 ZPO [*], such as the maxim to ensure a party's fair conduct in good faith within trial, stipulated under § 50 ZPO. In fact, [Seller] argues with resort to pages 16 and 17 of its surrejoinder in the first instance that [Buyer] had objected to perform on the debts of Y Limited claiming a set-off with other positions, which had no connection to Y Limited Germany. All important agreements between [Seller] and its Co-Plaintiff at the time (which subsequently quitted the trial), on the one side, and the "Z-Gruppe" on the other, had been stipulated centrally for the latter through [Buyer], and especially through B personally. This is true in particular for the given orders of goods addressed to the Plaintiffs. A had promised the Plaintiffs compensation for the open accounts concerning their deliveries to Y Limited Germany. A had been authorized to sign on behalf of [Buyer] as well as on behalf of Y Limited Germany. Neither the former nor the latter had, at any point during the business relations with the Plaintiffs, given even the slightest indication that it would consider the signed documents or the orally given promises as not binding.
[Seller] alleges that both Plaintiffs had always rightfully relied on A acting as agent within its authority. Hence [Seller] does not mean that [Buyer]'s first disputing of the liability of Y Limited of Germany in its surrejoinder in the first instance had been abusive or inconsistent to rules of procedure, or in particular to the principle that a party may act according to good faith within trial due to § 50 ZPO [*]. Rather, [Seller] argues that [Buyer] acted inconsistently and in abuse of its rights with regard to the appearance of acting as authorized agent, which [Buyer] set through its conduct in the course of the conclusion and execution of the sales contracts at issue. Therefore, [Buyer]'s subsequent objection as regards the Y Limited Germany's liability must be considered an abuse of rights, especially given that [Buyer]'s raising counterclaims on behalf of Y Limited, according to [Seller], implied its own liability. Consequently, [Seller]'s claimed abuse of rights, if ever justified, can only be based on Art. 2 ZGB [*]. This, again, is an issue of substantive Federal law (see Messmer / Imboden, ibidem, No. 75 with references), as is the question of liability as such. Therefore, the Court refrains from considering it (see above under 2.4. b) and 2.4. c)).
3.4. The first instance's normative interpretation of A's expressions as well as the issue of a possible abuse of rights (discussed under 3.3. above), both concern matters of law (see under 3.2.) rather than matters of facts. [Seller]'s resort to its offerings of evidence misses this point.
3.5. All of [Seller]'s further arguments on which it has based its claim for [Buyer]'s liability to pay US $2,218,601 for the deliveries to Y Limited Germany (see the judgment's reasoning under VIII.4.), were already brought forth in the previous instance. In its appeal, [Seller] claims that the Court of First Instance - arbitrarily and in abuse of its judicial discretion - neglected these arguments.
Whether [Buyer] indeed is liable to pay for deliveries made to the Y Limited Germany is an issue of substantive law (Frank / Sträuli / Messmer, ibidem, zu �� 27/28 notes 65 et seq, � 108 note 13). Particularly, this is true for the question whether [Buyer] for the said reasons owes to [Seller] payment of the purchase prices for the deliveries to Y Limited Germany. Therefore, the Court may not consider these points of the appeal (see above under 2.4. b) and 2.4. c). [Seller]'s contention that the first instance had arbitrarily not taken account of its submitted arguments, can be brought down to the claim that the Court had wrongly applied substantive law dismissing [Seller]'s claim. On the other hand, neither violations of rules of procedure as such, as for example, the right to be heard in court or the principle of party representation, nor arbitrary findings of facts could have been sustained by [Seller].
3.6. [Seller] contests the first instance's conclusion that it could not be established for which deliveries in particular [Buyer] might have assumed liability and what amount had been covered by its presumably given guaranty. According to [Seller], the correspondence between the parties, as well as [Buyer]'s pleadings indicate that [Buyer] had given a "guaranty of payment" for any open account, irrespective of whether it concerned deliveries to Y Limited Germany or not. Whereas the appealed section of the Court of First Instance's reasoning concerned the alleged promise given by A, [Seller]'s more recently alleged "guaranty of payment" apparently refers to something else. Consequently [Seller]'s effort to substantiate the Court of First Instance's reasoning as being arbitrary must fail, as it does not specify what "guaranty of payment" it actually means. The references to pages 26 to 41 of [Buyer]'s reply in the first instance and to pages 11 to 18 of its response to that, again, are too broad.
4. Section XIII of the reasoning of the previous instance goes about [Buyer]'s raised counterclaims as subject of its declared set-off. The Court held that in 2000 the parties had agreed on [Seller]'s authorization to distribute [a certain model] within Europe, too. In exchange, [Seller] owed [Buyer] payment of a commission, which in its amount is disputed among the parties. [Buyer] submitted that a commission of 20% of the market price "FOB Hong Kong" had been agreed (see judgment of the first instance KG act. 2 p. 36 section XIII.1; italicized in the original). According to [Seller], however, 20% of its profit margin had been stipulated as commission (see judgment of the first instance KG act. 2 p. 37; italicized in the original). The testimonies of the summoned witnesses proved neither version of the parties. Hence, there had been no inner consent between [Buyer] and [Seller] on this point. In this case, according to the principle of good faith, an objective interpretation of the will of each party has to elaborate what might have been agreed on this question hypothetically. The Court of First Instance undertook such an interpretation and found that the commission due had to be calculated based on the market price. As [Seller] itself submitted, it had sold 641,153 items for US $31.83 each. 20% of this amount came to US $4,081,580. This sum [Buyer] was entitled to bring into account for set-off.
4.1. [Seller] claims a violation of Art. 8 ZGB [*] by the decision of the Court of First Instance, which will be appealed separately. However, [Seller] also argues that Cantonal procedural law had been disregarded. According to [Seller], the Court of First Instance had entirely ignored the evidence [Seller] had offered in pages 2 to 4 and 18 of its rejoinder of 29 January 2004. Thus the Court had violated a fundamental principle of procedure in the sense required by § 281 No. 1 ZPO [*].
In its order of 17 March 2004, the Court of First Instance provided reasons for its dismissal of [Seller]'s motion to take evidence, which referred to [Seller]'s submissions. The Court also stated which evidence it actually allowed. Hence, the Court by no means entirely ignored [Seller]'s offers.
[Seller]'s appeal on this point is unfounded; in particular because it does not specify which piece of the offered evidence in particular had been wrongly neglected in the previous instance. The vague claim that the Court had missed out completely on taking account of its evidence is insufficient, if only for the fact that the Court indeed had considered part of its offered evidence. For instance, it had summoned witness C.
4.2. The first instance's reasoning that [Seller] itself had submitted within the proceedings that there had been mutual agreement between the parties on the payment of a commission, [Seller] contests as inconsistent with the record of the case. In contrast, witness C only mentioned that there had been a unilateral concession on this point from [Seller]'s side.
a) According to Art. 55(1) d) aOG, [*] an appeal to the Federal Supreme Court for a presumed violation of Swiss federal law might entail the argument that - in that context - the findings of fact of the Cantonal Court of First Instance had suffered from an obvious mistake (see Messmer / Imboden, ibidem, No. 100; Münch, in: Geiser / Münch (eds.), Prozessieren vor Bundesgericht, Basel / Frankfurt a.M., 1996, notes 4.59 and 4.65 f.; see also Art. 63(2) aOG). Substantively, the claim of an obvious mistake under Art. 55(1) d) and Art. 63(2) aOG equals the claim of the judgment being inconsistent with the case record, according to § 281 No. 2 ZPO [*]. Inconsistency with the case record emerges, when parts of the case files and exhibits were not at all, or not adequately in their true meaning, accounted for within a court's recorded evaluation of evidence. The court's findings may thus turn out as a sheer error (ZR No. 115; 81 under section 6; von Rechenberg, ibidem, p. 27; Spühler / Vock, ibidem, pp. 67/8; Frank / Sträuli / Messmer, ibidem, � 281 note 44).
The Court is barred from considering inconsistencies as regards the case record in cases in which further appeal is possible; as such a claim shall be brought forth within an appeal to the Swiss Federal Supreme Court (ZR 81 No. 88 under section 6; 55 N0. 115; von Rechenberg, ibidem, p. 42; Frank / Sträuli / Messmer, ibidem, � 285 note 14; � 281 note 44; Spühler / Vock, ibidem, p. 68).
b) Yet, contrary to [Seller]'s own allegations, its claim in fact does not concern an inconsistency of the judgment with the case record due to a mistake of the Court. Instead, [Seller] argues that the Court of First Instance had "mixed up", i.e., wrongly interpreted its submitted facts. Such a claim may well be raised within the current nullity appeal.
c) The previous instance referred to the pages 70 and 71 of [Seller]'s rejoinder; and to page 63 of [Seller]'s surrejoinder.
d) In page 70 of its rejoinder, [Seller] explains that although it had not been forced to do so, it promised [Buyer] a commission, respectively, a bonus for sales of [a certain model] in Europe, in order to keep the business relations and partnership with [Buyer] intact. This, and only this, was meant when [Seller] submitted that a commission of 20% -- first due to be invoiced on 31 December 2000 -- had been agreed. However, subject to the understanding that this agreement did not provide for a commission of 20% of the market price, but rather 20% of the [Seller]'s profit margins. [Seller]'s letter of 30 June 2000 (as submitted by [Buyer] in attachment 27) referred only to this agreement, in which it announced a cut down of the commission form 20% to 10%, beginning 1 July 2000.
On page 63 of its surrejoinder, [Seller] kept to its submissions "without exception and reservation" and maintained that the commission agreement had been made for the reasons named in its rejoinder, and only referred to the direct distribution of the goods within Europe. Thereby, [Seller] objected to [Buyer]'s allegation that [Seller] had breached this arrangement (see HG act. 28 p. 63 under H.1., italicized in the original).
e) Considering these submissions, the previous instance's finding that [Seller] itself in the proceedings presumed the agreement of a commission, respectively, the parties' mutual consent on this point, turns out to be correct. [Seller] itself clearly mentioned that a commission had been agreed. This is true irrespective of [Seller]'s further references to other submissions. Hence the appeal is unfounded.
f) The question whether a commission had been agreed at all (or rather unilaterally stipulated according to [Seller]) must be discerned from the question on what basis the commission had to be calculated. The fact that this basis has been in dispute between the parties does not contradict the fact that [Seller] admitted in the previous instance that a commission had been agreed at all. Therefore, the ruling of the Court of First Instance, as far as it relied on this point, is not arbitrary.
4.3. [Seller] claims that it alleged on several occasions that agreement of a commission of 20 % of the market price FOB Hong Kong would have been absurd and devoid of any sense. [Seller] alleged that the Court of First Instance had not considered these allegations. This failure, according to [Seller], constituted a reason for the judgment's nullity under § 281 No. 1 ZPO [*].
Due to its interpretation according to the principle of good faith, the Court of First Instance concluded that a commission of 20% of the market price had been stipulated. Thus, the Court applied federal law (Art. 1 et seq. OR [*]). As far as the appeal contests this application of the law, it cannot be considered (see sections 2.4. c) and 2.4. b) above). The argument that the Court's interpretation leads to an absurd result that did not make any sense, objects to the Court's application of the law. Therefore, it cannot be considered within the appeal, as cannot [Seller]'s submission that the Court had ignored its previous instance submissions.
Besides, the Court of First Instance did indeed summon witnesses D and E, which had been called by [Seller] to testify on this point. Therefore, even if this point of the appeal was to be considered, it would be unjustified.
4.4. The Court of First Instance reasoned that a commission calculated on a basis that correlates to the profit margin might only be assumed if this was positively indicated by the particular settings of the case. Yet, for the case at issue, the submissions of both parties did not indicate that such a commission had been agreed. [Seller] calls this reasoning inconsistent with the case record: There were plainly obvious indications for a commission based on the profit margin. It would be absurd to assume that [Seller] had bindingly promised [Buyer] a commission of US $6.37, although its own profit margin only amounted to US $6.09.
This point, again, falls within the previous instance's interpretation of the principle of good faith, and thus within its application of federal law. Thus, it may not be considered within the appeal. Besides, [Seller]'s allegations, again, are insufficiently specified, as [Seller] failed to sustain that it had submitted as towards its own profit margin already within the proceedings in the first instance.
4.5. In the first instance, [Seller] alleged that by letter of 30 June 2000 it had reduced the commission from 20% to 10%. As [Buyer] had not raised any objections, it had to be assumed that the parties had validly agreed to this reduction. The Court of First Instance found that [Seller] had communicated its intention to reduce the commission from 20% to 10% by letter of 30 June 2000. [Buyer] had not responded. Its remaining silent did not amount to an implicit consent.
[Seller] finds these conclusions wrong and absurd. However, it again contests the previous instance's application of federal law, and thus will not be heard on this point.
4.6. The previous instance took into account that [Buyer], to sustain its allegation of a commission of 20% of the market price, referred to a contract of 14 September 1999 between [Buyer], F Ltd, and G Ltd. However, this cited contract itself did not entail an agreement of a commission, but merely provided for a license fee, to be due for each sale of the product, that was yet to be negotiated. Hence it was of interest to the Court, how this fee agreement had been actually executed. Due to an invoice of 7 March 2007, G Ltd paid US $45 per [_], whereas the market price for the product had been US $36. [Buyer] thus presumed a license fee of US $9 per [item], equaling 20% of the market price. [Seller] did not dispute these facts. From this, the Court of First Instance further concluded that with respect to F Ltd's distributing the goods in England and Ireland too, the commission was to be calculated based on the market price, and not on the profit margin. It could not simply be drawn from the contract of 14 September 1999 that the arrangement in dispute, that the parties agreed in Atlanta and that was concerned with [Seller]'s distributing of the [certain product] within the European Market, was identical. However, it might easily be assumed that the arrangement in dispute was to be interpreted in the same way, i.e., to be calculated on the same basis, if the parties had not expressly deviated from this. Due to the evidence rendered, the latter was not the case.
a) [Seller] elaborates that from the contract with firm "G Ltd", the agreement of a price of US $45 per item had been agreed. This price G Ltd had to pay directly to [Buyer]. Hence, the commission due had already been calculated and included into this purchase price. Consequently, [Seller]'s own profit margin amounted to US $19.26, being the difference between the agreed selling price of US $45 FOB Hong Kong that had been bindingly agreed with G Ltd for a period of twelve months and the manufacturing costs of US $25.74 per item. This profit margin had been split between the parties. [Seller] had got US $9 per item and [Buyer] had received US $10.26 per item. Subtracting US $9 that had been paid in advance, the remainder of payable US $36 was not identical with the agreed market price "FOB Hong Kong." The contractual agreement and the figures would prove that subject to the arrangement had been the sharing of [Seller]'s profit and not the granting a fixed commission to [Buyer]. The market price of US $45 per item that had been fixed for a period of twelve months ensured that, after subtraction of US $9, a fair profit margin remained, even in case of rising manufacturing costs. This would support [Seller]'s claim that the arranged commission was solely based on its profit. Therefore, the Court of First Instance was ultimately wrong in assuming that the commission was to be calculated on the market price. As the case of the G Ltd displayed, the parties had shared the profit as the margin of the market price and the manufacturing costs. If one took this into account, then, according to [Seller] one necessarily had to assume that the commission consisted of a percentage share of [Seller]'s profit, as [Seller] had always alleged since the beginning of the proceedings.
b) [Seller] does not specify if and how these alleged facts resulted in the nullity of the appealed decision. For this reason alone, the Court cannot consider its argument. Moreover, [Seller] does not allege that all it had drawn from the contract of G Ltd has been already submitted in the first instance. Neither does [Seller] sustain that it alleged the parties' sharing of the profit margin - as difference of the market price of US $45 that had been agreed with G Ltd and the manufacturing costs - in the first instance, nor does [Seller] allege or substantiate that the Court of First Instance's finding (that [Seller] did not dispute [Buyer]'s version of the fact, i.e., that a fee of US $9, as equivalent to 20% of the purchase price, had been agreed) was wrong.
Given the above, [Seller]'s submissions are precluded from being considered within the appellate proceedings. Eventually, the appealed reasoning of the Court of First Instance, again, concerned matters of legal interpretation, and thus lead to the application of Swiss federal law. For this reason also, the Court may not consider [Seller]'s claim.
4.7. [Seller] contests the reasoning of the Court of First Instance, in particular because it indiscriminately assumed its own submissions as towards sold quantities, manufacturing costs, and average market price, and used them as a basis to calculate a presumed commission of 20 % of the market price "FOB Hong Kong" for the whole year of 2000. Yet, [Seller] does not explain why and how this treatment of facts would be wrong. Where the Court of First Instance relied on the submissions of [Seller], despite being challenged by [Buyer], this was not to [Seller]'s detriment (see requirement under § 281 ZPO [*]). Hence [Seller]'s allegations will not be considered.
4.8. The arguments brought forth in section 3, pages 33 and 34 of [Seller]'s appeal are mere summaries of previously raised complaints and thus may not lead to an annulment of the judgment.
5. In conclusion, [Seller] fails to substantiate in its appeal that the contested judgment suffered from a defect in the sense of § 281 ZPO [*] which would amount to its nullity. As [Seller] may neither submit any new arguments after expiration of the time allowed for appeal on 6 March 2006, nor amend previously made submissions, all of its allegations made after 6 March 2006 will not be considered. As for the remaining part, [Seller]'s appeal is unfounded.
[Seller] bears the costs of the appeal (§ 64(2) ZPO [*]). [Seller] is liable to pay [Buyer] due compensation for its expenses in the appellate proceeding (§ 68(1) ZPO).
The appeal is dismissed, as far as it was to be considered by the Court.
[Seller] bears the costs of the appeal.
[Seller] is liable to pay [Buyer] SFR (Swiss francs) 46,000 as compensation for expenses in the appellate proceedings.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellant of Germany is referred to as [Seller] and Defendant-Appellee of Italy is referred to as [Buyer].
Translator's note on abbreviations: aOG = Bundesgesetz über die Organisation der Bundesrechtspflage [Federal Act on the Organization of Federal Jurisdiction]; BGE = Bundesgerichtsentscheid [Decisions of the Swiss Federal Supreme Court]; OR = Obligationenrecht [Swiss Law of Obligations]; ZGB = Zivilgesetzbuch [Swiss Civil Code]; ZPO = Zivilprozessordnung [Swiss Code on Civil Procedure].
*** Jan Henning Berg is a law student at the University of Osnabrück, Germany, who participated in the 13th Willem C. Vis Moot with the Osnabrück team. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis Moot and 4th Willem C. Vis (East) Moot.
Pace Law School Institute of International Commercial Law - Last updated January 15, 2008